All taxpayers should know the telltale signs of common tax scams

Every year scammers add new twists to well-known tax-related scams and 2020 is no exception.

Taxpayers should remember that the IRS generally first mails a bill to a taxpayer who owes taxes. There are special circumstances when the IRS will call or come to a home or business.

Here are some tips to help taxpayers spot scams and avoid becoming a victim.

Email phishing scams

• The IRS does not initiate contact with taxpayers by email to request personal or financial information.
• For ways to avoid these scams read tips from the Department of Homeland Security.
• For additional tips, check out Taxes. Security. Together.

Taxpayers should report IRS, Treasury or tax-related suspicious online or email phishing scams to phishing@irs.gov. They should not open any attachments, click on any links, reply to the sender or take any other actions that could put them at risk.

Phone scams

The IRS and its authorized private collection agencies will never:

• Leave pre-recorded, urgent or threatening messages.
• Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying, deported or revoke their licenses.
• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The agency doesn’t use these methods for tax payments.
• Ask for checks to third parties. The agency has specific instructions on how to pay taxes.
• Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

Criminals can fake or spoof caller ID numbers to appear to be anywhere in the country. Scammers can even spoof an IRS office phone number or the numbers of various local, state, federal or tribal government agencies.

If a taxpayer receives an IRS or Treasury-related phone call, but doesn’t owe taxes and has no reason to think they do, they should:

• Hang up immediately.
• Contact the Treasury Inspector General for Tax Administration to report the call.
• Report the caller ID and callback number to the IRS by sending it to phishing@irs.gov. The subject line should include “IRS Phone Scam.”
• Report the call to the Federal Trade Commission.

If a taxpayer owes tax or thinks they do, they should:

• View tax account information online at IRS.gov to see the actual amount owed.
• Review their payment options.
• Call the number on any billing notice they receive or call the IRS at 800-829-1040.

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Have an installment agreement or payment plan? Payments should resume starting July 15

The IRS reminds taxpayers who received tax relief as part of the People First Initiative and didn’t make previously owed tax payments between March 25, 2020 and July 15, 2020 they will need to restart those payments to avoid penalties.

Here’s what people need to do to restart their IRS Installment Agreements, Offers in Compromise or Private Debt Collection program payments:

Installment Agreements
Taxpayers who suspended their installment agreement payments between April 1 and July 15, 2020, will need to resume their payments by their first due date after July 15. Under the People First Initiative, the IRS didn’t default agreements, but interest did accrue and the balance remained.

Taxpayers who had their bank suspend direct debit payments, should contact the bank immediately to ensure their first monthly payment on or after July 15, 2020 is sent to avoid penalties. If someone can’t meet their current installment agreement terms because of a COVID-related hardship, they can revise the agreement or call the number on their IRS notice if they have a Direct Debit Installment Agreement.

Offer in Compromise

• Pending offers – If the IRS is currently reviewing a taxpayer’s Offer in Compromise but hasn’t accepted it, the taxpayer should restart their required payments on July 15, 2020. The IRS will amend the taxpayer’s offer to allow them to pay any skipped payments at the end of the offer period, if the offer is accepted.
• Accepted offers – If a taxpayer has an Offer in Compromise, and they were unable to make the payments because of a COVID-19 hardship, they should restart payments and make up the missed payments by July 15, 2020. If the taxpayer can’t to make up the missed payments, they should call the number on the IRS notice to discuss their situation.

Private Debt Collection
The IRS didn’t forward new delinquent accounts to private debt collection agencies from April 1 to July 15, 2020 and collection agency interaction with taxpayers was limited to phone calls, unless otherwise requested by the taxpayer.

Taxpayers should restart private debt collection payments by July 15. They should also work with their assigned collection agency to establish a new payment arrangement or restructure their existing one based on their current situation.

Other payment options
Taxpayers who owe but can’t pay, or have questions about their payments, can call the number on their notice but they may experience a long wait time on the phone. IRS.gov offers several convenient ways to make one time or recurring electronic tax payments.

