• Gifts
• Charitable Gifts
• Business Ventures
• SEC Registration

Raising money through Internet crowdfunding sites prompts questions about the taxability of the money raised. A number of sites host money-raising projects for fees ranging from 5 to 9%, including GoFundMe, Kickstarter, and Indiegogo. Each site specifies its own charges, limitations, and withdrawal processes. Whether the money raised is taxable depends upon the purpose of the fundraising campaign.

Gifts – When an entity raises funds for its own benefit and the contributions are made out of detached generosity (and not because of any moral or legal duty or the incentive of anticipated economic benefit), the contributions are considered tax-free gifts to the recipient.

On the other hand, the contributor is subject to the gift tax rules if he or she contributes more than $15,000 to a particular fundraising effort that benefits one individual; the contributor is then liable to file a gift tax return. Unfortunately, regardless of the need, gifts to individuals are never tax deductible.

A “gift tax trap” occurs when an individual establishes a crowdfunding account to help someone else in need (whom we’ll call the beneficiary) and takes possession of the funds before passing the money on to the beneficiary. Because the fundraiser takes possession of the funds, the contributions are treated as a tax-free gift to the fundraiser. However, when the fundraiser passes the money on to the beneficiary, the money then is treated as a gift from the fundraiser to the beneficiary; if the amount is over $15,000, the fundraiser is required to file a gift tax return and to reduce his or her lifetime gift and estate tax exemption. Some crowdfunding sites allow the fundraiser to designate a beneficiary so that the beneficiary has direct access to the funds which keeps the fundraiser from encountering any gift tax problems.

Gifts to specific individuals, regardless of the need are not considered a charitable contribution under tax law. An example is raising funds to help pay for someone’s funeral expenses. Another example, which includes a little tax twist, would be raising money to help someone pay for their medical expenses. Because it is a gift, it is not taxable to the recipient, but if the recipient itemizes their deductions, any amount of the gift the recipient spends to pay for their or a spouse’s or dependent’s medical expenses can be included as a medical expense on the recipient’s Schedule A.

Charitable Gifts – Even if the funds are being raised for a qualified charity, the contributors cannot deduct the donations as charitable contributions without proper documentation. Taxpayers cannot deduct cash contributions, regardless of the amount, unless they can document the contributions in one of the following ways:

• Contribution Less Than $250 – To claim a deduction for a contribution of less than $250, the taxpayer must have a cancelled check, a bank or credit card statement, or a letter from the qualified organization; this proof must show the name of the organization, the date of the contribution, and the amount of the contribution.
• Cash contributions of $250 or More – To claim a deduction for a contribution of $250 or more, the taxpayer must have a written acknowledgment of the contribution from the qualified organization; this acknowledgment must include the following details:
  o The amount of cash contributed;o Whether the qualified organization gave the taxpayer goods or services (other than certain token items and membership benefits) as a result of the contribution, along with a description and good-faith estimate of the value of those goods or services (other than intangible religious benefits); and

  o A statement that the only benefit received was an intangible religious benefit, if that was the case.

Thus, if the contributor is to claim a charitable deduction for the cash donation, some means of providing the contributor with a receipt must be provided.

Business Ventures – When raising money for business projects, two issues must be contended with: the taxability of the money raised and the Security and Exchange Commission (SEC) regulations that come into play if the contributor is given an ownership interest in the venture.

• No Business Ownership Interest Given – This applies when the fundraiser only provides the contributor nominal gifts, such as products from the business, coffee cups, or T-shirts; the money raised is taxable to the fundraiser.
• Business Ownership Interest Provided – This applies when the fundraiser provides the contributor with partial business ownership in the form of stock or a partnership interest; the money raised is treated as a capital contribution and is not taxable to the fundraiser. The amount contributed becomes the contributor’s tax basis in the investment. When the fundraiser is selling business ownership, the resulting sales must comply with SEC regulations, which generally require any such offering to be registered with the SEC. However, the SEC regulations carve out a special exemption for crowdfunding:

  o Fundraising Maximum – The maximum amount a business can raise without registering its offering with the SEC is $1.07 million in a 12-month period. Non-U.S. companies, businesses without a business plan, firms that report under the Exchange Act, certain investment companies, and companies that have failed to meet their reporting responsibilities may not participate.

  o Contributor Maximum – The amount an individual can invest through crowdfunding in any 12-month period is limited:

  • If the individual’s annual income or net worth is less than $107,000, his or her equity investment through crowdfunding is limited to the greater of $2,200 or 5% of the investor’s annual net worth.
  • If the individual’s annual income or net worth is at least $107,000, his or her investment via crowdfunding is limited to 10% of the investor’s net worth or annual income, whichever is less, up to an aggregate limit of $107,000.

