Didn't get a W-2?

This is a question I get quite a bit. Whether it be from an employer that went out of business, it is a common question..."what do I do if I didn't get a W-2...?" The IRS this week issued the following tax tip to address this problem.

IRS Tax Tip 2011-28 - February 09, 2011

Before you file your 2010 tax return, you should make sure you have all the needed documents including all your Forms W-2. You should receive a Form W-2, Wage and Tax Statement, from each of your employers. Employers have until January 31, 2011 to send you a 2010 Form W-2 earnings statement.

If you haven't received your W-2, follow these four steps:
1. Contact your employer. If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the em- ployer, allow a reasonable amount of time for them to resend or to issue the W-2.

2. Contact the IRS. If you do not receive your W-2 by February 14th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:
- Employer's name, address, city and state, including zip code and phone number,
- Dates of employment,
- An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. The estimate should be based on year- to-date information from your final pay stub or leave-and-earnings statement, if possible.

3. File your return. You still must file your tax return or request an extension to file by April 18, 2011, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W0-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. Ther may be a delay in any refund due while the information is verified.

4. File a Form 1040X On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

IRS delayed processing to being February 14

From Accounting Today,

Valentine’s Day will turn into Tax Day as the Internal Revenue Service plans to begin processing tax returns delayed by last month’s tax law changes on Feb. 14.

On Thursday, the IRS reminded taxpayers affected by the delay that they can begin preparing their tax returns immediately, however, because many software providers are ready now to accept these returns.

Beginning Feb. 14, the IRS said it would start processing both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction. Based on filings last year, about 9 million tax returns claimed any of these deductions on returns received by the IRS before Feb. 14.

The IRS said a few weeks ago that it would delay tax returns with itemized deductions as well as a number of forms after Congress’s December extension of the Bush-era tax rates (see IRS Says Tax Season Will Be Delayed for Some and IRS Delays More Forms for Filing This Season).

People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms. Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.

Most other returns, including those claiming the Earned Income Tax Credit, education tax credits, child tax credit and other popular tax breaks, can be filed as normal, immediately.

The IRS said it needed the extra time to update its systems to accommodate the tax law changes without disrupting other operations tied to the filing season. The delay followed the Dec. 17 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended a number of expiring provisions, including the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

IRS begins accepting e-filed returns

From Accounting Today

The Internal Revenue Service opened its 21st season of electronic filing Friday with a reminder to taxpayers that e-file remains the best way to get fast refunds and ensure accurate tax returns, particularly following several tax law changes in December.

IRS e-file is approaching the milestone of 1 billion returns processed. The electronic transmission system, which has revolutionized the way the IRS processes tax returns and made speedy refunds possible, has safely and securely processed 892 million tax returns since its national debut in 1990. In 2010, nearly 100 million people - 70 percent of the taxpayers - used IRS e-file.

“IRS e-file is the best option for everyone, especially for people impacted by recent tax law changes,” said IRS Commissioner Doug Shulman in a statement. “E-file ensures people can file accurately and get refunds quickly. With a new legislative e-file mandate for tax preparers, we anticipate that more tax return preparers will be using e-file this year, and we urge people who prepare their own taxes to give it a try. IRS e-file is now the norm, not the exception.”

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act extended a number of tax deductions and credits for 2011 and 2012 such as the American Opportunity Tax Credit and the modified Child Tax Credit, which help families pay for college and other child-related expenses. The Act also provides various job creation and investment incentives including 100 percent expensing and a two-percent payroll tax reduction for 2011. Those changes have no effect on the 2011 filing season.The IRS also announced today it anticipates starting to process tax returns impacted by December’s tax law changes by mid-February. The IRS continues working to reprogram its computers to reflect new tax law changes enacted by Congress and signed by the President in December.

Generally, taxpayers who itemize their deductions by using Schedule A, who claim the higher education tuition and fees deduction or who claim the educator expense deduction must wait a few more weeks to file their returns. Based on historical filing patterns, the IRS anticipates the delay impacts about 9 million taxpayers; in 2010, the IRS received more than 141 million tax returns. While the delay impacts both paper and electronic tax returns, most taxpayers can file immediately. More details are available on IRS.gov.

