Tag: IRS
IRS may legitimately ask for taxpayer ID verification with Letter 5071C
In 2015, we first reported a new method the IRS was using to verify the identity of taxpayers as part of its effort to combat the growing problem of identity theft. That technique, a mailed letter known as Letter 5071C,...
IRS updates online refund tool
The IRS has enhanced the "Where's My Refund?" online tool by adding a new feature that allows taxpayers to check the status of their current tax year and two previous years' refunds. Previously, the tool only displayed the status of...
IRS updates status of tax return processing backlog
The IRS continues to struggle with tax return processing in the wake of the COVID-19 pandemic. As of 5/14/22, the IRS had 9.8 million unprocessed individual returns received before 2022 as well as new tax year 2021 returns. The backlog...
Tax refunds are slow coming to paper filers for a second year
In 2020, pandemic-related factors significantly delayed refunds due to taxpayers. Those filing 2021 taxes may find an unwelcome repeat of last year's delay, as it could again take six months or more for taxpayers who filed paper returns to receive their...
Caretakers may exclude certain Medicaid waiver payments from income
Family members who care for a disabled relative in their shared home, and receive Medicaid payments to provide that care, may qualify for an exclusion of certain Medicaid waiver payments on their gross income calculation. IRS Notice 2014-7 provides guidance on...
Some IRS notices may be temporarily suspended, agency advises
While the Internal Revenue Service works through a return and correspondence backlog, the agency has notified taxpayers it will not send certain letters and notices, including the mailing of automated collection notices normally issued when a taxpayer owes additional tax,...
“Staked” cryptocurrency value may no longer be taxed as income
A recent settlement offered to taxpayers who filed a suit against the IRS may indicate a change in how staked cryptocurrencies are taxed. Previously, staking income was thought of, and treated similar to, interest income. Many crypto exchanges were handling it...
2021 federal tax season dates announced; expect delays
The 2021 tax filing season will begin on Monday, January 24, 2022, and run through April 18, 2022. However, taxpayers are warned that between the ongoing pandemic and a lack of resources at the Internal Revenue Service, returns could be slow...
Net Operating Loss (NOL) carry-forward requires careful record-keeping
Taxpayers who claim a net operating loss (NOL) on a tax return must keep careful records to substantiate the claim, including past tax returns that show consistent treatment of NOLs and financial data (or strong corroborating testimony and recreated records), or...
Determining nexus for multi-state income tax filings for businesses
Establishing "nexus" of a corporation's business activity determines the state or foreign country which has jurisdiction to impose an income tax or franchise tax measured by net income. For businesses generating revenue in multiple states, or doing activities that generate...