LOS ANGELES — A Laguna Beach man is facing four years in prison for failing to return a $110,000 tax refund that the IRS mistakenly sent him.

Stephen Mcdow, who received a tax refund intended for a 67-year-old woman, received her money and spent over half of it paying for students loans and his mortgage.

When the woman found out he received the money, he told her his story. He then reported him to authorities. McDow was arrested and charged with one felony of grand theft by misappropriation of lost property.

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Obama’s File Tax Return: Paid $453k In Taxes On $1.7 Million

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Itemize your tax deductions? Itching for a refund? You’re going to have to wait.

The IRS said that it needs until mid- to late-February to reprogram its processing systems because Congress acted so late this year cleaning up the tax code. The bill, which includes deductions for state and local sales taxes, college tuition and teacher expenses, wasn’t signed into law until Dec. 17.

The bill ensured that the federal income tax rates would not change, and itemized deductions will continue to be allowed in full for high-income taxpayers.

As a result, the 50 million taxpayers who itemize their deductions will have to hold off for a bit before they file. Of course, not everyone files early: only about 9 million of the 140 million U.S. tax filers filed in January or February of last year.

“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” said IRS Commissioner Doug Shulman in a statement. “The IRS will work through the holidays and into the New Year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.”

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Article courtesy CNN Money

WASHINGTON — Nearly 50,000 prison inmates claimed more than $130 million in tax refunds this year without providing any wage information to the IRS, a government investigator says in a report to be released Thursday.

The Treasury inspector general for tax administration stops short of saying the refunds were fraudulently claimed. It does, however, say the Internal Revenue Service should investigate further.

The report is the latest in a series of audits looking at prison inmates claiming tax credits and other government payments. It notes that the IRS identified nearly 250,000 fraudulent tax returns during the 2010 filing season — a 50 percent increase over 2009 — preventing $1.48 billion in fraudulent refunds.

“While the IRS is identifying larger numbers of fraudulent returns, improvements must be made to its screening processes to ensure that returns filed by prisoners get adequate scrutiny,” said J. Russell George, the Treasury inspector general for tax administration. “Expanded and expedited access to wage and withholding information would significantly increase the IRS’s ability to verify information reported on a tax return when processed, and prevent fraud.”

The IRS issued a statement saying the agency takes refund fraud seriously and aggressively fights it.

“The IRS is very successful at detecting and stopping incorrect refunds, including criminal refund fraud, and overall prevents 98 percent of questionable claims from being issued,” the statement said.

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More than 2,000 Northeast Ohio nonprofits are in danger of losing their tax-exempt status Monday if they do not file a new tax return. Many don’t realize it.

As the final days tick away, experts fear that a 2006 change in the tax law will wipe out many local grassroots charities that never realized they had to file.

Jacque Jovic, who founded the Women’s Empowerment Board six years ago, considers herself lucky that her dad recently told her about the change in IRS rules. She is hurrying to file her group’s first tax return.

“When we started the organization, we never had to do that,” she said.

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Article courtesy cleveland.com

We could all use a little found money! Shake the money tree! Check for your name and see if the IRS owes you big bucks!

Look for your name on the IRS website here!

It was every businessperson’s nightmare.

Arriving at Harv’s Metro Car Wash in midtown Wednesday afternoon were two dark-suited IRS agents demanding payment of delinquent taxes. “They were deadly serious, very aggressive, very condescending,” says Harv’s owner, Aaron Zeff.

The really odd part of this: The letter that was hand-delivered to Zeff’s on-site manager showed the amount of money owed to the feds was … 4 cents.

Inexplicably, penalties and taxes accruing on the debt – stemming from the 2006 tax year – were listed as $202.31, leaving Harv’s with an obligation of $202.35.

Zeff, who also owns local parking lots and is the president of the Midtown Business Association, finds the situation a bit comical.

“It’s hilarious,” he says, “that two people hopped in a car and came down here for just 4 cents. I think (the IRS) may have a problem with priorities.”

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Article courtesy sacbee.com

Some people who didn’t file a federal tax return for 2006 have more than 1 billion reasons to reconsider, but they need to do it fast, according to the Internal Revenue Service.

The IRS says it has more than $1.3 billion in refunds for 1.4 million people who didn’t file a 2006 return. But to collect the cash, they will have to file for that year by April 15.

Otherwise, the money will become the property of the U.S. Treasury, as happens with all tax refunds that aren’t claimed within three years.

The IRS estimates the median unclaimed refund for 2006 nonfilers is $604. California is the state with the most nonfilers who qualify for refunds from that year (159,700), with Texas (109,600) and Florida (101,700) right behind.

Some of the eligible people may have skipped filing because they earned too little to require it, even though they had taxes withheld from their wages or made quarterly estimated payments, according to the IRS.

“A lot of those are dependents or younger people … with part-time jobs” — people who didn’t make enough to require filing, but who may have underestimated the refunds they’d receive if they did file or didn’t realize they were eligible for certain credits, said Elaine Smith, enrolled agent and master tax adviser at H&R Block.

Others include people who were required to file, but didn’t. People who failed to submit a required return but are owed refunds will not be penalized for filing that return late, according to the IRS and Smith.

Current- and prior-year tax forms are available on the Forms and Publications page of IRS.gov. People seeking the forms also can request them at 1-800-829-3676.

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Article courtesy cnn.com

AUSTIN, Texas – A man upset with the Internal Revenue Service set fire to his home, got into his small plane and crashed it Thursday into a multistory office building that houses federal tax employees, authorities said.

At least two people were injured in the crash and a third person who worked in the building was unaccounted for, fire officials said. The crash caused a fire that sent black smoke billowing from the seven-story Echelon Building.

Federal law enforcement officials said they were investigating whether the pilot crashed on purpose in an effort to blow up IRS offices.

About 190 IRS employees work in the building, and IRS spokesman Richard C. Sanford the agency was trying to account for all of its workers.

The pilot, listed in FAA and property records as Andrew Joseph Stack 3rd of Austin and identified by law enforcement sources as Joseph Stack, apparently had a long-running dispute with the IRS.

Stack apparently left a long message, dated Thursday, on his company Web site outlining problems with the IRS and said violence “is the only answer.”

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“If you’re reading this, you’re no doubt asking yourself, ‘Why did this have to happen?’ The simple truth is that it is complicated and has been coming for a long time,” the note begins.

A senior law enforcement official told NBC’s Pete Williams the saga began Thursday morning, when police received a domestic disturbance call at Stack’s house. When they responded, they discovered that the man had lit a fire in his house and fled. They said he went to the Georgetown Municipal Airport, got into his small plane and took off.

A short time later, the plane crashed into the office building about 30 miles away. Federal authorities said they did not know whether the man crashed the plane intentionally, though they said it was a distinct possibility, the official told NBC.

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Article courtesy of: msnbc.com

The Internal Revenue Service plans to start regulating paid tax preparers, requiring them to register with the government, pass competency tests and adhere to ethical standards.

The new regulations, announced Monday, will not be in effect for the current filing season — individual tax returns are due April 15. But IRS Commissioner Doug Shulman said tax preparers will be held to higher standards in future years as the IRS steps up its oversight.

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Article courtesy AP via cleveland.c0m