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The IRS "Dirty Dozen"

Posted By Lisa Novack, IRS, Thursday, March 15, 2018

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Don’t fall prey.

For a detailed description of each scam, please refer to the list below:

  • Falsely padding deductions highlighted in IRS 2018 ‘Dirty Dozen’ tax scams - See IR-2018-54
  • IRS ‘Dirty Dozen’ list of tax scams for 2018 contains warning to avoid improper claims for business credits - See IR-2018-49
  • Taxpayers alerted against falsely inflated refunds in ‘Dirty Dozen’ list; Seniors, many others at risk - See IR-2018-48
  • Fake charities make 2018 ‘Dirty Dozen’ list; taxpayers should be alert to scams involving disasters, worthwhile causes - See IR-2018-47.
  • Tax Return Preparer Fraud Ranks on 2018 ‘Dirty Dozen’: Taxpayers Urged to Choose Reputable Tax Preparers - See IR-2018-45.
  • Despite Major Progress, Identity Theft Still on IRS ‘Dirty Dozen’ Tax Scams List - See IR-2018-42
  • Phone Scams Pose Serious Threat; Remain on IRS ‘Dirty Dozen’ List of Tax Scams - See IR-2018-40.
  • Phishing Schemes Make IRS ‘Dirty Dozen’ List of Tax Scams for 2018; Individuals, Businesses, Tax Pros Urged to Remain Vigilant - See IR-2018-39.

 

To read the original article, click here.

Tags:  IRS  small business  tax filing  taxes 

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So You Filed Your Taxes. Now What?

Posted By Kenyatta Turner, LegalShield Independent Associate, Friday, May 6, 2016

YOUR POST TAX FILING CHECKLIST

After filing your taxes there are a few things you can do to prepare yourself for next year’s filing, protect yourself from scammers and even ease worry about a potential audit. This may include storing documents where you can easily find them, protecting your personal financial information from thieves and being ready should you be selected for an audit. 

•    Hold on to your tax documents. Save copies of your return as well as all of the receipts and other documents you use to prepare your taxes. Keep the documents in a safe and accessible location. You may be asked to produce documents to back up your return. Having all of the information organized and accessible will make it easier for you to validate your return should the IRS come calling. It is a good rule of thumb to retain your tax records for six (6) years. While you may not need all of your tax documents for that long, it is better to have them available should you need them.

•    Keep your documents safe. Whether you file online or use a professional you must keep your personal information safe. Tax returns are a goldmine for identity thieves. Never store sensitive information on public computers or transmit financial information through unsecured WiFi. 

•    Watch for signs of identity theft. Your tax information may be at risk of falling into the wrong hand at no fault of your own. Scammers have been targeting human resources and payroll professionals. Scammers have requested W-2s by email using spoofing to pose as company executives. Click here to learn more about this scam. If you believe you may be the victim of identity theft and you have an IDShield membership call (800) 806-3991. If you do not have an IDShield membership visit www.IDShield.com to learn more.

•    Beware of phony audit or IRS correspondence. If you receive a phone call at home or work from someone claiming to be an IRS official collecting a debt do not make a payment or provide them with your personal information. Scammers pose as IRS officials and use severe threats to convince victims to make immediate payment or to provider personal financial information. The IRS will not contact you by phone, email or in person for an audit or to collect back taxes. Legitimate communication from the IRS will come via postal mail. Do not respond to, open or click on any links in emails claiming to be from the IRS. If you believe you may owe back taxes you should contact the IRS directly at 800-829-1040 or the Canada Revenue Agency at 800-959-8281.

•    Be ready if you are audited. Only a small percentage of tax payers will ever face an audit, but the threat alone is enough to make many worry. Often, you will simply be asked to clarify a particular portion of your return rather than face a full audit. If you are audited, your LegalShield family plan offers audit legal services starting with your tax return due on April 15th of your first membership year. This includes an attorney at your initial audit meeting and if necessary an attorney to represent you further at the preferred member rate. If you receive notice of an audit, call your LegalShield provider law firm right away.  http://www.legalshield.com/hub/kenyattaturner

•    Improve the process for next year. If getting your documents together to file and figuring out deductions was difficult this year, learn from those challenges. Is there a better way to track expenses or file receipts? Figure out how to improve the process so you don’t face the same headaches next year.

-LegalShield

 

Tags:  bookkeeping  identity protection  identity theft  IRS  legal competency  tax planning  tax strategy  taxes 

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Personal IRS Identity Theft Experience

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Wednesday, March 30, 2016

In my post of March 11, 2016, “IDENTITY THEFT KINGPEN CAUGHT BECAUSE HE FLUNKED GEOGRAPHY”, I mentioned identity theft was becoming personal.  My daughters’ electronically filed tax return was rejected since someone had already filed a tax return using her social security number.   The solution was to file a paper tax return with the IRS.  In my post, I said to ‘stay tuned for further developments’.

