Might be old news already; however I neglected to add this line to the last newsletter.
Of course, this will rev up the economic engine to new heights! We are (and have been) one of the highest minimum wage states in the U.S.
I wrote this newsletter to update you on a few important matters including:
I. Scam alert!
Scam Reports have surged this year! IRS warns that people pretending to be IRS or police officials are calling taxpayers demanding immediate payment for back taxes rand even refer to a warrant and threatening the taxpayer that the police will be there within 30 minutes if you don’t pay up! (There are reports of scammers even calling your local Police reporting a crime in progress- so you may see cruiser at your address) Like last year, other scams also use email. IRS is not permitted to use email for taxpayer correspondence for any reason. Agents also do not telephone taxpayers either unless letters via US Mail has been in use and you were expecting the call. Never release any personal information! Scammers are looking for social security numbers, dates of birth, and banking/credit card information. If you are concerned that the caller is really IRS, you can tell the caller that you are represented by this firm. Just contact us right away. You may also telephone IRS at 800-829-1040, but be prepared to wait on hold for a while. Please do not speak to or give any information to these crooks! Just hang up!!
II IRS and audit enforcement
The recent budget bill gave the IRS a budget of $10.945 billion for FY 2015. That’s $346 million less than the year before. Now, for every 5 employees that leave the IRS can only hire 1. These cuts will cause individual audit rates to fall in 2014 and 2015 across all levels of income. IRS’ current funding level is less than the amount appropriated in 2008. The most recent exam rate for individuals has sunk..0.24%, or 1 out of every 417 returns.
High-income taxpayers got the most scrutiny. More than 5% of filers with incomes of $1 million or more encountered a revenue agent. The face-to-face examination rate was a bit lower for filers who had incomes between $200,000 and $1 million…1.11%. Folks with incomes under $200,000 had a 1 in 519 chance of seeing a revenue agent. S Corps and Partnerships are below 1%.
But with these newest cuts those rates will drop even further and the agents have to control, run, and police the Affordable Care Act ’s 25,000 + new regulations (more each day)
Less IRS agents means less field audits and less service, but computer generated audits are significantly being increased! These can lead to less qualified examiners dragging out audits and much more communications via faxing and telephone taking longer and longer to resolve.
Corporate exams are still more likely to be examined by a field agent. But with the cuts, less will be selected. The service has 3 years from the date the tax was assessed or date due, whichever is later.
Massachusetts is cracking down on any return with the EIC (Earned Income Tax Credit) and also increasing sales or meals tax audits.
III Certain business and personal deductions finally passes House and Senate (The “extenders”)
The US Congress actually pushed through a bi-partisan bill making most of these deductions effective 01/01/14 thru 12/31/14. So in 2015 we are set back to old, smaller deductions until they fix this again.
The day before the over $1Trillion ‘omnibus’ funding agreement to keep the bloated government running into next year was signed into law by President Obama. Please contact the office if you have questions, or bring it up during this year’s tax appointment.
Here is a list of the extended tax law provisions:
There are many more extended, but not as popular as the ones listed here.
Items not extended include the electric plug in vehicle credit and the energy efficient appliance credit.
IV. Office alerts and new items
Merry Christmas and Happy Holidays!
The staff at Henry C Kulik, Jr. CPA, LLC