Tax Tips

Over 100 New Tax Law Updates for 2018 Tax Season

2019-02-07T10:07:00.002-08:00

New Tax Laws for 2018 taxes includes approximately 119 tax law updates, according the IRS. TaxesWillTravel.com Here you can find access to the new tax laws and updates which will effect individual tax payers and Schedule C filers.

What to Do With Form 5498-SA

2017-07-01T17:07:00.000-07:00

The correct answer is nothing. You do nothing with Form 5498-SA. Form 5498-SA is a statement of contributions. The amount shown on 5498-SA should have already been on your W2 so there's no need to enter it on your Federal tax return. Form 5498-SA is for informational information only.

The Form is confusing because it looks just like a 1099-MISC. But not to worry. No need to enter onto the tax return.

The IRS Explains How Offer in Compromise Works

2017-04-28T08:17:00.000-07:00

Before you read "exactly" what the IRS tells you about the OIC or Offer in Compromise program, understand a few things the IRS doesn't say.

If you read and follow the instructions you can prepare and file a successful OIC. This doesn't mean that the IRS won't reject your first or even second submission. Just follow the instructions and stay committed.
When completing your expenses and income form (Form 656, Form 656-A, Form 656-B) ALWAYS remember that private school and your cable bill are NOT qualified expenses. This also applies to additional luxury items that you may be financially responsible for.
If you have the finances, it's best to consult with an Enrolled Agent to help you file your OIC, especially if you have assets that you'd like to protect.
Know that the IRS is governed by a book called "The Tax Codes." In most cases, their response to you is not personal, but legal. Yes, an IRS agent can make decisions which can make your life easier, and that is why you always want, to be honest, and professional when speaking with an IRS agent. It is a felony to lie to a federal agent.

Now let's read what the IRS has to say on the matter:

Taxpayers who have a tax debt they cannot pay may have heard that they can settle their tax debt for less than the full amount owed. It’s called an Offer in Compromise.

Before applying for an Offer in Compromise, here are some things to know:

In general, the IRS cannot accept a settlement offer if the taxpayer can afford to pay what they owe. Taxpayers should first explore other payment options. A payment plan is one possibility. Visit IRS.gov for information on Payment Plans – Installment Agreements.

A taxpayer must file all required tax returns first before the IRS can consider a settlement offer. When applying for a settlement offer, taxpayers may need to make an initial payment. The IRS will apply submitted payments to reduce taxes owed.

The IRS has an Offer in Compromise Pre-Qualifier tool on IRS.gov. Taxpayers can find out if they meet the basic qualifying requirements. The tool also provides an estimate of an acceptable offer amount. The IRS makes a final decision on whether to accept the offer based on the submitted application.

Taxpayers wishing to file for an Offer in Compromise should visit IRS website’s Offer in Compromise page for more information. There taxpayers can find step-by-step instructions as well as the required forms. Taxpayers can download forms anytime at www.irs.gov/forms or call 800-TAX-FORM (800-829-3676) and ask for Form 656-B, Offer in Compromise booklet.

Deadline to File 2016 Taxes is April 18th, 2017

2017-04-07T11:29:00.000-07:00

IRS Reminder: Use IRS.gov for Fast Answers as April 18

WASHINGTON — With the tax deadline fast approaching, the Internal Revenue Service today reminded taxpayers that they can use IRS.gov to find fast answers to tax questions, use free online tools and find key tax forms and publications. With millions of people just now seeking help to complete their taxes, the IRS expects high call volumes between now and the April 18 tax filing deadline. This makes IRS.gov even more invaluable to taxpayers seeking quick answers. Answers to the most common questions taxpayers have this time of year are on IRS.gov.A

Research Credit Available for Small Business Startups

2017-04-05T10:11:00.000-07:00

Special Note: Businesess who have already filed may still use this option for the 2016 tax season.

WASHINGTON –The Internal Revenue Service today issued interim guidance explaining how eligible small businesses can take advantage of a new option enabling them to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. Before 2016, taxpayers could only take the research credit against their income tax liability.

Notice 2017-23, posted today on IRS.gov, provides guidance on a new provision included in the Protecting Americans From Tax Hikes (PATH) Act enacted in December 2015. This new option will be available for the first time to any eligible small business filing its 2016 federal income tax return this tax season. Those who already filed still have time to choose this option.

The option to elect the new payroll tax credit may especially benefit any eligible startup that has little or no income tax liability. To qualify for the new option for the current tax-year, a business must have gross receipts of less than $5 million and could not have had gross receipts prior to 2012.

An eligible small business with qualifying research expenses can choose to apply up to $250,000 of its research credit against its payroll tax liability. An eligible small business chooses this option by filling out Form 6765, Credit for Increasing Research Activities, and attaching it to a timely-filed business income tax return. But under a special rule for tax-year 2016, a small business that failed to choose this option and still wishes to do so, can still make the election by filing an amended return by Dec. 31, 2017. See the notice for further details.

After choosing this option, a small business claims the payroll tax credit by filling out Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. This form must be attached to its payroll tax return, for example Form 941, Employer’s Quarterly Federal Tax Return. Further details on how and when to claim the credit are in the notice.

The notice provides interim guidance on controlled groups, the definition of gross receipts, and other issues. The notice also requests public comment on various payroll tax credit issues to be addressed in future guidance. See the notice for details on how and when to submit comments. For more information on the research credit itself, see the instructions to Form 6765.

From the IRS: Seven Reasons Taxpayers Should E-file Their Taxes in 2017

2017-01-23T11:10:00.000-08:00

Taxpayers who still file paper returns may find now is the best time to switch to e-file. Last year over 85 percent of taxpayers filed their taxes electronically. E-file is the fastest and safest way to file.

