I openly admit that I hate the IRS. That said, I am incredibly afraid of the IRS. Last year, an IRS Revenue Officer knocked on my front door looking to collect $600 from 5 years ago. I decided to pay them again instead of proving I had already done so, just to keep the IRS off my back. Today, the IRS presents a more dynamic concern than ever before.
5 things you need to know about the “new” IRS:
#1 – Penalties are front-loaded. The example given today by Board Certified Tax Attorney, Jeffrey Kahn, described a man who was only 22 days late filing his returns with full payment to the IRS of about $24,000 included in his filing. His fine for being 22 days late? $8,500. No matter what you think is owed, make sure you file a return or file for an extension. Late returns will cost you big-time.
#2 – Collection efforts are very aggressive. The IRS has hired 16,500 new Revenue Officers to help them collect. They are tracking people down any way possible, including knocking on your front door as I personally experienced. You need to treat them like any other collector and hold your cards close to your chest. Never speak directly with the IRS if you owe them money. Always use a Tax Attorney.
#3 – Tax debt is considered “community”. If you marry someone who owes the IRS, then YOU now owe the IRS too. They will not discriminate when it comes time to collect; you can count on that.
#4 – Online payment plans are a trap. The IRS has created a nice online application where you can apply to make payments for whatever debt you may owe. However, you have no idea what they are offering until you get all the way through the application and have divulged every piece of information to them! What if the payment they offer is way out of your ability to pay? This is too risky. It is no way to negotiate and should be avoided entirely.
#5 – Foreign accounts are a major focus. If you have income from a foreign account and you do not report it to the IRS, they have the authority to penalize you for 50% of the account balance! For example, if the account is $1,000,000 then they can fine you $500,000 as a penalty for not reporting the account!
Other topics discussed today:
– We dissected this article from CNBC to determine what advice was smart and not so much.
– The President is taking a pay cut as his way to join other federal workers harmed by the sequester.
– Japan started a QE initiative, very similar to the US, but under very different circumstances
– Corporate behavioral science and maximizing your investment in human capital