On the bright side, even if the money raised is income to the business, it will probably net out to zero taxable if it is spent on tax deductible business expenses.

Does the IRS Track Crowdfunding? – Maybe. It depends on the aggregate number of backers contributing to the fundraising campaign and the total amount of funds processed through third-party transaction companies (credit card, PayPal, etc.). These third-party processers are required to issue a Form 1099-K reporting the gross amount of such transactions. There is a de minimis reporting threshold of $20,000 or 200 reportable transactions per year. Question is, will the third party follow the de minimis rule?

If you have questions about crowdfunding-related tax issues, please give this office a call.

With scam artists hard at work all year, taxpayers should watch for new versions of tax-related scams. One such scam involves fake property liens. It threatens taxpayers with a tax bill from a fictional government agency.

Here are some details about the property lien scam that will help taxpayers recognize it:

• This scheme involves a letter threatening an IRS lien or levy.
• The scammer mails the letter to a taxpayer.
• The lien or levy is based on bogus overdue taxes owed to a non-existent agency.
• The non-existent agencies might have a legitimate-sounding name like the “Bureau of Tax Enforcement.” There is no such agency.
• This scam may also reference the IRS to confuse potential victims into thinking the letter is from a real agency.

Taxpayers who do owe tax or think they might owe should:

• Review their tax account information and payment options at IRS.gov. Reviewing tax account information online will show the taxpayer if they indeed owe the IRS and how much. This is the fastest way to get this information.
• Call the IRS at 800-829-1040 to confirm the notice if they’re still not sure they owe.
• Call IRS Problem Solvers to help you resolve your tax problem.

Anyone who doesn’t owe taxes and has no reason to think they do should:

• Contact the Treasury Inspector General for Tax Administration to report the letter. The taxpayer should use their IRS Impersonation Scam Reporting web page. When reporting the scam, they should include the key words “IRS Lien.”
• Scan a document received as a letter or fax, and send it to [email protected].
• Report it to the Federal Trade Commission using the FTC Complaint Assistant on FTC.gov.
• Report it also to the FBI’s Internet Crime Complaint Center, known simply as IC3.

If you have unpaid taxes that you haven’t yet been making payments toward, it might make you fearful that the IRS will come a-knocking one day to collect on what you owe. Tax debt can quickly snowball from interest, penalties, late fees, and the amount of the taxes due.

However, a lot of the scaremongering surrounding the IRS is largely sensationalized in media and daily conversation. Agents won’t come bursting through your door just because you have tax debt. Instead, they must follow due process in accordance with the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA). This means that you will always receive written notice concerning your balance due as well as collection actions and any requests for payment plans or settling your account.

However, if you haven’t received further notification concerning what you owe, you may be able to ride out the little-known statute of limitations on tax debt collections, which is 10 years.

What the 10-Year Statute of Limitations Entails

Your tax debt can actually be canceled in 10 years if the IRS makes no efforts to collect on your account – and if you also don’t contact the IRS. However, it’s not as simple as just waiting a decade without ever paying the taxes you owe. There are conditions that must be satisfied. The first is that this 10-year time frame doesn’t begin when you filed that tax return with a balance due or when you realized you owed taxes you couldn’t pay.

The official statute of limitations date begins once you receive written notice from the IRS concerning what you owe. You may receive a notice of deficiency with an actual tax bill or a substitute tax return if you didn’t file by the due date. So, if you filed your tax return on June 15, 2019, and got a notice in the mail dated September 1, your statutory period would begin September 1, not June 15. This date is called the CSED (Collection Statute Expiration Date), and if you make it to September 1, 2029, without further collection actions, then you can actually get your entire tax bill from this period canceled. (Note: Future tax bills, such as next year’s taxes you also can’t afford to pay on the due date, do not count toward this.)

However, the IRS will not notify you of this. While the date of assessment is also generally when that notice is received, the IRS has argued over when the assessment date actually was. Some situations can also delay the CSED by halting the clock on the 10-year time frame, such as:

• Filing for bankruptcy
• Being outside the U.S. for at least six months
• Military deferment
• Submitting an offer in compromise to settle back taxes
• Filing a lawsuit against the IRS
• Having your assets held in court custody due to divorce, judgments against you, etc.

It takes six months after bankruptcy cases settle to get the clock restarted on the CSED, so this means the IRS has more time to take collection actions against you, and the IRS will tend to ramp up these efforts before the statute of limitations expires.

State Tax Debt

Unlike the IRS, state tax departments do not have reciprocity with the RRA or the Taxpayer Bill of Rights. Taxpayers who are subject to state income tax need to find out what options, if any, are offered by their state tax department. State tax departments may actually take harsher collection actions since they don’t have to have oversight committees and the option for taxpayers to settle back taxes or make payment plans, and they do not have a statute of limitations on collections. The IRS tends to get a bad rap in movies and on TV, but it’s actually the state tax departments that are more likely to show up unannounced or issue liens a lot sooner.

It’s very rare than anyone rides out the statute of limitations, and it’s usually due to extenuating circumstances like disability or a debilitating business closure. If enough time has passed that you think you might be able to go the whole 10 years without payments or responses to collection actions, you must keep fastidious records of all correspondence with the IRS. If the IRS sent you little or no mail in the time period after the time you think the CSED kicked off, you may qualify for the statute of limitations but should not intentionally try to ride it out without the guidance of a tax professional specializing in tax relief and resolution issues.

Don’t be fooled. The IRS will never send you any unsolicited email or email you about the status of your tax refund. Opens a New Window.

Officials this month warned taxpayers to watch out for a new scam after receiving an uptick of reports about unsolicited emails from imposters claiming to represent the IRS.

Some of the recent scam emails included subject lines like “Automatic Income Tax Reminder” or “Electronic Tax Return Reminder,” officials said. They include links to websites that look like IRS.gov, but aren’t the actual IRS website. When a user clicks to access files purportedly about their refund, electronic return or tax account, they inadvertently download malware.

“The IRS does not send emails about your tax refund or sensitive financial information,” IRS Commissioner Chuck Rettig said. “This latest scheme is yet another reminder that tax scams are a year-round business for thieves. We urge you to be on guard at all times.”

Officials said they’ve worked with state tax agencies and the tax industry to combat stolen identity refund fraud, but people still remain vulnerable to scams by imposters sending phony emails or making annoying phone calls.

It’s important to remember that the IRS doesn’t initiate contact with taxpayers by email, text messages or social media, officials said. Anyone requesting personal or financial info like PIN numbers, passwords or account information on those channels is not working for the IRS.

The IRS also doesn’t call to demand immediate payment using a specific method like a prepaid debit card, gift card or wire transfer, officials said. They will usually mail you a bill instead.

Source: https://www.foxbusiness.com/personal-finance/email-from-irs-scam

Article Highlights:

• IRS Focus
• About Cryptocurrency
• Tax Treatment
• IRS Compliance Program
• Letters Being Sent

If you own cryptocurrency, you need to know that the IRS has owners of cryptocurrency in its sights because many cryptocurrency owners are not reporting or paying taxes on their cryptocurrency transactions. In fact, the IRS is so focused on this issue that it recently issued warning letters to over 10,000 taxpayers it suspects might have an under-reporting problem.

About Cryptocurrency – If you are unfamiliar with the term cryptocurrency, the short definition is a form of digital money that is not controlled by any central authority. The first cryptocurrency created was Bitcoin, back in 2009. Since then, over 4,000 other cryptocurrencies have been created. Cryptocurrency can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, euros, and other real or virtual currencies.

Tax Treatment – One of the big issues of cryptocurrency is how it is treated for tax purposes. The IRS says that it is property, so that every time it is traded, sold or used as money in a transaction, it is treated much the same way as a stock transaction would be, meaning the gain or loss over the amount of its original purchase cost must be determined and reported on the owner’s income tax return. That treatment applies for each transaction every time it is sold or used as money in a transaction.

On the bright side, for most, cryptocurrency is generally treated as a capital asset, so any gain is a capital gain, and if the gain is held for more than year and a day, any gain will be taxed at the more favorable long-term capital gains rates. If the cryptocurrency is being held as an investment and the sale results in a loss, then the loss may be deductible. Capital losses first offset capital gains during the year, and if a loss remains, taxpayers are allowed a $3,000-per-year loss deduction against other income, with a carryover to the succeeding year(s) if the net loss exceeds $3,000.

