State Tax Garnishment Rules to Know 

When it comes to state tax garnishment rules, they are effectively non-negotiable. If you have an eligible income, you have a tax liability, and if you are self-employed, you will have to report and file your taxes diligently and single-handedly. But certain circumstances – from an ineligible deduction on a return to a penalty for tardiness – can leave you with more taxes than you might have expected and an unexpected (and unwanted) tax bill.

The smaller the bill, the easier it is paid off. But as your tax debt grows, so does the affected tax authority’s interest in collecting on it. Failing to communicate an interest in repaying your debt may lead to collection actions on behalf of the local tax authority or federal government (the IRS). And when push comes to shove, the IRS and state tax authorities can turn to their last resort: the wage levy or wage garnishment.

 

What is Wage Garnishment?

Wage garnishment involves taking a portion of every paycheck you make to go towards paying off your debt. The only way your wages can be garnished is through your employer, so a self-employed debtor need not worry about them. In cases of self-employment, the state tax authorities will issue a levy on certain properties or bank accounts instead.

Once wage garnishment begins, it doesn’t end until the debt is paid or the garnishment is otherwise discharged. All debtors are entitled to enough of their earnings to cover their legal obligations, namely state, federal, and local taxes, their share of Social Security and Medicare, and State Unemployment Insurance tax. Any income past that, however, counts as disposable income – even when it’s needed for rent and food.

The government does have a limit on when wage garnishment can kick in for most wage garnishment orders, however. If a debtor’s weekly disposable income is less than 30 times the federal minimum wage, no garnishment can take place.

Anything above 30 times minimum wage may be garnished, up to a certain maximum percentage of weekly wages depending on the type of debt (up to 15 percent for student loans and taxes, but up to 50-60 percent for child support and alimony, for example).

When you’re dealing with back taxes, however, your situation might look a little different. The IRS, for example, will levy your wages based on how many dependents you have, as well as standard deductions.

State and federal tax debt, as well as wage garnishment applied as part of certain bankruptcy court orders, do not take these limitations into consideration.

That is wage garnishment in a gist. There are, of course, important details. First, your rights as a debtor:

The first thing you should do if you are about to face wage garnishment in your state is contact an attorney. A tax professional can help you navigate the issue and find the best solution for your circumstances.

For example, in the District of Columbia, wages cannot be garnished by creditors if the debtor’s weekly disposable income is less than 40 times the state minimum wage ($15 per hour). On the other hand, in Florida, if the debtor is the head of their family and makes less than $750 a week, their wages cannot be garnished either.

 

When Will State Tax Authorities Consider Garnishment?

Wage garnishment is a powerful collection action levied by the state when a taxpayer has failed to pay their debt and other collection actions have failed.

While it may take a while for the IRS to garnish your wages, state tax authorities tend to jump the gun more often. Take your state and federal tax debts very seriously – until paid, they typically don’t go away. It’s important to consult a professional on how to deal with your back taxes to the government before they become insurmountable.

 

What Does the State Consider Earnings?

The government doesn’t plan on only claiming one paycheck. The Consumer Credit Protection Act defines earnings as compensation paid or payable for personal services. This includes wages, salaries, bonuses, payments from pension or retirement, and bonuses. Examples include:

Whenever tips are involved, these count as wages if they exceed the tip credit claimed by the employer, if a tip credit exists. Otherwise, they do not.

 

What Can I Do about State Tax Garnishment Rules?

While limited, you do have options when it comes to state tax garnishment rules. You can file a dispute if the wage garnishment notice is inaccurate. You can seek the help of a tax attorney or find legal aid. You can contact the state tax authorities and work out a payment plan. Or, you can work your way through the garnishment.

 

What If You Don’t Owe Taxes?

Federal agencies and affiliated collection agencies under contract with them can still garnish your wages for other defaulted debts owed to the US government.

However, if you feel that your wages are being unfairly or incorrectly garnished, you need to get in touch with a tax professional in a timely manner and discuss your case. Understanding available financial assistance programs, such as the california middle class tax refund program, can also help you navigate any hardships. Researching these options will provide you with insights into additional resources that may alleviate some of your financial burdens. It's essential to stay informed about any changes in these programs that could benefit your financial situation.

