Tag Archives: IRS

House Democrats to test Republicans on Trump’s wall demand

U.S. House Speaker Nancy Pelosi (D-CA) arrives for a House Democratic party caucus meeting at the U.S. Capitol in Washington, U.S. January 9, 2019. REUTERS/Jonathan Ernst

By Richard Cowan

WASHINGTON (Reuters) – On the 19th day of a partial U.S. government shutdown, Democrats were set on Wednesday to test Republicans’ resolve in backing President Donald Trump’s drive to build a wall on the border with Mexico, which has sparked an impasse over agency funding.

House of Representatives Speaker Nancy Pelosi and her fellow Democrats, who took control of the chamber last week, plan to advance a bill to immediately reopen the Treasury Department, the Securities and Exchange Commission and several other agencies that have been partially shut down since Dec. 22.

Democrats are eager to force Republicans to choose between funding the Treasury’s Internal Revenue Service – at a time when it should be gearing up to issue tax refunds to millions of Americans – and voting to keep it partially shuttered.

In a countermove, the Trump administration said on Tuesday that even without a new shot of funding, the IRS would somehow make sure those refund checks get sent.

White House spokeswoman Sarah Sanders told Fox News on Wednesday that Trump was still considering a declaration of a national emergency to circumvent Congress and redirect government funds toward the wall.

The Republican president’s push for a massive barrier on the border has dominated the Washington debate and sparked a political blame game as both Trump and Democrats remain dug in.

In a nationally televised address on Tuesday night, Trump asked: “How much more American blood must be shed before Congress does its job?” referring to murders he said were committed by illegal immigrants.

Senate Republican leader Mitch McConnell opened the Senate on Wednesday with an attack on Democrats for not supporting Trump’s demand for $5.7 billion for the wall.

But Senate Democratic leader Chuck Schumer said Trump’s speech was a rehash of spurious arguments and misleading statistics.

“The president continues to fearmonger and he makes up the facts,” Schumer said.

DEMOCRATIC TACTICS

Later in the week, Pelosi plans to force votes that one-by-one provide the money to operate departments ranging from Homeland Security and Justice to State, Agriculture, Commerce and Labor.

By using a Democratic majority to ram those bills through the House, Pelosi is hoping enough Senate Republicans back her up and abandon Trump’s wall gambit.

The political maneuvering comes amid a rising public backlash over the suspension of some government activities that has resulted in the layoffs of hundreds of thousands of federal workers.

Other “essential” employees are being required to report to work, but without pay for the time being.

As House Democrats plow ahead, Trump and Vice President Mike Pence will go to Capitol Hill on Wednesday to attend a weekly closed lunch meeting of Senate Republicans.

They are expected to urge them to hold firm on his wall demands, even as some are publicly warning their patience is wearing thin.

Later in the day, Trump is scheduled to host bipartisan congressional leaders to see if they can break the deadlock. On Thursday, Trump travels to the border to highlight an immigration “crisis” that his base of conservative supporters wants him to address.

With tempers running high over Trump’s demand for $5.7 billion just for this year to fund wall construction, there are doubts Pelosi’s plan will succeed in forcing the Senate to act.

McConnell has not budged from his hard line of refusing to bring up any government funding bill that does not have Trump’s backing even as a few moderate members of his caucus have called for an end to the standoff.

The funding fight stems from Congress’ inability to complete work by a Sept. 30, 2018, deadline on funding all government agencies. It did, however, appropriate money for about 75 percent of the government by that deadline – mainly military and health-related programs.

(Reporting by Richard Cowan; Additional reporting by Amanda Becker and Susan Heavey; Editing by Bill Trott and Alistair Bell)

IRS gives taxpayers one-day extension after computer glitch

A general view of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said it would give taxpayers an additional day to file their 2017 returns after computer problems prevented some people from filing or paying their taxes ahead of Tuesday’s midnight deadline.

