by NFS | Jan 20, 2011 | Archives
WASHINGTON — The Internal Revenue Service plans a Feb. 14 start date for processing tax returns delayed by last month’s tax law changes. The IRS reminded taxpayers affected by the delay they can begin preparing their tax returns immediately because many software providers are ready now to accept these returns.
Beginning Feb. 14, the IRS will 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 nine million tax returns claimed any of these deductions on returns received by the IRS before Feb. 14.
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 (EITC), education tax credits, child tax credit and other popular tax breaks, can be filed as normal, immediately.
The IRS 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.
by NFS | Jan 18, 2011 | Archives
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 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.
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.
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.
Contact my office if you need help e-filing your return this tax season. For an inexepsnvie online option to prepare you own taxes, please visit the NFS Online Tax Prep Page.
Accounting Today
by NFS | Jan 13, 2011 | Archives
SANTA FE, NM – A Santa Fe, N.M., woman and her husband have pleaded guilty to conspiracy to defraud the federal government, and she has been ordered to pay over $1.7 million in taxes from operating an adult entertainment Internet business.
Carolynne Tilga, 50, and her husband Michael Chandler, 51, pleaded guilty last Thursday to conspiring to defraud the United States by impeding the lawful functions of the Internal Revenue Service before United States Magistrate Judge W. Daniel Schneider.
Tilga and Chandler each pleaded guilty to Count 1 of a 10-count indictment charging them and their codefendant Helen Geer, also of Santa Fe, under plea agreements with the U.S. Attorney’s Office.
At sentencing, which has yet to be scheduled, Tilga and Chandler each face up to five years imprisonment. Under the terms of her plea agreement, by her sentencing date, Tilga must file amended tax returns for tax years 1998 through 2004 and pay a minimum of $1,735,025 to the United States to cover her outstanding tax debt for those years.
The agreement also requires that Tilga file amended tax returns for tax years 2005 through 2009, and pay any taxes due and owing on the amended returns. The indictment in the case, which was filed on April 9, 2009, alleges that, from 1998 through 2006, Tilga owned and controlled various businesses involved in adult entertainment Internet services.
Chandler worked with Tilga in several of Tilga’s businesses during this period, according to prosecutors, and Tilga employed Geer as an in-house accountant for her businesses from 2002 through 2004.
The indictment further alleges that, from 1998 through 2006, Tilga and Chandler took steps to conceal from the IRS a significant amount of taxable revenue generated by Tilga’s adult entertainment Internet businesses, and that Geer aided the couple’s unlawful conduct from 2002 through 2004.
According to the indictment, Tilga and Chandler purchased numerous off-shore entities designed and used to conceal Tilga’s income and assets from the IRS. They did not report the revenue, and they filed false tax returns with the IRS. Tilga and Chandler then used the money in the off-shore entities to purchase real estate and vehicles, including multi-million dollar residences in Santa Fe and Kilauea, Hawaii; a residence and other real estate in Taos, N.M.; real estate in Telluride and Mount Crested Butte, Colo.; and a Lexus and a Mercedes Benz.
In her plea agreement, Tilga admitted that, since the late 1990s, she has been a minority owner of certain Canadian Internet businesses that provide computer billing services to entrepreneurs who market online pornographic materials to adults.
Tilga also admitted that the Canadian businesses generated substantial revenues between 1999 and 2006, and that she directed her share of the revenues to the off-shore entities identified in the indictment. Tilga did not report the revenue generated by the Canadian businesses or pay taxes on that revenue. Instead, Tilga used the revenue to purchase real estate properties, to renovate real estate properties she purchased, and to purchase vehicles, including the real estate and vehicles identified in the indictment.
Tilga admitted that, as a result of her unlawful conduct, she owes, and will pay by her sentencing date, taxes in an aggregate amount of $1,735,025.00 to the IRS.
In his plea agreement, Chandler admitted that, beginning in 1998 or 1999, he agreed to assist Tilga in moving money from off-shore trusts to purchase property in the United States, and that he knew that the off-shore trusts were used to evade their tax obligations.
Their co-defendant, Geer, has entered a not guilty plea to the indictment and her trial is pending.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty, prosecutors noted.
By Accounting Today Staff
by NFS | Jan 12, 2011 | Archives
Another great client question….
Q: I would like to roll over a portion of my Traditional IRA to my Roth IRA. Should it be rolled over to the existing Roth IRA account or to a separate new Roth IRA account? I do not want to lose the ability to recharacterize the rollover should my investment diminish. Does putting the rollover money in an existing account disallow recharacteriztion?
A: The fact that you might want to recharacterize means that you should consider establishing a separate Roth IRA for the amount being converted. If you use the existing Roth IRA for the conversion it would not prohibit you from recharacterizing. It would, however, make it more difficult because you would have to consider all the assets in the account for gains and losses that must be attributed to the amount being recharacterized.