 

Get Professional Help Today

Certain factors can greatly complicate your situation, like losing employment or trying to pay off another creditor while the government garnishes your wages. If you are in financial trouble and are considering bankruptcy or other options for your state tax debt, contact a local tax professional immediately. You may have more options than you would expect, depending on individual circumstances.

We at Rush Tax Resolution have multiple tax debt experts on hand ready to help you navigate your situation and find the best way forward through your state tax garnishment rules. Get in touch today.

IRS Form 9423: The Collection Appeal Request Process

If you've been approached by IRS Collections, you know how stressful it can be. However, you may have the opportunity to begin the collection appeal request process with IRS Form 9423.

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If the IRS finds that you owe back taxes, and decides to begin its collection process, one of your only forms of recourse is to create an appeal request to halt or modify their enforcement procedures.

This is where IRS Form 9423 comes into play. It is the form you will have to fill out to begin the process for requesting an appeal of the collection process, to halt or modify the IRS’ different collection actions.

 

What is IRS Form 9423?

The Collection Appeal Request, or Form 9423, is used by taxpayers to request an appeal for liens, levies, seizures, and rejection, modification, or termination of installment agreements. In general, IRS Form 9423 allows a taxpayer to specifically appeal the following actions under what the IRS calls the Collection Appeals Program:

When filling out IRS Form 9423, you will be asked to provide identifying information, explain why you disagree with the collection actions the IRS has taken or plans to take, and provide your signature. The IRS will process your appeal request, and the Collection Office will halt collection until either your appeal is approved or processed and otherwise settled.

You cannot have a higher court review the resolution of the Collection Appeals Program once an appeal has been settled. But if the IRS rejects your appeal, you do have other options.

 

Understanding the Collection Appeals Process

The Collection Appeals Program is the means by which you can appeal a planned or taken collection action via the office responsible for that collection action. You do not begin a Collection Appeals Program with the Independent Office of Appeals, but with the office responsible for the collection actions you want to appeal.

A tax professional can help you fill out IRS Form 9423 and communicate with the office in question, to ensure that your appeal gets the attention it deserves. Understanding the IRS Fresh Start Program benefits can also be essential in maximizing your chances of a successful resolution. These benefits can include reduced penalties, extended payment plans, and more flexible terms for eligible taxpayers, making it easier to navigate your financial obligations. Consulting a tax expert who is well-versed in these programs can provide you with valuable insights and guidance.

 

Appealing a Notice of Federal Tax Lien

A Notice of Federal Tax Lien is a legal claim made by the government over your entire account. This means everything you own is temporarily put on hold until your debt is paid. The IRS doesn’t claim your home or your property but does limit your ability to sell assets or secure financing. In practice, this means that another creditor or debtor cannot supersede the IRS’ claim over your property.

This can massively reduce your financial options, until the tax lien is lifted. You can request a lien certificate to limit the lien’s effect over a specific property or debtor in order to repay your debt. If the IRS rejects your request for lien certification, or you find the lien to be unwarranted/premature, you can make an appeal.

 

Appealing a Notice of Intent to Levy

A levy is a physical claim of a property or account for the fulfillment of a tax liability. The IRS can claim an asset like a parcel of land and sell it for its quick sale value. It can then use that money to cover your debt and either sending you the remainder or issue another levy for your outstanding tax liability.

If you can prove that your property was levied and/or sold prematurely, or that the levy was filed falsely, you can file an appeal to be reimbursed or to undo the levy.

 

Appealing an Installment Agreement Change

Installment agreements are necessary when paying the IRS back in anything other than a single lump sum. If you fail to make a payment, the IRS may cancel the agreement, and resume collection actions against your account. You can appeal this decision if you provide reasonable cause for your late payment.

If the IRS rejects your installment agreement request, it may be due to low income. You can appeal this and explain that you will be able to pay despite previous income issues.

If the IRS modifies your installment agreement, it’s usually because your income has increased (fewer, but bigger monthly dues). You can appeal against a modification of your agreement if you do not agree with it.

 

Collection Appeals Program and Collection Due Process Hearings

The Collection Appeals Program is separate from a Collection Due Process hearing. CDP hearings are launched through the IRS’ Independent Office of Appeals, through a Form 12153, functioning as an alternative way to keep the government from making a move on your property or tax account if you fear a lien or levy, or have been affected by a lien or levy. There is a 30-day deadline for filing a Form 12153 after receiving a notice of a collection action.