“Taxpayers do not need to do anything to receive this extra time,” the IRS said in a statement announcing the extension.

The agency said its processing systems were now back online.

Earlier, the agency said several systems were hit with the computer glitch, including one that handles some returns filed electronically and another that accepts online tax payments using a bank account.

The IRS said it believed the problem was a hardware issue and “not other factors.”

It was not clear how many taxpayers might have been affected, but the agency said it received 5 million tax returns on the final day of filing season last year.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” acting IRS Commissioner David Kautter said in a statement.

The agency said taxpayers should continue to file their taxes as normal on Tuesday evening – whether electronically or on paper.

Taxpayers could also ask for six-month extensions, as President Donald Trump did. The White House said on Tuesday that Trump, because of the complexity of his tax returns, would file his by Oct. 15.

(Reporting by Eric Beech; Editing by Diane Craft and Chris Reese)

Your Money: New U.S. gift tax strategies could alter giving

U.S. 1040 Individual Income Tax forms are seen in New York March 18, 2013. REUTERS/Shannon Stapleton

By Beth Pinsker

NEW YORK (Reuters) – Get a big money check from a wealthy great aunt every year for your birthday? Parents buying you a car? Grandparents paying for private school tuition?

How generous they are could be changing very soon.

When somebody gives a big cash gift, the U.S. Internal Revenue Service wants a cut of it. This year, the IRS adjusted the annual limit that escapes taxation, upping it to $15,000 from $14,000.

A more important change that came with the new tax rules: the estate tax limit doubled in 2018 to $11 million per person from $5.49 million.

That boost in giving potential could make people change their behavior, but, as always, family dynamics make things tricky.

One strategy for those who were over the previous estate limit was to give away money on a yearly basis so they did not owe taxes when they died. With the new rules, couples with less than $22 million do not have to worry about parceling out annual gifts and may choose more long-term giving strategies.

Some may also choose to structure large gifts as loans, and then simply forgive the loan over time up to the annual $15,000 amount, said Marc Bloostein, an estate lawyer who is a partner at Ropes Gray in Boston. Bloostein cautioned that the key to this is good record-keeping.

Those giving away money now simply to be generous will likely keep giving at the $15,000 amount annually, said Mark Smith, a certified financial planner at Vision Wealth Planning in Richmond, Virginia.

PARENTAL HELP

Smith typically sees baby boomers helping millennial children with student loan payments and mortgages. He also sees parents making their kids’ retirement contributions, giving them money to put in an IRA or Roth account.

The contributions can add up. Bloostein works with couples who give combined cash gifts to more than 12 family members. “When they give out $30,000 to each one, that’s a huge amount,” he said.

Gift recipients sometimes become dependent on the cash influx, so if the givers change strategy, it could be a rude awakening. But wealthy families may still be interested in reducing their estates because some states have much lower estate tax limits, such as $1 million in Massachusetts.

The older generation also makes a lot of additional payments directly to private schools, colleges and healthcare providers. These skirt the annual limits and do not count as gifts.

But be careful with this approach if there is big disparity in income between grandparents and parents filling out financial aid forms, because the gifts could lower awards. A smarter strategy may be to have grandparents chip in junior year of college, or to pay off loans after graduation, said financial aid consultant Kalman Chany, president of Campus Consultants Inc in New York.

More complications arise when real assets are involved, like a house or a car. Morris Armstrong, a registered investment adviser and enrolled agent tax accountant in Danbury, Connecticut, had an unmarried couple file a gift tax return when they bought a house together – one put up $150,000, but the other was included on the deed.

Sometimes generosity has a darker side, when gifts are used as a means of control, or to assuage guilt, Armstrong noted.

“If kids run into debt, parents sometimes feel a sense of failure, and they are bailing kids out to their own detriment,” Armstrong said.