 Monday, March 28, my daughter received a letter from the IRS.  The letter contained instructions to go to a website and answer some personal questions, or call a specific number of the IRS.  She first went to the website and answered some specific questions. One of the questions was the birthdate of a former sister-in-law of her husband.  Another was a question about different addresses.  After answering the website questions, she was then directed to call a specific IRS number.  She called and was placed on hold for an hour.  The fraud department of the IRS is shorthanded and very busy.

Finally, after an hour she was able to talk to an IRS representative.  The representative stated the fraudulent tax return filed had been flagged since it did not fit the profile of her previously filed tax returns.  “The IRS is getting smarter because of the amount of fraudulent tax returns being filed.  We now track the trends of taxpayers.”  After proving her identity, she was told to expect her refund in about six weeks, as opposed to the 10 days it normally takes for an electronically filed tax return. She was also told to expect a letter from the IRS advising her of other action to take, such as contacting the Social Security Administration, Credit Bureaus, and other action to take.  She will also receive a specific pin number to use when filing future tax returns.  

 

Tags:  accountants  fraud  identity protection  taxes 

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IRS Consumer Alert: Scammers Change Tactics

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Monday, March 14, 2016

IRS CONSUMER ALERT: SCAMMERS CHANGE TACTICS

March 14, 2014, Internal Revenue Service Alert, Newsletter IR-2016-40

This alert came across my desk this morning.  I think it is too important not to pass on.  The gist of the article is that identity thieves have new tactics to obtain your personal financial information. 

The swindle is an aggressive and threatening telephone call from criminals posing as IRS agents to verify your tax information.  The fraudster states they have your tax return and want to verify your social security number, bank numbers, or credit card information.  Of interest:  IRS Commissioner John Koskinen personally received one of these calls. 

The swindlers will provide fake titles, fake badge numbers, and provide some personal information to make it look like the call is a legitimate telephone call.  They will be persistent, demanding, and attempt to bully you into paying a bogus tax bill.  They will insist on your sending cash, through a prepaid debit card or wire transfer.  There has been a 400% increase in phishing and in bogus calls. 

Don’t be fooled.  The IRS will not call or email you to verify information!  Hang-up immediately.  Do not respond to the email.  If in doubt call the IRS at 800-829-1040.  You can also post details of the call to  this IRS site: https://www.treasury.gov/tigta/contact_report_scam.shtml.  Alternatively, call 800-36-4484.  

Tags:  fraud  swindle  taxes 

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Identity Fraud Kingpin Caught Because He Flunked Geography

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Friday, March 11, 2016

Hieu Minh Ngo (Pronounced No), a 26-year-old identity theft kingpin made a million or more a year by selling identity information to other identity thieves, who in turn used the information to comprise individuals’ identities.  Ngo started when he was 16. He hacked retail sites and made as much as $10,000 a day. Hacking credit card information was too much work, so he looked for another swindle.  He created a web portal and combined with social engineering was able to create a massive database by hacking into vulnerable companies that contained data of consumer information.  The information was sold to criminals.  He resold his information to criminals for $1. 

Ngo was caught when another hacker agreed to help him restart his business after his web portal identity had been compromised. Unknown to Ngo the other hacker was working with the Secret Service so his sentence would be reduced.  Ngo turned down meeting in New Zealand since he was wanted there and was afraid he would be handed over to the US since he was also wanted there.  He agreed to meet the undercover agent in Guam.  Only after landing in Guam for the meeting did he realize Guam was a US Territory.  He was promptly arrested and is now serving a prison term.

Ngo’s identity files were sold to at least 1,300 criminals and contained a database of at least 200 million Americans.  The potential revenue: 1,300 times the 200 million files, and when you consider the US Population is about 323 million, chances are your identity is compromised.

As a Certified Fraud Examiner I am constantly aware of the enormous amount of identity thefts that exist today.  As Frank Abernathy, of ‘Catch Me If You Can Fame’ stated, “…if your identity has not been compromised it’s just a matter of time before it is!”

Now, for me it becomes personal.  I filed my daughter’s 1040 tax return this last weekend.  I use a sophisticated tax program favored by CPA’s (according the AICPA Journal of Accountancy). I filed her return using the E – filing system of the program. Her return is a joint return with her husband.  Within 30 minutes of filing the return I was notified the IRS had rejected the return.  The problem “Spouse SSN in the Return Header must not be equal to the Primary SSN on another tax return”.  In other words, the IRS thinks she has already filed her tax return and received a refund.  Note: the average refund for an electronically filed 1040 tax return is averaging $3,100 so far for the 2015 tax returns. 

Stay tuned for further developments – currently the problem rests with the IRS to determine what happened. We are anxiously awaiting an IRS response.

