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Tag: Internal Revenue Service

  • IRS Will Require Photo ID and Live Selfie to Access Online Account

    IRS Will Require Photo ID and Live Selfie to Access Online Account

    The IRS will soon begin requiring a photo ID, paired with a live selfie, in order to access online accounts.

    As online security becomes a growing concern, the IRS is taking a major step forward to verify users’ identities. According to Krebs on Security, the IRS is adopting ID.me’s verification service.

    Beginning in the summer of 2022, users looking to access their online IRS accounts will need to upload a copy of their government-issued IDs, such as a driver’s license or passport. Once the document is uploaded, the new system requires the person to use their computer camera or mobile device to film a video selfie, which ID.me then compares to the uploaded photo ID.

    The system then prompts the user for a mobile or landline phone number — not a VoIP service — along with a copy of a social security card, birth certificate, health insurance card, or utility bill. In fact, Krebs reports the system requires two such “secondary identification documents.”

    Users may be understandably concerned about giving over so much personal information to a third-party company, but ID.me founder and CEO Blake Hall told Krebs that if a person signs up “in connection with legal identity verification or a government agency we will not use your verification information for any type of marketing or promotional purposes.”

    Despite the hassle, Krebs believes services like ID.me are unavoidable, and may provide significant security benefits.

    Love it or hate it, ID.me is likely to become one of those places where Americans need to plant their flag and mark their territory, if for no other reason than it will probably be needed at some point to manage your relationship with the federal government and/or your state. And given the potential time investment needed to successfully create an ID.me account, it might be a good idea to do that before you’re forced to do so at the last minute (such as waiting until the eleventh hour to pay your quarterly or annual estimated taxes).

  • IRS Delays Tax Deadline to May 17

    IRS Delays Tax Deadline to May 17

    The Internal Revenue Service (IRS) is extending the tax deadline by a month, until May 17, to help ease the burden on taxpayers.

    The last year has been one of the hardest on taxpayers, thanks to the pandemic. Many taxpayers have lost jobs, or at least partial income. Many others have had to take on additional jobs or freelance gigs, further complicating their taxes. In addition, the IRS is already running behind in its efforts to process returns.

    A press release issued by the Ways & Means Committee makes clear these various factors led to what is sure to be a welcome reprieve for taxpayers.

    “This extension is absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis,” said Chairman Neal and Chairman Pascrell. “Under titanic stress and strain, American taxpayers and tax preparers must have more time to file tax returns. And the IRS itself started the filing season late, continues to be behind schedule, and now must implement changes from the American Rescue Plan. We are gratified that the IRS has recognized the need and heeded our calls for additional time, and while we are pleased with this 30-day extension, we will continue to monitor developments during this hectic filing season. We look forward to hearing directly from the Commissioner tomorrow afternoon to discuss how the IRS is managing this filing season and the justification for the duration of this extension.”

  • IRS Whistleblowers Paid $53 Million In 2013

    According to the annual report of the Internal Revenue Service (IRS) to Congress, the IRS paid whistleblowers a total of $53 million in 2013 for turning in people who cheated on their taxes.

    The report titled “Fiscal Year 2013 Report to the Congress on the Use of Section 7623” says in its executive summary that the IRS is required to pay awards “if information an individual provides substantially contributes to the collection of tax, penalties, interest, and other amounts when the amounts in dispute are more than $2 million.”

    The $55 million was divided between 122 awards, with an average award of $435,000. Tips led the IRS to collect more than $367 million in taxes, interest, and penalties.

    As IRS.gov states, “The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.”

    The report also notes that claims recorded in the Whistleblower Office have increased dramatically since 2006, with a total of 9268 claims being filed in 2013 for a total of 51,390 since legislation was passed in 2006 changing laws governing the whistleblower process and award amount. The 2013 total claims amount was up slightly from 2012.

    It can take years to receive an award, however, with 40 awards being paid in full for claims filed pre-2007. There are also other reasons for closing claims, such as “allegations unclear,” “issues below threshold for IRS action,” and “insufficient time remaining on state of limitations.”

    The report does note that “The law does not provide for whistleblower protection” when referring to section 7623. Whistleblowers are subject to retaliatory action, including “job-related action,” “physical harm” or “damage to economic interests.” Although it is in the best interest of the IRS to protect the identity of whistleblowers, identities may come to light in court proceedings.

    Image via Wikimedia Commons

  • IRS: Bitcoin is Property, Not Legal Tender

    IRS: Bitcoin is Property, Not Legal Tender

    Despite the wild swings in the virtual currency markets and the recent scandal involving the Mt. Gox exchange’s loss of $400M, Bitcoin continues to hold some value online. As the most popular virtual currency, Bitcoin is becoming increasingly popular with investors looking for risky, (though potentially lucrative) investments and tech aficionados who want to be in on the ground floor of a currency that answers to no government.

    This has led to debate and legal questions in recent years about just how legitimate virtual currencies are as legal tender. Though recognized by no official entity, Bitcoins are regularly traded and used for transactions on many parts of the web (and deep web, of course).

    The popularity of virtual currencies has also offered consumers a new way to invest or convert their real-world money, causing a bit of confusion when it comes to taxing Bitcoin and other similar products. Now the Internal Revenue Service (IRS) has weighted in on the matter, clarifying how virtual currencies should be listed on tax forms.