Although the IRS has not announced a specific mid-February start date for accepting the delayed tax returns, many people using e-file can get a head start. Many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open in mid-February for the delayed forms.

Taxpayers using commercial software can check with their providers for specific instructions. Taxpayers should check with their tax return preparers, who also may be holding prepared returns until the updates are complete.

Even with the delay, IRS e-file remains the fastest option for taxpayers, and e-file returns will be processed and refunds issued much faster than paper returns. It will take less than two weeks to process an e-filed return, but as many as four to six weeks to process a paper return.

In general, for people concerned about security, e-file has proven itself year in and year out as a safe and secure method of filing a tax return. E-file has a proven track record. Software vendors and preparers use the latest encryption technology. Plus, within 48 hours, taxpayers receive an electronic acknowledgement that their return has been received by the IRS and either accepted or rejected.

With most people receiving a refund, the fastest way to get a refund is by e-filing and using direct deposit. Taxpayers can get their money automatically in as few as 10 days. For people who owe taxes, e-file offers payment alternatives such as filing now and paying prior to the April tax deadline. Taxpayers who still want to pay by check can do so by e-filing and then mailing a payment voucher.

Taxpayers can e-file their tax returns one of three ways: through a tax return preparer, through commercial software or through IRS Free File. The IRS does not charge for e-file. Many tax return preparers and software products also offer free e-filing with their services. Free File offers free tax preparation and free electronic filing.

As people become more comfortable using computers and the Internet for financial transactions, the IRS has seen a huge growth in the number of people who are preparing their own tax returns with the help of software. Last year, more than one-third of all e-filed returns were done by people preparing and e-filing their own tax returns with software.

For people seeking free electronic options to do their own taxes, IRS Free File offers something for almost everyone through two formats: brand-name software or online fillable forms. People must access Free File through the IRS Web site at www.IRS.gov and click on Free File or Free File Home - Your Link to Free Federal Online Filing. People can read more about Free File at www.freefile.irs.gov or IR-2011-5.

People looking for a tax return preparer who files electronically and for more information on e-file can review IRS e-file for Individuals. Taxpayers also can locate an e-file authorized tax professional nearest to them by doing a zip code search.

When using e-file, you also must use an e-signature. The IRS no longer accepts the paper signature document. If you prepare your own return using software you must use the self-select PIN method. If you have a third-party prepare your return, you can use either the self-select PIN method or the practitioner PIN method. See Fact Sheet 2011-07 for more details.
A recently passed law requires certain paid tax return preparers to electronically file federal income tax returns that they prepare and file for individuals, trusts and estates. Those are Forms 1040, 1040A, 1040EZ and 1041.

2011 Tax Filing Season Gets Under Way With Many Changes

From Journal of Accountancy

January 14, 2011

The IRS started accepting e-filed and Free File returns on Jan. 14, marking the official start of the 2011 tax filing season. However, many taxpayers will not be able to file until some time in February while the IRS updates forms and reprograms its systems to account for legislative changes made late in 2010.

Individual taxpayers will have until April 18 to file their returns. Although the normal deadline, April 15, falls on a Friday, that day is a legal holiday in the District of Columbia, and because D.C. holidays affect tax deadlines in the same way federal holidays do, all taxpayers are being given an extra three days to file their returns.

The IRS has announced that taxpayers who itemize deductions on Schedule A, as well as those who take certain recently extended deductions, will not be able to file their returns until mid- to late February. See “Tax Law Changes Will Delay Start of Filing Season for Some Taxpayers.”

For the 2011 filing season, the IRS is again making available its online “Where’s My Refund?” tool, which can be found on the front page of its website.

PTINs

For paid tax return preparers, perhaps the biggest procedural change this tax season is that they must obtain and use a preparer tax identification number (PTIN) when preparing returns. The IRS has launched an online PTIN registration site where preparers can obtain or renew their PTIN. PTIN registration costs $64.25. Preparers can also apply using a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application.

Generally, on any tax return or claim for refund, the preparer—whether signing or nonsigning—must provide his or her PTIN. However, the IRS recently provided a list of 28 forms or series of forms that are not subject to the PTIN requirement—for a list, see “IRS Exempts CPA-Supervised Nonsigners From New Preparer Rules.”

