The IRS assessed the tax and sent you a bill reflecting a balance on your tax account.

Some penalties require supervisory approval before they can be assessed by the IRS. The applicable statute, however, is vague regarding the point at which this approval must occur. This statutory ambiguity has generated conflicting decisions among the courts, which leaves taxpayers unsure about how they should be treated by the IRS and leads to unnecessary litigation that is bad for everyone. In hopes of bringing additional certainty to this area, the IRS has proposed regulations, for which public comments were open until July 10, 2023. The next step in this regulatory process will be a public hearing to be held on September 11, 2023.

I and others have written tomes about the complexity of the tax code and the burdens that tax law complexity imposes on taxpayers and the IRS alike. Taxpayers (and tax professionals) are often left wanting to pull out their hair, and comedians often mine the tax code for fresh material, especially during tax season.

• Lien Enforcement • Government Files Suit in Court • Reduce Assessment to Judgement • Foreclosure of Tax Lien • Action to Enforce Levy

If you received a Form 1099-K this year and aren’t sure why or if you want to learn how to reduce your risk of receiving an incorrect Form 1099-K in future years, read on to learn a few best practices and how this reporting works. If you didn’t receive a Form 1099-K this year for transactions in 2023, you might get one next year for transactions in 2024. The number of Forms 1099-K issued should drastically increase over the next few years. According to an estimate in 2023, fully implementing the $600 Form 1099-K reporting threshold – which the IRS plans to do on a phased-in basis – would result in an additional 30 million Forms 1099-K issued per year. However, the key question is not whether you received a Form 1099-K but rather whether the monies received are taxable. Forms 1099 are information returns sent to you by an entity that paid you certain types of income throughout the tax year. Getting a Form 1099 doesn’t necessarily mean you owe taxes on that income, but you will have to report the income to the IRS on your tax return.

Every year, the IRS advises taxpayers to e-file their returns to avoid processing delays during the filing season. This year, the IRS states that now more than ever, e-filing is the safest and best way to file a return and ensure timely payments of refunds. During the COVID-19 pandemic, taxpayers have faced extreme delays and hardship caused by the IRS’s delay in processing their paper returns. As of April 2, 2021, the IRS still had nearly 16 million paper returns waiting to be processed, including about a third that were received in calendar year 2020. Despite the extreme burden taxpayers face when they file paper tax returns, there is one group of individuals who generally cannot e-file: taxpayers who need to apply for a new Individual Taxpayer Identification Number (ITIN).

Taxpayer receives a notice or letter from the IRS and either chooses to respond to the notice or letter by paying their tax balance in full and/or filing missing tax returns; or pursuing a payment option; or the taxpayer chooses not to respond or choose any collection alternatives.

An Initial Contact Letter is your notification that your tax return has been selected for an audit (also called an examination). Included in the letter is a listing of the specific items reported on your tax return or that you failed to include on your return that are being questioned by the IRS, with a request that you provide documentation to support the identified items.

Among its many provisions, Section 603 of the TAS Act is especially significant for its potential to reform the way the IRS processes refund claims. If enacted, Section 603 could remedy long-standing inefficiencies and delays in IRS refund processing and adjudication, similar to our prior legislative recommendation.

Taxpayer Advocate Service Celebrates 50 Years of the Earned Income Tax Credit

In addition, filers of tax year 2019 information returns (other than IIRs) filed on or before August 3, 2020, will have any portion of an information return penalty that is the result of late filing abated. Information reporting penalties assessed for reasons other than lateness, such as incorrect information or non-compliance with e-file requirements, will not be waived. For tax year 2020 information returns (other than IIRs), the same relief applies to returns filed on or before August 2, 2021.

In a previous blog, I highlighted the impact of the IRS’s processing delays and the resulting increase in cases on TAS’s ability to serve taxpayers. Today, I want to provide information on limitations TAS is facing in assisting individual and business taxpayers who have filed amended tax returns and are waiting for the IRS to process them. We know many individuals and businesses are frustrated by the delays, particularly those awaiting refunds.