IRS announces 125,000 new cases with notices being mailed by the thousands beginning in March 2024

Here comes the 80 Billion Dollars

Funding provided by the Inflation Reduction of 2022 has made it possible for the IRS to start cases on people they believe owe them a ton of money. Remember the cable news hosts losing their minds over the prospect of 87,000 new IRS agents? Well, the IRS has finally gotten around to deploying their 80 billion dollars in new funds and hiring and training up to 87,000 new employees.

They used their newly found resources to start cases. By the way, the word “cases” is what caught my attention and should catch yours too.  It is another way of saying the IRS has identified procrastinators who have not filed their returns since 2017.

If you receive a CP59 letter from the IRS call us immediately (835) 222-6600, this means that the IRS already has established a case on you.  The worst possible thing for you to do now, is ignore the notice. 

Some ask, “what happens if I do not respond?”

The answer is that the IRS will continue its enforcement action against you, including filing a Substitute for Return (SFR). These “substitute” returns are prepared and filed by IRS personnel in a vacuum and often do not give people like you, the deductions and credits that are rightfully theirs. Often, these SFRs show a higher balance due to the IRS then if you had a competent professional tax preparer to prepare and file your return.

From that point the IRS will take the SFR and assess the unpaid taxes, create an IRS lien and pursue collections procedures which may include the legal seizure of your property to satisfy the tax debt. Without going to court, the IRS can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property.

Remember, the IRS is the most brutal collection agency in the world.

“Collections” sounds agonizing and awful, and it is.  But you do not have to go it alone. We are here to help you through this process.  And once you have retained us, we manage the correspondence with the IRS, and in most instances, you will not have to talk to the IRS in person or by phone. 

What about you?

And the good news for you is that there are many programs enacted by Congress that are there to help you.  Including but not limited to Offers in Compromise, full and partial pay installment agreements, Innocent Spouse relief and more.

7 Reasons Taxpayers Get An IRS Audit

Facing an IRS audit is a daunting experience. The idea of having your financial records scrutinized by the most feared collection agency, the IRS, can shake anyone to their core. The cost in both time and money can seem never-ending.

Understanding the top reasons taxpayers get audited by the IRS can help you avoid common pitfalls and navigate the audit process more confidently.

In this article, we’ll shed light on these audit triggers, offering you insights into what may prompt the IRS to take a closer look at your tax return.

Additionally, we’ll cover how a tax relief professional like E Ten Broeck, LLC can provide assistance should you ever find yourself facing an IRS audit.

1. Math Errors and Discrepancies

Mathematical errors or discrepancies on your tax return are a prime reason for IRS audits. Common mistakes include errors in addition, subtraction, or basic mathematical operations. While these errors may be unintentional, they can still trigger the IRS to take a second look

2. Large Discrepancies Between Reported Income

The IRS receives copies of the income you report through information returns like W-2s and 1099s. When these documents show significant disparities from the income you’ve reported on your tax return, it raises concerns.

For example, if someone you did work for reports a different income figure on a 1099 than what you reported, it may trigger an audit. Accurate reporting and proper documentation are essential to avoid this issue.

3. High Deductions and Credits

Claiming excessive deductions or tax credits compared to your income level or industry norms can invite IRS scrutiny. While deductions and credits are valuable tools to reduce your tax liability, they must be justified and supported by appropriate documentation.

For instance, inflating charitable contributions or business expenses can lead to audits. Taxpayers should exercise caution, ensuring their claims align with tax regulations and that they maintain comprehensive records.

4. Failure to Report Income

Failure to report income, whether intentional or accidental, is a significant audit trigger. This includes income from freelance work, rental properties, interest, dividends, or offshore accounts. Accurate and comprehensive income reporting is crucial to prevent tax audits and legal complications.

5. Self-Employment and Business Activities

Self-employed individuals and small business owners face higher audit risks due to the complexity of their tax returns. The IRS closely scrutinizes business deductions, income sources, and compliance with tax laws.

Common audit triggers in this category include claiming excessive business expenses, misclassifying workers as independent contractors, or underreporting self-employment income.

Taxpayers in these categories should maintain accurate records and seek professional guidance to ensure compliance.

6. Inconsistent Filing History

Frequent amendments or inconsistencies in your filing history may prompt IRS scrutiny. While it’s perfectly acceptable to amend a tax return to correct genuine errors or provide additional information, excessive amendments or inconsistencies can raise suspicion.

Maintaining consistent and accurate filing practices helps reduce the likelihood of audits based on your filing history.

7. High-Income Individuals

High-income individuals often face increased audit risks due to the potential for larger tax liabilities. The IRS verifies that high earners accurately report their income, deductions, and credits. While high-income individuals have legitimate opportunities for deductions and credits, their returns undergo more thorough examination.

Already Audited? Do This Next

What if you’re already in an audit? The first thing you need to do is call a firm like ours that specializes in complicated tax problems like this.

Should you ever face an IRS audit, remember that E Ten Broeck. LLC is available to provide expert assistance, ensuring that you navigate the audit process with ease and confidence.

If you’re currently dealing with IRS problems and owe $10,000 or more in back taxes or are being audited, reach out to our tax resolution firm, and we’ll schedule a free and confidential consultation to explain your options thoroughly and help you permanently resolve your tax problem. Please call Eric at (835) 222-6600.

How to avoid common scams using patience and your trusted relationships

Scams scammers and fraudsters; many of us have suffered financial losses in one way or another to the unscrupulous. In this article I am going to show you how to avoid common scams using patience and your trusted relationships.

Receiving a call from an unknown caller


Patience is a virtue

Cato the Elder

In any scam, the scammer usually projects a sense of urgency, often times presenting a threatening situation that you must immediately respond to or suffer undesirable consequences. Your delaying action coupled with the involvement of a key relationship may help you thwart a rip off.

