Don't Mess With Taxes

Every tax season is challenging. Often, it's because Congress has fiddled with tax laws, presenting new learning curves for both taxpayers and the preparers they hire to lead them through the Internal Revenue Code. Problems during the last two years, however, can be blamed on COVID-19. Not only did the pandemic produce new laws, there have been delayed deadlines and health-related closures that created processing problems for the Internal Revenue Service. The latest 2021 filing season hurdle, for both taxpayers and the IRS, is the amount of tax returns the agency says must be processed by hand. The IRS is... Read more →

Some people got less COVID-19 relief money because the IRS took some to pay other debts. Every year, some taxpayers find the tax refunds the Internal Revenue Service sends them are less than they expected. The usual reason for the shortfall is that the federal refund amounts were offset by other debts, such as unpaid taxes, student loans or delinquent child support. That situation cropped up last year when the Recovery Rebate Credit was created as part of COVID-19 relief legislation. The rebates were paid in advance to millions of taxpayers. And in some, but not all, instances, economic impact... Read more →

The Internal Revenue Service has delivered two rounds of COVID-19 economic impact payments (EIPs). The first was the $1,200 per person approved in late March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second EIP for $600 per person was authorized at the end of last December as part of the Consolidated Appropriations Act (CAA), with payments distributed through the first two weeks of January 2021. By now, folks know that if they didn't get the full amounts, which included additional payments for eligible dependents, they need to claim the Recovery Rebate Credit (RRC). You'll do... Read more →

Image via GIPHY If you were part of the millions of taxpayers who didn't get their refunds — and I am seeing on social media that even into 2021, some people are still waiting … — the National Taxpayer Advocate (NTA) feels your pain. NTA Erin M. Collins included that complaint in her list of the 10 most serious problems facing taxpayers. The list is part of the Internal Revenue Service watchdog office's Annual Report to Congress, which was released on Wednesday, Jan. 13. Tax fraud fighting delays: There's a common thread among the 1040s where refunds are delayed. These... Read more →

Congress is debating, sort of, the possibility of, among other pandemic-related issues, another round of COVID-19 economic relief payments (EIPs). That's good news for folks struggling to make ends meet in the wake of coronavirus-related economic troubles. But some folks haven't yet received the first stimulus checks created back in March under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Created to help, but…: Now there's some good news for some encountering relief payment problems. The Taxpayer Advocate Service (TAS) now can help taxpayers in certain situations resolve their COVID-19 payment issues. "Previously, the IRS did not have a... Read more →

The Hon. John Lewis receiving the Presidential Medal of Freedom from President Barack Obama in 2010. (Obama White House photo) The celebration of the life of the Hon. John Lewis continues. Today, the late civil rights leader and long-time member of Congress lies in state in his native Alabama. Other key moments from his early days in the South also will be commemorated as part of the six-day journey of memorialization and tributes that continues in Washington, D.C., before he goes to his final rest in Atlanta. America, the world actually, lost a true hero when Lewis passed away on... Read more →

Erin M. Collins took over as National Taxpayer Advocate on March 30, just as the United States was coming to grips with the coronavirus, so it's no surprise that the pandemic and its effects on taxes are part of her first official report to Congress. "Starting in the midst of a pandemic and witnessing IRS offices closing one by one was not the way I envisioned my role when I accepted the position," wrote Collins in the report's preface. But, added Collins, there's been a silver lining. In conference calls with her leadership team, Taxpayer Advocate Service (TAS) employees and... Read more →

Millions of folks — around 152 million of us, by the Internal Revenue Service's latest count — have received COVID-19 economic impact payments, or EIPs as they are called in the acronym crazy federal government (and tax) world. The payments of up to $1,200 per individual and $500 for each eligible child were created by the Coronavirus Aid, Relief and Economic Security (CARES) Act. The IRS began sending out EIPs in April. But now, two months after the CARES Act became law on March 27, some EIP-eligible recipients are still waiting for direct deposit or a paper check or a... Read more →

Law schools and their students, like these at Georgia State University College of Law, are major contributors to the success of Low-Income Taxpayer Clinics nationwide. (Photo courtesy Philip C. Cook LITC) Sometimes, taxpayers encounter issues more serious that just filing their returns. They discover that the Internal Revenue Service has some questions about a prior return or an appeal of an agency decision isn't going as expected or that the federal tax collector is taking his name to heart and initiating collection procedures. What to do? Specifically, what to do if you don't have much money? Find your nearest Low-Income... Read more →

Erin Collins, representing KPMG, speaking at the 2014 Step Up Inspiration Awards (Photo courtesy Step Up) Erin M. Collins was named today as the Internal Revenue Service's National Taxpayer Advocate. The former managing director of KPMG's Tax Controversy Services practice for the Western Area in Los Angeles assumes the post vacated last July by Nina E. Olson. Bridget Roberts of the Taxpayer Advocate Service had been serving as interim Taxpayer Advocate. "I am deeply honored to join the talented team at the IRS as the National Taxpayer Advocate," said Collins. "I will work every day to be a strong and... Read more →