As with the Collection Appeals Program, you have to provide a good explanation for why the IRS shouldn’t move in on your tax account – from financial distress to a wrongful lien or levy, given the right evidence.

The main difference between the Collection Appeals Program and the Collection Due Process hearing is that a CDP hearing goes through the Office of Appeals, while the CAP goes through the Collection Office handling your tax account. CAPs can be used to challenge changes in a taxpayer’s installment agreement, while CDP hearings cannot. Unlike a CAP decision, a taxpayer can appeal to the US Tax Court if they do not agree with the decision of the Independent Office of Appeals.

 

Should You Request Participation in a Collection Appeals Program?

As with any appeal made to the IRS, it’s only best if you have good cause. The simplest and most common reason to appeal to the IRS is that you do not have the means to pay your back taxes due to disability, high medical costs, lack of income, or terminal illness.

In other cases, you may find evidence that the IRS made a simple error when calculating your taxes or issuing a premature collection action, such as not following the proper procedure when filing a Notice of Federal Tax Lien.

If you attempted to file a lien certificate of subordination, discharge, or withdrawal, and were refused, you can work with a professional to appeal the IRS and explain why you meet the requirements for a lien certificate.

You can also file an appeal when aiming to convince the IRS that releasing a lien or reversing a levy assists you in paying your back taxes (for example, by allowing you to use your property to secure financing for your debt).

In most cases, the Collection Appeals Program is a taxpayer’s only hope after their Collection Due Process rights expire.

 

Working With the Right Team

When seeking help or representation for the Collection Appeals Program (or a Collection Due Process hearing), it’s important to turn to the right people.

You can seek representation from an attorney, a certified public accountant, or an enrolled agent. Regardless of who you choose to represent or help you, always look for a tax professional.

We at Rush Tax Resolution pride ourselves on being upfront and realistic with our clients, while providing optimal outcomes. Certain tax situations can be especially difficult to navigate and having the right team in your corner can make all the difference in the world. Give us a call today.

Understanding Small Business Tax Deductions and Relief Options for 2022 

Small business tax deductions can help your business continue to run smoothly. Here's what to know about relief options for your small business.

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The IRS defines small businesses – within the context of tax relief and deduction options – as any business with assets under $10 million. These businesses, including self-employed professionals and independent contractors, can avail of certain tax credits and deductions to help minimize their tax liability and stay afloat during the COVID pandemic. Let's dive into the current tax relief programs and general small business tax deduction options for the new year.

Basic Business Tax Deductions and Tax Credits

Tax credits are money the IRS lets you omit from your tax liability. When a tax credit is described as refundable, the IRS lets you withdraw the remainder of as cash if your tax liability is more than covered. Most tax credits require businesses to meet certain eligibility requirements to avail for a tax credit.

The IRS provides multiple different forms for small business tax credits, from ones designed to provide special benefits to carbon dioxide sequestration programs to a tax credit for paid family and medical leave, in addition to basic tax deductions.

Tax deductions for businesses essentially allow companies to minimize their tax liability by writing off eligible business expenses, from office supplies to fuel.

Not all business expenses can be deducted. Capital expenses generally cannot be deducted, for example, unless the startup of a business fails (in which case they become capital losses). These include assets that continue to generate value for the business, such as buildings, equipment, or vehicles. In this case, the business hasn't really lost any value – it simply moved it around, from liquid cash to an asset.

Knowing what your business can and cannot deduct can require great attention to detail and a thorough understanding of federal and state tax laws. Be sure to consult a professional when dealing with tax credits and deductions.

Coronavirus-Related Tax Relief for Small Businesses

Following the beginning of the coronavirus crisis, the government and US Treasury rolled out multiple different relief programs aimed to aid American workers, families, and small businesses, providing economic relief to keep companies and households afloat during the harshest and hardest months of the crisis.

Most of these tax relief programs ended in early to late 2021, and very few are slated to be extended into 2022, if at all.

For small businesses, in particular, coronavirus-related tax relief and financial assistance programs took on the form of an

Among these four, the first two are tax-related, in that they provide refundable tax credits, which can be used to minimize a business's tax liability and even provide a cash infusion if withdrawn.

Employee Retention Tax Credit

The Employee Retention Tax Credit began in 2020 as a refundable tax credit equal to $5,000 per employee, or 50 percent of eligible wages paid, whichever was less. Eligible businesses that took out PPP loans are also allowed to claim an Employee Retention Tax Credit for 2020, provided they do not use the eligible wages calculated for the tax credit for their PPP loan forgiveness application.

In 2021, the Employee Retention Tax Credit was extended – first into the first quarter of the year and eventually throughout the entire fiscal year. This time, employees received a tax refund equal to the lower of either $7,000 per employee or 50 percent of eligible wages paid. Eligibility to receive an Employee Retention Tax Credit in 2021 was lowered to a 20 percent decline in gross receipts during a single quarter compared to 2019.

The Employee Retention Tax Credit has not been extended into 2022, however eligible businesses can still claim their tax credit retroactively, provided they file their amended payroll tax forms. Understanding IRS audit time limits explained is crucial for businesses to ensure compliance and effectively manage their tax obligations. Being aware of these timeframes can significantly impact a company’s ability to address any potential issues before they escalate. It is advisable to consult with a tax professional to navigate these complexities and secure the best outcomes for your financial situation.

Paid Sick and Family Leave Tax Credit

The other major coronavirus-related tax credit was the Paid Sick and Family Leave Tax Credit, or the Paid Leave Credit.

This tax credit was provided to offset the requirement that businesses with 500 or fewer employees were required to provide paid sick and family leave for employees struggling with the results of the pandemic. It initially took on the form of wages paid over an 80-hour paid leave per employee, either:

In addition, employers were obligated to provide employees with ten weeks of paid leave to take care of their children while school or child care was unavailable due to COVID, receiving an incentive tax credit equal to two-thirds of their employee's wages, capped at $200 per day per employee, or a total of $10,000 per employee.

The tax credit was extended throughout 2021, but the requirement to provide paid leave was not. This means only businesses that continued to provide paid leave to their employees for COVID-related obligations were eligible for a tax credit. If you have not received your tax credit, you can file amended payroll tax forms to claim the tax credit and receive a refund for your business.

The Paid Leave Credit is not being extended into 2022.

Child Tax Credit

While not strictly relevant to small businesses tax deductions, the Child Tax Credit was relevant to millions of self-employed and working Americans with dependents, as it was slated to be extended into 2022 – remaining one of the only coronavirus tax relief offerings that might have made it into the new year.

As many as 35 million families across the US relied on the tax credit, with many using it for school supplies and childcare. With cases surging and a new variant looming on the horizon, news of Congress' inability to extend the program has caused many lawmakers to try and figure out state-level solutions instead to help families retain an important safety net ahead of yet another wave of economic uncertainty. So far, seven states have their own implemented Child Tax Credit, with another nine states having seen proposals for one in the past two years.

While small business owners with dependents and other families might not see an expansion of the Child Tax Credit in 2022 – the jury is still out on whether Congress will be able to vote in a revised version of the Build Back Better bill next year – there are still other deductions and tax credits to take advantage of, both for individual taxpayers and small businesses working to survive the ongoing crisis.

Other Important Tax Relief Tips

Running a small business is a monumental task. Most small business owners are struggling to make ends meet, nowadays more than ever.

There's payroll to worry about, increasing fuel costs, supplier rates, and unprecedented supply chain issues. Everything from lumber to server space is becoming more expensive, and there are a million balls to keep juggling in the air.

Why let one more worry pile up and cost you precious capital? Get in touch with a tax professional to help you minimize your business's tax liability, from providing sensible and actionable tax credit information to tax return filing services down to advice on restructuring. Let Rush Tax Resolution help. Get in touch with us today and find out more.

What Happens If the IRS Sends You to Collections? 6 Things to Know

Dealing with the IRS can be incredibly stressful, so what happens if the IRS sends you to collections? Here is what you should know.

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We all know that the taxman can be frightening. But it’s important to separate fact from fiction.

The IRS is tasked with enforcing tax law and ensuring that taxpayers are held accountable for their tax liability – but it can and does make mistakes and offers plenty of recourse to taxpayers caught in a sticky situation.

Furthermore, taxpayers unable to pay or faced with certain circumstances can negotiate their way out of collection actions entirely – or even fight for a reduced tax liability. But what happens if the IRS sends you to collections?

