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IRS warning: Don’t be a victim of ‘ghost’ tax return preparers

Posted By Lisa Novack, IRS, Wednesday, April 11, 2018

IR-2018-89, April 10, 2018

WASHINGTON – The Internal Revenue Service is cautioning taxpayers to avoid the dangers of “ghost” tax return preparers.

According to the IRS, a ghost preparer is paid to prepare a tax return, but does not sign it, either electronically or on paper, as the paid preparer. These phantom preparers who won't put their name on the tax return are a warning sign for taxpayers of a potential scam. 

Here's how it works. The ghost preparer can print the paper return for their client and tells them to sign and mail it to the IRS. Or, for electronically-filed returns, they will prepare it but won’t digitally sign it as the paid preparer. By doing so, the tax return appears to be self-prepared, with no indication that a paid tax preparer was used in completing the tax return -- helping keep the return preparer under the radar.

By law, anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2018 Preparer Tax Identification Number, or PTIN, before preparing any tax return. Tax preparers should sign the tax returns they prepare on paper and include their PTIN on the tax return, which provides the IRS with their identifying information. A paid tax preparer who prepares more than 10 tax returns is also generally required to e-file those returns. In this case, the preparer would digitally sign the tax return.

 

For 2018, the IRS has issued more than 737,000 PTINs to tax preparers.

Dishonest and unscrupulous tax preparers, including some who are “ghost" tax preparers, perpetuate refund fraud and scams that hurt honest taxpayers who are simply trying to do the right thing and file a legitimate tax return. Dishonest preparers look to make a fast buck by promising a big refund, sometimes charging fees based on a percentage of the refund. These shady preparers may also:

  • Require payment in cash only and not provide a receipt.
  • Invent income to erroneously qualify their clients for tax credits or claim fake deductions to enable the taxpayer to get a larger refund.
  • Direct refunds into their own financial account rather than the taxpayer’s account.

The IRS urges taxpayers to review their tax return carefully and ask questions if something is not clear before they sign and file it with the IRS. They should ensure they are comfortable with the accuracy of their tax return. And for any direct deposit refund, taxpayers should make sure both the routing and bank account number on the completed tax return are correct.

 

Taxpayers can report abusive tax preparers to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

 

To find a tax preparer, taxpayers can visit the IRS preparer directory at www.irs.gov/chooseataxpro. Remember: Taxpayers are legally responsible for what is on their tax return even if someone else prepares it.

 

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Tags:  finance  government  IRS  small business  tax planning  taxes 

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Do you have the right amount of federal income tax withholding?

Posted By Lisa Novack, IRS, Friday, March 16, 2018

 

Do you have the right amount of federal income tax withholding?
Find out with a Paycheck Checkup!

 

Recent tax law changes can affect the amount of withholding you should have for 2018. The revised IRS Withholding Calculator can help determine if you can put more money into your paycheck or make sure that you’re withholding enough. File the recently revised Form W-4 with your employer if you need to change your withholding.

(Please click the underlined text below for more information or check the homepage on www.IRS.gov)

 

  1. READ IRS News Release 2018-36 to learn more about the Updated IRS Withholding Calculator, