Wednesday, November 22, 2017


As I told you in Monday’s BUZZ introduction, I recently attended the National Association of Tax Professionals’ (NATP) annual year-end tax update class “The Essential 1040”.

I provided a “review” of the class I attended in Parsippany NJ for my fellow tax pros in “The 2017 NATP ‘ESSENTIAL 1040’”.

This class covered the new COLA and inflation-adjusted numbers for tax year 2017 (which I have compiled here), that we preparers will use during the upcoming tax filing season, and new tax law, Tax Court decisions, IRS regulations, and other developments that will affect 2017 returns.

There has not been any substantive new tax legislation, nor any new developments of consequence, and not much of real value of interest to report here.

I did learn that, in addition to the “normal” Standard Mileage Allowance” for business, charitable, medical, and relocation driving, there is also a specific Standard Mileage Allowance for business use of motorcycles and airplanes – for 2017 the amount for motorcycles is 50.5 cents per mile and for airplanes is $1.15 per mile.

A draft copy of the 2017 Form 1040 was included in the workbook, and it appears the only change is to Line 34 on Page 1, previously the line to claim the Tuition and Fees adjustment to income, which now reads “Reserved for future use”.

We were told that the instructions for the 2017 Form 1040 will tell taxpayers who are not requesting direct deposit of their refund to put X’s in all of the boxes at 76b and 76d, where you would enter the bank account information, so crooked IRS employees could not enter their own personal bank information, which, apparently, has been done in the past.

The class included a discussion of the continued concerns of National Taxpayer Advocate Nina Olsen about the use of, and abuse by, outside collection agencies to collect outstanding tax debt, required, despite a history of pervious failures, by the idiots in Congress.

As fellow tax blogger Kelly Phllips Erb, FORBES.COM’s TaxGirl, pointed out in a discussion of this issue when Congress first passed the law that required this nonsense -

About 20 years ago, the IRS tried their hand at using private debt collectors. That lasted a year and was canned amid complaints about unfair practices and harassment. Congress made another go at private tax debt collectors during the George W. Bush administration as part of the American Jobs Creation Act. It didn’t end happily. That program ‘resulted in a number of complaints, including one case in which a private debt collector made 150 calls to the elderly parents of a taxpayer’ even after the collection agency discovered the taxpayer was no longer at the address.”

And -

The 1996-1997 program resulted in a $17 million net loss to the government. That second go in the mid-2000s? Another loss of $4.5 millionThose aren’t costs. They’re losses.”

I doubt the third time will be the charm.

My advice to taxpayers who are contacted by a private collection agency about a tax debt has always been this - If you receive an IRS letter stating that your account has been referred to an outside agency, write to the IRS, and the assigned agency, and tell them that you refuse to deal with a private collection agency and will only deal directly with the IRS because of your privacy concerns.

I have always said -

Outside collection agencies don’t give a rat’s hind quarters about the legitimacy of an alleged outstanding tax debt.  They only make money if they collect money, whether the money is actually due or not.  And they will continue to unethically harass alleged tax delinquents, as they do when collecting alleged private debts, and as they been proven to have done in prior outsourcing programs. 

It appears that NATP agrees, and included in the Appendix to the workbook for “The Essential 1040” class the following “Sample Letter For Returning Collection Cases From the Private Debt Collection Agencies to the IRS” –

Agency Name
Agency Address

Taxpayer Name:
Taxpayer SSN:

Dear Agency Name,

I am in receipt of IRS letter CP40 assigning my account to your agency for collection actions.  I am enclosing a copy for reference and am copying the IRS office that issued this letter on this correspondence.

Pursuant to the Fair Debt Collection Practices Act, I am instructing you to return my account to the Internal Revenue Service immediately for resolution.  I will contact the IRS Collections division to pursue a resolution to this matter.

Please provide a written acknowledgement of receipt of this request confirming that my account is being returned to the IRS for resolution.

I am further requesting you immediately cease all attempts to contact me pursuant to the Fair Debt Collection Practices Act, except for the written acknowledgement that the account is being returned to the IRS.


Taxpayer Name

Great letter, NATP!  Thanks for providing this.


No comments: