Counseling Notes Collection
Dec 2017 – Jan 2018
WTR Counselor Conference Calls
One idea that came up at the recent WTR gathering in Massachusetts was to have periodic conference calls for counselors and contacts in the NWTRCC Network. The call would offer technical updates and answer questions to keep our counselors more up-to-date and able to respond accurately to queries. A date and time will be announced soon, or contact the NWTRCC office if you are interested in becoming a WTR counselor or contact for your area.
In the last issue of this newsletter we noted no news of WTRs having their debt sent to private
collection. As soon as the issue was printed, our consultant Sam Koplinka-Loehr opened her mail to find just such a letter. The IRS sends a letter with the name of the company assigned your debt, and then the company follows-up with a first notice. Keep us posted with any such news and stories of “what happened next.”
Higher Charitable Deductions for Hurricane Relief
Congress has lifted some limits on how much you can deduct for charitable contributions in 2017 — when those contributions are made to hurricane relief efforts. This may allow you to greatly reduce or even eliminate your federal income tax, something that is not usually easy to do. Ordinarily, the law limits these deductions to a percentage of your Adjusted Gross Income (20%, 30%, or 50% depending on the nature of the donation). Also, this deduction is an “itemized” deduction and is subject to limits on how much of such deductions you can take. The new law removes those limits for donations made between August 23 and December 31, 2017, to an organization involved in hurricane relief efforts in the disaster areas proclaimed in response to hurricanes Harvey, Irma, and Maria.
In addition, if you have an IRA and have reached 70½, there is no tax on required minimum distributions if you donate them directly to charity. Check out the rules, and take advantage of this if you can afford to do so.
We’re watching the progress of the Trump administration’s tax overhaul to see what the final version means for WTRs (aside for hurting just about all middle and lower income people). Filers may lose important means of lowering their taxable income, such as deductions for medical expenses or for state and local taxes, and grad students could see tuition waivers count as income. And we’re trying to keep up with changes to the Affordable Care Act. One version of the proposed bill removes the mandate for health insurance and thus the penalty for not complying with the ACA. Right now the IRS is still planning to reject forms that do not include required health care information and to add the penalty to tax bills. Keep us updated with your real-life stories too.
— Thanks to David Gross for contributions. His Picket Line blog can be read at sniggle.net/TPL.
Telephone tax resister Ellen Barfield contacted the NWTRCC office because her landline phone company, Verizon, was no longer crediting the federal tax on her account. She had been sending the tax refusal form to a Verizon address in Florida for years, but then the post office started returning the mail with “forwarding order expired.” While NWTRCC was investigating, Ellen sent a new report:
Well glory be and my word! I just called Verizon as I’d been dreading, and after less than 10 minutes holding got a woman who bloody well knew what war tax resistance is and appears to have totally resolved my account. Removed about $10 late charges, AND gave me the new monthly reporting address. They apparently sold properties in Florida where I’d been sending the NWTRCC slip every month, and in Texas and California, and the post office was told nothing but not to deliver to those anymore. New address is c/o Verizon, PO Box 4846, Trenton, NJ 08650-4846.
AND I just got a customer service rating call which allowed several keyed-in-answers and 60 seconds to comment. WOW. Somebody at Verizon is taking criticisms to heart. I’ll totally believe it when my bills remove the FET again every month, but it seems to be settled for now!
Move to End Social Security Garnishment?
On February 13, 2017, the New York Times ran an editorial that ended with the simple statement “Congress should exempt Social Security income from garnishment.” Entitled “Haunted by Student Debt Past the Age of 50,” the editorial says that the fastest growing group of student loan debtors is over the age of 60. This means that their Social Security payment can be garnished in order to pay off their remaining loans, often pushing these older folks into poverty.