Financial professionals caution that even if you do not owe tax, it is best to file the proper gift tax forms at the time of the gift. Bloostein has seen a number of situations where gifts had to reconciled during the estate settlement process, and taxes paid.

While the IRS might not catch up with you right away, they will eventually. “It’s not unusual for them to audit an estate tax return,” Bloostein said.

Even when lower estate limits were in force, only 2,700 people owed gift tax in 2016, the last year of data available from the IRS. Most gave away more than $1 million. The other 200,000 gift tax returns owed no tax; the filers were simply reporting the transactions and counting them against their lifetime exclusion amount.

(Editing by Lauren Young and Jonathan Oatis)

IRS puts Equifax contract on hold during security review

FILE PHOTO: Credit reporting company Equifax Inc. corporate offices are pictured in Atlanta, Georgia, U.S., September 8, 2017. REUTERS/Tami Chappell/File Photo

By John McCrank

NEW YORK (Reuters) – The U.S. Internal Revenue Service has temporarily suspended a contract worth more than $7 million it recently awarded to Equifax Inc following a security issue with the beleaguered credit reporting agency’s website on Thursday.

Equifax, which disclosed last month that cyber criminals breached its systems between mid-May and late July and made off with sensitive data on 145.5 million people, said on Thursday it shut down one of its website pages after discovering that a third-party vendor was running malicious code on the page.

“The IRS notified us that they have issued a stop-work order under our Transaction Support for Identity Management contract,” an Equifax spokesperson said on Friday.

“We remain confident that we are the best party to perform the services required in this contract,” the spokesperson said. “We are engaging IRS officials to review the facts and clarify available options.”

The IRS is the first organization to say publicly that it is suspending a contract with Equifax since the credit reporting agency’s security problems came to light.

Atlanta-based Equifax said its systems were not compromised by the incident on Thursday, which involved bogus pop-up windows on the web page that could trick visitors into installing software that automatically displays advertising material.

Still, the IRS said it decided to temporarily suspended its short-term contract with Equifax for identity-proofing services.

“During this suspension, the IRS will continue its review of Equifax systems and security,” the agency said in a statement. There was no indication that any of the IRS data shared with Equifax under the contract had been compromised, it added.

The move means that the IRS will temporarily be unable to create new accounts for taxpayers using its Secure Access portal, which supports applications including online accounts and transcripts. Users who already had Secure Access accounts will not be affected, the IRS said.

IRS granted the $7.25 million contract to Equifax on Sept. 29, weeks after Equifax disclosed the massive data hack that drew scathing criticism from several lawmakers.

“From its initial announcement, the timing and nature of this IRS-Equifax contract raised some serious red flags … we are pleased to see the IRS suspend its contract with Equifax,” Republican Representatives Greg Walden and Robert Latta said in a joint statement on Friday.

“Our focus now remains on protecting consumers and getting answers for the 145 million Americans impacted by this massive breach,” they said.

Government contracts in areas such as healthcare, law enforcement, social services, and tax and revenue, are major sources of revenue for Equifax.

In 2016, government services made up 5 percent of Equifax’s overall $3.1 billion in revenue, accounting for 10 percent of its workforce solutions revenues, 3 percent of its U.S. information solutions revenues, and 7 percent of its international revenues, according to a regulatory financial filing.

(Reporting by John McCrank in New York; additional reporting by Dustin Volz in Washington; Editing by Bill Rigby)

U.S. charges 61 over India-based IRS impersonation scam

A policeman escorts men who they said were arrested on Wednesday on suspicion of tricking American citizens into sending them money by posing as U.S. tax officials, at a court in Thane, on the outskirts of Mumbai, India

WASHINGTON (Reuters) – The U.S. Justice Department charged 61 people and entities on Thursday with taking part in a scam involving India-based call centers where agents impersonated Internal Revenue Service, immigration and other federal officials and demanded payments for non-existent debts.

The scam, which had operated since 2013, targeted at least 15,000 people who lost more than $300 million, the department said in a statement.

The defendants, who were indicted by a grand jury in the U.S. District Court for the Southern District of Texas on Oct. 19, included 32 people and five call centers in India and 24 people in nine U.S. states, the statement said.

The indictment said the operators of the call centers in Ahmedabad, in the Indian state of Gujarat, “threatened potential victims with arrest, imprisonment, fines or deportation if they did not pay taxes or penalties to the government.”

Payments by victims were laundered by a U.S. network of co-conspirators using prepaid debit cards or wire transfers, often using stolen or fake identities, the statement said.

The call centers also ran scams in which victims were offered short-term loans or grants on condition of providing good-faith deposits or payment of a processing fee, it said.

The investigation involved Immigration and Customs Enforcement, Treasury, Homeland Security, U.S. Secret Service and police officials, the Justice Department said.

(Reporting by Eric Walsh; Editing by Jeffrey Benkoe and Frances Kerry)

India arrests 70 call-center workers accused of duping U.S. citizens

Police escort men who they said were arrested on Wednesday on suspicion of tricking American citizens into sending them money by posing as U.S. tax officials, at a court in Thane, on the outskirts of Mumbai, India,

By Devidutta Tripathy

MUMBAI (Reuters) – Police in India said they arrested 70 call-centre workers on Wednesday on suspicion of tricking American citizens into sending them money by posing as U.S. tax officials.

A total of 772 workers were detained earlier on Wednesday in raids on nine call centers in a Mumbai suburb, a senior police official told Reuters. Seventy were placed under formal arrest, 630 were released pending questioning over the coming days, and 72 were freed without further investigation.

“The motive was earning money,” said Parag Manere, a deputy commissioner of police. “They were running an illegal process, posing themselves as officers of the (U.S.) Internal Revenue Service.”

The police official did not identify the company where the call center workers were employed, or any of the main players involved in the alleged scam. He also declined comment on whether Mumbai police were investigating in conjunction with U.S. authorities, or comment on what prompted the inquiry.

Manere said the alleged scammers asked Americans to buy prepaid cash cards in order to settle outstanding tax debts and also used the threat of arrest against people who did not pay up.

Last year, a Pennsylvania man who helped coordinate a fraud in which India-based callers preyed on vulnerable Americans by pretending to be U.S. government agents was sentenced to 14-1/2 years in prison.

India is home to a vast number of back office operations for North American and European companies. Thousands of call centers in India provide back office services to these firms, processing everything from utility payments to credit card bills.

While such business arrangements help Western companies cut costs, there have been frequent allegations of security breaches and improper trading of consumers’ account details and other commercial information for profit.

(Reporting by Devidutta Tripathy; Editing by Euan Rocha and Mark Heinrich)

IRS notifying more taxpayers about potential data breach

Hackers may have accessed the tax transcripts of approximately 724,000 United States taxpayers by using stolen personal information, the Internal Revenue Service announced Friday.

The agency also said hackers targeted another 576,000 accounts, but could not access them.

The announcement followed a nine-month investigation into its “Get Transcript” application.

The tool was launched in January 2014 and gave taxpayers a way to download or order several years of their transcripts through the IRS website.

However, the agency announced last May that “criminals” had been able to access other tax histories that were not their own by using personal information that had been stolen elsewhere.

The IRS originally announced that about 114,000 transcripts may have been improperly accessed, while hackers targeted another 111,000 but were unsuccessful in their attempts.

The tool has been offline ever since while officials searched for other suspicious activity.

The Treasury Inspector General for Tax Administration (TIGTA) has handled the investigations.

In August, the IRS announced TIGTA found about another 220,000 cases of potential breaches since “Get Transcript” debuted, and about 170,000 more unsuccessful suspicious attempts.

On Friday, the IRS announced TIGTA’s latest review found about 390,000 potential additional cases of improper access, and some 295,000 cases where tax data was targeted but not obtained.