Here are the top seven reasons a taxpayer should file electronically in 2017:

Accurate and Easy. IRS e-file is the best way to file an accurate tax return. The tax software helps taxpayers avoid mistakes by doing the math for them. It guides users through each section of a tax return. E-file is easier than doing taxes by hand and mailing paper tax forms.
Safe and Secure. IRS e-file meets strict security guidelines. It uses modern encryption technology to protect tax returns. The IRS continues to work with states and tax industry leaders to protect tax returns from refund fraud. This new effort has put more safeguards in place to make tax filing safer than ever before. The IRS has processed more than one billion e-filed returns safely and securely.
Convenient and Often Free. Taxpayers can e-file for free through IRS Free File. Free File is only available on IRS.gov. Taxpayers may qualify to have their taxes e-filed for free through IRS volunteer programs. Volunteer Income Tax Assistance offers free tax preparation for those earning $54,000 or less. Tax Counseling for the Elderly generally helps people who are age 60 or older. Taxpayers can buy commercial tax software or ask their tax preparer to e-file their tax return. Most paid preparers have to file their clients’ returns electronically.
Faster Refunds. In most cases, e-file prevents mistakes and helps people get their refund faster. The quickest way to get a refund is to combine e-file with direct deposit into a bank account. The IRS issues more than nine out of 10 refunds in less than 21 days – however, some returns need further review and take longer.
Prior-Year Tax Return. Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
Health Care Coverage Reporting. IRS e-file can help with tax provisions of the health care law. The software will walk users through each line on the tax form that relate to the Affordable Care Act.
Payment Options. If taxpayers owe taxes, they can e-file early and set up an automatic payment on any day until the April 18 deadline. They can pay electronically from their bank account with IRS Direct Pay. Other payment options include electronic funds withdrawal and payment by debit or credit card. Visit IRS.gov/payments for details.

What is a Tax Levy?

2016-11-03T13:19:00.000-07:00

This is when the IRS sends you written (legal notice) to your employer and or your bank saying that you owe the IRS and that the employer and or the bank is under legal obligation to forward YOUR money to the IRS to satisfy your tax debt.

The good news is the IRS will send you a series of tax notices before this happens..

The bad news is; When and if you don't respond to their mail, the IRS will levy your bank account and attach your wages, legally, without having to go to court.

If you are receiving notices because of unfilled taxes, the way to avoid a tax levy is to:

First, file your OWN tax return. Do not rely on the IRS's Substitute Return (a return the IRS prepared for you)

More than likely you'll owe less money. However the penalties and interest can increase the amount back up. In fact we've had clients who ended up getting a refund.

At this point you don't need an attorney. It's just a matter of filing your unfilled tax returns, unless there are additional skeletons in your tax closet.

We can offer you professional, affordable and expert help, but you'll need to provide me with your tax information. Visit this page and scroll to the bottom for easy instructions on how to get your tax information.

It is best to get your tax information directly from the IRS, that way your unfilled return will correspond with what the IRS has on file and your chances of being audited will decrease. Anytime the IRS contacts you concerning unfilled tax returns, you become a person of interest. The best way to get them off your back is to file a return which includes the same figures the IRS has in your tax file/records. Yes, your bank and your employers has already sent information to the IRS - This is how they know you should have filed and didn't.

The IRS won't go away. They don't know how. They will get your attention one way or another. Visit me on the eBay platform, which is safe and easy, and get the IRS off your back. .

Okay You Prepare Taxes Online, Past Due Returns and Unfiled Taxes, How Does That Work?

2016-11-03T13:15:00.000-07:00

Easy.

We depend on the safety and security of a "fax"

You fax your info to our secure fax line, which we have the password and security information to access.

We send your pdf tax return black under a fake "subject"

You print out your return, delete the email and act like nothing happened.

We delete our attachment files once you receive your tax return. .

Easy. Fax info to secure line

Receive taxes in PDF format

Print Out. Sign, Date and Mail or take to the IRS.

We delete the attachment.

Okay, how do I get my tax information to fax to you? I lost my W2s and all tax information for the year(s) the IRS is bugging me about.

Easy. We explain in detail how to get your tax information from the IRS

If you'd rather NOT talk to the IRS, we all explain a way to get your information without speaking to the IRS.

The IRS prepared a "Substitute Tax Return" for me, now they say I owe them money. Should I just pay them? What about a payment plan?

NO. Before you make payments, you should file your OWN tax return, which we can do for you. We will still need your tax information and once you receive this information from the IRS we can have your return ready within 48 hours.

The IRS is not aware of your legal tax deductions or write-offs. When we prepare a "real" return, more than likely you'll less, maybe even a lot less.

YES. We can help you with an Installment Agreement. We complete the Installment Agreement Request Form and usually the IRS will grant the Installment Agreement if you don't already have a payment plan in place and sometimes, even if you do.

Go here follow the instructions at the bottom of the page. We use eBay. As you know eBay will ensure you receive the services you pay for. We have an excellent rating. You will receive information where to fax your information after you've completed the transaction on eBay

Who the hell are you, and why should I trust you?

I am the lead tax accountant. Retired part-time. Registered with the IRS every year since 1999. Basic tax instructor in the San Francisco Bay Area. Since retirement, I travel often, write children's books and books on how to save on taxes. By law I must and will provide to you, my ID# from the Department of Treasury.

Click here to learn more

Tax Loopholes for the Little Guy

2016-11-03T13:02:00.003-07:00

Tax Loopholes do exist for the middle income taxpayer. Everything from deducting a percentage of the cost of your cell phone bill when your mobile phone is used for business and your employer does NOT reimburse you to deducting the cost of security provided by security dogs who remain on your business property overnight.

You can download the book on Amazon and read on any mobile device. 100 Tax Loopholes and Tax Write-Offs for Home Based Businesses

Senate Committee Mulls Regulation of Tax Preparers

2014-04-09T09:53:00.000-07:00

The Senate Finance Committee held a hearing Tuesday on the subject of incompetent and unethical tax preparers and heard testimony on how the Internal Revenue Service should deal with them.

The committee heard testimony from IRS commissioner John Koskinen, National Taxpayer Advocate Nina Olson, an official with the Government Accountability Office, tax preparers and advocates from across the country, as well as the attorney who represented the tax preparers whose lawsuit ended the IRS’s tax preparer regulatory program.

“Taxpayers today face a double burden: crooked or incompetent tax preparers, along with an overgrown and complicated tax code. We should put an end to both,” said Senate Finance Committee chairman Ron Wyden, D-Ore. “I’m proud to say my state gets this issue right. While Oregon and a few other states are already leading in this area, we need to restore federal standards to protect all American taxpayers.”

Wyden said that unlike many other industries, paid tax preparers don’t have to meet any standards for competence in order to prepare someone else’s return.