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IRS advice for those who missed the July 15 deadline, file now to avoid bigger bill

WASHINGTON — For those who missed the July 15 tax deadline and didn’t request an extension, the Internal Revenue Service reminds taxpayers about some important tips, including filing electronically as soon as possible to reduce potential penalties.

Some taxpayers may have extra time to file and pay any taxes due without penalties and interest. These include:

• Members of the military who served or are currently in a combat zone. They qualify for an additional extension of at least 180 days to file and pay taxes.
• Support personnel in combat zones or a contingency operation in support of the Armed Forces. They may also qualify for a filing and payment extension of at least 180 days.
• Some disaster victims. Those who qualify have more time to file and pay what they owe.

The IRS offers these after-tax-day tips:

File to get a tax refund
The only way to get a refund is to file a tax return. There is no penalty for filing after the deadline if a refund is due. Use electronic filing options including IRS Free File available on IRS.gov through Oct. 15 to prepare and file returns electronically.

The IRS reminds taxpayers that, while we continue to process electronic and paper tax returns, issue refunds, and accept payments, we’re experiencing delays in processing paper tax returns due to limited staffing. If a taxpayer filed a paper tax return, we will process it in the order we received it. Do not file a second tax return or call the IRS.

Taxpayers can track a refund using the “Where’s My Refund?” tool on IRS.gov, IRS2Go and by phone at 800-829-1954. Taxpayers need the primary Social Security number on the tax return, the filing status and the expected refund amount. The tool updates once daily, usually overnight, so checking more frequently will not yield different results. The “Where’s My Refund?” tool cannot be used to track Economic Impact Payments.

File to reduce penalties and interest
Normally, taxpayers should file their tax return, or request an extension, and pay any taxes they owe by the deadline to avoid penalties and interest. Taxpayers need to remember that an extension to file is not an extension to pay. Penalties and interest will apply to taxes owed after July 15.

Even if a taxpayer can’t afford to immediately pay the taxes they owe, they should still file a tax return as soon as possible to reduce possible penalties. The IRS has more information for taxpayers who owe the IRS, but cannot afford to pay.

Ordinarily, the failure-to-file penalty is 5% of the tax owed for each month or part of a month that a tax return is late. But if a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less. Filing and paying as much as possible is important because the late-filing penalty and late-payment penalty add up quickly. The basic failure-to-pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month. For more see IRS.gov/penalties.

Taxpayers who have a history of filing and paying on time often qualify for penalty relief. A taxpayer will usually qualify if they have filed and paid timely for the past three years and meet other requirements. For more information, see the first-time penalty abatement page on IRS.gov.

Pay taxes due electronically
Those who owe taxes can view their balance, pay with IRS Direct Pay, by debit or credit card or apply online for a payment plan, including an installment agreement. Several other electronic payment options are available on IRS.gov/payments. They are secure and easy to use. Taxpayers paying electronically receive immediate confirmation when they submit their payment. With Direct Pay and the Electronic Federal Tax Payment System (EFTPS), taxpayers can opt in to receive email notifications about their payments.

Need help? Tips for selecting a tax professional
Taxpayers can also look for help from a tax professional. Taxpayers can use several options to help find a tax preparer. One resource is Choosing a Tax Professional, which includes a wealth of consumer guidance for selecting a tax professional. There are various types of tax return preparers, including enrolled agents, certified public accountants, attorneys and some who don’t have a professional credential.

The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications is a free searchable and sortable database. It includes the name, city, state and zip code of credentialed return preparers who are CPAs, enrolled agents or attorneys, as well as those who have completed the requirements for the IRS Annual Filing Season Program. A search of the database can help taxpayers verify credentials and qualifications of tax professionals or locate a tax professional in their geographic area.

Taxpayer Bill of Rights
Taxpayers have fundamental rights under the law that protect taxpayers when they interact with the IRS. The Taxpayer Bill of Rights presents these rights in 10 categories. IRS Publication 1, Your Rights as a Taxpayer, highlights these rights and the agency’s obligation to protect them.

What someone should do if they missed the July 15 deadline to file and pay

While the federal income tax-filing deadline has passed for most people, some taxpayers haven’t filed their 2019 tax returns yet.

If a taxpayer is entitled to a refund, there’s no penalty for filing late. Penalties and interest will begin to accrue on any remaining unpaid tax due as of July 16, 2020.

Anyone who didn’t file and owes tax should file a return as soon as they can and pay as much as possible to reduce penalties and interest. Electronic filing options, including IRS Free File, are still available on IRS.gov through Oct. 15, 2020 to prepare and file returns electronically.

Taxpayers should then review their payment options. The IRS has information for taxpayers who can’t pay taxes they owe.

Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, military service members and eligible support personnel in combat zones.

Filing soon is very important because the late-filing penalty and late-payment penalty on unpaid taxes adds up quickly. However, in some cases, a taxpayer filing after the deadline may qualify for penalty relief. For those charged a penalty, they may contact the IRS by calling the number on their notice and explain why they couldn’t file and pay on time.

Additionally, taxpayers who have a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer will usually qualify if they have filed and paid timely for the past three years and meet other requirements. For more information, see the first-time penalty abatement page on IRS.gov.

State filing and payment deadlines may be different from the federal July 15 deadline. A list of state tax division websites is available through the Federation of Tax Administrators.

The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who mail or who have already mailed a tax return will experience a longer wait. There is no need to file a second tax return or call the IRS.

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Major changes to retirement plans due to COVID-19

Qualified individuals affected by COVID-19 may be able to withdraw up to $100,000 from their eligible retirement plans, including IRAs, between Jan. 1 and Dec. 30, 2020.

These coronavirus-related distributions aren’t subject to the 10% additional tax that generally applies to distributions made before reaching age 59 and a half, but they are still subject to regular tax. Taxpayers can include coronavirus-related distributions as income on tax returns over a three-year period. They must repay the distribution to a plan or IRA within three years.

Some plans may have relaxed rules on plan loan amounts and repayment terms. The limit on loans made between March 27 and Sept. 22, 2020 is raised to $100,000. Plans may suspend loan repayments due between March 27 and Dec. 31, 2020.

Qualifications for relief
The law defines a qualifying person as someone who:

• Has tested positive and been diagnosed with COVID-19
• Has a dependent or spouse who has tested positive and been diagnosed with COVID-19
Experiences financial hardship due to them, their spouse or a member of their household:
o Being quarantined, furloughed or laid off or having reduced work hours
o Being unable to work due to lack of childcare
o Closing or reducing hours of a business that they own or operate
o Having pay or self-employment income reduced
o Having a job offer rescinded or start date for a job delayed

Employers can choose whether to implement these coronavirus-related distribution and loan rules. Qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren’t changed. Administrators can rely on an individual’s certification that they’re a qualified person.

Required minimum distributions
People who already took a required minimum distribution from certain retirement accounts in 2020 can now roll those funds back into a retirement account.

The 60-day rollover period has been extended to Aug. 31, 2020.

Under the relief, taxpayers with required minimum distributions from certain retirement plans can skip them this year. Distributions that can be skipped were due in 2020 from a defined-contribution retirement plan. These include a 401(k) or 403(b) plan, as well as an IRA. Among the people who can skip them are those who would have had to take the first distribution by April 1, 2020. This waiver does not apply to defined-benefit plans.

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Local IRS Offices

York
2670 Industrial Hwy, York, PA 17402
Monday-Friday 8:30am - 4:30pm
(Closed for lunch 12:30pm - 1:30pm)
(717) 757-4977

Harrisburg
228 Walnut St, Harrisburg, PA 17101
Monday-Friday 8:30am - 4:30pm
(Closed for lunch 12:30pm - 1:00pm) (717) 777-9650

Lancaster
1720 Hempstead Rd, Lancaster, PA 17601
Monday-Friday 8:30am - 4:30pm
(Closed for lunch 12:30pm - 1:00pm)
(717) 291-1994










NATP

National Association of Tax Professionals