ZERO TAX TALK

By Jeff Schnepper, Author of

 

 It’s been said that the only difference between death and taxes is that death doesn’t become more complicated and convoluted every time Congress meets. Here’s what’s going to dominate this year’s tax season:

 1) Identity theft has become a major problem for the Internal Revenue Service. As electronic filing has become the way to go (about 90% of returns filed are done electronically), your Social Security number and tax information have become available to more non-government employees. The Federal Trade Commission (FTC) end of the year statistics show tax identity theft as their top 2014 complaint.

In February 2015, Intuit Inc. temporarily suspended their filing of state tax returns after discovering that its TurboTax software and services may have been used to file fraudulent returns. Massachusetts and Vermont suspended issuing tax refunds in the wake of concerns about the magnitude of fraudulent returns electronically filed.

According to the Wall Street Journal, the “The only way to avoid sharing your tax information is the one the IRS discourages……filing on paper.” You’ve been warned.

2) Don’t expect much help from the IRS this year. The IRS’s budget has been reduced by about $1.2 billion, or 10%, since 2010. Staffing levels have been cut by 11% and the agency expects the individual audit rate for 2015 to be about 20% lower than the 2014 target levels. This is the lowest level of funding since 2008 and the lowest since 1998 when inflation is considered.

Forget service. I put in a phone request for basic 1040 Instructions almost 6 weeks ago and am still waiting for delivery. When I went to my local IRS office, I found it closed and boarded up with no forwarding address and all calls answered with busy signals. Last week, I responded to an IRS letter for a client and had to wait on hold for 2 hours before anybody picked up.

You really can’t blame the IRS for this one. Congress cut their funding, increased their responsibilities (see the Affordable Care Act), and their staff is being decimated by retirement coupled with budget induced hiring freezes. It’s a perfect storm for multiple waves of tax troubles. If you’re looking for help, this is going to be a long tax season.

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