 

Understanding What Happens if the IRS Sends You to Collections

If you are sent to IRS collections, there are a few things that will happen. But can the IRS pressure you over the phone? Harass you at your place of business? Send you to jail? Or demand payment through threatening calls and messages? Let’s set the record straight on a few things, and help you better understand your situation:

 

The IRS Won’t Harass You at Home

There is a code of conduct that the IRS must generally follow, as well as a taxpayer “bill of rights”, which somewhat serves as a guideline for the IRS’s treatment of taxpayers regardless of the situation they are in. Let’s remember that the people working at the IRS are doing a job like any other – and are trying to do it to the best of their abilities. Additionally, understanding the IRS fresh start program details can provide taxpayers with options for relief and a path towards financial stability. This program is designed to help individuals who may be struggling to meet their tax obligations by offering various options to alleviate their burden. By familiarizing themselves with these details, taxpayers can take proactive steps to navigate their situations more effectively.

Some people do impersonate IRS personnel and threaten people over the phone and via emails. These are often IRS tax scammers, either:

      1. Trying to collect certain information tied to your tax account, such as your social security number or tax identification info to collect tax refunds;
      2. Or pressure you into making “payments” through gift cards, cryptocurrency, and other suspicious avenues.

If you’ve received legitimately threatening or pressuring calls from someone claiming to work for the IRS, especially if they demanded money or immediate payment via the phone, or asked you to divulge private and identifying information (such as certain account numbers or details), then get in touch with the IRS via official channels (such as their hotline or website) and make a report, and install call blocking software for your smartphone, as well as employing other ways of blocking these scam callers and robocalls on your landline.

 

The IRS Won’t Demand Information Over Email

If the IRS sends you to collections, they will not reach out and demand information via email. A common scam involves getting people to provide information via fake websites, forms, or edited documents. Note that the IRS will not use email to ask for information. They may notify you of certain things via email but will only ever send official letters and notices of the mail, including any applicable forms.

The IRS will never ask for you to send them your information via email. If at all, they would ask that you sign into your tax account via the official IRS.gov website to review your information and tax notices, including collection notices and outstanding tax debt.

To that end, the IRS will never demand payment via email. The IRS only accepts payments via the official website, and over the Electronic Federal Tax Payment System. Do not attempt to ever send the IRS any money outside of these official channels.

 

The IRS Won’t Forget Your Debt

If you have a tax debt to the government, and haven’t paid it for years, but haven’t been pressured by any specific collection actions, this may be because the IRS didn’t pursue your account in particular over a rather small debt.

But that debt does not go away, and it continues to accrue interest until it is paid. The IRS can and will pick up the slack at any point in time, which can result in tax liens and tax levies.

 

The IRS Has to Inform You Via Mail

If the IRS has sent you to collections, any notice or letter the IRS sends your way has to come via physical mail. If the IRS fails to deliver an important notice or letter to you, you can use that to your advantage when arguing for a reduced penalty – especially if you only paid your overdue balance a few days after it was due for a penalty.

However, you are responsible for keeping the IRS up to date on where it should send your mail. Failing to do so can land you in very hot water, and make it impossible for you to appeal a decision to penalize your tax account, even if you didn’t get your hands on the notice you were supposed to receive in time.

 

The IRS Can Compromise

If the IRS has sent you to collections, your tax debt is not necessarily set in stone. While your tax account can continue to accrue debt, it can also potentially see a reduction in debt.

For one, if you successfully appeal that it was the IRS that made a mistake (it does happen!), you may see your new tax debt wiped out. But if you really do owe back taxes, or made a mistake on your return and have to pay up, the IRS will consider compromising on the amount you pay if you:

These offers in compromise are notoriously difficult to get, so it’s always a good idea to approach a tax professional first.

 

The IRS Does Employ Private Debt Collectors

This might come as a surprise, but the IRS does not do all of its debt collection work via its own agents. Sometimes, it must outsource. However, it outsources to only three specific collection agencies, and these agencies have no right to collect payments themselves.

All they are in charge of doing is establishing contact between you and the IRS’s payment system, and help you resolve your debt. They are not allowed to threaten you, and must also respect the same rules and guidelines for taxpayer interaction as your IRS.

 

What to Do If the IRS Sends You to Collections

Yes, the IRS does have the tools to pressure you into payment – but you also have certain tools at your disposal. Working with a tax attorney can help you protect yourself from any uncouth action the IRS might take – and help you ensure the best possible deal for your tax debt.