Information obtained from the ACFE Fraud Newsletter of March 7, 2014

 

 

 

Tags:  Identity Fraud  security  small business  taxes 

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Arizona small businesses hope for tax reform

Posted By Gabriel Salcido, Arizona Small Business Association, Friday, April 17, 2015
CBS 5 - KPHO

You may be relieved that April 15 is over, but the fight for tax reform is just beginning. Small businesses are banding together to make taxes - and tax season - less burdensome.  (04/16/2015)

Tags:  small business  tax reform  taxes 

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Five Ways To Avoid Tax Foolishness

Posted By Jason Trujillo, Woodbury Financial, Monday, April 6, 2015

Five Ways To Avoid Tax Foolishness by Steve Parrish

Article appeared on April 6th, 2015 on Forbes.com.

Click here to read original article.

Between April Fools’ Day and Tax D-Day (April 1 through April 15), taxes are on many people’s minds. With all the April fooling behind us, what better time to start taking tax savings seriously?

The challenge is to avoid foolish tax moves caused by the panic of an impending deadline and bad news from your tax advisor. I talked with a business owner friend who visited his tax advisor last weekend. He commented, “Once I heard that my taxes had gone up, even though my income hadn’t, I stopped listening.”

Ignoring tax planning opportunities? Foolish.

Another acquaintance told me he planned on saving taxes by “setting up some sort of trust.” Until he understands his plan and is certain that this “sort of trust” is founded on good law, his tax strategy has the potential to be foolish as well.

Taxes may be inevitable, but you have some say over how much you pay in taxes and when. Let’s consider five tax strategies, and ponder whether they are an unwitting, belated April Fools’ joke or are a tax relief tactic to consider for next year’s April 15 filing deadline.

Delay

Some taxpayers are tempted to delay filing their tax return and, even worse, delay paying their taxes. As long as an extension is filed, a delayed return is not necessarily a problem. Delaying payment is definitely a problem. Both interest and penalties will apply.

In many ways, putting off paying the IRS by April 15 is tantamount to a very expensive payday loan. There are better ways to borrow money for taxes than borrowing from the IRS.

Defer

A few years ago, it was considered passé, even foolish to defer income. The thinking was that taxes would go up, so it made sense to pay tax currently while tax rates were low.

The situation has changed. Taxes have already gone up. Accordingly, a legitimate strategy is to defer taxes, particularly as part of a retirement strategy. An advantage to deferring is not only the time value of money saved on the deferred taxes but also the potential to pay future taxes at a lower rate.

Your money may currently be subject to a high marginal tax bracket because of the Alternative Minimum Tax, the Net Investment Income surtax and other high-income-tax regimes. But income you receive during retirement may not be subject to these additional taxes.

You will likely be in a lower income bracket and not subject to those high-tax-bracket regimes. Consider deferring taxes by contributing to your 401(k) or your nonqualified deferred compensation plan. Or, use your after-tax excess income to fund a tax-favored product such as municipal bonds, annuities or cash value life insurance.

Deduct

It’s hard to argue with taking a legitimate tax deduction.

Incurring the expense simply to generate the deduction? Foolish.

The highest tax rate is still not much more than 50 percent. Why pay $2 for something you don’t need just to save $1? There are instances, though, where you get something for your expense. For example, money put into your qualified retirement plan is money saved for retirement – and you get a tax break besides.

There are other tax-advantaged benefit plans such as health, disability and life insurance programs.

Declare

It sounds foolish to say “pay taxes now,” but in many cases this is an opportunistic tax approach. Look for situations where either:

  1. The asset is expected to substantially increase in value in the future.
  2. Or where the product being used has future tax advantages. That way you pay tax on the seed but not on the harvest.

Here’s an example of a future gain idea. In certain situations, the holder of a stock option can elect current taxation in lieu of paying tax when the stock option is actually exercised. It’s commonly called an “83(b) election.” If the anticipated appreciation on the option is high enough, it makes sense to pay tax now, before the appreciation occurs.

For a tax-favored product example, consider a Roth IRA. You use after-tax dollars now but avoid tax on both the gain and the payout in the future.

Decide

Tax planning should not be a fourth quarter activity. Now that you know what last year’s tax bill is –and while it’s still the first half of the year – do something about it. Decide to save future taxes by doing something now.

Not deciding is a decision. The decision to go through the same foolishness next year. So stop fooling around, and start saving taxes.

 

Tags:  after-tax dollars  Alternative Minimum Tax  annuities  April 15th  April Fools  business owner  IRS  life insurance  payday loan  Principal Financial Group  retirement income  Roth IRA  Steve Parrish  tax brackets  tax deduction  tax extension  tax planning  tax rate  tax return  tax strategy  taxes 

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What's Not Keeping The Fastest Growing Companies Awake At Night

Posted By Jason Trujillo, Woodbury Financial, Tuesday, October 21, 2014

What's Not Keeping The Fastest Growing Companies Awake At Night by Steve Parrish. Article originally appeared on Forbes.com on October 17, 2014. Click here to read original article.