In addition, if you have a serious financial or legal problem, you are already well aware of it.

Eric Ten Broeck, MBA

If you are not certain about the nature of the matter or the person(s) contacting you, delay a response. If someone or something in your world is truly wrong, then chances are, more then one person will be trying to contact you. In addition, if you have a serious financial or legal problem, you are already well aware of it.

In your financial life your key relationships are with your accountant, banker, lawyer, and financial advisor. Here, I am highlighting banking relationships. Scammers often find a way to put you off guard by creating a sense of urgency or by inducing a mindset of fear.

Phishing and Banking Scams

Lets start with your banking relationship. Many people are moving to banks that only do business online. I am not in favor of these. I am not suggesting that online only banks are financially unsound. However there is no one you can see face to face and start a relationship with. My recommendation is ask around to find a bank that has a local presence with and staff that has longevity. If your bank fits that description, great!

Introduce yourself to the branch manager

The next step is to introduce yourself to the branch manager and get his or her business card. Take a picture of the card, and enter the information in your contacts. Make sure the manager’s email is in you email contacts. You can even send a short email saying “Dear Ms. Smith it was nice to meet you today at the Mulberry Street branch located in Scranton, Pennsylvania.” Lastly, try to do walk in business and say hello to the manager and key staff.

How does your banking relationship help you with scams? Lets take the email phishing scams that look like you are being contacted by your bank urging you to take action. How do you respond? Take a moment and ask is this truly my bank contacting me about misplaced funds or unauthorized transfers?

First, if the email looks bogus or fake delete it without opening it. Then call your banker and see if there is an issue. Secondly, you can always ask a legitimate person to resend an email. Therefore, if you think it may be an issue in need of your attention; here is a suggested email response.

“Dear _____, thank you for your email, I am not familiar with this situation, I am copying Ms. Smith, Branch Manager of XYZ Bank by this email to see if she can help us investigate this matter. Can you please give me your address, phone number and normal business hours so that we may properly and timely respond this matter?”

Your email reply to a phishing scam

Remember, you have the Bank Manager’s information at your disposal because you have already sent the Bank Manager a follow-up an email. I also recommend not logging into your bank until your bank has had a chance to reply and you are certain this matter has been resolved.

Internal Revenue Service (IRS) scams

This where your relationship with your accountant comes in handy. These scams originate as phone calls and or emails. Scammers claim to IRS Agents. They claim you have unpaid taxes and threaten severe penalties an/or enforcement actions. And some of these calls appear to originate from the Washington D.C. (202) xxx-xxxx area code. Then they instruct you to make a bank or credit card payment to satisfy your IRS debt.

How to bust the IRS scam – Firstly, the IRS never emails taxpayers, they rarely if ever call by phone. If you have an issue with the IRS, you will receive a letter from them. That letter will explain any deficiency, give you a time period in which to reply and provide a phone number by which to contact the IRS. If you really have a severe problem they may show up at your place of business. But the agents will properly identify themselves and clearly identify the matter they are there for. Also, if you truly have an issue with the IRS, chances are you are already well aware of it.

Remember, people are rarely imprisoned over income tax matters. And if they are it is after a lengthy investigation, prosecution and conviction taking months if not years.

Here is what you do when you are contacted by persons claiming to by IRS agents.

Scammer: “Sir/Madam we are going to seize your bank account and initiate enforcement activity against you if you do not pay now.”

You: After taking a moment to think about this call you reply:

“Thank you for your call Mr. IRS Agent, my accountant handles these matters for me. Can I have your number and he/she/they will call you back as soon as he has a chance? And can I please have your badge number so I can write it down?”

Your accountant, if he or she is a CPA and/or Enrolled Agent, has priority access to the IRS. It may take them a few days to reach the IRS by phone, but once in touch they can find out if you have any legitimate problems. Remember there is a lengthy process the IRS has to undertake before your assets are seized and/or you are put in any kind of legal jeopardy, your patience will pay off.

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SALT Deduction – has rusted out your 2021 Itemized Deductions

A picture of a rusted out boat

If you itemize your deductions, the aggregate amount of SALT State and Local Taxes shall not Exceed $10,000.

SALT TAXES ARE: State and Local Taxes are Real Estate Taxes, State and Local Income Taxes, State and Local Personal Property taxes.

Based on our experience from the 2021 tax season (2020 Form 1040), the $10,000 SALT limitation forced many taxpayers to use the Standard Deduction.

For your 2021 Form 1040 The Standard Deductions per the IRC are:

Married Individuals Filing Joint Returns $ 25,100
Heads of Households $ 18,800
Unmarried Individuals $ 12,550
Married Individuals Filing Separate Returns $ 14,250
Standard Deductions

E Ten Broeck SALT predictions:

Due to the fact that taxpayers who used to itemize are now forced into the Standard Deduction, I have the following predictions:

  • Charitable deduction: There will be a decline in charitable giving. Tax savings motivate charitable giving.
  • Mortgage Interest Deduction: There will be a decline in Home Ownership, more taxpayers will consider renting verses owning a home. Same applies to Real Estate Taxes. Tax favored deductions like mortgage interest and real estate taxes encourages home ownership.
  • SALT Taxes: Taxpayers will consider moving to states that offer lower lower real estate and income taxes. In other words, did you see the exit New Jersey for good sign, last time you drove the New Jersey Turnpike?
  • Employee Business Expense Deduction: Employees with high out-of-pocket expenses will form LLC’s. Self employed people will move these business expenses to Schedule C.
  • Investment Interest Deduction: Investors will seek lower fees, and/or use discount brokers.

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