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.
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.
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.
For most people in Georgia and throughout the country, tax day is the only day in which they give much thought to their state and federal returns. However, those who receive a notice from the government may have to think about them for a little longer. The good news is that fewer than seven people per every 1,000 will receive an audit letter. Furthermore, receiving a letter from the IRS doesn't always indicate bad news.
Georgia residents who are involved in the cryptocurrency market may find their tax filings more complex as the IRS has made efforts to tax crypto income. In Novemeber 2017, the IRS was victorious in a case against Coinbase, a cryptocurrency exchange. As a result of the case, the exchange was required to provide information on more than 14,000 people who traded cryptocurrency between 2013 and 2015. During that period, only 800 to 900 people each year reported capital gains from cryptocurrency investments.
Employers in Georgia have a responsibility to pay payroll taxes for their employees. Tip boxes set up for volunteers, however, have created confusion about employee classification and employer tax obligations. The Internal Revenue Service has addressed this issue in an IRS Chief Counsel Memorandum.
Georgia residents who receive a letter from the IRS should respond to it as quickly as possible. This is generally true whether a person has received an audit notice or a request for more information. In some cases, the IRS is writing to let a person know that he or she used the wrong Social Security number or otherwise provided incorrect information on a return.
By April, everyone in Georgia and throughout America will be required to file their federal income tax return. Those who are considered to be employees of a company will receive a form W-2 and were supposed to get them by Jan. 31. The IRS is warning payroll departments that a scam could attempt to collect employee information through by way of phishing. In 2017, the targets were largely for-profit companies.
Individuals and business owners in Georgia naturally take communications from the Internal Revenue Service seriously, but the agency warns that cyber criminals often take advantage of people's willingness to comply with tax requests. Criminals will attempt to access personal and financial information or load malicious software onto computers.
Georgia residents may have heard about the crypto-currency called Bitcoin. Even if they haven't heard of it, the IRS certainly has, and the organization has won a court order to get the identities of those who own 14,355 accounts at Coinbase. Those accounts have accounted for roughly 9 million transactions between 2013 and 2015. A federal court judge ordered the information to be turned over in a ruling made on Nov. 28.