The IRS noted that some of the attempts might not have been malicious.

“It is possible that some of those identified may be family members, tax return preparers or financial institutions using a single email address to attempt to access more than one account,” it said in a statement, though added it is notifying all of the affected taxpayers as a precaution.

The latest wave of taxpayers will be notified through the mail beginning Feb. 29, the IRS said.

“The IRS is committed to protecting taxpayers on multiple fronts against tax-related identity theft, and these mailings are part of that effort,” IRS Commissioner John Koskinen said in Friday’s announcement. “We appreciate the work of the Treasury Inspector General for Tax Administration to identify these additional taxpayers whose accounts may have been accessed.”

The agency is offering all affected taxpayers free identity theft protection services and the chance to obtain an identity protection PIN, which helps protect Social Security numbers on returns.

Supreme Court Throws Out Ruling Against Catholic Group

A Catholic organization that was being threatened with fines by the IRS because they were not providing insurance coverage including contraception has been given a reprieve by the Supreme Court.

The court granted Michigan Catholic Conference their request for an exemption for religious regions against the mandate by the Department of Health and Human Services.  The ruling means that the previous decision against the group was vacated and the Court of Appeals for the Sixth Circuit must consider the Hobby Lobby decision in reviewing the case.

A counsel for the Becket Fund for Religious Liberty praised the ruling in a message to the Christian Post.

“That’s what is so bizarre about the government’s position,” said Mark Rienzi a senior counsel with the Becket Fund.

“The government says they are not a ‘religious employer’ and therefore they have to sign forms to authorize and require other people to give out contraceptives for them. That makes no sense at all.”

Rienzi said the Court will likely have to take up one of these cases in the future.

I think that the Court will continue the path it has set in the long string of mandate cases to date … and it will protect religious ministries from this mandate,” said Rienzi.

“This whole fight is unnecessary and silly. Obviously the government can distribute contraceptives without the forced involvement of the Catholic Church and its ministries. The government can put a man on the moon — they can distribute pills without religious ministries.”

The group is the sixth the justices have sided with on the issue since December 2013.

Atheist Deal With IRS Subject Of Lawsuit

A legal group has filed suit in federal court concerning a deal the IRS made with an anti-religious organization to monitor churches.

The Alliance Defending Freedom says the IRS has failed to honor a Freedom of Information act request regarding the details of an agreement between the group and the anti-religious Freedom From Religion Foundation.

“As of the date of this complaint, Defendant has failed to: (i) determine whether to comply with the request; (ii) notify Plaintiff of any such determination or the reasons therefor; (iii) advise Plaintiff of the right to appeal any adverse determination; and/or (iv) produce the requested records or otherwise demonstrate that the requested records are exempt from production,” reads the complaint.

“Plaintiff is being irreparably harmed by reason of Defendant’s unlawful withholding of records responsive to Plaintiffs’ FOIA request, and Plaintiff will continue to be irreparably harmed unless Defendant is compelled to conform its conduct to the requirements of the law.”

The anti-religious group demanded in 2012 that the IRS enforce their view of the Johnson Amendment which strips churches of tax exemptions if they are openly involved in political activity.

This is the second suit against the IRS over agreements related to “monitoring of churches and other tax exempt religious organizations.”

IRS Customer Service at an All Time Low This Year

With the tax season about to begin and many people concerned about the way they have to handle Affordable Care Act changes, the IRS is making it more difficult for taxpayers to obtain help.

A report from the IRS blames Congress for budget cuts.

The official who represents taxpayers within the IRS, Nina Olson, warns that customer service will be at an all time low with less help on the phone, less help with tax preparation, and more obstacles when disputing an IRS mistake.

“I think that for taxpayers they will not be able to get assistance from the IRS; they will not get their questions answered,” Olson stated.

The IRS has refused to answer questions about what the IRS considers helplines for taxpayers.