When cryptocurrency is used as payment to an employee, the usual payroll withholding and reporting still apply, and if used to make payments to an independent contractor, 1099 form reporting is still required. If the individual receiving payment in cryptocurrency is subject to backup withholding, the payer is required to withhold the required amount. In all reporting and withholding instances, the amounts must be in U.S. dollars.

IRS Compliance Program – That brings us to the issue at hand. The IRS has begun sending letters to taxpayers; by the end of August, more than 10,000 taxpayers will receive one of three varieties of letters. If you have received one of these letters, do not ignore it! The IRS compiled this list of taxpayers that it feels has not been reporting their cryptocurrency transactions from various ongoing IRS compliance efforts. The following is a synopsis of the types of letters:

Last year, the IRS announced a virtual (crypto) currency compliance campaign to address tax noncompliance related to virtual currency use through outreach and examinations of taxpayers. The IRS has announced that it will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits and criminal investigations.

Taxpayers who do not properly report the income tax consequences of virtual currency transactions are liable for the tax, penalties and interest. In some cases, taxpayers could be subject to criminal prosecution.

If you have received one of these IRS letters – or even if you haven’t had correspondence from the IRS but have unreported cryptocurrency transactions from past years – and need assistance in responding to the letter or in preparing the amended or late original returns to report your cryptocurrency transactions, please contact us right away.

The IRS is cracking down on fake letters being sent out to people across the nation.

“Aside from the phone calls, the phishing, now the letters,” said Irma Trevino, who works with the IRS in Harlingen.

Fake tax letters are popping up in people’s mailboxes.

“The thieves don’t rest, they are trying to get you any way they can,” said Trevino.

Trevino says the IRS is getting more and more calls about these fake letters that have an IRS emblem on it and at first glace look normal, but Trevino says there are ways to tell the fake part.

“When IRS sends a correspondence, it’s an official envelope and that letter has the name of the representative, the identification number and a phone number,” said Trevino. “So please do not ignore the correspondence, open the letter, call the number and verify it is the IRS that is trying to contact you.”

If you call that number and the person on the other end is demanding money- it’s not the IRS.

The IRS will never ask for money over the phone and will never threaten to have you arrested for not paying.

The easiest way for you to be sure a letter is real is to visit IRS.GOV/Payments and check your tax account.

“It’s so easy, you check your tax account so there is your history, so if the IRS has an outstanding tax liability, it’s going to show over there,” said Trevino. “These new variations of scams is going on across the country.”

To report a fake letter call the IRS at 1-800-829-1040.

(Source: https://valleycentral.com/news/local/fake-irs-letters-being-sent-to-tax-payers)

The United States Internal Revenue Service (IRS) is sending letters to crypto investors to apparently scare them into accurately reporting their crypto-related income.

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” IRS Commissioner Chuck Rettig said in a statement.

“The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

According to a Forbes report by crypto tax attorney Tyson Cross, published on July 26, a number of Cross’s clients have received a letter “6174-A” from the IRS, threatening “future civil and criminal enforcement activity” if they fail to fully comply with reporting requirements.

IRS Letter 6174-A. Source: Tyson Cross via Forbes

While Cross notes that the letter may give the impression that it is a personally targeted enforcement action, he argues that it is much more likely to be a generic mailing campaign intended to encourage voluntary compliance — one year after the IRS first launched its cryptocurrency compliance push.

Although the agency could feasibly have identified tax cheats and sent the letter to specific individuals, Cross notes that over a dozen of his clients — all of whom accurately reported their crypto-derived income — had received the letter.

Much more likely, he claims, is that the IRS has used its list of taxpayers identified in 2017 by Coinbase and conducted a blanket campaign to exert psychological pressure on investors. He notes:

“This would seem to indicate the IRS is sending these letters to taxpayers as a fishing attempt without any real belief that each recipient has under-reported.”

Cross writes that several other tax professionals have revealed to him that their own clients — despite accurate reporting — had also received Letter 6174-A.

The IRS hopes to tighten the noose

Cross advised investors not to panic should they receive the letter, but to thoroughly ensure the accuracy of their tax returns, given that at the very least it means they are on the agency’s radar.

As previously reported, data released ahead of the close of the preceding tax year indicated that just 0.04% of tax filers were reporting capital gains from crypto investments to the IRS.

