New IRS guidelines for teachers who spread salary through the summer...

School Districts Deal with IRS Rule Change by WebCPA staff

Teachers and other school employees returning from summer vacations are dealing with the prospect of an IRS rule change on deferred compensation that could see their taxes increase by 20 percent if they aren't careful. The rule involves deferred compensation and applies to school districts that offer employees who work for 10 months but are paid over a 12-month period the option of having their payments spread out throughout the year, as many school districts do.

However, the IRS has proposed newer rules that it hopes will alleviate some of the worries. The IRS has released Notice 2008-62, which provides that no deferral income will occur if both of the following conditions apply.

* The arrangement does not defer payment of any of the recurring part-year compensation beyond the last day of the 13th month following the beginning of the service period. For example, if the service period begins in August 2008, all compensation must be received by Sept. 30, 2009. * The total amount deferred is less than a dollar amount provided under Section 402(g)(1)(B) of the Tax Code for that year. For 2008, this amount is $15,500.

The Treasury Department and the IRS anticipate that these rules should exclude from coverage most arrangements for public school teachers and other school-year employees under which they are permitted to annualize school-year compensation, whether or not they are given individual elections. - complete article

IRS Warns Taxpayers of New E-mail Scams...

A scheme in which a tax refund form is e-mailed, supposedly by the Taxpayer Advocate Service (a genuine and independent organization within the IRS which assists taxpayers with unresolved problems), is particularly blatant in the amount and type of information it requests. The top of the form tells the recipient that they are eligible for a tax refund for a specified amount. The form asks for name, address and phone number and a substantial amount of financial information, such as bank account number, credit card number and expiration date, ATM PIN number and more. It also asks for mother's maiden name (frequently used by many people as an account security password). At the bottom is a phony name and signature, claiming to be that of the Taxpayer Advocate. The implication is that the taxpayer must fill in and submit the form to receive a tax refund. In reality, taxpayers claim their tax refunds through the filing of an annual tax return, not a separate application form. - complete article

Careful before you believe those TV ads about eliminating IRS debt...

Missouri AG Sues Tax Resolution Firm

The Missouri attorney general has filed suit against tax representation chain JK Harris & Co., saying the firm did not provide the services promised to resolve its clients' state and federal tax problems. The Missouri lawsuit follows on the heels of a $1.5 million settlement by the chain with 18 other state attorneys general in June, and a $6 million settlement of a class-action lawsuit last year (see Tax Debt Firm to Pay $1.5M in Restitution). The AG's suit is seeking full restitution from JK Harris for Missouri customers who paid up to $4,500 for the services they did not receive.

"JK Harris promises it can help consumers who are having tax problems, but the Missourians who complained to my office told a different story - one of unreturned phone calls, lost paperwork and a worse financial situation than when they started," said Missouri AG Jay Nixon in a statement. - complete WebCPA article