“In some egregious cases, preparers calculate a taxpayer’s refund in person and skip the line that shows who did the work,” said Wyden. “Then after the taxpayer leaves, the preparer falsifies the math to boost the refund, files the return and pockets the difference. And worst of all, unless the taxpayer can prove what happened, they’re on the hook for the money when the IRS finds out.”

At the hearing, the GAO released the results of a new investigation involving undercover site visits in which 17 of 19 randomly selected, paid tax preparers failed to complete a tax return accurately, either due to significant mistakes or willful negligence. The new GAO investigation reported findings similar to those of a 2006 GAO investigation that identified preparer mistakes in 19 of 19 uncover visits.

Tax refund errors in the site visits varied from giving the taxpayer $52 less to $3,718 more than the correct refund amount. Only two out of 19 preparers calculated the correct refund amount. The full report can be found here.

GAO director of tax issues James R. McTigue Jr., told the Senate committee that tax returns prepared by a paid preparer showed a higher estimated error rate of 60 percent, compared to an error rate of 50 percent for tax returns that were self-prepared by the taxpayer.

Voluntary Certification

IRS commissioner John Koskinen told the senators that the tax preparer community is a key ally in the agency’s efforts to fulfill its dual mission of providing taxpayer service and ensuring tax compliance. “We view our relationship with tax professionals as a partnership, one that has enabled a system that interacts with hundreds of millions of taxpayers to nimbly adjust to new tax laws, speed the average time for refunds, and encourage the voluntary compliance of taxpayers,” he said. “Return preparers are a vital link between the IRS and taxpayers, especially given that the vast majority of people seek help in doing their taxes.”

Koskinen noted that each year, paid preparers are called upon by taxpayers to complete about 80 million returns, or about 56 percent of the total individual income tax returns filed, while another 34 percent of taxpayers use tax preparation software, for a total of 90 percent who seek some form of assistance.

“Competent preparers make our job easier by helping their clients properly report their taxes and pay what they owe,” said Koskinen. “Given the crucial role that return preparers play in our tax system, the IRS believes it is critical to ensure a basic competency level for tax return preparers and to focus our enforcement efforts on identifying and stopping unscrupulous preparers.”

Last year, he noted, the U.S. District Court for the District of Columbia issued an injunction last year in the case of Loving v. IRS that prevented the IRS from enforcing the regulatory requirements it had tried to impose for competency testing and continuing education, and the decision was upheld by a federal appeals court this year. “The IRS is continuing to assess the scope and impact of the court’s decision while consideration is given to options for appeal,” he added.

Koskinen noted that the Obama administration’s fiscal 2015 budget includes a proposal to explicitly authorize the IRS to regulate all paid tax preparers. He asked Congress to provide that authorization and said the IRS might offer a voluntary form of certification to tax preparers in the meantime.

“Following the court decision, the IRS remains concerned about protecting taxpayers and ensuring they receive quality assistance in preparing their tax returns,” said Koskinen. “While we urge Congress to quickly enact the proposal described in the President’s Budget, we are taking a close look at the possibility of an interim step involving a program of voluntary continuing education.

The idea of a voluntary program is under consideration because we believe it is important to maintain the momentum for regulation and oversight of unregulated preparers that has built up over the last five years, and to lessen the risks to taxpayers resulting from the lack of federal education requirements. Before moving forward on this idea, however, we will solicit feedback from a wide range of external stakeholders as to whether such an interim step would be useful and appropriate.”

Taxpayer Advocate

National Taxpayer Advocate Nina Olson reiterated her support for requiring competency exams for tax preparers, pointing out that she had been an unenrolled tax preparer at one time. “Shortly after I graduated from college in the mid-1970s, I hung out a shingle and held myself out as a return preparer,” she said. “I had been a Fine Arts major, so to say the least, I was not a tax expert. But in that period, tax software was not yet widely available, so an individual wanting to prepare tax returns had to learn the basics. I took this endeavor seriously, and ultimately, I believe I did a good job for my clients. Even then, however, taxpayers would have been better served if return preparers were required to demonstrate basic competency in tax return preparation.”

However, Olson noted that tax prep software makes it easy for anyone to claim they are tax preparers. “With the advent of tax preparation software and the Q&A format, a person can hold himself out as a return preparer with almost no knowledge or skill by simply sitting with a taxpayer and working through the software’s prompts,” she said. “As many undercover ‘shopping visits’ to return preparers have found, preparing returns with software and little knowledge typically does not produce accurate results.”

She pointed out that unscrupulous tax preparers are able to take advantage of clients and charge high fees for services such as pay-stub loans and refund anticipation checks, which have largely replaced refund anticipation loans in recent years.

“In tax year 2012, 56 percent of 142 million individual taxpayers paid preparers to complete their returns for them,” said Olson. “Very simply, the absence of minimum competency standards for return preparers leaves these taxpayers vulnerable to inadvertent errors that could cause them to overpay their tax or to underpay their tax and face IRS collection action. It also leaves some taxpayers open to unscrupulous preparers, many of whom would be weeded out if the return preparation industry were professionalized. At present, we require volunteers who help prepare returns for elderly, disabled, and low-income taxpayers through the VITA and TCE programs to pass a competency test. Yet we ask nothing of hundreds of thousands of persons who make their living off tax preparation. That makes little sense to me.”

H&R Block president and CEO William Cobb told the senators about his company’s support for tax preparer regulation. “H&R Block employs more than 70,000 highly trained tax professionals across the country and 80,000 professionals worldwide,” he said. “A typical client is served by an H&R Block tax professional with more than a decade of experience and hundreds of hours of training. Our tax professionals progress through a 14-level certification program, culminating in master tax adviser status. To be re-hired, H&R tax professionals must complete at least 15 hours of continuing education annually. H&R Block’s tax professionals are trained on systems, policies and procedures that require an additional 35 hours of education annually.”

State Licensing

Wyden touted Oregon’s tax preparer licensing standards and pointed out that a 2008 study by the GAO found that tax returns from Oregon were 72 percent more likely to be accurate than returns from the rest of the country.

Nineteen Things the Millionaire Next Door Won’t Tell You! | Xica's Blog, Books, Fiction, Mystery, Crime and More

2014-03-12T17:50:00.001-07:00

Nineteen Things the Millionaire Next Door Won’t Tell You! | Xica's Blog, Books, Fiction, Mystery, Crime and More

Tax Preparers Defeat IRS in Appeals Court Ruling on Licensing, Not Everyone is Happy

2014-02-12T08:44:00.000-08:00

The D.C. Circuit Court of Appeals ruled Tuesday that the IRS had no legal authority to impose a nationwide licensing scheme on tax return preparers that would have required testing and continuing education as Registered Tax Return Preparers. continue below:

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The decision affirms a January 2013 ruling by U.S. District Court Judge James E. Boasberg, which struck down the IRS’s new regulations as unlawful (see Court Rules IRS Doesn’t Have the Authority to Regulate Tax Preparers). In the case, known as Loving v. IRS, both courts rejected the IRS’s claim that tax-preparer licensure was authorized by an obscure 1884 statute governing the representatives of Civil War soldiers seeking compensation for dead horses.

“This is a major victory for tax preparers—and taxpayers—nationwide,” said Dan Alban of the Institute for Justice, the lead attorney for the three independent tax preparers who filed the suit. “The court found that Congress never gave the IRS the power to license tax preparers, and the IRS cannot give itself that authority.”

The appeals court held, “If we were to accept the IRS’s interpretation of [the statute], the IRS would be empowered for the first time to regulate hundreds of thousands of individuals in the multi-billion dollar tax-preparation industry. Yet nothing in the statute’s text or the legislative record contemplates that vast expansion of the IRS’s authority.”

More than 350,000 tax-return preparers would have been subject to the regulations. The attorneys for the preparers argued that the regulations would have put tens of thousands of mom-and-pop preparers out of business and increased the cost of tax-return preparation for millions of taxpayers.

“My customers—not the IRS—should be the ones who get to choose who prepares their taxes,” said Sabina Loving, an independent tax preparer from Chicago and the lead plaintiff in the case. “I have a right to earn an honest living without getting permission from the IRS.”

The court ruled that “[t]he IRS may not unilaterally expand its authority through such an expansive, atextual,


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and a historical reading of [the statute].”

“We think it’s a major victory for both independent tax preparers and taxpayers,” Institute for Justice senior attorney Scott Bullock said in an interview. “The three-judge panel unanimously affirmed all the fundamental points of the District Court’s opinion and held that the IRS does not have the authority to regulate tax preparers under the statute and under the legislative history of the law. The IRS simply cannot assume that authority to license tax preparers. They need to go to Congress to get that authority. That's what the D.C. Circuit held. They gave six separate reasons for affirming the District Court opinion and just really affirmed it across the board.”

Bullock hopes the IRS decides not to pursue further appeals in the case. “It has now been rejected by four judges, both the District Court and by three D.C. Circuit judges,” he said. "They do have the right to petition the entire D.C. Circuit. I believe they have 45 days to do so. The federal government has a little bit longer than most folks. Then the court will decide that relatively quickly. Then, after that, the next step for them would be to go before the Supreme Court and they would have 90 days. If they decide not to petition the entire D.C. Circuit, it would be 90 days from today. If they do decide to petition the entire D.C. Circuit and they reject that, it would be 90 days from whenever that order rejecting the en banc petition came though.”
When Judge Boasberg clarified his original decision last year, he ruled that the IRS can continue to require tax preparers to register for Preparer Tax Identification Numbers, or PTINs, and the latest ruling should not affect that. However, it should also bring some relief to tax professionals.

“It was a big relief to many of the independent tax preparers when the decision was first handed down,” said Bullock. “Hopefully this will end the matter once and for all and they would not be subjected these new licensing requirements, but it’s up to the IRS if they decide to continue to appeal.”

The IRS was noncommittal on whether it plans future appeals. “The IRS is currently reviewing the decision,” the IRS said in a statement. “The IRS continues to believe that it’s critical for taxpayers to be able to rely on quality work from tax preparers.”

Bullock believes the IRS should provide refunds to tax preparers who paid to take the tests and continuing education courses before the RTRP regime was invalidated by the courts.

“I believe they would probably be required to do that, and they [the tax preparers] would have the right if they so choose not to be subjected to these licensing requirements.”

“Administrative agency overreach threatens the economic liberty rights of entrepreneurs,” said Institute president and general counsel William Mellor in a statement. “This precedent ensures that agencies must follow the law and cannot exceed the power given to them by Congress.” As the Court noted, “‘fox-in-the-henhouse syndrome is to be avoided . . . by taking seriously, and applying rigorously, in all cases, statutory limits on agencies’ authority.’”

IRS Commissioner John Koskinen has indicated he would be open to offering the certification on a voluntary basis to tax preparers if the IRS loses the appeal. “If you can’t require it, offer it, and if you complete the information, you get a certificate that says, ‘I have completed the IRS preparer course.’ I think that could be over time very valuable to preparers, and consumers could ask preparers, ‘Have you gone through the IRS training?’” said Koskinen during a press conference last month after he was sworn in as commissioner (see IRS’s New Commissioner Favors Voluntary Tax Preparer Certification). “Whatever happens with the court case, we ought to be able to move forward on that and provide taxpayers with as much assurance as we can that the preparers they are dealing with have met some kind of minimum standards.”

Bullock indicated the Institute for Justice would have no problem with a voluntary certification scheme. “We made that very clear in our statements because they [the IRS] had asked the D.C. Circuit to stay the ruling, and they had stated they had no power to even do this on a voluntary basis,” said Bullock. “And we had said, ‘That’s not true. You can offer this, but you can’t require licensure. But if you want to do this on a voluntary basis, you’re free to do so.’ And the district court judge made it clear that the IRS was free to do this on a voluntary basis, but they could not legally require it, it. If they did that, that of course would end the legal dispute.”

H&R Block Slams Decision
H&R Block, which was one of the main proponents of the RTRP tax preparer regulation regime, reacted with dismay to the Appeals Court decision.

Block said that in a country where all 50 states regulate hair dressers, the tax prep chain found it “stunning” that tax preparers, with extensive access to the personal financial history and identities of their clients, are not required to meet minimum competency standards.