In 2015, 20,000 Americans over the age of 50 had their Social Security check cut to below the poverty line because of student loans. In the last decade the number of student loan debtors over age 60 has quadrupled from 700,000 in 2005 to 2.8 million by 2015, and the average amount owed has doubled to $23,500. These numbers are a disturbing representation of the cost of education that can lead to excruciating amounts of debt and ruined lives. Interesting that the Times is championing this reform, which would be a great benefit to older war tax resisters also, but for now there is no indication that Congress is feeling the pressure to make the change.
New Collection Letters?
Recently a few people have been in touch with the NWTRCC office or posted on the war tax resistance listserve (firstname.lastname@example.org) after receiving a letter that lists all the tax-due years, and/or non-filed tax periods, and gives one total for the accumulated amount owed including interest and penalties. The letter is headlined something like, “Your account has been assigned for enforcement action. Please call us about your unpaid taxes.” The text says “Enforcement action may include seizing your wages or property.”
Maybe this is finally a real step toward “paperwork reduction” by the IRS. For some years they have been mailing out separate envelopes and letters for each year owed along with duplicate enclosures — and that was a change from the many years they did send a single letter listing all the years and a total due.
Nevertheless, the new style letter does not seem to indicate that the collection process is speeding up, and the Trump Administration has proposed more cuts to the IRS budget. Thus far we have had no reports from WTRs whose accounts were turned over to private collection. If you are noticing anything new, please contact the NWTRCC office!
As a longtime war tax resister with something over $18,000 “taxes due” being demanded from me by the IRS, I had a little qualm about needing to renew my passport. When the time came in June, I sent it in with the renewal application and money order payment but didn’t order a rush turn-around. This inspired a friend to add an additional worry by asking, “But what if you need to get out of the country fast?” I didn’t have to stress for long. Within a month my new passport arrived in the mail, followed by my old one (cancelled) a few days later.
This year a new provision took effect allowing the State Department to cancel or refuse to renew passports for individuals who owe over $50,000 in federal taxes. This news sent ripples of concern through the WTR network, even though most of those concerned owe nothing close to $50,000. Besides my own experience, I have heard from a nonfiler who renewed her passport in July with no problem. Another resister with a substantial “debt” traveled outside the U.S. and worried a bit about getting back in. After the trip he reported, “I don’t think I’ve ever been waved through faster.”
Please keep us updated on your experiences — and especially any problems related to your passport and war tax resistance.
— Ruth Benn
Bits and Pieces
• Tax scams continue. Now the cybercriminals are not only targeting individuals, but they are going after tax professionals. The IRS recently launched a campaign called “Don’t Take the Bait,” which warns tax professions to be wary of emails asking them to click on a link or open an attachment, even when it seems to come from a known source, such as a familiar bank or a colleague.
• There remains confusion over which tax to resist on a phone bill. While cell phones have many taxes added, the federal excise tax is only on local landline service. The Federal Communications Commission has a helpful set of webpages that defines all the taxes and helps people understand their phone bill: fcc.gov/consumers/guides/understanding-your-telephone-bill
• The number of liens filed, levies made, and property seizures performed by the IRS all dropped again last year, following a several-year trend. The agency is beset by lower budgets and greater responsibilities and has had to trim its enforcement activity. You can see charts showing the ups and downs at sniggle.net/TPL/index5.php?entry=02Apr17.
• Those interested in maximizing credits and deductions in order to lower their taxable income (or get it to 0) should read up on the Retirement Savings Tax Credit. If your Adjusted Gross Income is under $62,000 you may qualify for this credit if you put money into a retirement savings account such as a 401k or an IRA. A number of refusers in our network rely on this tax credit (and deduction) to lower their federal income tax to zero. More information on how it works and how to qualify for it are here: sniggle.net/TPL/index5.php?entry=8880
• The number of Americans renouncing their U.S. citizenship hit an all-time high in 2016 (up 26% from 2015). Not only that, but this is after the government jacked up the cost, from a $450 fee to renounce and no fee to relinquish to a $2,350 fee either way. The State Department said raising the fee was about demand and paperwork, but the number of American expatriations still increased after the fee hike.