Now that you know what happens if the IRS sends you to collections, remember that one thing is always true: you should deal with your tax problems as soon as possible. We at Rush Tax Resolution can help you put together the right plan to get the IRS off your back and get back on the taxman’s good side.

How to Protect Yourself from These IRS Tax Scams

During the past few years, we have seen an influx in tax related scams affecting consumers. Here's how to protect yourself from the most common IRS tax scams.

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The IRS is renewing its information on frequent and common tax scams, providing multiple newsletters to taxpayers urging them to beware the signs of a tax-related con, especially during the pandemic.

The IRS is part of a coalition of state and national tax community members called the Security Summit, focusing on disseminating helpful security tips to taxpayers and businesses looking to protect their personal information, and prevent IRS tax scams and identity theft.

 

IRS Tax Scams to Avoid

In addition to the latest Dirty Dozen scams, below are a few common tax-related scams, as well as important tips for self-defense both online and via the phone.

 

1. Tax-Related Identity Theft

Identity theft is still one of the most common and most dangerous tax-related scams that fraudsters run. Many consumers rely on reviews to guide their decisions, and online platforms often feature fivestar ratings from BBB as a mark of trustworthiness. This can create a false sense of security, leading individuals to lower their guard against potential scams. These deceptive practices can result in significant financial losses if proper precautions are not taken. As consumers seek to educate themselves, many turn to word of the day examples to expand their vocabulary and comprehension of key financial terms. By doing so, they aim to better understand the language used in various scams, enabling them to identify red flags more effectively. This heightened awareness can significantly enhance their ability to protect themselves from fraudulent schemes.

The purpose of utilizing someone’s personal tax info to masquerade as them is usually to collect on tax refunds and unemployment benefits, as well as other benefits. Scammers may also use your Social Security number to file a fraudulent tax return in your name, or claim your dependents on a tax return of their own.

You may have been a victim of a case of tax-related identify theft if the IRS notifies you about a suspicious tax return, or if you cannot e-file your return because one has already been made with your Social Security number. Keep in mind these are only a few of the signs of identity theft.

 

2. IRS Phishing

Phishing is the act of extracting sensitive information from a victim online by setting up a fake form or log-in screen. Phishing attempts will generally copy the design or look of an official IRS webpage or form, but there are a few obvious ways in which you can distinguish a phishing attempt from the real deal.

First – check the address of the sender. Most phishing attempts occur over email, and most email services successfully weed out obvious scammers. But if you do receive an email from what seems like the IRS, double- and triple-check the sender’s address to see whether they’re really sending an email from the IRS’s email servers.

Next, look for obvious discrepancies in the email itself. Phishing mails will often feature odd typesetting, misspelling, graphical errors, or contents that make no sense.

Finally, the most obvious clue – the IRS never asks for your information via email. Any email saying you should open the attached file, go to the link on the message, or reply with your log-in information or other sensitive data (including things like your full name, birthdate, and so on) should be ignored, and forwarded to the IRS’s phishing reporting email.

 

3. Impersonating IRS Personnel

Another common IRS tax scam is a phone call or email wherein the scammer claims to be an IRS employee, demanding that you pay your tax debt. The IRS will never ask you to pay your debt over the phone, nor will they ask for your information via telephone or email. Common ways in which scammers try to extract money from taxpayers for their alleged debt include Google Play gift cards, fake invoices, wire transfers, and escrow payments.

If the IRS wants something from you, they will ask for it via a letter in the mail, not digitally or over the phone. Alternatively, you can request information from the IRS securely over the IRS’s own website. Be sure that you’re on https://irs.gov.

 

4. Malware and Ransomware

Another common online IRS tax scam is an email from a scammer claiming to represent the IRS, telling you to open the attached file.

Rather than a just form, however, the attachment may be a type of malware that infects your computer and steals information, logs keystrokes, spies on you, utilizes your computer’s resources to mine cryptocurrency, or holds all of your data ransom for an exorbitant cryptocurrency fee.