Taxpayer Advocacy Panel members provide information on how to improve the IRS at the agency's annual Tax Forums. (Photo courtesy TAP News) How many times, perhaps times per day, have you said, "If I were in charge, I'd do things differently." Now's your chance to follow up on that, at least when it comes to how U.S. taxpayers interact with our tax system and the agency that administers it. Become a member of the Taxpayer Advocacy Panel, or TAP as it's called, and improve the Internal Revenue Service. My personal TAP dance: I can hear the skepticism coming through the... Read more →

The second filing season under the Tax Cuts and Jobs Act (TCJA) is about to start. This one will be easier, right? Right? Maybe. At least this year, we and the Internal Revenue Service aren't dealing with the longest federal government shutdown in history. Plus, folks got a good look with their filings last year at how the massive Republican tax reform law affects them, although some areas are still a bit fuzzy. And of course, everyone adjusted their payroll withholding so there won't be a replay of 2019's reduced/no-tax-refund drama. Yeah, I'm rolling my eyes at that statement, too.... Read more →

I've dealt with bill collectors over the years. Fortunately for me, it's been on behalf of a couple of relatives who found themselves in over their heads financially. Fortunately for my family members, after much — way too much — and often contentious back and forth, we were able to come to a satisfactory resolution. That's why I tend to share former Taxpayer Advocate Nina Olson's skepticism about the way that private collection agencies, or PCAs in tax-acronymese, interact with folks who owe taxes. But despite my, Olson's and many others' lingering distrust of these operations, private debt collect is... Read more →

National Taxpayer Advocated Nina E. Olson today departs the Internal Revenue Service watchdog office she's held since 2001. An acting advocate, Bridget Roberts, has been named until the position is filled full-time. National Taxpayer Advocate Nina E. Olson makes a point, here expressing her concerns about private tax debt collection (you can watch her full testimony at the official video), during one of her many Capitol Hill appearances during her almost two decades as an IRS watchdog. Goodbye and thanks to Nina E. Olson. Today, July 31, is her last as National Taxpayer Advocate (NTA). She is retiring from government... Read more →

In one tax world case, it does appear that the third time really is a charm. A recent Internal Revenue Service report says that its latest use of private bill collectors to bring in old unpaid taxes is working. In fact, this latest iteration has produced enough additional money to allow the IRS to hire new in-house employees. Third time's a collection charm: The use of private collection agencies, or PCAs as they are known in tax acronymese, was restarted in 2017 after being mandated as part of a 2015 transportation law. It's the third attempt after two previous PCA... Read more →

The Earned Income Tax Credit (EITC) was created more than 40 years ago as a way to give lower-earning workers a tax break. But from the get-go, the EITC has been problematic. Now, just weeks before the National Taxpayer Advocate retires, her office has offered Congress some suggestions on how to improve the tax credit, as well as how it can be more effectively administered. Some tax credit history: The way we got to today's EITC is almost as complicated and intricate as the tax break itself. When created in 1975, the EITC was supposed to be a temporary tax... Read more →

Washington, D.C., subway car awaiting Red Line passengers. (Photo by Washington Metropolitan Area Transit Authority) Moving from West Texas to Washington, D.C., was a revelation for many reasons. One of the key differences was transportation. The hubby and I came from a part of the country where cars (OK, trucks) were, and still are, the predominant way to get around. Suddenly, as the "On the Town" opening song goes, we were riding in a hole in the ground. We quickly fell in love with the D.C. Metro, even though when we arrived there in 1981, its routes were somewhat limited.... Read more →

National Taxpayer Advocate Nina E. Olson, shown here in a screen shot from an earlier C-SPAN appearance, takes parting shot at 'woefully inadequate' IRS customer service in her final report to Congress before she retires in July. Nina E. Olson is nothing if not consistent. The problem for taxpayers with this trait is that it means much of the change to and improvement of the Internal Revenue Service that Olson has championed for almost two decades remains unfinished. Olson is the National Taxpayer Advocate (NTA), at least for another few weeks. She was appointed to the IRS oversight post in... Read more →

The White House's fiscal year 2020 budget proposal was delivered to Capitol Hill today. (Screenshot from AP video via USA Today) The Trump White House today released its fiscal 2020 budget request. The annual fiscal request for money is a month later than usual this year because of the 35-day government shutdown. In his latest budget proposal, Donald J. Trump asks for $8.6 billion for the border wall. He's also calling for spending cuts of $2.7 trillion, the largest proposed reduction ever by an administration. The math involved also is monumental. The budget forecasts trillion-dollar deficits for four straight years,... Read more →

The National Taxpayer Advocate this year selected 21 major problems that taxpayers encounter in their dealings with the Internal Revenue Service. I found five of those issues particularly troublesome. Every year, the National Taxpayer Advocate issue a report to Congress. The 2018 version released this week included a look at, not surprising, how the recent government shutdown affected not only Internal Revenue Service operations, but also the taxpayers who, particularly at this time of year, are relying on IRS services. Part of that annual report also includes at least 20 tax matters that the Taxpayer Advocate identifies as the most... Read more →