Many CPAs have reported problems with the PTIN registration process, both online and using the paper form. See “PTINs a Pain for Some CPAs.”

E-Filing

While the vast majority of tax practitioners already e-file, this tax season marks the first year that e-filing is mandatory for individual returns. Specifically, tax return preparers who anticipate filing 100 or more federal individual or trust returns during 2011 are required to e-file them.

2010 Tax Changes

A number of pieces of legislation enacted during 2010 will affect returns filed this season, as will changes enacted in earlier years. The four biggest tax bills enacted in 2010 were the health care reform legislation (the Patient Protection and Affordable Care Act, PL 111-148, and the Health Care and Education Reconciliation Act, PL 111-152), the Small Business Jobs Act of 2010 (PL 111-240), and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act, PL 111-312).

Changes Affecting Individual Returns

Itemized deductions and personal exemptions: The itemized deduction limitation is repealed for 2010 (and through 2012). This means that taxpayers can deduct the full amount of their itemized deductions in 2010. The personal exemption phaseout rules also do not apply in 2010 (and through 2012).

Alternative minimum tax (AMT): The 2010 Tax Relief Act included a patch of the AMT exemption amounts for 2010 and 2011. For 2010, the AMT exemption amounts are $47,450 for unmarried individuals and $72,450 for married individuals filing jointly. The 2010 Tax Relief Act also extended (through 2011) the ability to use nonrefundable personal credits to offset AMT (under IRC § 26(a)).

First-time homebuyer credit: The IRC § 36 first-time homebuyer credit expired during 2010. It is available to eligible taxpayers who closed on their home purchase on or before Sept. 30, 2010 (under a binding contract in place before May 1, 2010). The closing date deadline was moved during the year from June 30 to Sept. 30 by the Homebuyer Assistance and Improvement Act.

Rollovers to Roth accounts: The Small Business Jobs Act allows rollovers from elective deferral plans to Roth-designated accounts. If a section 401(k) plan, 403(b) plan or governmental 457(b) plan has a qualified designated Roth contribution program, a distribution to an employee (or a surviving spouse) from an account under the plan that is not a designated Roth account is permitted to be rolled over into a designated Roth account under the plan for the individual. This provision is effective for distributions made after Sept. 27, 2010. The taxable amount of the rollover must be included in gross income (although for rollovers in 2010, the taxable amount is includible in gross income half in 2011 and half in 2012).

Extended Provisions for Individuals

A number of credits and deductions that had expired for 2010 were retroactively extended by the 2010 Tax Relief Act and are therefore available for taxpayers to claim on their 2010 returns. Those available to individuals include the $250 deduction for elementary and secondary schoolteachers for purchasing classroom supplies; the state and local sales tax deduction in lieu of a state income tax deduction; the deduction for tuition and related expenses; and allowance for tax-free distributions from individual retirement plans for charitable purposes.

For a list of extended provisions, see “Congress Resolves Many Tax Issues During Lame-Duck Session.”

Changes Affecting Business Returns

The Small Business Jobs Act introduced a number of changes that may affect 2010 business returns.

Small business stock: The act created a 100% exclusion of gain from the sale of certain small business stock under IRC § 1202. To be eligible, stock must be purchased after Sept. 27, 2010 (this provision has been extended through 2011 by the 2010 Tax Relief Act).

Section 179 expensing: The Small Business Jobs Act increased the maximum amount a taxpayer may expense under IRC § 179 to $500,000 and increased the phaseout threshold amount to $2 million for tax years beginning in 2010 and 2011.

Bonus first-year depreciation: The first-year 50% bonus depreciation available under IRC § 168(k) was extended for one year by the Small Business Jobs Act to apply to property acquired and placed in service in 2010 (or 2011 for certain long-lived and transportation property). This amount was then increased by the 2010 Tax Relief Act to 100% for business property acquired after Sept. 8, 2010, and before Jan. 1, 2012, and placed in service before Jan. 1, 2012 (or before Jan. 1, 2013, in the case of certain property).