“It is outrageous that all consumers don’t enjoy basic protections with such a significant financial transaction as tax preparation,” said H&R Block president and CEO Bill Cobb in a statement. “Something is out of whack when you are better protected when getting your haircut than when sitting across the desk from a tax preparer. All consumers should have access to the protection that our clients receive when working with our highly trained tax professionals.”

H&R Block noted that it has long supported efforts to better serve and protect consumers through minimum standards for, and oversight of all tax return preparers. Block pointed out that it already trains and has continuing education requirements for all of its tax preparers and added that it looks forward to working with Congress and the Treasury Department on “any legislation that may be necessary to implement minimum tax preparer standards as a formidable tool in the fight against fraud.”

One tax attorney pointed out that the IRS will still be able to check up on errant tax preparers, even after the latest ruling. “The IRS’s ability to require previously unregistered tax preparers to meet certain education and testing requirements, while perhaps now temporarily set back a step, will inevitably come to pass because of the important role preparers play in tax system administration,” said G. Michelle Ferreira, tax attorney and managing shareholder of the San Francisco office of international law firm Greenberg Traurig. “I believe law makers will recognize the need to make explicit that the IRS should be able to set basic standards for individuals who prepare tax returns so that we can be sure such returns are correct and in compliance.”

Because the Loving decision does not disturb the rules requiring all paid preparers to obtain a PTIN, those individuals must still register with the IRS, Ferreira said, “which still gives the IRS the ability to check up on preparers where evidence points to problems.”

CPA Reactions
While attorneys and CPAs would have been exempt from the proposed rules, several CPAs from the New York State Society of CPAs reacted strongly to the news of the court’s decision Tuesday.

“The potential impact is that the storefront tax preparer will thrive on the ignorant and the fraud will continue,” said Vincent Cosenza, CPA and tax manager at Shanolt, Glassman, Klein and Kramer PC in New York City.

“Much of what the IRS was looking for is already being done by most CPA firms,” said David Young, CPA, owner of Young & Company CPAs LLC in Rochester, N.Y. “Having a strong system of quality control for tax return preparation and continuing professional education is in part what differentiates a CPA firm from H&R Block and other non-CPA firms. The taxpayer is ultimately responsible for what is on his or her income tax return.

“When choosing a tax preparer, the taxpayer should consider the possible negative ramifications of choosing an unregulated and unlicensed tax return preparer,” Young advised. “It would be wise for the taxpayer to ask about the tax preparer’s qualifications, continuing professional education, and the firm’s quality control as it relates to tax returns.”

“I am a little upset that unlicensed tax preparers don’t have to deal with taking CPE and keeping themselves up to date with new legislation, as CPA are required to do annually,” said Johnpaul Crocenzi, CPA, a tax manager at Raich Ende Malter & Co. LLP in New York. “Having the IRS regulate tax preparers will actually protect the consumer from having a tax return done by someone that doesn’t know or understand the Tax Code.”

Although the IRS proposed regulation of tax return preparers did not directly affect CPAs, there is always a concern about regulations that can creep into other areas, according to Kevin McCoy, CPA, director of Marvin and Company near Albany, N.Y. But “until the IRS is granted the authority by Congress, it appears the unlicensed tax return preparers are free to continue to operate as before,” he said.

What You Should Know About the Alternative Minimum Tax

2014-02-11T10:25:00.000-08:00

This tax more than any other tax can sneak up on you. And once the tax is applied it's difficult if not impossible to lower it or get rid of it. The best way to handle the AMT tax is to do tax planning. At least that way, you can prepare for the tax or avoid it all together.

What You Should Know about AMT

Have you ever wondered if the Alternative Minimum Tax applies to you? You may have to pay this tax if your income is above a certain amount. The AMT attempts to ensure that some individuals who claim certain tax benefits pay a minimum amount of tax.

Here are some things from the IRS that you should know about AMT:

1. You may have to pay the tax if your taxable income, plus certain adjustments, is more than the AMT exemption amount for your filing status. If your income is below this amount, you usually will not owe AMT.

2. The 2013 AMT exemption amounts for each filing status are:

• Single and Head of Household = $51,900

• Married Filing Joint and Qualifying Widow(er) = $80,800

• Married Filing Separate = $40,400

3. The rules for AMT are more complex than the rules for regular income tax. The best way to make it easy on yourself is to use IRS e-file to prepare and file your tax return. E-file tax software will figure AMT for you if you owe it.

4. If you file a paper return, use the AMT Assistant tool on IRS.gov to find out if you may need to pay the tax.

5. If you owe AMT, you usually must file Form 6251, Alternative Minimum Tax – Individuals. Some taxpayers who owe AMT can file Form 1040A and use the AMT Worksheet in the instructions.

Good News. IRS Provides Safe Harbor for Taxpayers with Discharged Debts for Real Property

2014-02-10T14:38:00.001-08:00

Washington, D.C. (February 7, 2014)

By Michael Cohn

The Internal Revenue Service has issued a revenue procedure to help taxpayers with so-called “mezzanine” financing in workouts and similar circumstances when they have debts that have been discharged in connection with real property.

Revenue Procedure 2014-20 provides a safe harbor under which the IRS will, under certain defined circumstances, treat indebtedness that is secured by 100 percent of the ownership interest in a disregarded entity that holds real property as indebtedness that is secured by real property for purposes of Section 108(c)(3)(A) of the Tax Code. The revenue procedure will assist taxpayers with mezzanine financing in workouts and similar circumstances.

The IRS noted that borrowers will often incur debt in connection with real property used in a trade or business. If the debt is later discharged, the income from the discharge of indebtedness may be excluded from gross income if certain requirements are met. In some cases, the real property is held by the borrower in an entity that is wholly owned by the borrower, and is, for federal tax purposes, disregarded as an entity separate from its owner. In these cases, the debt may be secured by the borrower’s ownership interest in the disregarded entity holding the real property.

Revenue Procedure 2014-20, will be included in Internal Revenue Bulletin 2014-09 on Feb. 24, 2014.

IRS Criminal Prosecutions Climbed 23% under Obama

2014-02-05T12:12:00.001-08:00

More people are being prosecuted for tax evasion.

***

The number of criminal prosecutions referred by the Internal Revenue Service to the Justice Department has increased 23.4 percent during the Obama administration.

