Category Archives: Blog

COVID-19 Business Relief Loans and IRS Updates

On March 27, 2020, President Trump signed into law the CARES Act, which provides assistance for small business owners (fewer than 500 employees).

Below are the highlights of two programs available for small businesses, as well as recent IRS updates.  Funds are being rapidly exhausted.

Paycheck Protection Program  

Purpose: Help businesses retain or bring back employees let go and pay other expenses.

Use of funds:  Pay wages and compensation to employees, provide self- employed owners working capital, pay health care costs, rent, utilities, and interest on debt incurred prior to February 15, 2020.

Amount:  Up to $10,000,000 or 2.5 X the business’s average monthly payroll and net profit from self employment, whichever is less.
Rate:  1%
Term:  2 years, but no payments for first six months.
Features:  No collateral or guarantee.
Forgiveness:  Up to 100% of eligible expenses paid with loan funds during 8 weeks following closing, subject to compliance verification.
Eligibility:  Small business owners, including DBAs, sole proprietors, LLCs, corporations and partnerships, as well as 501(c)(3)s and independent contractors, with fewer than 500 employees.  Must have been in business on February 15, 2020.
Deadline to apply:  By June 30, 2020.

Information needed:  2019 and 2020 financial statements, 2019 and 2020 payroll reports, state unemployment filings, tax identification number, and ownership information.

Economic Injury Disaster Loans (EIDL)

Purpose:  To supplement lost revenue on account of Covid-19.
Use of funds:  Business expenses.
Amount:  Up to $2,000,000.
Rate:  3.75% or 2.75% for non-profits
Terms:  Up to 30 years
Forgiveness:  None
Features:  No guarantor support for loans under $200,000.

 IRS Updates

Stimulus checks:  No information available yet, BUT, you must have at least your 2018 personal income tax return filed, unless you are currently receiving social security benefits.  No registration needed.

Tax day:  Has been extended from April 15, 2020 to July 15, 2020.

Tax payments:  All tax payments due between April 15, 2020 and June 30, 2020 have been extended until July 15, 2020, regardless of the amount.

Refunds:  Will continue as normal.

Refundable tax credits:  Will be provided for those businesses providing Covid-19 related leave to their employees.

Deadline for obtaining a refund for tax year 2016:  Is still April 15, 2020.  This date has not been extended.

Existing installment agreements:  Payments due between April 1, 2020 and July 15, 2020, are suspended.  Payments not made during this period of time will not cause an installment agreement to be defaulted.

 Offers in Compromise (OIC):

 Pending OICs:  The IRS will allow taxpayers until July 15, 2020 to provide requested additional information.  Also, IRS will not close any pending OIC before July 15, 2020.

OIC payments:  Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020.

New OIC applications:  Are still being accepted by IRS.

 Liens and levies:  Are suspended until July 15, 2020.

Audits:  No new audits until July 15, 2020.  For existing audits, there will be no in-person meetings.  However, IRS may be working remotely and may continue to ask for information.

Independent Office of Appeals:  Appeals will continue to work their cases.  However, there will no in-person meetings.

Statute of limitations:  IRS may take steps to prevent the statute of limitations on collection from running out by asking taxpayers to voluntarily sign an extension of time for IRS to collect.  However, this is unlikely to happen before July 15, 2020.

Should you have any questions, or need assistance, please contact the offices of Lothamer Tax Resolution, at 877-Tax-Bill.

Trouble Contacting the IRS

Having trouble with the IRS? Having difficulty getting through to them? You’re not alone. According to the National Tax Payer Advocate, an independent organization within the IRS, phone lines to reach the IRS for taxpayers who want to make payment arrangement were appalling, with average wait times of 93 minutes. Even after the shutdown was over, 93.3% of taxpayers calling to make payment arrangements were unable to speak to a live agent. For the first week of the filing season, after the shutdown ended, there was a shocking decrease in service levels on the agency’s phone lines.

Upon returning to work, the IRS had over 5 million pieces of mail that had not been sorted for processing. There were 80,000 responses to the fiscal 2018 earned income tax credit audits that had not been addressed along with 87,000 amended returns waiting to be process.

If you find you have a tax problem this tax season, give Lothamer a call and see how we can set you free. (877) 829 -2455

What to expect from the IRS during the shutdown

If you have been waiting to file your taxes due to the government shutdown, now is the time! As of January 28, 2019, the IRS is accepting returns and issuing refunds but tax experts are urging people to file this week due to the possibility of another government shutdown on February 15, 2019. You can utilize the IRS website for any further questions or concerns you may have. Unfortunately, no live person assistance will be available through phone or through appointment. It’s likely that there will be at least a week’s delay from what taxpayers are used to. We are bracing for one of the most chaotic tax seasons in three decades. This year, just over 70,000 permanent agency employees will be processing an estimated 155 million returns.

 

If you have a scheduled appointment related to an examination or audit, you should assume that these meetings are canceled during the length of the shutdown. Once the IRS opens again, they will reschedule meetings.

 

Taxpayers who have submitted applications or requested determinations for tax-exempt or pension plans will have to wait. These will not be processed until after the shutdown.

 

The IRS will not be conducting audits during this time, no collection activity will generally occur, except for the automated collection activity. You should still keep an eye out for letters. Automated initial contact letters for audits, as well as for automated collection notices, will still be sent out.

 

If this tax season you find you have a tax problem, Call Lothamer and see how we can set you free! (877) 829-2455

Lothamer is pleased to announce a new team member

We have a new addition to the Lothamer family in our office, Emma Schut. Emma is currently attending Olivet College in her third year pursuing a Bachelor’s degree in Accounting. Her future academic plans are to earn a Master’s degree in Accounting and continue to become a Certified Public Accountant (CPA). In addition to her education, for the past couple years Emma has given her time to aid the Volunteer Income Tax Assistance. Outside of work, Emma enjoys playing the French horn and mellophone for the Olivet College Marching Band and Wind Ensemble, and Women’s bowling team.

The IRS has social media you can follow

Would you like a direct source for IRS tips or updates?

The IRS has taken advantage of the many opportunities that social media has to offer us. Truth be told, the IRS does not want anyone to get in trouble, and they wish to educate the public to help them gain understanding their tax responsibilities and changes tax payers may not be aware of. Their latest addition to their different social media accounts is an Instagram page which is a great platform for them to target young adults.

What are all their accounts?

The IRS currently has active accounts on Instagram, YouTube (English, Spanish, and ASL), Twitter (English or Spanish), LinkedIn, and Facebook. In addition to all these resources, IRS works with IRS2Go which is a free mobile app to check your refund status, watch videos, sign up for IRS tax tips through email, or pay your taxes (English and Spanish).

Don’t fall victim to IRS issues due to lack of knowledge and use these many great resources! Links are posted in the description.  

Learn all about IRS Criminal Investigations

How does it start?

If the IRS suspects fraudulent activity from information given by a revenue agent, revenue officer, ongoing investigations by law enforcement agencies, attorney offices, or even tips from the general public. This information is given to a ‘special agent’ for them to go over then decide if this is a criminal offence, this is

known as the ‘primary investigation.’ If there is substantial evidence and the supervisor of the agent has also reviewed the information and deems it to be something of interest, it begins action to initiate a “subject criminal investigation.”

 

What steps happen next: The special agent will continue to gather more evidence using interviews, surveillance, warrants, bank records, and financial data. This special agent will also work with IRS Criminal Tax Attorneys to ensure that every legal aspect is covered. At this point when all possible evidence is gathered, the agent and their supervisor decide whether the case continues or it is closed. If it is continued then the agent writes a ‘special agent report’ which is looked over by a supervisory special agent, Centralized Case Review, assistant special agent in charge, and finally the special agent in charge.

 

End results?

At this point in the process, and the Criminal Investigation department determines it should be prosecuted, the recommendation is sent to the Department of Justice, Tax division, or the United States Attorney. If the investigation is accepted for prosecution, the investigation is handed off to the prosecutors.

“The ultimate goal of an IRS Criminal Investigation prosecution recommendation is to obtain a conviction – either by a guilty verdict or plea. Approximately 3,000 criminal prosecutions per year provide a deterrent effect and signals to our compliant taxpayers that fraud will not be tolerated.” – IRS.gov

Wages for Section 199A

The new IRS proposed regulations confirm that the S corporation treats as wages the reasonable compensation that it pays to its shareholder-employees.

 

That’s good, and it opens planning opportunities. Even better!

 

There had been some commentators who claimed that wages of an S corporation did not count for the Section 199A wage calculation or that it was necessary for the IRS to clarify in its regulations whether such wages were wages for the 199A calculation.

 

Now the tax code and the regulations are aligned with clarity as to the wages paid to the shareholder-employees.

 

And in the new proposed regulations, the IRS has issued a warning: fail to pay a reasonable wage and the IRS will deduct what it thinks is the reasonable wage from your Section 199A qualified business income—and, of course, that would create big trouble on the wages not paid.

 

Rental Property Losses

Drive Time Increases Odds of Deducting Rental Property Losses

Your rental properties provide tax shelter when you can deduct your losses against your other income. One step to deducting the losses is to pass the tax code’s 750-hour test. And one step to finding the hours you need to pass the time test may be your drive times.