Business credits: The carryback period for eligible small business credits under IRC § 38 was extended from one to five years. The Small Business Jobs Act also allows taxpayers to use eligible small business credits to offset both regular and alternative minimum tax liability. Both provisions are effective for credits determined in the taxpayer’s first tax year beginning after 2009.

Self-employed individuals’ health insurance: The Small Business Jobs Act allows self-employed individuals who deduct the cost of health insurance for themselves and their spouses, dependents, and children who have not attained age 27 as of the end of the tax year to take the deduction into account in calculating net earnings from self-employment for purposes of SECA taxes. This provision applies to the taxpayer’s first tax year beginning after 2009.

Startup expenses: The Small Business Jobs Act increased the IRC § 195 deduction for trade or business startup expenses from $5,000 to $10,000 for tax years beginning in 2010. The start of the limitation on the deduction is increased from $50,000 to $60,000. So for 2010 the amount of the deduction is the lesser of: (1) the amount of the startup expenses or (2) $10,000, reduced (but not below zero) by the amount by which the startup expenditures exceed $60,000.

Cell phones: The Small Business Jobs Act removed cell phones from the definition of listed property. Thus, the heightened substantiation requirements and special depreciation rules that apply to listed property under IRC § 280A will no longer apply to cell phones.

Extended Provisions for Businesses

A number of business credits and deductions that had expired for 2010 were retroactively extended by the 2010 Tax Relief Act and are therefore available for taxpayers to claim on their 2010 returns. These include the credit for research and development expenditures and various empowerment zone designations and renewal community tax incentives.

More Forms Delayed by IRS

From Accounting Today

The Internal Revenue Service said a series of forms will be disabled until mid- to late February with error codes.

In e-mail alert to software developers, tax return transmitters, and authorized IRS e-file providers and electronic return originators, the IRS said Friday that the following forms would be disabled until mid- to late February with a new error reject code, 0248.

The following forms cannot be electronically filed at this time, according to the IRS:

In addition, Error Reject Code 0014 does not allow entries for educator expenses (Form 1040, line 23 and Form 1040A, line 16) or tuition and fees (Form 1040, line 34 and Form 1040A, line 19). In mid- to late February, the record layout for Form 1040 and Form 1040A will be updated to allow entries for educator expenses (SEQ 0623) and tuition and fees deduction (SEQ 0705), according to the IRS.Schedule A, Itemized Deductions
Form 3800, General Business Credit
Form 4684, Casualties and Thefts
Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (Page 2)
Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit
Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit
Form 8859, District of Columbia First-Time Homebuyer Credit
Form 8910, Alternative Motor Vehicle Credit
Form 8917, Tuition and Fees Deduction
Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

The IRS said last month after the late passage by Congress of an extension of the Bush-era tax cuts that some of these same forms, especially Schedule A for itemized deductions and other forms for educators and tuition expenses, would not be available until mid- to late February, but it did not list many of the other forms enumerated on Friday at the time (see IRS Says Tax Season Will Be Delayed for Some).

Separately, the IRS also announced a delay in its Modernized e-File system for accepting some types of business tax returns. The IRS said that due to the extensive amount of infrastructure work being done on the MeF system to enhance performance, and the impact of additional work in support of the recently passed extender legislation, the annual Business Master File cutover window has been extended, and BMF startup has been delayed. Instead of opening at 9:00 am, Eastern on Saturday, January 8th, the MeF system will open for BMF returns and extensions at 9:00 am, Eastern on Wednesday, January 12.

Once BMF startup begins, and until changes caused by extender legislation are implemented, the IRS said it would reject any BMF e-filed tax returns that have the following forms or schedules attached: Form 1120-PC (Tax Year 2010), Form 6478 (Tax Year 2010) and Form 8849, Schedule 3 (Tax Year 2011). The IRS said it is working as quickly as possible to implement the necessary programming changes so these forms/returns can be processed.

The IRS noted that the due date for any tax return or extension originally due on January 15th has been extended to Tuesday, January 18th due to the 15th falling on a Saturday and the Martin Luther King Day holiday on Monday

Charitable Gifts from IRA's Ideal for Making Donations

As posted on AccountingWeb.Com

By Vaughn W. Henry

The clock is ticking. For tax and financial advisors of donors 70 1/2 or older, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 signed in December allows donors to tap their Individual Retirement Account to make qualified charitable distributions through January 31, 2011.

