IRS Nationwide Tax Forum 2024: SECRETS YOU NEED TO KNOW

Last week, I had the chance to attend the IRS Tax Forum in my hometown of Chicago, Illinois. It was my first time attending such an event, and I found it incredibly enlightening. The forum was a three-day event packed with informative seminars throughout the day, featuring many top IRS officials, including IRS Commissioner Danny Werfel and Erin Collins, head of the Taxpayer Advocate Service.

In this blog post, I'll share the most essential insights I gained from the forum—information that could directly impact your taxes. You won't want to miss this.

1. The New Era for the IRS

The IRS has received $60 billion in new funding, which the Commissioner said was desperately needed. It’s a historic time at the IRS, and they are set to overhaul their systems, some of which date back to the 1950s. They're still using fax machines, and if you need to communicate with them, you either call (good luck with that) or send a letter and wait months for a response.

But things are changing. They’re modernizing how you can communicate with them and pay your taxes. They’ve introduced a new and improved individual online account where you can make tax payments, resolve issues, view your balance, and review your tax records. If you haven't already, set up an IRS individual online account.

Imagine getting a letter from the IRS and not knowing if it’s real or a scam. With an IRS online account, you can log in and check if they really sent you the letter. They've even added a document upload tool, so no more mailing or faxing your responses.

Some other features coming soon include setting up an installment agreement, a lien payoff calculator, signing up and viewing your IP PIN (for identity protection), refund tracking, audit status checking, and enhanced transcript integration. They also now offer text messaging alerts and email communication if you opt in.

2. IRS Collections

I attended a seminar by Mr. Frank Augustino on the best practices for responding to IRS collection notices. There are 15 million taxpayers in the collection division of the IRS, and they’re overwhelmed. They want more processes done online because waiting for letters and faxes is too slow.

Did you know you can scan the QR code on your collections letter and upload your documents to respond? Also, always trust but verify when you receive an IRS notice saying you owe money. The IRS has an error rate of 2% to 4% from third-party information, meaning the information they have about you might not be accurate.

For example, a friend of mine had a large tax due balance with California. After receiving collection notices and having their bank account funds seized, they contacted me. We found that the tax folks in California had estimated their income figures, even though my friend didn’t work that year due to health reasons. The tax due amount was eliminated.

It could also be an identity theft issue. Fixing an identity theft issue with the IRS takes 22 months. Ouch.

3. IRS Scams and Schemes

There was an eye-opening panel on scams and schemes. An IRS employee stressed that there’s no such thing as free money. Be cautious of anything on social media about free grants or tax credit money. The IRS is aware of all the scams and schemes going around, especially the Employee Retention Credit, Fuel Tax Credit scheme, and misleading Self-Employed tax credits.

They’re going after scammy tax preparers and those who fake W2s to get large refunds. With their new funding, they now have the resources to investigate these scams more thoroughly. They monitor social media and are taking scams and schemes very seriously. If it seems too good to be true, it probably is.

4. Your Taxpayer Rights

Did you know the IRS has a Taxpayer Bill of Rights? Here’s a quick summary:

• The right to be informed.
• The right to quality service.
• The right to pay no more than the correct amount of tax.
• The right to challenge the IRS’s position and be heard.
• The right to appeal an IRS decision.
• The right to finality.
• The right to privacy.
• The right to confidentiality.
• The right to retain representation.
• The right to a fair and just tax system.

If you ever feel your rights are being violated, speak up, ask for a manager, or seek professional help. These rights are there to protect you.

5. IRS Audits

The purpose of an IRS audit is to make sure your tax return is substantially correct. They use the 80/20 rule, meaning if an IRS examiner is comfortable with 80% of the return being correct, then you’re probably good.

IRS Audits end in one of three ways: you owe the government money, the government owes you money, or the return is accepted as filed.

How Are Tax Returns Selected For IRS Audits?

So how are returns selected? They do this a couple of ways. For example, if they can identify that you're involved with, let's say, an abusive tax avoidance scheme, they'll gather all those names of people involved and audit them.

They also use computer scoring called a DIF, which helps to identify tax returns that may need further review. All returns get a DIF score based on norms, averages, or anything unusual. So if your return diffs out, it means you got selected for an audit.

They also use information matching. They get information reported to them from your employer, side jobs, investments, banks, and even eBay. If you don't report the information on your tax return, the IRS will know about it. And now with AI, their audit selection process will likely be even more improved.

Another way is if someone is using a bad preparer, for example. This could be like a ghost preparer, somebody who doesn't sign the returns, a fly-by-night preparer.

And let's say they catch that bad preparer that prepare, who's maybe falsifying tax deductions or credits. You better believe they'll audit all the returns that bad tax preparer prepared.

I learned a ton at the tax forum, and I thought these would be the top things of interest to you. I hope you found value in this blog post. Thanks for reading, and see you in another post!