 

Trzeciak Case

 

Mariam Trzeciak owned, managed, and rented 14 single-family homes in and near Columbus, Ohio. She and her husband, Marc, on their joint tax returns claimed rental property losses of $126,376 and $151,884 in the two years that were subject to this IRS audit.

 

The IRS revenue agent assigned to examine the Trzeciaks’ returns disallowed the losses as passive losses, claiming that Mariam did not qualify as a real estate professional because she could not count her drive time from her home near Dayton to Columbus, where the properties were.

 

It took Mariam’s CPA, who prepared her returns and assisted with the audit, and then her lawyers almost three years to surface the home-office deduction as the savior. Once it surfaced, the IRS allowed the drive time, and that allowed Mariam to deduct her rental property losses of $126,376 for year 1 and $151,884 for year 2.

 

Leland Case

 

In Leland, Clarence McDonald Leland traveled 13 to 16 hours from Mississippi to Texas and back several times each year to perform necessary work on his 1,276-acre farm in Turkey, Texas.

 

The court noted that the IRS did not object to the inclusion of the travel time in determining Clarence’s participation in the farm. And the court went on to say: “The facts of this case establish that petitioner’s [Clarence’s] travel time was integral to the operation of the farming activity rather than incidental.”

 

Leyh Case

 

The Leyh case involved Richard Leyh and Ellen O’Neill. Ellen owned 12 rental properties in Austin, Texas, about 26 to 30 miles from her home at a ranch in Dipping Springs, Texas.

 

Ellen and Richard deducted a $69,531 loss from their rental operations. The IRS said no because Ellen, without inclusion of her drive time, failed the 750-hour test to establish herself as a real estate professional.

 

The sole question that the court had to address was whether Ellen could include her drive time from her home to the rentals as rental property time. Interestingly, she failed to include her travel time in her well-kept log of time and had to reconstruct that travel time for the court.

 

The court ruled that her reconstruction of the travel time to and from the properties was adequate and ruled that she and Richard could deduct her $69,531 in rental losses on their joint tax return.

 

 

Kalamazoo – Lothamer’s Location of the Month!

Lothamer aims to be the best tax resolution office in Michigan, and in order to do that we need to be able to assist as many people as possible. We are currently operating out of 9 offices throughout the state of Michigan and plan to open more offices and expand our reach to better service you. This month our featured office will be our Kalamazoo site, which is located at:

 

5985 W. Main St. Suite 804, Kalamazoo, MI 49008

 

We can meet you at this location via appointment, call us at 517-484-1040 to set up a time with us!

 

Here is a peek inside our Kalamazoo office:

We have had a lot of success with clients at our Kalamazoo location, here is one of our many 5 star reviews from a previous client:

“Best decision I’ve ever made. Lothamer made a potentially horrible situation go away quickly and easily. Thank you!” – Tim and Alice Galovan

Another indication of how we have been able to help with clients’ finances is on our case number 6145, who we have saved over $60,000.00

Contact us today and make sure Lothamer sets you free! 1-877-829-2455

Tax scams and fake IRS calls

If you have, or even haven’t received a text, call, letter, or email in relations to the IRS for a variety of reasons we have some information and insights relating to the types of scams currently happening and what to do to be proactive in protecting yourself. The IRS never initiates contact with taxpayers via social media, email, or texts when requesting information and never contact you via phone asking for money only communicating through regular postal service mail. The IRS will also never threaten arrest, or send local police to arrest you.

What types of scams you could potentially receive:

Phone calls –

If the scammer calls, they can even impersonate the caller ID to appear as “IRS” and even have information like the last 4 digits of your social security number. They may potentially make threats in regards to being arrested by the police.

Hostage scams have also been brought to light where some people have reported calls claiming they were holding certain family member’s hostage and would harm them if they didn’t pay up an unpaid tax bill.

 

Text messages/Social media/Email –

The IRS will never contact you via this channels and it is important to not click on any links or download any of the information.

 

Requesting payments via iTunes cards and other gift cards –

The IRS will never demand you pay for your taxes via a specific payment method like prepaid debit card, gift card, or wire transfer, or to ask for credit/debit card numbers over the phone.

 

What you can do:

 

Forward fraudulent emails to and any fraudulent texts to (202) 552-1226, after it has been sent to the IRS you should delete the message.

 

Some scammers have been getting and using people’s social security numbers and filing false returns; to help protect yourself against tax-refund fraud you can get an Identity Protection PIN (IP PIN) from the IRS. You request the IP PIN service, before you file your taxes you will receive a new PIN each year that has to be used on the tax return to help verify the tax payer. If you qualify, once you begin to use the service of this program, you cannot opt out.