The roughly 8 million Americans who live abroad automatically get a couple additional months each year to file their taxes. Don’t expect them to be grateful.
Filing to the Internal Revenue Service from overseas is more confusing, complicated, and expensive than it is for Americans at home (and that’s saying something). Unlike almost every other country in the world, the U.S. demands its citizens pay taxes on all foreign income. They must file even if they have lived and worked abroad for decades, and even if they’re already paying hefty taxes to the countries where they reside.
The sigh of relief a business owner heaves after filing an income tax return may be quickly followed by an unsettling thought: What if I’m audited?
Owners dread an audit not just because they might get a big bill for unpaid taxes, interest and penalties. Audits can also be time-consuming and expensive, in some cases lasting months or even years, distracting owners from running their companies and requiring them to pay accountants or lawyers to deal with the government. But companies that keep good financial records can make the process easier.
The IRS audited less than 1 percent, or nearly 1.4 million, of the nearly 192 million tax returns filed in 2014. That included business and personal returns and audits conducted either by letter or in person, according to the most recent available IRS figures. The audits resulted in an additional $25 billion in taxes recommended by IRS agents, and more than $7 billion in refunds, the IRS says.
The US Internal Revenue Service said last week that the number of records it lost in a 2015 data breach is higher than it previously thought. When the agency first announced in May 2015 that hackers had broken into its website and stolen tax transcripts, it said that about 100,000 people were affected. It bumped that number up to 334,000 last August, and now says the number of records stolen is actually 724,000.
And it gets worse. To protect the victims of the data breach from further harm, the IRS provided them with “Identity Protection PINs.” The PINs are secret codes those taxpayers now have to put on all of their tax returns, or the IRS won’t accept them. As long as they keep their PINs secret, they should be safe from fraud.
For this master plan to work, though, the IRS would also have to keep the PINs secret. Unfortunately, it seems the agency is having some trouble with that.
Security researcher and journalist Brian Krebs reported yesterday (March 1) that at least one of the PINs has been compromised. An accountant in South Dakota, Becky Wittrock, told Krebs she was assigned her PIN in 2014, after she was a victim of fraud. When she filed her tax return this year, she found out the PIN had already been used:
Wittrock said she found out her IP PIN had been compromised by thieves this year after she tried to file her tax return on Feb. 25, 2016. Turns out, the crooks beat her to the punch by more than three weeks, filing a large refund request with the IRS on Feb. 2, 2016.
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You have always depended on me to provide you with great service for all your Tax needs. From filing a simple Tax return to the most complex corporate return my goal has always been to do what is right for you and of course always do it with a smile! In response to the many customer inquiries I will continue to be open to serve you. My office is a safe environment however if you feel uncomfortable going out in today’s environment or just find you are running out of time, do what many of my long term clients do. E-mail me your information and we can complete your Tax Returns electronically. We can conference by phone to go over the details just as if we were talking in person. Payments can be made by many forms including Zelle so basically we can do everything you need without having ever having to visit my office.
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