I’m in Arizona this week at a meeting where 1,500 business owners and key employees have gathered to:

  •  Share best practices
  • Learn from each other
  • Hear from nationally recognized experts

 These are businesses that have made the prestigious Inc. 500/5000list.

 And what have I learned?

 It’s my third time at the Inc. 500/5000 annual meeting, but there is always so much insight from this  impressive group.

 A colleague and I presented on the financial issues that are keeping business owners awake at night (taxes, retirement planning, employee benefits, etc.). My big takeaway from the discussion was the long list of business issues that are NOT keeping them awake at night.

 These are issues that are being addressed, neutralized or even leveraged.

 Optimism for the overall business environment

 As always, there is a lot of enthusiasm and confidence among Inc. 500/5000 attendees.

 These are entrepreneurs with fast-growing companies.

 Pessimism and insecurity would simply not work for this crowd. That being said, this is the most upbeat I’ve ever seen Inc. 5000 business owners. They are reporting a positive consumer market, good liquidity and a manageable economic environment.

 The elephant in the room

 In past years, the Affordable Care Act (ACA) had been the proverbial elephant in the room. Some disguised their concerns through a political rant, some procrastinated by taking a “wait-and-see” approach, and many simply chose to ignore the law.

 Despite all the bravado, however, I sensed the ACA was keeping them awake at night.

 This year there seemed to be a refreshing turn. Companies have come to accept the reality of the ACA’s existence and have started learning and adapting. These businesses are almost universally building healthcare planning into their strategic and tactical business planning.

 Incorporating the new law has caused some growing pains. One retailer I met with can’t find anyone who wants to provide his successful company health insurance, and his business – by default – is relegated to the federal exchange market.

 But the owner is simply accepting the challenge as a normal part of doing business, and he’s doing what he can to mitigate its effect on the company’s plans.

 Valuations

 Business owners I talked with are receiving unsolicited sales offers with high multiples of earnings. The buyers appear to have available financing and liquidity.

 These are fast-growing companies, of course, and the multiples being offered are dependent on the industry they’re in. Still, compared with three years ago, the merger and acquisition market has heated up significantly.

 Interestingly, notwithstanding these high multiples, there doesn’t seem to be much of a mood among owners to take the money and run. Many want to grow their companies organically and eventually sell their business interests to their other partners or employees.

 Marketing

 Fast-growing companies always seem to have a unique marketing spin, but there are some themes I noticed that apply to a number of marketing strategies.

  •  Retailers who entered the market by selling online are often seeking to additionally sell their products through brick-and-mortar retailers. I talked with both a snack company and a skin care company that sell through the Internet but have started to also sell their products through name-brand retailers in malls. They report that this gives them some credibility to advertise on the Web. They promote that they also sell their products at, say, Bed Bath & Beyond, GNC, etc.
  • Retailers that traditionally sell through their own stores or dealerships are increasingly finding success in selling online. Imagine an RV company that reports excellent sales through Web purchases. A family researches the product online, even buys online, and then comes to the shop to pick up their camper as part of their vacation.
  • Similarly, manufactures and retailers of big-ticket items like specialty vehicles report success in selling used products through the Web. They buy back products they’ve manufactured or sold, post it on the Web and sell it to a new buyer. Consumers are accustomed to eBay-style purchases, and they find peace of mind in buying a used product through the website of the original manufacturer.

 Key employees

 It was particularly encouraging to see that employers want to address recruiting and retaining key employees.

 Business owners recognize that key people are mobile and attuned to pay and benefit issues. The “keep my head down and keep my job” mentality is history among employees.

 Even more encouraging is that many of these owners want to avoid the mistakes of the past, where the solution was to try to mollify the key employee with stock options or restricted stock. A number of business owners are interested in unique and exciting employee benefits (voluntary service days off, weight loss programs, flex time) and goal driven incentive plans.

 They’ve come to realize pay and bonuses work as rewards but not necessarily as retention tools. More than one owner I talked with plans on selling their business soon yet still wants to install long-term incentive plans for key employees.

 In the end, I can only guess what business issues do or don’t keep these successful business owners awake at night, but I did see a lot more willingness to recognize potential problems as opportunities for the future rather than impediments to growth. No wonder they’re among the fastest-growing companies in the country.

 

Tags:  Affordable Care Act  Business Best Practices  business concerns  Business Learning  business planning  business worries  employee benefits  fast growing companies  Forbes  Inc. 500/5000  National Business Experts  Principal Financial Group  retirement planning  Steve Parrish  taxes 

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