• In an effort to force users of bitcoin to report their income, the IRS demanded that one company selling bitcoin provide the IRS with detailed data and account information on all of their customers. When the company refused, the IRS sued but then backed down and changed their approach to demanding the information only for those with total transactions over $20,000. Whether the company will comply is still open, but this is an ongoing battle on the part of the IRS to force compliance to the “voluntary” tax system in the digital age.
Additionally, an article by Laura Saunders in the Wall Street Journal, noted that many online sellers and workers in the gig economy fall into an income-reporting shadow. Under a law enacted in 2008 and later clarified by the IRS, many online-platform businesses that take credit-card payments, such as Airbnb, Etsy and ride-sharing firms, fall into a special category. They have to report a provider’s income to the IRS only if that person earns more than $20,000 and has more than 200 transactions; then the company sends both the provider and IRS a Form 1099-K listing gross income. By contrast, freelance workers who don’t use online platforms often face a much stiffer reporting threshold of $600 for Form 1099-MISC.
• The IRS has launched a “view your tax account” service, irs.gov/uac/view-your-tax-account. If you’re a resister and want to keep an eye on how much money they’re after you for, this is a convenient way to do it. This service supplements the agency’s “Get Transcript” service, with which you can get more detailed information about your account, your past filings, IRS actions taken with regards to your account, and what the agency knows about your income sources.
• The Treasury Inspector General for Tax Administration looked at the IRS backlog of unpaid tax accounts and found hundreds in which penalties and interest had been incorrectly calculated by the agency. You might want to check your account transcripts and double-check the IRS’s numbers.
— Thanks for contributions to Bits and Pieces from David Gross, whose blog The Picket Line, sniggle.net/TPL, includes more on these topics.
Four companies — CBE Group, Conserve, Performant, and Pioneer — have begun collection work for the government. The program is starting slowly, but will build over the year. Private collectors are given cases in which the taxpayer has years-old unpaid taxes and the IRS has stopped trying to actively collect. Take note of the company names to distinguish them from the ubiquitous scam callers, and note these requirements:
• The IRS will give taxpayers written notice of accounts being transferred to a private collection agency. The agencies will send a separate letter to the taxpayer confirming this transfer. The initial contact will not be by telephone.
• Private collection agencies will identify themselves as contractors of the IRS and must follow the Fair Debt Collection Practices Act.
• Payment is made directly to IRS by check or at irs.gov, not to the private agencies.
• If you do not wish to work with the assigned private collection agency, you must submit
a request in writing to that collection agency.
Nondirective or “TMI” — and Other Topics
A variety of questions came up during a workshop for current resisters and a counselor training at NWTRCC’s recent gathering in St. Louis.
• A tenet of WTR counseling is to be nondirective, per our list of counseling tips: “We should be careful not to advise or try to convince counselees to follow one particular course of action, but rather assist them to make responsible decisions.” However, one counselor asked how to be nondirectional and yet not overwhelm a counselee with too many options. One response was to begin to narrow it down as the counselor understands the counselee’s personal situation as regards work and assets, along with goals and motivations for wanting to resist. Someone who lives off the grid has different choices than an individual with a career salaried job. This brought up the suggestion to create some kind of “choices in WTR” flow chart, an idea we’ll work on.
• What is the IRS response to low levels of resistance, like $10, $20, $50, even $100?
We don’t know for sure. If you resist at a low level, has the IRS sent many collection letters? Have they collected from a salary or bank account? Or, does this level of resistance get ignored by and large? Contact NWTRCC with your experience.
• Explaining W-4 resistance can make anyone tongue-tied. Being clear about what’s legal or not is important. Encouraging workers to add at least one allowance so that the government is not getting a big loan is usually legal and often recommended by accountants to bring withholding into balance and avoid a big refund or a lot of taxes due. Some in our workshop said most people they know already take extra allowances to have more money in their pocket; others want the refund as a more guaranteed form of savings than “money in their pocket.” Additional allowances that leave tax due for resistance purposes risks penalties. For counselors, we recommend reading NWTCC’s Practical #1 on W-4 resistance frequently, practice filling out the W-4 so you know the form, and then listen carefully to a counselee about their situation before launching into the ins and outs of W-4 resistance.
