Mike Cohn’s Post

The IRS is banking on states for the success of its new, free online tool for filing tax returns, Danielle Muoio Dunn and Erin Slowey report. The more people use it, in as many states as possible, the bigger chance the Direct File program has of surviving opposition from Republican lawmakers and tax preparation companies. And the most important factor (and one everyone following me from my tech days might want to note): how seamlessly state tax IT systems can integrate with the IRS so that federal taxpayer information can be ported from Direct File into a participating state's own tax-prep platform.

🚨 NEW FLORIDA POLLING: Direct File, the new free online tax filing tool from the IRS, receives near unanimous support across the state (!!!) with 95% (!!!) of taxpayers supporting the program piloting in the Sunshine State. Read more in the Naples Daily News: 

In 2025, the number of states that will let their residents use Direct File will grow by two. New Jersey and Oregon are the latest to join the free online IRS developed and operated tax preparation and electronic filing program.

The IRS emphasizes the importance of carefully selecting a tax return professional to ensure personal and financial information is secure, highlighting that most tax preparers offer honest service but some may engage in fraud or scams. Taxpayers are ultimately responsible for their tax return's accuracy and are advised to use the IRS's directory of credentialed preparers and ask critical questions to avoid unethical ""ghost"" preparers and ensure their preparer has a valid Preparer Tax Identification Number (PTIN). 📍 What is this about? 🐦 Follow us on #twitter: https://lnkd.in/d3RYR_7k https://lnkd.in/dZztDHig #TaxPreparationSafety #IRSAdvice #ChooseWisely

“This pilot program is simply a way to expand the power of the IRS that no one asked for, especially considering Americans already have numerous options for filing free tax returns." House Ways and Means Committee Chair Jason Smith noted in his recent statement the duplicative and unnecessary nature of the IRS's Direct File "pilot." The IRS's attempted program is costly, and leaves taxpayers in a vulnerable position by granting the IRS too much power as tax preparer, auditor and enforcer. Read more from Representative Smith: https://lnkd.in/g-EE6HjT #IRS #DirectFile #taxpreparation #taxes #waysandmeans

In case you missed it... The IRS plans to increase audits on wealthy taxpayers, large corporations, and large and complex partnerships by "sizeable percentages" for tax year 2026, including: - nearly tripling the audit rates on large corporations with assets over $250 million; - a nearly tenfold increase in audit rates on large, complex partnerships with assets over $10 million; and - a more than 50% increase in audit rates on wealthy individual taxpayers with total positive income over $10 million. What a time to be alive and a tax controversy lawyer. https://lnkd.in/gZ9VvunY

https://bit.ly/3QwZ9Gf What’s your worst tax nightmare? Identity theft? Not having enough money to pay all the taxes you owe? How about this: your CPA, enrolled agent, or other tax preparer has not filed your taxes for three years. Dr. Lee, a Florida surgeon who earned over $1 million annually, had this sad experience. His CPA completed his tax returns and had Dr. Lee review and approve them for electronic filing, but the CPA never e-filed them with the IRS. By the time Dr. Lee found out about it and filed his returns late, he had lost a $288,409 estimated tax payment to the statute of limitations and ended up owing the IRS over $70,000 in failure-to-file and failure-to-pay penalties. Dr. Lee sued the IRS in court, arguing that he shouldn’t have to pay the penalties because he had “reasonable cause” for failing to file: he had authorized and relied on his CPA to electronically file them. The court rejected Dr. Lee’s argument, stating that all taxpayers are legally obligated to see that their tax returns are filed on time. A taxpayer’s duty to file a return is not excused because he or she relied on a CPA or an attorney to file the return. This rule has no exceptions—not even for e-filed returns, which taxpayers can’t file themselves. when using a paid preparer. The lesson of this case is clear: Never take your CPA’s or other tax professional’s word that your return was e-filed. Check with the IRS to make sure that your return was e-filed. You do this by establishing an online account at irs.gov and requesting a tax account transcript. It takes two to three weeks after your return was supposed to be filed for a transcript to become available. If no transcript is on record, check with your tax preparer. Alternatively, you can always file your tax return yourself by mail or private delivery service. Taxpayers can’t electronically file their returns themselves—they must rely on a tax preparer (or tax software provider) to do so for them. To file your return by mail or private delivery service, you must give your tax preparer a hand-signed and dated statement that you choose to file in paper format and that you, not the preparer, will submit the paper income tax return to the IRS. Then, your tax preparer must attach IRS Form 8948 to the tax return you will paper file. Filing a paper return will significantly slow the IRS processing of your return, which may prove a hardship if the IRS owes you a refund.

The Internal Revenue Service is turning up the heat on high-income individuals who haven’t filed tax returns in some years. How to get help - When it comes to filing back taxes and making any payments due, there are options. Here are some things to consider. • Hire a pro: Before filing past-due returns, consider hiring a tax professional for advice on “the various compliance paths,” Ciraolo says. That can include the intricacies of how to seek penalty relief, which can be surprisingly complex. Hire an experienced lawyer if you might be facing “potential criminal exposure,” she adds. • How many years are involved: “There is no statute of limitations for an unfiled tax return,” says Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. However, the IRS “typically does not go back more than six years,” Luscombe says. • You have payment options: Some people haven’t filed their tax returns for years because they can’t afford to pay what they owe and assume it is better to wait until they can. That is a recipe for disaster, says Eric L. Green, a tax lawyer at Green & Sklarz in New Haven, Conn. Instead, people should look into paying what they can and then apply for a payment plan through the IRS to pay whatever else is owed over time, Green says. • Negotiate the amount owed: You can ask the IRS to accept less than you owe by making an “offer in compromise,” Green says. This can be successful, for example, if someone can convince the IRS that the amount offered is the most that the government can expect to collect within a certain period—or if someone can demonstrate that paying would cause a financial hardship, or would be unfair because of “exceptional circumstances.” https://lnkd.in/egkQc5bN

The Taxpayer Bill of Rights outlines fundamental rights for taxpayers in dealings with the IRS, including the rights to be informed, to quality service, to pay no more tax than is due, to challenge and appeal IRS decisions, to privacy, confidentiality, representation, and a fair tax system. Key Takeaways Taxpayers are entitled to clear explanations of tax laws and IRS procedures, and to be informed about decisions regarding their tax accounts. They have the right to prompt, courteous service, and to file complaints about inadequate service. There is a stipulation that taxpayers should only pay the amount of tax legally due and have their payments correctly applied. Taxpayers can object to and appeal IRS decisions, expecting fair and timely consideration. The rights to privacy and confidentiality protect taxpayers' information and ensure respectful, lawful IRS conduct. Representation by a chosen authorized individual is permitted, with assistance available for those unable to afford it. The tax system should consider individual circumstances, and the Taxpayer Advocate Service is available for issues not resolved through normal channels.

Taxpayers, beware! The IRS advises caution when selecting a tax return preparer. Stay informed by checking the IRS website for guidance on choosing a preparer and access the free directory of federal tax preparers. Protect yourself against ghost preparers and other dishonest practices aimed at exploiting unsuspecting customers. Click below this post to go the article. #TaxPreparation #IRS #FinancialSecurity #ghostpreparers