Written by: Theodore M. David,
Chair, Tax Law Committee
1) Join the IRS?
2) A New Tax Page
3) Don’t Do It
4) IRS Raises Rates
1) I know there are lawyers out there who are building their practices or trying to stay afloat in these difficult virus filled times. I get emails every day with suggestions how to expand a lawyer’s business. They come in right alongside those who advocate a keto diet so I can be healthier I guess while I am busy expanding my business. And then of course there are plenty of invitations to join match up applications guaranteeing a future and active love life. And it’s nice to know that if all else fails, Amazon is also interested in hiring me. I guess the headhunters don’t get the idea that I’m not expanding my business, nor looking for a mate or in need of the premium diet suggestion or a new career putting packages on a conveyor belt so some goof ball can go into space. But for lawyers who are in fact civic minded and willing to volunteer… (And for those not familiar with that term it means not being paid, and for most of you I know you’re not gonna read any further) I won’t argue with you except to say if you are in fact interested in making an IRS connection then a recent notice by IRS asking for persons to serve on the Taxpayer Advocacy Panel may be of interest. TAP, as those who need that sort of alphabet soup, is a federal advisory committee that works to improve IRS services and taxpayer satisfaction. You can go to IRS.gov for more information and to begin the application process. But before you do perhaps you should read an Op Ed article written by Commissioner Chuck Rettig for Yahoo money where he notes that “the IRS is facing enormous challenges this filing season related to the pandemic and resource limitations.” Frankly, I think those members of the bar with that part of the practice would conclude that the IRS would probably file for bankruptcy protection if it could. That would give them some time to sort out the tons of yellowing letters and taxpayer documents sitting in piles somewhere. With 45 years of experience and having been a former IRS agent and IRS lawyer I would in fact volunteer but I’m scared to death to think that they would accept my humble application and actually ask me to do something. And I must confess that taking a job with Amazon on the conveyor belt has more attraction as I am sure I could use the exercise and perhaps I could go along on the next space flight with what’s his name. Wasn’t that guy on one of those space TV shows years ago in a tight spandex get up? BTW the Keto diet doesn’t give rules for calories. That’s a lot like the tax code.
2) Your car is ensconced in ice. Walking out your door poses the threat of real harm. You have read all of the novels you have piled up over the years. What to do next? It is time to get to a new special page on IRS.gov to provide the latest details and information affecting the 2022 filings season. A number of tax issues that took place in 2021 are addressed at the new page. It is designed to raise awareness about these issues and provide people with the latest timely information. According to the tax Commissioner this new page provides a “one-stop-shop” for the latest key information people and the tax community may need. The tax filing season started officially on January 24 and IRS says it has already sent out 4 million tax refunds amounting to $10 billion. I promise I will get to that page but I still have a few books like War and Peace and the collected works of Ernest Hemmingway to get to first.
3). If you need to be reminded that helping clients commit tax fraud is a crime spend a few minutes looking at the recently released cases brought by the tax division of the Department of Justice. One lady got three years in prison and one year of supervised release for filing fraudulent tax returns for her clients. Another preparer was banned from ever operating a tax-preparation service again. What hurts more is that courts will also determine that these unsavory characters are required to disgorge the fees they obtained by preparing false and fraudulent tax returns. In one case it amounted to $353,000 payable to the United States. The wheels of the Department of Justice turn very very slowly but as most practitioners will attest they eventually grind those caught up in the mechanism.
4) The party’s over. The IRS is raising the rate it charges on underpayments. For the second quarter of 2022 that rate will be 4%. That’s the same rate for individuals on overpayments that is on refunds the IRS doesn’t make in 45 days. But IRS interest rates still offer a financial bonanza for companies and individuals who know how to play the game. Frankly IRS does not require you to submit bona fide financial statements like a bank would before it lends you money. Many taxpayers use the IRS tax money for all host of things including lavish birthday parties, air-conditioned dog houses and all the rest. So long as they don’t encounter any of the stiff penalties, paying interest at 4% without having to disclose their financial wherewithal is a bargain. Needless to say the IRS being overwhelmed and undermanned has no chance in curbing this kind of activity. Some employers don’t show the existence of their employees until the very last quarter of the tax year thereby saving taxes by delaying payment to the end of the year.. They say a tax-deferred is a tax saved. The tax system counts on the honesty of taxpayers and their tax preparers and advisers. Any questions?
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