Prosecutions in fiscal year 2013 alone jumped 30.6 percent from the previous year, according to a new report by Syracuse University’s Transactional Records Access Clearinghouse.

Convictions for tax crimes under the Obama administration are also drawing slightly longer average prison terms, 27 months under Obama, compared to 25 months during the George W. Bush administration, according to information obtained by TRAC under the Freedom of Information Act from the Executive Office for United States Attorneys.

Among U.S. federal judicial districts, Alaska registered the highest per capita rate of IRS prosecutions, 53 per million people, compared with 6.4 prosecutions per million nationally. Next in line was the Middle District of Alabama (Montgomery), with 30 per million, followed by the District of Columbia with 27 per million.
For more details, see the report at http://trac.syr.edu/tracirs/latest/342/.

Tax Season Opens Jan. 31, Changes to IRS Service Options

2014-01-30T09:22:00.000-08:00

The 2014 tax filing season opens on Friday Jan. 31. That is the first day that the IRS will accept 2013 federal income tax returns.

If you are working on your taxes and need tax help, the IRS website has the tax help and information you need.

Taxpayers are strongly encouraged to explore the various self-service, technology-based options that exist for tax help and tax return preparation on IRS.gov. Taxpayers should be aware that due to limited resources, individualized tax help on IRS toll-free lines and Taxpayer Assistance Centers has changed beginning this year. More information on service changes for the 2014 tax season is available on IRS.gov.

The quickest way to get information and help is through IRS.gov. The web site is available 24/7, so you can get tax help any time you need. You may wish to bookmark 1040 Central as your go-to page for tax help. This web page has information and links to many helpful tools, products and services that will help you prepare and file your tax return. They include:

Tax Forms and Publications. Download tax forms and publications. Many publications are also available in Spanish.
IRS Tools. You’ll find several tools and self-service options on IRS.gov to help you with your taxes.
Here are just a few:
- Use the Interactive Tax Assistant to answer many of your tax questions.
- Find out if you’re eligible for the Earned Income Tax Credit by using the EITC Assistant.
- Use the AMT Assistant tool to find out if you may need to pay Alternative Minimum Tax.
- Track your refund using the ‘Where’s My Refund?’ tool.

When you are ready to file your tax return beginning Jan. 31, there are several, free options that you should consider. Taxpayers who have visited IRS Taxpayer Assistance Centers in prior years for free tax preparation should be aware that, beginning this year, these offices are no longer offering this service. Other options for free tax preparation include:

Use Free File to e-file for free. Most people e-file their tax return these days. Everyone can use IRS Free File to prepare and e-file their federal taxes for free. The only way to use this program is through the IRS website. If you made $58,000 or less, you can use free tax software. If your income is more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms. This option has the electronic versions of IRS paper forms.

Get taxes done with VITA or TCE. You may be able to get free tax preparation at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site. IRS-trained volunteers can help you get the tax credits and deductions you’re entitled to claim. The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less. The TCE program offers help mainly to people 60 or older. Thousands of free tax preparation sites around the nation will open in late Jan. and early Feb. Visit IRS.gov to find the one nearest you.

Which Tax Form To Use When Filing Your Taxes

2014-01-30T09:10:00.000-08:00

There is a right and wrong tax form to use when preparing your taxes. The IRS has provided some tips to help you file using the correct tax form

***

Which form should you use to file your federal income taxes? These days, most people use a computer to prepare and e-file their tax forms. It’s easy, because tax software selects the right form for you. If you file on paper, you’ll need to pick the right form to use.

Before you decide, check out IRS Free File on IRS.gov. It has free tax software or a Fillable Forms option that allows you to fill in your tax forms using a computer. You can e-file the completed forms for free!

If you still prefer paper and pen, here are some tips on how to choose the best form for your situation.
You can generally use the 1040EZ if:

Your taxable income is below $100,000;
Your filing status is single or married filing jointly;
You are not claiming any dependents; and
Your interest income is $1,500 or less.

The 1040A may be best for you if:

Your taxable income is below $100,000;
You have capital gain distributions;
You claim certain tax credits; and
You claim adjustments to income for IRA contributions and student loan interest.

However, reasons you must use the 1040 include:

Your taxable income is $100,000 or more;
You claim itemized deductions;
You are reporting self-employment income; or
You are reporting income from sale of a property.

Read more about which form to use in IRS Publication 17, Your Federal Income Tax. The quickest way to get tax forms and instructions is to visit IRS.gov and click on the ‘Forms & Pubs’ tab. New tax forms often appear online well before the printed forms are available.

You can also have forms mailed to you by calling the IRS at 800-TAX-FORM (800-829-3676), or you can pick them up at a local IRS office. Some libraries and post offices also have tax forms.
IRS YouTube Videos:

Welcome to Free File – English
IRS Tax Forms and Publications - English | Spanish | ASL

Top 10 Tips About Free Tax Preparation

2014-01-29T09:46:00.001-08:00

Each year millions of people have their tax returns prepared for free by volunteers. These volunteers are part of the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

Here are the top 10 tips the IRS wants you to know about VITA and TCE:

1. The IRS sponsors both the VITA and TCE programs. They work with local community groups to both train and certify volunteers.

2. The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less.

3. The TCE program offers help mainly to people age 60 or older. Volunteers specialize in tax issues unique to seniors. AARP is part of the TCE program and helps taxpayers with low to moderate incomes.

4. VITA and TCE provide free electronic filing. An e-filed tax return is the safest and most accurate way to file. Using e-file combined with direct deposit is the fastest way to get your refund.

5. Using VITA and TCE may help ensure you get all the tax credits and deductions you’re able to claim. For example, credits that you may qualify for include the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly.

6. Some sites provide bilingual help for people who speak limited English.

7. VITA provides free tax assistance to military members and their families. Volunteers help with tax issues related to the military. These include special rules and tax benefits for those serving in combat zones.

8. At some VITA sites, you can also prepare your own federal and state tax returns using free web-based software. This is an option if you don’t need much help or don’t have a home computer. Volunteers are on site to guide you if you need help. The self-preparation options generally offer free tax return preparation software and e-filing to people who earn $58,000 or less.

9. For more than 40 years, the IRS has partnered with nonprofit and community organizations to offer these vital services. Thousands of VITA and TCE sites around the nation will open in late Jan. and early Feb.

