Economic Impact Payments

Economic impact payments:
What you need to know

The Treasury Department and the Internal Revenue Service announced on March 30, 2020 that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.

Who is eligible for the economic impact payment?
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.

How will the IRS know where to send my payment?
The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.

For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

The IRS does not have my direct deposit information. What can I do?
In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

I am not typically required to file a tax return. Can I still receive my payment?
Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.

I have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.

I need to file a tax return. How long are the economic impact payments available?

For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.

If you need to prepare your tax returns, we can help. Call our office at (610) 863-8347 and set up a phone interview. 

Source IRS Newswire, IR-2020-61

Don't Fall for Scam Calls and Emails Posing as the IRS

Don't Fall for Scam Calls and Emails Posing as the IRS

Scammers and cyber-thieves continue to use the IRS as bait. The most common tax scams are phone calls and emails from thieves who pretend to be from the IRS. Scammers use the IRS name, logo, fake employee names and badge numbers to try to steal money and identities from taxpayers.

Taxpayers need to be wary of phone calls or automated messages from someone who claims to be from the IRS. Often, these criminals will say taxpayers owe money and demand payment right away and tell you that there is a warrant out for your arrest. Other times, scammers will lie to taxpayers and say they’re due a refund. The thieves ask for bank account information over the phone. The IRS warns taxpayers not to fall for these scams.

Below are several tips that will help filers avoid becoming a scam victim.

IRS employees will not:

• Call demanding an immediate payment. The IRS won’t call taxpayers if they owe taxes without first sending a bill in the mail.
• Demand payment without allowing taxpayers to question or appeal the amount owed.
• Demand that taxpayers pay their taxes in a specific way, such as with a prepaid debit card.
• Ask for credit or debit card numbers over the phone.
• Threaten to contact local police or similar agencies to arrest taxpayers for non-payment of taxes.
• Threaten legal action, such as a lawsuit.

If taxpayers don’t owe, don’t think they owe, or do owe any tax, and they receive an inquiry like this, they should just hang up.

In most cases, an IRS phishing scam is an unsolicited, fake email that claims to come from the IRS. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If the thieves get what they’re after, they use it to steal a victim’s money and identity.

For those taxpayers who get a phishing email, the IRS offers this advice:

• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

Think you've been scammed? Call us today at (610)863-8347 for a free consultation.

IRS Audits and Your Plan of Attack

As you grow your business and make more money, your chances of an IRS audit increase. For example, on an individual tax return, here are your chances of audit:

  • One in 38 with $200,000 or more in income
  • One in 10 with over $1 million in income
  • One in three with over $10 million in income

So, what do you do if the IRS sends you an audit notice? First, you call us.

What will we do? This depends on whom you will face in the audit: a tax auditor or a revenue agent.

If the IRS wants you to come to its office, you likely will meet with a tax auditor. If you spend just a little time with us, you may be able to handle this by yourself, because tax auditors are not tax experts. Or if you simply don’t want to talk to the IRS, we can represent you with or without your presence.

On the other hand, if the IRS wants to come to your office, expect a revenue agent. In this type of examination, you generally want us with you. We speak the same technical language as the revenue agent and this helps ensure that you don’t lose your rightful deductions.

Have questions? Give us a call at (610) 863-8347 today for a free consultation!

Stay tuned for more tax tips from Corvino and Verwys

Buy Your Employees Flowers

Buy Your Employees (and Yourself) Flowers and Fruit, and Deduct the Cost

Under the de minimis fringe benefit rules, your business deducts the cost of giving you or your employees flowers, fruit, books, and similar property under special circumstances. The recipients—you or your employees—receive these fringe benefits tax-free.

You can’t do this too often or spend too much money, but it’s easy to see that this is a great benefit, especially when you give to yourself.

For your business to make this fringe benefit tax-free, it must meet two requirements—value and frequency. Unfortunately, the IRS has not been very helpful in defining either criterion. With some research, we arrived at $70 as the maximum value for the flowers, fruit, books, and similar property.

How often is too often? The IRS doesn’t say, but it adds some common sense to the regulation with this guidance as to when this fringe benefit is appropriate: “Examples of de minimis fringe benefits are … flowers, fruit, books, or similar property provided to employees under special circumstances (e.g., on account of illness, outstanding performance, or family crisis).”

Just don’t use gift cards or certificates. The IRS considers the coupon or gift card taxable to the recipient no matter how small the amount, even if that small amount is used solely to buy the flowers or fruit.

How much is too much? Give us a call at (610)863-8347  for a free consultation. 

Stay tuned for more tax tips from Corvino and Verwys

Be Sure It's Really the IRS

Constantly changing scams require your attention 

Believe it or not, pretending to be an IRS agent is common among scam artists, according to the Better Business Bureau. Scam artists impersonate the IRS to either intimidate people into making payments over the phone, or in phishing attempts to trick people into sharing personal information via email.

You can defend yourself against these scammers by knowing these simple rules:

Rule 1: Expect a letter first

In almost every case, the IRS will send you a letter via standard mail if they need to get in touch with you. This will alert you to expect future communication from the agency and instruct you on the best ways to get in touch with them.

