Tax News & Views Chatbot Hash Trust Roundup

By Joe Kristan, CPA
September 27, 2023

IRS expands use of chatbots to help answer questions on key notices; expands on technology that’s served 13 million taxpayers - IRS:

The new chatbot feature will assist taxpayers who receive notices CP2000CP2501 and CP3219A. These mailings inform taxpayers if the tax information the IRS received from third parties doesn't match the information they provided themselves to the IRS.


The chatbot simulates human interaction with taxpayers through a web or mobile app on a computer or mobile screen by responding to questions or requests in a chat feature. Also, at the end of the conversation, taxpayers can press the "representative" button to speak to a live assistor.

Big deal. Real IRS personnel have simulated human interaction for years.

The new IRS chatbot is available to help taxpayers with questions such as:

-What to do if they received a notice.
-What to do if they need more time to respond to a notice.
-How to find out if the IRS received their response.

The IRS plans to continue additional bot technology features in the future to assist taxpayers with more complex issues.

You can't fault the IRS for this, as a chatbot is more helpful than being put on hold indefinitely. But if you get a notice and you have a tax pro, let the tax pro know about the notice right away. 

IRS Expands Chatbot Roster to Cover Information Mismatch Notices - Jonathan Curry, Tax Notes ($). "The new chatbots will assist taxpayers who receive CP-2000, CP-2501, and CP-2319A notices, which inform them of a discrepancy between their reported income and third-party information reported to the IRS. Taxpayers will still have the option to get help from a live assister if the chatbot is unsuccessful at answering their questions."


Pair Indicted On Charges Of Peddling Abusive Trusts - Anna Scott Farrell, Law360 Tax Authority ($):

A government agent posing as a potential client caught McPhee in February 2022 when he agreed to meet her at a restaurant in Colorado and detailed how the shelter illegally circumvented taxes, according to the indictment.

"McPhee explained that there was '[n]o limitations whatsoever at all' on how a taxpayer could spend the money held in a trust and said that all the money spent from a trust bank account — for example on a pool, car, meals, gifts, entertainment, or home renovations — is a deduction," the indictment said.

Without pre-judging the case, I can say that trust taxes don't work like that. Yet many taxpayers, including some sophisticated ones, think that there are exotic trust structures that work like a tax fairy, legally and magically wiping out taxes. We can assume that taxpayers who bought into the deals in this case are learning otherwise. 


California Enacts First Statewide Gun and Ammunition Tax in U.S. - Christine Mai-Duc, Wall Street Journal. "Starting next July, the state will collect an 11% tax on retail sales of guns, gun parts and ammunition. The money would be used for gun-violence prevention, enhanced school safety and programs geared toward victims of gun violence."

Roofing company loses court fight over unpaid employment taxes - Clark Kauffman, Iowa Capital Dispatch. "The company had argued that because it doesn’t treat its workers as employees – requiring them to use their own cars and tools while denying them training and benefits – it was not liable for taxes as an Iowa employer."


Man Owes $24K In Late Fees On Lost Return, Tax Court Says - Anna Scott Farrell, Law360 Tax Authority ($). "A California man who said he mailed his tax return on time from a mailbox near Los Angeles International Airport must nonetheless pay $24,000 in late fees because the IRS never received it, the U.S. Tax Court ruled Tuesday."

With the October 16 deadline for extended 1040s approaching, this case illustrates the importance of filing returns the right way. How do you do that? 

1. If possible, e-file. Electronic filings don't get lost in the mail, and you get instant verification of filing. If for some reason the e-filing can't go through, you then get a few days extra time to mail a paper copy.

2. If you have to use paper - for example, for filing gift tax returns - use certified mail, return receipt requested, and save the postmark. It costs $4.35 - but could have saved the California man $24,000, a pretty good return on the investment.

3. If you are too late to get to the post office, you can use an authorized private delivery service. Be sure to use the IRS service center street address, as the private delivery services can't deliver to post office boxes. 

Why didn't he e-file? From the Tax Court opinion (taxpayer and preparer name omitted):

To evaluate why Taxpayer's return was not timely filed, we also consider why the return was not e-filed. Had Preparer e-filed the return, the risk of nondelivery through the mails would have been avoided. Furthermore, e-filing would have imposed no time cost on Taxpayer. Taxpayer's cross-examination testimony claims that Preparer advised against e-filing because of the size of the return. We are not persuaded this is true.

Nor am I. Of all the things that I have seen preventing e-filing, return size isn't one of them.

Related: Eide Bailly Penalty Help.


All Maine and Massachusetts taxpayers get Hurricane Lee tax relief, new Feb. 15, 2024 deadline - Kay Bell, Don't Mess With Taxes. "That's right, the tax relief applies to individuals and businesses in all of Maine's 16 counties, as well as those in Massachusetts' 14 counties. These taxpayers now join Hurricane Idalia-affected filers with a delayed Feb. 15, 2024, tax filing and payment deadline."

Your First Look At 2024 Tax Rates: Projected Brackets, Standard Deduction Amounts And More - Kelly Phillips Erb, Forbes. "According to Bloomberg Tax & Accounting, inflation-adjusted amounts in the tax code will increase by 5.4% from 2023. While this is a slight decrease from the 7.1% increase taxpayers felt in 2023, it is nearly double the 2022 increase of 3%."

An IRS Identity Protection Unit Saga: Part 4 - Russ Fox, Taxable Talk. "Last week I continued the saga of my client, call him John Smith, who has been waiting and waiting to receive his 2020 tax refund.  His 2020 federal return was selected for identity verification; he successfully completed that process in March 2023.  His refund, though, is nowhere to be seen."


Navigating the New Regulations for Inherited IRAs - Tax School Blog. "The SECURE Act sharply curtailed the stretch IRA. It shortened the period for distributions from the balance of the designated beneficiary’s life to 10 years. Except for surviving spouses and eligible designated beneficiaries, the new law required designated beneficiaries of IRAs to withdraw all remaining funds by the end of the 10th calendar year following the original owner’s death, assuming they died after their required beginning date."

The U.S. and Pillar Two, in 2025 and Beyond - Alex Parker, Things of Caesar. "If the U.S. ever complies with the OECD's global minimum tax plan, what will that compliance look like? It's a surprisingly tricky question that could dramatically influence the project's future."

Tax System Changes Can Help Reduce Poverty - Annette Nellen, 21st Century Taxation. "One of the recommendations is to increase and expand the Earned Income Tax Credit (EITC)."


Spain Demands Shakira Hand Over $7 Million In Unpaid Taxes—Latest Tax Trouble For Pop Star - Mary Whitfill Roeloffs, Forbes. "Spanish tax authorities filed new charges against Shakira on Tuesday for allegedly failing to pay over $7 million in taxes in just one year, the Associated Press reported, the second time the country has accused the pop star of committing income and wealth tax fraud."

Two Illinois businessmen charged in 7.8 million dollar Covid-relief fraud - IRS (defendant names omitted):

An indictment unsealed Tuesday in the Northern District of Illinois alleges that Defendants recruited purported sole proprietors, self-employed individuals, and businesses to provide personal identifying information, bank statements, and other documents, and then submitted fraudulent PPP loan applications on their behalf. The applications contained numerous misrepresentations and false statements that inflated the applicants' payroll, income, and other expenses, the indictment states. In exchange for preparing and submitting the fraudulent applications, Defendants received at least $1,000 to $4,000 per successful loan, the indictment states.

I suspect this foreshadows similar indictments involving Employee Retention Credit promotion. 


College Athletics Benefactor Can’t Pass on Paying $6.5M Tax Bill - Chandra Wallace, Tax Notes ($):

The Tax Court entered a decision in 2016 after the stipulation between the Rafiees and the IRS, finding income tax liabilities of $3.05 million and $1.22 million, and accuracy-related penalties of $457,620 and $184,253, respectively, for the 2009 and 2010 tax years.

The petitioners failed to pay that liability, which as of September 2019 had grown to more than $6.54 million, Lauber wrote.

Meanwhile, in sports news:

Rafiee was inducted into the Bryant Society at the University of Alabama in 2016 for “contributing to the success of Alabama Athletics through gifts to the Crimson Tide Foundation.”

The university announced in October 2017 that Rafiee had committed an additional $2 million to the foundation, bringing his total contributions to Alabama athletics to over $3 million.



Hungry? It's National Corned Beef Hash Day!

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