10. Visit IRS.gov to find the nearest VITA site. Search the word ’VITA’ and then click on “Free Tax Return Preparation for You by Volunteers.” Site information is also available by calling the IRS at 800-906-9887. To locate the nearest AARP Tax-Aide site, visit aarp.org, or call 888-227-7669.

Google Is Uping the Game on Artificial Intelligence

2014-01-27T08:21:00.000-08:00

LONDON (AP) - Google says that it has purchased the British startup DeepMind, an artificial intelligence company founded by a 37-year old former chess prodigy and computer game designer.

The American tech giant's London office confirmed a deal had been made but refused to offer a purchase price, which is reportedly $500 million. The company was founded by researcher Demis Hassabis together with Shane Legg and Mustafa Suleyman.

Hassabis, who is on leave from University College London, has investigated the mechanisms that underlie human memory.

Artificial intelligence uses computers for tasks normally requiring human intelligence, like speech recognition or language translation. DeepMind says the company, based in London, specializes in algorithms and machine learning.

Google, like other tech giants such as Facebook, are anxious to develop systems that work like the human brain.

Certain Taxpayers May Now File Their Employment Taxes Annually

2014-01-23T08:18:00.002-08:00

File Just One, Consider It Done!

To reduce burden on small employers, the Internal Revenue Service (IRS) has simplified the rules for filing employment tax returns to report social security, Medicare, and withheld federal income taxes.
If you have been filing Form 941, Employer's QUARTERLY Federal Tax Return, and believe your employment taxes for the calendar year will be $1,000 or less and would like to file Form 944, Employers ANNUAL Federal Tax Return, instead of Form 941, you must contact the IRS to request to file Form 944 rather than Form 941. You may make the request by calling the IRS at 1-800-829-4933 by April 1 of the current year, or by sending a written request, postmarked by March 15 of the current year, to:
Department of Treasury, Internal Revenue Service,
Ogden, UT 84201-0038
or
Department of Treasury, Internal Revenue Service,
Cincinnati, OH 45999-0038.
Select the appropriate addresses above based on the state you are in. See "Without a payment" under the "Where Should You File" section of the Instructions for Form 944.

If you do not receive written notice from the IRS to file Form 944, you must file Forms 941 for the current calendar year.

What if you want to file Forms 941 instead of the Form 944?

You must file Form 944 if the IRS has notified you to do so, unless you contact the IRS to request, and receive written notice, to file quarterly Form 941 instead. This is true even if your employment taxes for the year will be over $1,000. If you receive notice to file Form 944, you do not have the option to file quarterly Form 941, unless you follow the procedures to opt out of the Form 944 program. If you are required to file Form 944 but file a Form 941, you will be notified that the Form 941 you submitted will not be processed and advised that you must file a Form 944 unless you follow the procedures to opt out of the Form 944 program. Additionally, you must deposit employment taxes using the form number that the IRS has notified you to file, and using the correct deposit rules based on your tax liabilities as discussed below.

To request to file quarterly Forms 941 to report your social security, Medicare, and withheld federal income taxes for the current calendar you may make the request by calling the IRS by April 1 of the current year, or by sending a written request, postmarked by March 15 of the current year using the same contact information as above.

The IRS will send you a written notice that your filing requirement has been changed. If you do not receive this notice, you must file Form 944 for the current calendar year. See Rev. Proc. 2009-51, 2009-45 I.R.B. 625, for additional information. Read more

Payment Alternatives When You Owe the IRS

2014-01-23T08:14:00.000-08:00

Payment Alternatives When You Owe the IRS

Watching Your Tax Dollars, Arny Has Different Ideas for the Future, Robots!

2014-01-23T07:00:00.002-08:00

Based on the article below, it's safe to say that entering the computer age of robots is a safe place to place your career goals. There will be a need to program the future soldiers as well as maintenance! /iframe>

More robots, fewer people. That’s where the US military is headed in the future. But what kind of robots?
Army Gen. Robert Cone, four-star commander of the powerful Training and Doctrine Command (aka TRADOC), said that the service is studying how robots could help replace 25 percent of the soldiers in each of its 4,000-strong combat brigades. That’s because the current budget crunch is pushing the military to replace expensive human beings – and the expensive hardware required to keep them alive — with cheaper and expendable robots. The Army is under particular pressure because it has the most people, spending almost half its budget on pay and benefits, and those people take the heaviest casualties.

What’s hotly debated, however, is what jobs robots should do, under what level of human control. Should do they the drudge work of war, sparing humans the “dirty, dull, and dangerous” jobs like clearing roadside bombs? Or should we trust robots to kill on their own initiative?

The Army basically wants R2-D2s and mechanized mules, helpful bots that haul supplies, scout ahead, and provide technical support to the human heroes who do the actual fighting. They want small robots that trundle alongside the foot troops, loaded with sophisticated sensors so they can point out potential dangers, “robots that respond, if you will, like a bird dog,” said TRADOC’s Maj. Gen. William Hix in a conference call with journalists this morning. They want mid-size robots that carry extra supplies for infantrymen on long patrols, a concept once officially called MULE. They want big trucks that drive themselves, entire supply convoys where a long line of robots plays “follow the leader” behind a single human-driven vehicle at the front. They want scout drones that fly ahead of manned helicopters and report back what they find.
But, as TRADOC Col. Kevin Felix once told me, “No Terminators.”

Not so outside the Army. In a thinktank report released today, 20YY: Preparing for War in the Robotic Age, former Navy Under Secretary Robert Work and co-author Shawn Brimley call for developing “autonomous attack systems” cheap and numerous enough to form “reconnaissance-strike swarms.” Think big, robotic killer bees that attack with smart bombs instead of stingers and that coordinate their maneuvers using wi-fi instead of pheromones.

Both sides agree there’ll be more robots in the future military — and not just our military. In fact, when you put together cuts to military research and development, the spread of high technology worldwide, and our unease about letting computers decide when to pull the trigger, there’s a real fear that more agile and less ethical enemies may field killer robots first.

These are questions of life, death, and taxes — that is, the tens of billions of your taxpayer dollars that the military will have to invest in whatever it decides to do.