Although it’s late in 2010, and may be logistically difficult to make those charitable distributions, there is a little wrinkle in this tax bill that allows donors an extra month to elect to have those gifts treated as qualified charitable distributions (QCD) made in 2010. Consequently, your clients have until January 31 if they would like to make a tax efficient gift to a public charity this year, and all of next year to do it again.

There are a few important rules to remember about IRA gifts and QCD.

There is a minimum age restriction of 70 1/2, and a $100,000 limit per IRA donor for charitable distributions from IRAs each year. Individuals may exclude the amount distributed directly to an eligible charity from their gross income. While there’s no income tax deduction, neither is there recognition of income; the net effect is tax efficiency.

This is especially helpful for clients who have large IRA account balances, a charitable interest, who don’t usually itemize or don’t have an AGI large enough to make use of significant charitable tax deductions, or who live in a state without a concurrent state income tax deduction for charitable gifts.

The recipient charities generally need to be public charities, however, you can’t distribute the IRA to supporting organizations or donor advised funds held at public charities. However, you may use funds that target specific interests or projects at many community foundations.

No split interest trusts (CRT, CLT), charitable gift annuities, or private non-operating foundations qualify as QCD recipients. However, in normal estate planning situations, making any of these entities (except for the charitable lead trust) a beneficiary of a retirement plan account often makes good sense.

Charities must acknowledge the charitable gift as coming from the donor’s IRA and that there were noquid pro quo expectations.

If your clients haven’t gotten around to making their Required Minimum Distributions from their IRA, the Internal Revenue Service treats distributions to charity as qualifying for those annual minimum distributions from the donor’s IRA.

The gifts are restricted to either traditional or Roth IRAs. Note that 403(b), 401(k), and other retirement accounts do not qualify.

The gift must come directly from the IRA. Do not take the distribution and endorse the check or cash it and give the proceeds to the charity. However, the IRA custodian can make the charity the payee but mail it to the donor who may then deliver it to the charity.

Charitable gifts from IRAs are very tax efficient and, in most cases, are an ideal means to make significant donations to charit

IRS Extends Tax-Filing Deadline to April 18

WASHINGTON, D.C. (JANUARY 5, 2011)

BY ACCOUNTING TODAY STAFF

The Internal Revenue Service has opened the 2011 tax season by announcing that taxpayers have until April 18 to file their tax returns as a result of a Washington, D.C., holiday.

Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.

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The IRS expects to receive more than 140 million individual tax returns this year, with most of those being filed by the April 18 deadline. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.

“The IRS has made important strides at stopping tax avoidance using offshore accounts,” said IRS Commissioner Doug Shulman in a statement. “We continue to focus on offshore tax compliance and people with offshore accounts need to pay taxes on income from those accounts.”The IRS also cautioned taxpayers with foreign accounts to properly report income from these accounts and file the appropriate forms on time to avoid stiff penalties.

In addition, the IRS reminded tax professionals preparing returns for a fee that this is the first year that they must have a Preparer Tax Identification Number. Tax return preparers should register immediately using the new PTIN sign-up system available through www.IRS.gov/taxpros.

For most taxpayers, the 2011 tax-filing season starts on schedule. However, tax law changes enacted by Congress and signed by President Obama in December mean some people need to wait until mid- to late February to file their tax returns in order to give the IRS time to reprogram its processing systems.

Some taxpayers – including those who itemize deductions on Form 1040 Schedule A – will need to wait to file. This includes taxpayers impacted by any of three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 enacted Dec. 17. Those who need to wait to file include:

• Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.

• Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.

• Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

In addition to extending those tax deductions for 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act also extended those deductions for 2011 and a number of other tax deductions and credits for 2011 and 2012 such as the American Opportunity Tax Credit and the modified Child Tax Credit, which help families pay for college and other child-related expenses. The Act also provides various job creation and investment incentives including 100 percent expensing and a two-percent payroll tax reduction for 2011. Those changes have no effect on the 2011 filing season.

