IRS Extends Voluntary Disclosure Deadline for Secret Offshore Accounts

With 48 hours left before the final deadline to participate in a voluntary disclosure program designed get taxpayers with unreported foreign bank accounts to come back into the system and report their foreign income, the IRS has announced that it is extending the deadline from Wednesday September 23, 2009 until October 15, 2009.

The IRS reports that this extension was made in response to repeated requests from attorneys and other tax practitioners from all over the country.

In addition, an IRS agent working on a team evaluating the disclosures being submitted by taxpayers trying to participate in this program told me that there was a huge volume of submissions.

Within the guidelines of this program, taxpayers are given an opportunity to avoid criminal prosecution for tax crimes such as tax evasion and tax fraud.

Also, as part of this program, a taxpayer is subject to paying penalties on previously unreported income in foreign bank accounts under guidelines defined earlier this year, in March 2009. These guidelines are tough and expensive, but not nearly as tough or expensive as the sort of penalties a taxpayer would be facing if not working within this program.

New Scam Email Claiming to be From IRS is Fake

The Internal Revenue Service flatly states about its own practices: “The IRS does not send taxpayers e-mails about their tax accounts.”

So, if your email in-box has a message saying that its from “Internal Revenue Service [no-reply@irs.gov]” with a subject line of “Notice of Underreported Income” you  can know, from the start, that this message is a fake.

This message is apparently being sent to gazillions of email addresses.

The text of one I received today reads as follows:

Taxpayer ID: arp-0000174073547US

Tax Type: INCOME TAX

Issue: Unreported/Underreported Income (Fraud Application)

Please review your tax statement on Internal Revenue Service (IRS) website (click on link below):

review tax statement for taxpayer id: arp-0000174073547US

Internal Revenue Service

This is plainly a fake, and a scam, probably designed to steal the recipient’s identity, or install malicious software on the recipient’s computer.

Steve Ragan of The Tech Herald (thetechherald.com) reports that this bogus message is being sent out at a rate approaching 90,000 an hour, and that the goal of it is, in fact, to trick computer users to install malicious software onto their computers.

So the quick thought here: don’t fall for it, don’t click on the link in this bogus email which is designed to do harm.

Taxman’s Facebook Miranda Warning? Anything You Put on Your Wall Will Be Used Against You

By now, as taxpayers, if we’ve ever had a scrape with the IRS or a state’s taxing agency, especially if we happen to be owing some, we are accustomed to getting letters, maybe getting phone calls, maybe even having some live person from the IRS show up at our door.

And we are familiar with the forms, and the questions: things like:

  • Where do you work?
  • Where do you bank?
  • Do you rent or own your house or apartment?
  • What is the rent?
  • What is the mortgage?
  • What is the maintenance or common charges?
  • Do you own stocks or bonds?
  • What are they worth?

All these questions, and more.

And, if you happen to get audited, the Revenue Agent (the IRS’s name for the person who does the audit) might send you a few pages of forms which ask you to provide specific information and documents to help answer these sorts of questions. The IRS calls them IDRs, which stands for “Information Document Request.”

If you don’t respond, and things get ugly, the IRS can drag you into court and have you explain to a judge why didn’t provide the information the IRS requested. You might have a good reason; you might not.

It’s all pretty low tech: letters, paper, phone calls, knocking on doors.

But according to an article in the Wall Street Journal, the Taxman is leaping quickly into the 21st Century and gathering information about taxpayers from Facebook walls, MySpace posts, chat rooms, and Google.

In “Is ‘Friending’ in Your Future? Better Pay Your Taxes First,” The Wall Street Journal’s Laura Saunders reports that state taxing authorities in Minnesota, Nebraska, and California have been catching long-time tax debtors and tax evaders who announce their professional and travel plans on social media sites. Other states are doing so as well, or at least thinking about it.

For example, one tenacious and inquiring tax collector found a delinquent taxpayer who was a “rigger of sails” by searching for his name and the phrase (“rigger…”). This search led him to a discussion board of local riggers, and in it, a discussion thread telling where this rigger went after his store closed.

With this morsel of information, the taxman located the missing “rigger of sails” and collected the unpaid tax debt.

While states are jumping into mine social media sites and more generally the internet, the IRS is playing its hand very close to the vest. It refused to comment on whether or how it might be using social networking sites.