Back in July 2017, the IRS had required that major U.S. crypto exchange Coinbase hand over detailed information on every one of its then 500,000+ users in an attempt to prevent tax evasion. However, a court order in November 2017 reduced this number to around 14,000 “high-transacting” users, which the platform later reported as 13,000.

An alleged presentation by the agency earlier this month reportedly revealed that the IRS hopes to use Grand Jury subpoenas on firms such as Apple, Google and Microsoft to check taxpayers’ download history for crypto-related applications.

Source: https://www.zerohedge.com/news/2019-07-26/irs-sends-1000s-fishing-letters-crypto-users

First, don’t panic. Audits are relatively rare, as fewer than 1% of taxpayers grouped by income level will get that dreaded notice on IRS letterhead.

Per the linked statistics, for the average American who earned $50‒70K per year, only about half a percent of those tax returns got audited. If you made between $25‒50K or between $75‒100K, less than half a percent of those returns were under audit. Only 6.66% of tax returns reporting an eight-figure adjusted gross income were audited as well. Additionally, the IRS has less funding and about one-third fewer agents on board compared to less than a decade ago, so this keeps audit figures down.

To cut to the point right away, your chances are being audited by the IRS are quite slim. There are often many red flags that are likely to trigger an audit, but even then, you’re still more likely to get an examination notice than an actual field audit in which an IRS agent shows up at your door demanding to examine your workspace and files.

An IRS Letter Is Not Likely to Be an Audit

You might think that you’ve been selected for an audit because a letter from the IRS came in the mail that demanded to know why a line item on your tax return was reported a certain way or that they computed your tax bill for you. A notice is not the same thing as an audit.

Most IRS notices are computer-generated with a “CP” prefix. Notices in the CP series will be automatically mailed to you when changes are made to your IRS account, such as making a payment or having all or part of your tax refund seized to pay down your current balance. These notices are sent with the intent to catch discrepancies and underreporting based on information they already have on file, such as if you forgot to report that 1099 you received for giving a side hustle a try or you mistyped your salary as $56,000 when $65,000 was reported on your W-2.

Requests for more information are often referred to as a “desk audit,” but your contact with the IRS is still largely minimal, particularly if your notice pertains to math or input errors.

Common Audit Red Flags

Despite having a pretty low chance of ever being audited, it’s helpful to know which criteria are the most likely to trigger an audit:

• Earning $200,000 or more per year. Don’t pass up that promotion or acting on your entrepreneurial instincts, but your chances of being audited increase once you enter the upper middle class. The higher your income, the higher the likelihood of being audited.
• Home office deduction. Self-employed people in general are far more likely to be audited than people with regular jobs. But your chances go up big time when you take the home office deduction, even though it is a perfectly legitimate write-off. It’s not just the amount deducted, but home office deductions are subject to a “regular and exclusive use” rule that many work-at-home types inadvertently violate without realizing it.
• Suspiciously high charitable contributions. Any larger-than-average deduction is going to arouse suspicion, but charitable contributions are a common red flag. Many people donate to causes they care about, but cash donations are easy to substantiate, as are marketable securities. Did some spring cleaning and gave a lot to Goodwill? People often overvalue non-cash donations and don’t have the time and wherewithal to take pictures and document them unless it’s an extremely valuable item, like donating rare art to a museum that had a professional appraisal.
• Gig work and cash-intensive businesses. Consistent with the high audit rates among the self-employed, any cash-intensive type of work is an audit minefield. While rideshare drivers get a 1099 and can properly track mileage with many apps and tools, discrepancies are still common. Cash-heavy businesses like cafes, laundromats and selling items at craft fairs also provide opportunities to overstate expenses and understate income with little or no substantiation of these numbers.

You should still take advantage of all the tax benefits legally available to you and keep fastidious records you and your tax professional can easily access. This way, you can substantiate any claims if your tax filing situation is more complicated than just getting a W-2 from a job. Nevertheless, these situations are most likely to turn you into an audit statistic—so beware. If you are ever facing an audit, either as an individual taxpayer or a small business owner, you don’t have to go it alone: we can help.