The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the recent tax law changes. In the interim, taxpayers affected by these tax law changes can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes. Additional information will be available at www.IRS.gov.

For taxpayers who must wait before filing, the delay affects both paper filers and electronic filers. The IRS urges taxpayers to use e-file instead of paper tax forms to minimize confusion over the recent tax law changes and ensure accurate tax returns.

Except for those facing a delay, the IRS will begin accepting e-file and Free File returns on Jan. 14. Additional details about e-file and Free File will be announced later this month.

The IRS is also continuing to focus on taxpayer service. Taxpayers with questions should check the IRS website atwww.IRS.gov, call our toll-free number or visit a taxpayer assistance center.

This is also the first filing season that tax packages will not be mailed to individuals or businesses. There are still many options for taxpayers to get paper forms and instructions if they need them. In recent years, fewer and fewer taxpayers received these mailings. Last year, only 8 percent of individuals who filed tax returns received tax packages in the mail. Taxpayers can still get any forms and instructions they need online at www.IRS.gov, or they can visit local IRS offices or participating libraries and post offices.

In addition, individuals making $49,000 or less can use the Volunteer Income Tax Assistance program for free tax preparation and, in many cases, free electronic filing. Individuals age 60 and older can take advantage of free tax counseling and basic income tax preparation through Tax Counseling for the Elderly.

IRS Free File provides options for free brand-name tax software or online fillable forms plus free electronic filing. Everyone can use Free File to prepare a federal tax return. Taxpayers who make $58,000 or less can choose from approximately 20 commercial software providers. There’s no income limit for Free File Fillable Forms, the electronic version of IRS paper forms, which also includes free e-filing.

Once taxpayers file their federal return, they can track the status of their refunds by using the “Where's My Refund?” tool, located on the front page of www.IRS.gov. Taxpayers can generally get information about their refunds 72 hours after the IRS acknowledges receipt of their e-filed returns, or three to four weeks after mailing a paper return.

Taxpayers need to provide the following information from their tax returns: (1) Social Security Number or Individual Taxpayer Identification Number, (2) filing status, and (3) the exact whole dollar amount of your anticipated refund. If the U.S. Postal Service returns the taxpayer’s refund to the IRS, the individual may be able to use “Where’s My Refund?” to change the address the IRS has on file, online.

Also, taxpayers may complete a Form 8822, Change of Address, and send it to the address shown on the form. They may download Form 8822 from www.IRS.gov or order it by calling 800-TAX-FORM. Generally, taxpayers can file an online claim for a replacement check if more than 28 days have passed since the IRS mailed their refund.

If you have any questions, please contact our office at (615) 746-4632. Frank

Online scams that Impersonate the IRS

from www.irs.gov

Consumers should protect themselves against online identity theft and other scams that increase during and linger after the filing season. Such scams may appropriate the name, logo or other appurtenances of the IRS or U.S. Department of the Treasury to mislead taxpayers into believing that the scam is legitimate.

Scams involving the impersonation of the IRS usually take the form of e-mails, tweets or other online messages to consumers. Scammers may also use phones and faxes to reach intended victims. Some scammers set up phony Web sites.

The IRS and E-mail

Generally, the IRS does not send unsolicited e-mails to taxpayers. Further, the IRS does not discuss tax account information with taxpayers via e-mail or use e-mail to solicit sensitive financial and personal information from taxpayers. The IRS does not request financial account security information, such as PIN numbers, from taxpayers.

Object of Scams

Most scams impersonating the IRS are identity theft schemes. In this type of scam, the scammer poses as a legitimate institution to trick consumers into revealing personal and financial information — such as passwords and Social Security, PIN, bank account and credit card numbers — that can be used to gain access to and steal their bank, credit card or other financial accounts. Attempted identity theft scams that take place via e-mail are known as phishing. Other scams may try to persuade a victim to advance sums of money in the hope of realizing a larger gain. These are known as advance fee scams.

Who Is Targeted

Anyone with a computer, phone or fax machine could receive a scam message or unknowingly visit a phony or misleading Web site. Individuals, businesses, educators, charities and others have been targeted by e-mails that claim to come from the IRS or Treasury Department. Scam e-mails are generally sent out in bulk, based on e-mail addresses (urls), similar to spam.

How an Identity Theft Scam Works

Most of the scams that impersonate the IRS are identity theft scams. Typically, a consumer will receive an e-mail that claims to come from the IRS or Treasury Department. The message will contain an enticing or intimidating subject line, such as tax refund, inherited funds or IRS notice. Usually, the message will state that the recipient needs to provide the IRS with information to obtain the refund or avoid some penalty. The message will instruct the consumer to open an attachment or click on a link in the e-mail. This may lead to an official-looking form to be filled out online or send the taxpayer to a seemingly genuine but bogus IRS Web site. The look-alike site will then contain a phony but genuine-looking online form or interactive application that requires the personal and financial information the scammer can use to commit identity theft.

Alternatively, the clicked link may secretly download malware to the consumer’s computer. Malware is malicious code that can take over the computer’s hard drive, giving the scammer remote access to the computer, or it could look for passwords and other information and send them to the scammer.

Phony Web or Commercial Sites

In many IRS-impersonation scams, the scammer sends the consumer to a phony Web site that mimics the appearance of the genuine IRS Web site, IRS.gov. This allows the scammer to steer victims to phony interactive forms or applications that appear genuine but require the targeted victim to enter personal and financial information that will be used to commit identity theft.

The official Web site for the Internal Revenue Service is IRS.gov, and all IRS.gov Web page addresses begin with http://www.irs.gov/.

In addition to Web sites established by scammers, there are commercial Internet sites that often resemble the authentic IRS site or contain some form of the IRS name in the address but end with a .com, .net, .org or other designation instead of .gov. These sites have no connection to the IRS. Consumers may unknowingly visit these sites when searching the Internet to retrieve tax forms, publications and other information from the IRS.

Frequent or Recent Scams

There are a number of scams that impersonate the IRS. Some of them appear with great frequency, particularly during and right after filing season, and recur annually. Others are new.

Refund Scam — This is the most frequent IRS-impersonation scam seen by the IRS. In this phishing scam, a bogus e-mail claiming to come from the IRS tells the consumer that he or she is eligible to receive a tax refund for a specified amount. It may use the phrase “last annual calculations of your fiscal activity.” To claim the tax refund, the consumer must open an attachment or click on a link contained in the e-mail to access and complete a claim form. The form requires the entry of personal and financial information. Several variations on the refund scam have claimed to come from the Exempt Organizations area of the IRS or the name and signature of a genuine or made-up IRS executive. In reality, taxpayers do not complete a special form to obtain their federal tax refund — refunds are triggered by the tax return they submitted to the IRS.
Lottery winnings or cash consignment — These advance fee scam e-mails claim to come from the Treasury Department to notify recipients that they’ll receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail. The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay 10 percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees. In reality, the Treasury Department does not become involved in notification of inheritances or lottery or other winnings.
Beneficial Owner Form — This fax-based phishing scam, which generally targets foreign nationals, recurs periodically. It’s based on a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. The scammer, though, invents his or her own number and name for the form. The scammer modifies the form to request passport numbers, information that is often used for account security purposes (such as mother’s maiden name) and similar detailed personal and financial information, and states that the recipient may have to pay additional tax if he or she fails to immediately fax back the completed form. In reality, the real W-8BEN is completed by banks, not individuals.
Other Known Scams

The contents of other IRS-impersonation scams vary but may claim that the recipient will be paid for participating in an online survey or is under investigation or audit. Some scam e-mails have referenced Recovery-related tax provisions, such as Making Work Pay, or solicited for charitable donations to victims of natural disasters. Taxpayers should beware of an e-mail scam that references underreported income and the recipient’s “tax statement,” since clicking on a link or opening an attachment is known to download malware onto the recipient’s computer.