 

Tips to Avoid IRS Tax Scams

Tax-related scams are incredibly dangerous. Scammers claiming to be the IRS, or to work with the IRS, can scam people out of their tax refunds, steal their information, sell their sensitive data, or extract financial info from their devices. Be sure to keep yourself safe on the internet by applying the following tips: Understanding the potential consequences of tax-related fraud is crucial for individuals. By being aware of irs audit penalties to avoid, taxpayers can better protect themselves from falling victim to such schemes. Educating yourself about your rights and the proper protocols can further minimize risks associated with these scams.

 

1. Read Emails Thoroughly

Scam mails are often too good to be true, clearly suspicious, or demand something from you via mail. Don’t click on any links, don’t open attachments, and don’t do what an email says if you aren’t sure it isn’t a scam.

Double-check the sender info, reread the message for signs of a scam, and get a second opinion from someone online if you aren’t sure. If you receive any emails from the IRS, know that if you’re ever notified of anything important, the IRS will have done so via physical mail.

 

2. Use Multi-Factor Identification

Multi-factor or two-factor identification utilizes multiple different login cues to enter an account. A common example of two-factor identification is providing your username and password, as well as a security code texted to the phone number associated with your account. This adds an additional layer of security to every login and makes it harder for scammers to access your accounts.

 

3. Be Stingy with Your Info

Double- and triple-check before you use your information online, especially when asked to login somewhere or provide credit card info to make a purchase. Do not share sensitive information via text, email, phone call, video chat, or over public channels.

 

4. Use Malware Detection and Security Software

Be sure your antivirus is on, and regularly scan your devices for signs of malware. Keep your malware detection and security software updated at all times.

 

5. Avoid Logging into Accounts in Public

One of the most glaring examples of cognitive dissonance is use of a public WiFi network to log into a private account, or shop and buy goods. Public WiFi networks are completely unsecured and turn your personal data and information – including your credit card info – into easy pickings for scam artists and hackers who are physically near you.

It’s scarily and trivially easy to sit around a coffee shop and steal data from people nearby by snooping through the phones and laptops of public WiFi users.

The best way to minimize the risk of an attack on your privacy and sensitive financial data is to avoid shopping and logging into any accounts on public networks.

 

6. Using VPN Services

Additionally, you may want to consider using a VPN service whenever you decide to browse the Internet on public WiFi networks, and via 4G/5G. A VPN or virtual private network is a service that reroutes and encrypts any outgoing traffic from your device.

VPNs help disguise your online identity and encrypt the information you send and receive in real-time. It’s not all roses and rainbows – some VPN services are better than others, some don’t offer real-time protection, and some even sell your data themselves. It’s important to choose a service like this with great scrutiny, if you’re considering it at all.

Protecting yourself and your data online can be incredibly difficult. While the IRS reminds us to be careful of what we do on the Internet, it’s important to keep in mind that the simplest things often have the greatest impact.

Enable multi-factor identification wherever available, only access sensitive information on secure networks, browse on websites with SSL certification (https:// rather than http://), and avoid opening suspicious messages, emails, or strange unidentified links.

If you are in need of tax relief services, call the professionals at Rush Tax Resolution today.

5 Tips to Finding Legitimate Tax Consultants: Avoid These 4 Red Flags

If you run into problems with the tax man, it's time to find tax consultants who can help you navigate through the process, but watch out for these 4 red flags.

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The US tax system is far from simple. While every US taxpayer has an obligation to keep up with their filing requirements and tax return preparation, it’s easy to get lost in the web of rules and regulations surrounding our tax code, and the different forms the IRS might ask you to submit. There are forms of making large cash payments, forms for certain acts of charity, forms for declaring income outside of your day job, forms for foreign assets, and more.

If you’re having trouble keeping up with it all, your best bet is to get in touch with professional tax consultants. But tax preparation services vary in what they do and don’t offer, and it’s easy to get hurt by teaming up with the wrong tax consultant and preparation service. Even worse is becoming a victim of a tax prep scam, a problem every taxpayer should be aware of.

 

Finding Reputable Tax Consultants

If you’ve never hired tax consultants or preparation services before, knowing what to look for – and what to beware – can help. Here are our basic pointers.

 

Ensure That They’re Licensed

Professional tax consultants and preparers typically do work in financial, accounting, or legal industries, and the best ones will be accredited lawyers, certified public accountants, enrolled agents, or professionals who have attended and completed the IRS’s Annual Filing Season program with a title such as Accredited Business Accountant, Accredited Business Advisor, or Accredited Tax Preparer.