    The IRS this week issued a notice stating that virtual currencies such as Bitcoin are to be treated as property for U.S. tax purposes, not as legal tender. The agency does acknowledge that Bitcoin operates much like a “real” currency in many places, but cites the fact that it does not hold the distinction of being legal tender in any real-world jurisdiction.

    The IRS also outlined a few different outcomes that follow from this decision. Wages paid in virtual currency are taxable to employees; are subject to income tax and payroll tax; and must be disclosed on W-2s. The same applies to payments made to independent contractors. Also, payments made using virtual currencies are subject to the information reporting required of other property transactions.

    Governments around the world have begun to take an interest in Bitcoin, as the technology could potentially impact or even threaten real-world currencies in the future. The FBI has taken an interest in Bitcoin almost purely for its link to illegal inter-state sales, an interest which culminated last fall in the shut down of the popular online black market Silk Road. China has taken a hard-line approach to Bitcoin, outright banning its banks from accepting the virtual currency as deposits.

    Image via Wikimedia Commons

  • Michael Jackson Estate Charged With $702M Tax Bill

    Michael Jackson’s estate is being heavily pursued by the IRS for “undervaluing assets” and now faces a $702 million charge. In U.S. Tax Court documents, executors estimate that Michael’s net worth at his time of death in 2009 was around $7 million; the IRS is now arguing that his worth was actually $1.125 billion. The tax collectors are reporting that the claims are so grossly inaccurate that they qualify for the gross valuation misstatement penalty, which doubles the usual penalty from 20% to 40%. That’s $505 million in tax charges, and $197 million extra in penalties.

    The dispute centers around an argument on the value of Michael’s “image and likeness,” which the estate estimated at only $2,105. The IRS says it’s closer to $434 million. The Estate also valued Michael’s interest in a trust that owned songs by The Beatles at zero (really?), when it’s actually $469 million by the IRS’ calculations.

    Not surprisingly, the Estate is fighting these charges, saying in a statement: “The Estate of Michael Jackson disputes the IRS position in its entirety…the Estate used independent, nationally-recognized and highly-qualified expert appraisers in determining the value of the Estate’s assets. The IRS consultant’s values are not based on standard appraisal methodology, but rather are speculative and erroneous assumptions unsupported by the facts or law. The Estate has paid over $100 Million dollars in taxes and is in full compliance with the tax laws.”

    In the four years since his death, the Estate has reportedly generated $500 million, with $60 million coming from the film This Is It and $250 million for the Michael Jackson Immortal World Tour. However, if the court rules in favor of the IRS, the Estate will turn that money over to the government, most likely in the form of a payment plan over the next 15 years.

    Image via Wikimedia Commons

  • Tax Returns: Jan. 30 is When Processing Begins

    The U.S. Internal Revenue Service (IRS) announced this week that the 2013 tax filing season won’t open until January 30. The IRS will not begin processing individual income tax returns until then.

    The IRS had originally planned to open electronic tax filing on January 22. The delay is due to changes in tax law passed by congress on New Year’s Day. The American Taxpayer Relief Act (ATRA) was the compromise bill that was the result of the “fiscal cliff” standoff between the president and house Republicans.

    The IRS is now updating forms and “completing programming and testing of its processing systems.” The updates should, the IRS states, allow the “vast majority” of Americans to file their tax returns beginning January 30. For those few who need more obscure forms for things such as residential energy credit claims, depreciation of property, or general business credits, further form updating and processing systems changes should allow them to file in late February or early March.

    “We have worked hard to open tax season as soon as possible,” said Steven T. Miller, acting commissioner of the IRS. “This date ensures we have the time we need to update and test our processing systems.”

    The IRS stated that not even paper tax returns will be processed before January 30, and that taxpayers receive their refunds more quickly when filing electronically anyway. Over 80% of taxpayers in the U.S. filed electronically in 2012.

    “The best option for taxpayers is to file electronically,” said Miller.

  • New Phishing Scam Targeting Veterans In New Jersey

    There are as many scams out there as there are stars in the sky. Just this morning I received an email about filling out an Apple survey to get free money for the app store. It even had an apple.com email address. The problem with most scammers is that they prey on the easy victims. That is what makes this new scam just despicable.

    The Internal Revenue Service (IRS) has sent out a warning to residents in New Jersey about a brand new email phishing scam that seems to be targeting veterans. The emails in question appear to come from the Defense Finance and Accounting Services, and even has a .mil email address, an IRS spokeswoman said.

    The message tries to get veterans who receive disability benefits from the Department of Veterans Affairs to send them personal information to obtain more money from the IRS. Since most Veterans receiving benefits are on a fixed income, it was really important for the IRS to speak up as fast as a giant government bureaucracy can.

    “The information on these documents is then used by the scammers to commit identity theft,” IRS spokeswoman Dianne Besunder said in a statement. “Typically, identity thieves use someone’s personal data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards or apply for new loans, credit cards, services or benefits in the victim’s name.”

    As a reminder for all, the IRS does not send unsolicited emails or ask for personal and financial information for accounts. Just think of it this way, the IRS is out to collect taxes, do you really think that they are going to inform you that you can pay less or get more back? No chance of that happening!