The Wall Street Journal reported recently that the big three credit rating companies — Equifax, Experian and TransUnion — will begin to remove tax-lien and civil-judgment data from credit reports starting around July 1. This is designed in part to address the problem of inaccuracies in the reports used by rating companies. The data will be removed if it does not include a complete list of at least three data points: a person’s name, address and either a social security number or date of birth. This will improve scores for many consumers, or “expand debt access” as the jargon goes. Many war tax resisters may be among those who see their scores improve. Some readers may question whether “widening the credit box” is a good thing or not, but others may find welcome benefits.
After some workshops recently, it seemed that people were going home with the understanding they could change the allowances on their W-4 to stop all withholding and that doing so is legal. This is probably a confusion when workshop leaders say a little too casually that this is low risk and the IRS hasn’t applied fines in years. An increase in this form of resistance may spark an IRS crackdown, so it is important to refer people to our literature or website information on W-4 resistance. The IRS can assess a $500 civil penalty for a false W-4, and there is also the potential of criminal penalties of up to one year in jail and/or a fine of up to $1,000 for “willfully supplying false or fraudulent information” on a W-4 form to decrease the amount of withholding. In recent years the one repercussion we have seen is that the IRS sends a “lock-in letter” to employers that changes the allowances to 1 unless the individual proves to the IRS’s satisfaction that more than 1 allowance fits their circumstances.
Allen D. Madison, Assistant Law Professor at the University of South Dakota Law School, has written up a good summary of “The Legal Consequences of Noncompliance with Federal Tax Laws.” While there’s an important difference between what the IRS can do and what it will do, this paper is an authoritative source on the power of the IRS: papers.ssrn.com/sol3/papers2.cfm?abstract_id=2914617. In addition, Professor Madison wrote a paper in the Thomas Jefferson Law Review (Vol. 36, No. 2, Spring 2014) that might be of interest to some, titled “The Futility of Tax Protester Arguments.” In it he distinguishes between tax resisters “who disagree with governmental policies and, as a result, refuse to pay taxes to fund such policies,” and protesters who refuse based on arguments that they do not owe tax. See http://bit.ly/2nZ8toh.
The IRS considers bitcoin a kind of investment. If you buy or earn some, and later spend it, the difference between the value of the bitcoin at those times counts as a capital gain or capital loss. You’re supposed to file a Form 8949 to report it. But to bitcoin users, the stuff is a currency, and it would be folly to keep track of how much it’s worth every time you earn and spend it. So it’s little surprise that only about 800 people report bitcoin transactions on Form 8949, according to the IRS.
And, in a nod to Kellyanne Conway, a twitter user posted a picture of Monopoly money with his protest: “I’m going to pay for my taxes this year with alternative cash.”
For readers with some money to invest but concerns about how that money is used, one Maine couple recommends tax-free muni bonds:
Several years ago we chose to finance construction of an elementary school in Lewiston (approved by the voters) which was needed because of the in-coming of many Somalian refugees. Recently we have invested in two school districts because we feel education is very important. Our broker knows we are not interested in any muni-bonds from Bath or Brunswick because Bath Iron Works makes war ships.
Please contact a professional for advice on investing in muni bonds. I am only an amateur who has invested in muni bonds for 30 years in order to pay for life-enhancing projects instead of financing war and preparations for war (including nuclear weapons) via federal taxes. We file a federal tax return but do not owe any money. All this is perfectly legal, and frees up funds for one’s own foreign and domestic giving programs while hopefully preserving some capital to be inherited by children and grandchildren.
— Marilyn Roper
— Thanks for some submissions from David Gross, The Picket Line