A July 2010 report released by National Taxpayer Advocate Nina E. Olson to Congress expresses concerns about the adequacy of the IRS’ taxpayer service, particularly as the IRS begins to implement health care reform, about new information reporting burdens facing small businesses and others, and about certain IRS collection practices. The Nation Taxpayer mid-year report also identifies priority challenges and issues for the upcoming year.

The report points out that while more taxpayers are contacting the IRS for tax assistance, spending for IRS taxpayer service programs continues to decline. At the same time, more taxpayers have been contacting the IRS for assistance as the IRS has been tasked with administering an increasing number of social benefit programs, including Economic Stimulus Payments, Making Work Pay credits, and First-Time Homebuyer credits. The report says that as a result of the imbalance between taxpayer demand and IRS resources, the IRS has fallen short of providing adequate taxpayer service in important areas. Most notably, after answering a high of 87 percent of its calls from taxpayers seeking to reach a telephone assistor in FY 2004, the IRS answered only 53 percent of its calls in FY 2008 and has set of goal of answering only 71 percent in the current fiscal year.

The report attributes much of the problem to inadequate funding for taxpayer services. While funding for the IRS overall has been increasing in recent years, the additional funding has been earmarked for enforcement programs. An analysis of IRS budget trends conducted by TAS shows that since FY 2004, inflation-adjusted funding for IRS enforcement activities has risen by 17.9 percent while spending for taxpayer service programs has declined by 6.8 percent.

Should taxpayers hold out hope taxpayer services will get more funding? Don’t bet on it! As the economy takes its toll on revenue, expect the IRS to continue funding its enforcement programs and less funding for taxpayer services.

source: www.irs.gov

The IRS is hosting a “Tax Help” Open House this weekend. The Internal Revenue Service has announced that on Saturday, June 5, 2010, IRS offices in all 50 states will be open to provide free tax help to individual taxpayers. Approximately 200 IRS offices, at least one in every state, will participate. Each office will be open from 9:00 a.m. until 2:00 p.m. local time.

The IRS Tax Centers will provide assistance to taxpayers dealing with notices and payments, tax return preparation, and other tax related issues.
Take advantage of the free tax help from the IRS and get answers to your tax questions.

Find the participating IRS tax offices in your state.

source: irs.gov

Starting in 2010, small businesses and tax-exempt organizations can get tax relief offered by the new Small Business Health Care Tax Credit. This tax credit, signed into law by President Obama earlier this year, takes effect beginning in the tax year 2010. It is designed to help small businesses and small tax-exempt organizations afford the cost of covering their employees.

“We want to make sure small employers across the nation realize that — effective this tax year — they may be eligible for a valuable new tax credit. Our postcard mailing — which is targeted at small employers — is intended to get the attention of small employers and encourage them to find out more,” IRS Commissioner Doug Shulman said. “We urge every small employer to take advantage of this credit if they qualify.”

The tax credit is available to small businesses that pay at least half the cost of single coverage for their employees in 2010. It was created specifically to offer tax help to small businesses and tax-exempt organizations that primarily employ low and moderate-income workers.

Below are specifics and answers to tax questions you may have about the tax credit:

Eligibility Rules
To qualify for this tax relief, small businesses and tax-exempt organizations must meet certain eligibility rules pertaining to the percentage of health care costs they provide, the firm size and average annual wage of it’s employees. The specific eligibility rules are as follows:

• Health care coverage
  A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size
  A qualifying employer must have less than the equivalent of 25 full-time workers (small businesses with fewer than 50 half-time workers may be eligible).
• Average annual wage
  A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify

Amount of Credit
The maximum tax credit is 35% of premiums paid for small businesses and 25% for tax-exempt organizations. Since the credit is targeted to help those who employ low- and moderate-income workers, the maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. Below are more details on the Amount of Credit:

• Maximum Amount
  The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out
  The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Small business or tax-exempt organizations can determine if they qualify for the Small Business Health Care Tax Credit with three simple steps.

To recap, starting in the tax year 2010, the new health care tax credit will offer small businesses tax help as an incentive to provide their employees health care coverage.

To get more information about the tax credit or get answers to your tax questions go the IRS website.

source: irs.gov

The month of April brings warm weather, major league baseball and the deadline for filing your 2010 income tax return? If you haven’t prepared your income tax, you still have options for filing before the April 15 tax deadline. Here are some of the options for filing your tax return.

The quickest and most efficient way to get your tax return in on time is to sign up for one of the many online tax services. They provide the software so you can file your income tax online. Most online tax services offer the service for free or at a steep discount. Taxpayers can also find tax coupons online by using searching the web using the keyword phrase “tax coupons”.

Another option is to contact the IRS. The IRS provides a free income tax preparation program for individuals earning less than $49,000 who cannot prepare their own federal income tax returns. The IRS Volunteer Income Tax Assistance (VITA) will help taxpayers prepare their income tax and help answer tax questions about special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Disabled. The program offers free electronic tax filing (e-filing) at most of it’s sites. For more information on TCE, call 1-800-829-1040 or log onto www.irs.gov

Individuals who have tax problems or complicated tax situations should contact an income tax lawyer or tax consultant immediately. Tax lawyers can answer your income tax questions and act as your tax representative to the IRS. If you have serious tax problems, the price for a consultation with a tax attorney is worth it.

If you will not meet the tax deadline, you can file for a tax extension. Taxpayers have 3 choices for filing the income tax extension form (Form 4868, Application For Automatic Extension of Time To File U.S. Individual Tax Return); electronically, by paying part of your tax due with a credit card through an outside service provider listed on the form, or by mail.

If you file your Form 4868 electronically you will receive an acknowledgment or confirmation number and you do not need to mail in Form 4868. If you need to pay additional taxes, you may do so through the outside service provider or through e-file. Be advised that each tax service provider will charge a convenience fee based on the amount of the tax payment.

These are the most common options available for filing your tax return. For more information about income tax or filing an income tax extension visit the IRS website.

source: irs.gov