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IRS warns public about tactics used by scammers posing as agents

The demand for unpaid taxes understandably strikes fear into some Georgia residents. Unfortunately, scammers use this emotional response to trick people into handing over their money. Although people need to take legitimate notices from the Internal Revenue Service seriously, the agency routinely issues warnings about scammers who try to pressure people into paying fake taxes. In general, the IRS informs people about real tax issues through the U.S. Postal Service. The agency issues paper bills for amounts owed, and people have a right to appeal tax bills. People also have the option to pay their taxes by check, debit or credit card. Checks would be mailed to a U.S. Department of Treasury address, and credit or debit payments would be made with select processors at the agency's website.

Scammers try to pressure people into making immediate payments. They sometimes show up unannounced at people's homes or businesses. This is a big red flag because the IRS attempts to contact people by mail before actually visiting a location. Scammers will try to frighten people with threats of arrest or revocation of a driver's license or immigration documents.

Draft of 2018 1040 form shows numerous changes

Georgians will be using new tax return forms when they file their taxes next year. The new Form 1040 has substantial changes and is now one page long. The IRS recently released a draft of the new form. While the new form might make filing taxes easier for many people, others who have complicated tax situations will have a more difficult time.

During his campaign, Trump promised that the tax form would be simplified so that it would fit on a postcard. While the new form is much shorter, there are six different schedules that people may also have to fill out. The information that was contained on the old 1040 was simply moved to the new schedules, meaning that filing taxes next year might not actually be any easier for some people.

Solar industry tax incentives defined by IRS

Georgia investors who are involved in solar energy development can benefit from a guidance published by the Internal Revenue Service. It said that developers who invest at least 5 percent of the complete cost of a utility-level solar project can receive a 30 percent investment tax credit. This policy applies to all investors until the end of 2019.

The investment tax credit for solar energy was created in 2015, but it did not define a specific framework for qualification as a project beginning construction. In the guidance, the agency specifies that developers can begin their project over a four-year period in order to qualify for the tax credit. So long as the project breaks ground or the 5 percent investment before 2020, developers can take until 2023 to fully activate their solar initiative and still benefit under the tax law. Depending on the dates that the project will be under construction and go into service, the tax credit has a sliding scale of 30 percent to 10 percent.

Are you eligible for IRS “Currently Not Collectible” status?

Let us say that you are a sole proprietor with a fledgling business. While you filed your tax return this year, you could not send payment to the Internal Revenue Service. You then received a bill for the amount owed, plus interest and penalties, and you do not know what to do about it because you have no money left in your monthly budget.

Paying your bills

Potential benefits of legal representation during a tax audit

When Georgia residents or businesses receive a notice from the Internal Revenue Service or other tax agency, they likely reach out to their accountants for advice and help. Representation from an attorney could also be beneficial, especially in situations that involve tax disputes or an audit. In some ways, the legal profession is better suited to adversarial encounters.

A party confronted by a tax problem could discuss the issues with an attorney and obtain the attorney-client privilege. This protection allows people to have frank discussions with their representatives, which could enable attorneys to develop effective strategies. Attorneys also have the ability to research a tax controversy from multiple angles and strive to protect clients from prosecution.

New tax laws confusing taxpayers

Many Georgia residents are trying to figure out how the new tax laws will impact their future returns. Many believe that it will be easier to file their taxes going forward. While there will be fewer people who itemize, those who continue to do so will likely find that their returns are no easier to file than they were in the past.

In addition, homeowners may be impacted by the fact that mortgage interest can only be deducted on $750,000 in debt. However, this is only true if a loan was taken out after December 2017. If a loan was taken out earlier than that, a homeowner can still take an interest deduction on up to $1 million in debt.

Tips for avoiding IRS tax scams

The IRS has told people to be on alert for tax scams during the summer months. While the IRS does contact taxpayers in Georgia and around the country after the April federal tax filing deadline, they will do so by mail. Conversely, a scammer may leave a message on a person's phone demanding that the individual call or face being taken into custody. In some cases, scammers may ask that a person make a payment by wire transfer or debit card.

For the most part, those participating in the schemes are trying to get identifying information such as a Social Security number. They may also try to get information such as email addresses or online account passwords. Other ways that fraudsters may try to scam taxpayers include spoofing numbers that appear on a caller ID to make them look as if they are coming from a tax assistance center.

Dealing with a notice from the IRS

In the weeks and months following the April deadline to file a federal tax return, the IRS verifies the data it receives and issues notices if needed. Georgia residents and others who receive a notice from the IRS should read it carefully and respond in a timely manner. Among the most common types of notices a person can get is a CP2000. It tells a taxpayer that the government has proposed a change to their tax return.

It is important to note that this is not a bill or an audit. However, if a person agrees to the change, he or she can sign and return the notice. If a person doesn't agree to the notice, a formal challenge to the proposed change can be sent within 30 days. It is possible that the IRS won't like the explanation, and that could lead to CP3219 being sent out.

Tax issues to avoid from the IRS “Dirty Dozen” list

Tax scams seem to be everywhere, and they are most in evidence during income tax season.

The Internal Revenue Service compiles an annual list of “Dirty Dozen” tax scams. Here are five schemes from the 2018 list that taxpayers at various levels might encounter:

Deducting expenses related to hobbies

Georgia residents who have a side activity in which they earn money may want to deduct related losses on their individual federal tax returns. If the Internal Revenue Service classifies the activity as a hobby, however, losses from the activity cannot be claimed as a deduction. In order to receive tax savings, taxpayers have to be able to verify that the intent of their business is to make a profit.

With the recent passage of the Tax Cuts and Jobs Act, it may now be even more difficult for taxpayers to claim deductions for a hobby-related enterprise. Before the legislation was passed, individuals could have deducted the expenses related to their hobby up to how much income was earned from the hobby. The expenses had to be included as part of the miscellaneous itemized deduction items.

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