How to Spot a Scam

Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:

Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
Gets the Internal Revenue Service or other federal agency names wrong.
Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (http://www.irs.gov). The actual link’s address, or url, is revealed by moving the mouse over the link included in the text of the e-mail.
What to Do

Taxpayers who receive a suspicious e-mail claiming to come from the IRS should take the following steps:

Avoid opening any attachments to the e-mail, in case they contain malicious code that will infect your computer.
Avoid clicking on any links, for the same reason. Alternatively, the links may connect to a phony IRS Web site that appears authentic and then prompts for personal identifiers, bank or credit card account numbers or PINs.
Visit the IRS Web site, www.irs.gov, to use the “Where’s My Refund?” interactive tool to determine if they are really getting a refund, rather than responding to the e-mail message.
Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from their inbox.
Consumers who believe they are or may be victims of identity theft or other scams may visit the U.S. Federal Trade Commission’s Web site for identity theft, www.OnGuardOnline.gov, for guidance in what to do. The IRS is one of the sponsors of this site.

The facts about e-filing

from www.irs.gov

Most taxpayers and tax preparers this year will use IRS e-file to file their federal tax returns or get extensions of time to file. During this process, they will not have to send a single scrap of paper to the Internal Revenue Service.

The IRS expects the total number of individual tax returns, both electronic and paper, to total about 140 million in 2010, and for e-file returns to exceed last year’s record high of 95 million.

The Many Benefits of E-file

Faster refunds. With IRS e-file, taxpayers get refunds in half the time it takes to file a paper tax return and receive a refund check. E-filers who choose Direct Deposit can receive their refund in as few as 10 days.

Paperless. A taxpayer eliminates paperwork by creating his or her own Personal Identification Number (PIN) and filing a paperless return using tax preparation software or a tax professional. There is nothing to mail to the IRS.

File now and pay later options. Taxpayers can file early and pay later by scheduling an electronic funds withdrawal any time through April 15, 2010. Taxpayers can also pay by credit or debit card when they e-file their returns. By enrolling in the Electronic Federal Tax Payment System (EFTPS), taxpayers can make all federal tax payments online or by phone.

More accurate returns. In addition to the error checks built into return preparation software, additional checks are done during the transmission of software enabled e-file returns. These checks reduce the chance a taxpayer will receive an error letter from the IRS.

Quick electronic confirmation. E-filers are notified within 48 hours that their returns have been received.

Convenient Federal/State e-filing. Taxpayers in 37 states and the District of Columbia can e-file their federal and state tax returns in one transmission to the IRS. The IRS forwards the state data to the appropriate state tax agency. In 2009, 49 million taxpayers filed federal-state electronic returns in Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, Wisconsin and the District of Columbia.

How to Choose a Tax Return Preparer

From www.irs.gov

Taxpayers who decide they need assistance when preparing a tax return should choose a tax preparer with care and caution. Even if a return was prepared by an outside individual or firm, taxpayers should remember that they are legally responsible for what they file with the Internal Revenue Service.

Most return preparers are professional, honest and provide excellent service to their clients, but some engage in fraud and other illegal activities. Return preparer fraud involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients.

Preparers may, for example, manipulate income figures to fraudulently obtain tax credits, such as the Earned Income Tax Credit. In some situations, the client, or taxpayer, may not even know of the false expenses, deductions, exemptions and/or credits shown on his or her tax return.

However, when the IRS detects a fraudulent return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may be subject to penalties.

The IRS Return Preparer Program focuses on enhancing compliance in the return-preparer community by investigating and referring criminal activity by return preparers to the Department of Justice for prosecution. The IRS can also assert appropriate civil penalties against unscrupulous return preparers.

Also to combat fraud, IRS Commissioner Doug Shulman recently made a series of recommendations with the twin goals of increasing taxpayer compliance and ensuring uniform and high ethical standards of conduct for tax preparers.

While most preparers provide honest service to their clients, the IRS urges taxpayers to be careful when choosing a preparer –– as careful as they would be choosing a doctor or lawyer. Even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the return. For that reason, taxpayers should never sign a blank tax form. And they should review the return before signing it and ask questions on entries they don't understand.

Helpful Hints When Choosing a Return Preparer

Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.
Avoid preparers who base their fee on a percentage of the refund.Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
Check the person’s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
Reputable preparers will ask to see receipts and will ask multiple questions to determine whether expenses, deductions and other items qualify. By doing so, they are trying to help their clients avoid penalties, interest or additional taxes that could result from an IRS examination.