The Army is already experimenting with armed robots like the MADDS prototype pictured above, but they always have a human being pulling the trigger, albeit by remote control. TRADOC doesn’t anticipate the actual fielding an of “unmanned combat platform” until around 2035 — and the military programs its unmanned systems not to fire without direct orders from a human. That’s not a restriction Army leaders are eager to release.

You Can Now Download Your Tax Return Transcript From The IRS

2014-01-17T10:43:00.000-08:00

Huzzah for convenience! Americans can now download their tax return transcript directly from the IRS. Previously, citizens had to slog through a questionnaire and wait 5-10 business days for a physical form through snail mail. I tried out their new service today and, after spending about two minutes answering security questions, I was able to download three years worth of tax information.

“I am very excited to announce that the IRS has just launched, this week, the ‘get transcript’ application which will give taxpayers the ability to view, print, and download tax transcripts,” said Katherine Sydor, Advisor at Office of Consumer Policy at the Treasury. Sydor made her announcement at the White House’s education “Datapalooza,” a gathering of hackers and policy leaders to jam on how open government data can help solve the nation’s education ills (Video link, ~1:37:00)

As is becoming tradition at the White House, the newly launched feature has some bugs. I had to re-register after I couldn’t log in a second time. The IRS asked me for a “user name,” which it never told me; when I tried retrieving it with the “forgot user ID” function, the website encountered an error. A minor bug, but it’s not helping the White House shake its tarnished reputation.

One would think that downloading tax returns would not be novel in 2014. But, the software tax industry has spent millions lobbying the government not to design its own interface. Intuit, the makers of TurboTax, reap heavy rewards from being one of the only web apps for filing and retrieving tax information.

Still, despite the lobbying, it seems the IRS can still make some progress in open government. Check out the Get Transcript web app here.

Billionaires Behaving Badly Again, Gets No Jail Time, Massive Penalties

2014-01-14T15:52:00.000-08:00

If you wondering how billionaires like Warner, the creator of Beanie Babies, can avoid paying taxes on billions, you'll want to read my latest book, Offshore Transparency by C, Ingraham RTRP. This book explains in detail how billionaires like Warner have successfully avoided millions in taxes over the decades.

CHICAGO (AP) -- The billionaire creator of Beanie Babies was sentenced to two years of probation, but no prison time, on Tuesday for tax evasion on $25 million in income he had stashed away in Swiss bank accounts.

H. Ty Warner, 69, appeared somber but composed as he made a brief statement before receiving his sentence in a Chicago federal courtroom, apologizing and saying he felt "shame and embarrassment" for what he had done.

He could have been sentenced to up to five years in prison, and prosecutors were seeking prison time for Warner, who pleaded guilty last year to a single tax evasion count.

U.S. District Judge Charles Kocoras, however, sentenced Warner to probation and 500 hours of community service, praising the toy magnate for the charity work he's done.

Kocoras said his decision was difficult, but he added, "Society will be better served by allowing him to continue his good works."

The judge said Warner's "public humiliation" and "private torment" as a result of his criminal prosecution was a punishment he's already paid.

Warner was among the highest-profile prosecutions in the federal government's push to go after Americans concealing income from the IRS overseas, often in Switzerland. Prosecutors say at one point, Warner was concealing as much as $107 million.

Beanie Babies first appeared in the mid-1990s, triggering a craze that generated hundreds of millions of dollars for Westmont, Ill.-based TY Inc., of which Warner is the sole owner. Forbes recently put his net worth at $2.6 billion.

The small, plush toys have heart-shaped name tags and are made to resemble bears and other animals. Some are designed to look like cartoon or comic book characters. As collectibles, some fetch thousands of dollars.

Warner maintained a secret offshore account starting in 1996 with the Switzerland-based financial services company UBS. He earned $3.1 million in gross income in 2002 through the account, but didn't report it, prosecutors say.

Grab a copy today, Offshore Transparency it all facts, but reads like a crime mystery. Both entertaining and enlightening, you'll be amazed at what wealthy taxpayers have been doing for years.

IRS Has Video Help For Filing 2014 Returns

2014-01-03T17:00:00.000-08:00

IRS Offers Videos to Help Taxpayers Preparing to File in 2014

WASHINGTON — The Internal Revenue Service is offering taxpayers a number of instructional YouTube videos to help prepare their taxes for the upcoming filing season, which begins on Jan. 31.

Several options are available to help taxpayers prepare for the 2014 tax season and get their refunds as easily as possible. Many software companies are expected to begin accepting tax returns in January and hold those returns until the IRS systems open on Jan. 31. This includes the Free File partners that offer access to their software for free at irs.gov/Free File. The IRS will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

In addition, the IRS has short and informative YouTube videos on a number of tax-related topics in English, Spanish and American Sign Language (ASL). The channels have received nearly 6.5 million views:

IRS Videos — http://www.youtube.com/irsvideos
ASL Videos — http://www.youtube.com/IRSvideosASL
Multilingual Videos —http://www.youtube.com/IRSvideosMultilingua

Specific videos that taxpayers may view to help them get ready over the coming weeks include:

Do-It-Yourself Free Tax Preparation ─ Helps taxpayers find free help from certified volunteers to electronically file tax returns. Taxpayers interested in helping their own communities can also watch a video to learn aboutbecoming involved in the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs.
Do I Have to File a Tax Return? ─ Learn about the requirements for filing a tax return, including income limits and age, and why taxpayers may want to file even if they don't have to.
How to Get 1040 Forms ─ Provides tips on the quickest way to get the various 1040 forms on IRS.gov.
Tax Scams ─ Offers some tips on how to protect personal information and avoid becoming a tax scam victim.
Record-keeping ─ Learn which financial and tax files to keep and how long to keep them.
Changed Your Name After Marriage or Divorce? ─ Find out what you need to do if you have changed your name before you file your tax return.
Choosing a Tax Preparer ─ Hear some useful tips for choosing a reputable tax preparer.

The IRS uses social media tools and platforms to share the latest information on tax changes, initiatives, products and services. These social media platforms include the IRS2Go phone application, YouTube, Tumblr, Twitter and Facebook. To protect taxpayer privacy, the IRS only uses social media tools to share public information, not to answer personal tax or account questions. It advises taxpayers to never post confidential information, like a Social Security number, on social media sites. A listing is available on IRS.gov.