Last week, the IRS released tips to help keep you on track for next year. See below for some summertime tax tips:

• Marital tax bliss. Newlyweds should report any name change to the Social Security Administration before filing next year’s tax return. Then, report any address change to the United States Postal Service, employers and the IRS to ensure receipt of tax-related items.
• Cash back for summer day camp. Unlike overnight camps, the cost of summer day camp may count as an expense towards the Child and Dependent Care Credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information.
• Part-time and summer work. Employers usually must withhold Social Security and Medicare taxes from pay for part-time and season workers even if the employees don’t earn enough to meet the federal income tax filing threshold. Self-employed workers or independent contractors need to pay their own Social Security and Medicare taxes, even if they have no income tax liability. Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer — even if they don’t work there anymore — to account for the summer’s work by January 31 of the following year. The Form W-2 shows the amount of earnings, withholdings for state and federal taxes, Social Security, Medicare wages and tips. Employees use the information on this form when they file their annual tax returns.
• Worker classification matters.  Business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.

Though the higher standard deduction means fewer taxpayers are itemizing their deductions, those that still plan to itemize next year should keep these tips in mind:

• Deducting state and local income, sales and property taxes. The total deduction that taxpayers can deduct for state and local income, sales and property taxes is limited to a combined, total deduction of $10,000 or $5,000 if married filing separately. Any state and local taxes paid above this amount cannot be deducted.
• Refinancing a home. The deduction for mortgage interest is limited to interest paid on a loan secured by the taxpayer’s main home or second home that they used to buy, build, or substantially improve their main home or second home.
• Buying a home. New homeowners buying after Dec. 15, 2017, can only deduct mortgage interest they pay on a total of $750,000, or $375,000 if married filing separately, in qualifying debt for a first and second home. For existing mortgages if the loan originated on or before Dec. 15, 2017, taxpayers continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes.
• Donate items. Deduct money. Those long-unused items in good condition found during a summer cleaning and donated to a qualified charity may qualify for a tax deduction. Taxpayers must itemize deductions to deduct charitable contributionsand have proof of all donations. Use the Interactive Tax Assistant to help determine whether you can deduct your charitable contributions.
• Donate time. Deduct mileage. Driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2019.
• Reporting gambling winnings and claiming gambling losses. Taxpayers who itemize can deduct gambling losses up to the amount of gambling winnings. Use the Interactive Tax Assistant to find out more about reporting gambling winnings and  losses next year.

The last two tips are for taxpayers who have not yet filed but may be due a refund and those who may need to adjust their withholding.

• Refunds require a tax return. Although workers may not have earned enough money from a summer job to require filing a tax return, they may still want to file when tax time comes around. It is essential to file a return to get a refund of any income tax withheld. There is no penalty for filing a late return for those receiving refunds, however, by law, a return must be filed within three years to get the refund. See the Interactive Tax Assistant, Do I need to file a tax return?
• Check withholding. Newlyweds, summertime workers, homeowners and every taxpayer in between should take some time this summer to check their tax withholding to make sure they are paying the right amount of tax as they earn it throughout the year. The Withholding Calculator on IRS.gov helps employees estimate their income tax, credits, adjustments and deductions and determine whether they need to adjust their withholding by submitting a new Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers should remember that, if needed, they should submit their new W-4 to their employer, not the IRS.

In addition to these tips, taxpayers can get helpful consumer tips by signing up for the IRS Tax Tips email service. For details on any of these tips, visit IRS.gov.

The Internal Revenue Service seized $446,000 from the bank accounts of brothers Jeffrey, Richard, and Mitch Hirsch in 2012, claiming a “structuring” violation against the owners of Bi-County Distributors Inc. for making multiple bank deposits of less than $10,000.

The government never charged them with a crime, nor gave them a hearing to enable them to contest the seizure, but after intense national media attention to the case, the government returned the funds.

The case was among many that highlighted an abuse by IRS agents known as legal source structuring that allowed the tax collection agency to use a law, the Bank Secrecy Act, intended to combat money laundering, to seize assets.

President Donald Trump signed a bipartisan bill Monday to force greater accountability on the IRS in the property seizures, as well as protect taxpayers from identity theft, boost whistle blower protections, and modernize the tax agency.

“We just finished signing, the important signing, of the Taxpayer First bill, the IRS Taxpayer First, which is a tremendous thing for our citizens having to deal with the IRS,” Trump told reporters after the signing. “It streamlines and so many other changes are made. That was just done and signed. It’s been made into law. So we are all set on that.”

The new law, the Taxpayer First Act, requires the IRS to show probable cause that the smaller transactions were made in order to evade financial reporting requirements.

Legal source structuring laws kick in when large financial transactions are broken up into smaller transactions, which sparks suspicion from the IRS. If dividing up transactions is done with the intent to evade bank reporting requirements, it’s illegal, and the IRS can seize assets.

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