Rule 2: Never over email

The IRS will never initiate contact with you using email. A common scammer trick is to send emails to taxpayers using accounts and graphics that imitate the agency's. They may threaten imprisonment or fines if you don't pay up, or promise an extra refund if you send money to "prepay" your taxes. Often the emails contain links to an official-looking but fake website to collect payments. Clicking on them may also trigger the installation of viruses on your computer.

What to do: Don't respond to any email communications that look like they’re from the IRS. Don't click on any links. Delete the email or forward it to phishing@irs.gov to help catch the scammers.


Rule 3: Proper phone call etiquette

After notification via the USPS, the real IRS may call you to discuss options to handle delinquent taxes or an audit. A real IRS agent or a debt collector won't demand immediate payment without giving you an opportunity to question or appeal the bill, nor will they threaten lawsuits, arrest or deportation. Their tone should not be hostile or insulting. Finally, if they ask for payment, they should be asking you to make it out only to the United States Treasury.

What to do: If you get a call from the IRS or an IRS debt collector, politely ask for the employee's name, badge number and phone number. They shouldn't hesitate to provide this information. You should then end the call and dial the IRS at 1-800-366-4484 to confirm the person's identity.

Rule 4: Check in-person visits

Ask the person for their credentials. Every IRS agent should be able to produce two forms of credentials: a pocket commission card and a personal identity verification card issued by the Department of Homeland Security, also called an HSPD-12.

What to do: Never provide sensitive information nor confirm information they may have without first independently verifying they are legitimate representatives of the IRS. If you have concerns you can call the IRS at 1-800-366-4484 to confirm the person's identity.

You do not need to navigate this problem on your own. Call immediately for assistance. It is good to have a knowledgeable expert on your side.

To be sure it's really the IRS, give us a call at (610)863-8347  for a free consultation.

Stay tuned for more tax tips from Corvino and Verwys.

Private Debt Collectors are Coming to a Doorstep Near You

A large chunk of overdue tax bills has sat idly uncollected due to the IRS’s lack of resources. But that’s about to change, thanks to some debt collectors that the IRS hired.

As part of the Fixing America’s Surface Transportation (FAST) Act, lawmakers wrote a provision that requires the IRS to outsource inactive tax receivables to private collection agencies. About nine months ago, the IRS announced it had contracted with four private collection agencies to operate the program.

And then, a little over two months ago, the IRS released new Internal Revenue Manual sections putting in place the procedures for this new program. This means that delinquent taxpayers could now receive a Notice CP40 telling them that the IRS assigned their case to a private collection agency.

Don't talk to the IRS! We have a wealth of experience in this area and can help you navigate through the IRS collection process. Please don’t hesitate to give us a call at (610) 863-8347.

Is the IRS on Your Trail?

There is no better debt collector in the country than the IRS. It has tools and techniques in its arsenal that many private collection agencies would drool at the thought of using.

But here's the good news: unlike some fly-by-night debt collectors, the IRS must stay within the bounds of the law.

Even though it may seem like it, the IRS's primary interest is NOT making your life miserable, but, instead, is collecting your debt. Therefore, if you follow the procedures and relief formulas the IRS allows you to use, you can pay off your debt and get the IRS off your back.

The IRS gives you avenues of relief when your tax debt is too big for you to pay.

• Offer in Compromise -  If you cannot pay your full tax liability, or if doing so would create a hardship, you may qualify to reduce your tax bill through an offer in compromise. Under this process, you determine an amount that you can pay using an IRS formula that considers your income and assets. You then submit this offer to the IRS and, pending IRS approval, you have up to 24 months to pay off the reduced amount, satisfying your debt in full.
• Installment Agreement - An installment agreement or payment plan gives you time to pay your tax debt. If you owe, you can provide IRS financial reporting documentation on your situation and negotiate the lowest possible payment plan.  Some payment plans are referred to as partial payment plans. This is where the amount you negotiate will not cover your IRS debt within the statutory time (10 years) the IRS has to collect by law. There are instances where this is better than an Offer in Compromise. 
• Abatement of Penalties -  You can use this strategy to eliminate the penalties the IRS dumped on you in addition to the taxes you owe. There are a number of grounds you can use to make this claim, such as undue economic hardship, the loss of property in a natural disaster, a recent death, divorce, various life events, alcoholism, depression, drug abuse and various other reasonable causes.
• Innocent Spouse Relief -  Normally, both spouses are equally responsible for the payment of taxes on a joint return. The innocent spouse relief will remove much or all of your liability and pin it slowly on your spouse (or ex-spouse). This might apply, for example, if your spouse operates a business that you do not participate in and owes taxes as a result of that business. We usually recommend, in these cases, to file separate tax returns and avoid the innocent spouse relief negotiation.
• Bankruptcy -  Bankruptcy is not a simple process and has many lingering effects, such as a potentially decade-long hit on your credit. However, bankruptcy can be a perfect tool in the right direction, and it can permanently eliminate some or all of your income tax liabilities, including interest and penalties.  

Is the IRS on your trail? Call us at (610) 863-8347 for an appointment today!