These are a lot of different titles, so it helps to narrow your search down by using online directories.

The IRS has its own directory of tax professionals with a Preparer Tax Identification Number (PTIN), which can give you a shortlist of professionals near you. You can identify services by PTIN-holding tax professionals with the following credentials:

 

Ask for a PTIN

Speaking of a PTIN, it’s important to ask your tax preparer to present theirs. The IRS requires anyone who performs professional tax preparation services to have a PTIN. It’s important to distinguish volunteer tax preparers from ones who ask for financial compensation.

If you get your uncle to do your taxes, because he’s a savant in tax law and has offered to help you out, then you obviously won’t need him to get a PTIN or note it down in your return. But if you’re paying someone to take care of your taxes, every return they prepare must have their PTIN included in it.

 

What Organizations Do They Belong To?

Aside from credentials, one way to further cement the competence and reputation of your prospective tax consultants is by finding out what organizations and associations they belong to.

Membership in the local Bar, the National Association of Tax Professionals, the American Institute of Certified Public Accountants, and other similar national and state-level organizations requires that any given member act in accordance with the ethical and professional standards of the organization.

Being a member is a good sign, as it means the preparer you’re working with has held themselves to high standards within the industry.

 

Check Their Reputation

You can go a step further and leverage online review systems to get a better idea of what it’s like to work with this professional in the long-term. What do former clients have to say about them? How well do they curate their online image? Do they have reviews on the BBB, Google, or Yelp, and what do these reviews mention?

An online reputation isn’t everything, of course. Reviews can be bought, competitors can be review bombed, and one vindictive client with an exaggerated horror story can cost a company dozens of potential clients down the line.

But it doesn’t hurt to give any prospective tax professional a cursory online search and find out more about their client history.

 

Can They Represent You?

A questionable tax return, a forgotten detail, a puzzling or unique life, or just bad luck. These are some of the factors that might lead to an inquiry by the IRS, a potential IRS audit notification, and even a collection action on tax debt. When things go awry with the government, it helps to have a legal professional representing you.

But not all tax preparers are legal professionals. Some tax preparers can represent you in front of the IRS on matters such as payment, collection issues, and potential audits. These include enrolled agents, attorneys, and CPAs. Some tax professionals can only represent you under a limited capacity, such as those who completed the Annual Filing Season Program.

Some tax preparers can represent you, but don’t offer to do so as part of their preparation services, out of availability issues, or as part of their low-cost offering.

Be sure about what services you are and aren’t paying for when looking for tax consultants. It’s always best to work with a legal professional who not only offers to represent you, but is also communicative, keeps track of your tax history, and will follow up for other issues.

Of course, cost matters too. Don’t be afraid to compare and contrast between services.

 

4 Important Red Flags to Keep an Eye On When Searching For Tax Consultants

Just as there are tips and tricks for getting the best tax consultants on your side, there are also important red flags that you can’t afford to miss.

 

1. They Don’t E-File

It’s not just a matter of being old-fashioned. Tax consultants who do not offer the option of e-filing probably aren’t doing as much tax preparation work as they claim to do. The IRS requires all paid preparers who do more than ten returns a year to file electronically via the IRS’s online system.

 

2. They Ask You to Sign a Blank Return

Never sign a blank return. Fraudulent tax preparers and scammers can use signed blank returns to fudge the details, omit income, and even include their own bank details to steal your tax refunds.

 

3. They’re Sending and Receiving Via Email

Financial security is crucial when working on your taxes. Diligent and modern tax consultants will exchange only the bare minimum of details via email and will otherwise insist on secure and encrypted file sharing services when discussing your tax returns and working remotely.

 

4. They Barely Ask Questions

A good tax preparer should know that the average layman won’t remember to bring up every relevant detail during the first interview.

While you should be asking questions to satisfy your own curiosities and learn more about your tax consultants' history and experience in the field, you should also expect to hear a lot of questions coming from your tax preparer if they’re serious about representing you and providing the best possible service.

Spotting the difference between a good and bad tax preparer can save you a small fortune, and plenty of headaches. Take your time, compare your options, and don’t be afraid to ask questions.

If you are looking for a qualified and professional tax consultant, contact Rush Tax Resolution today. We can help get you back into good standing with the IRS.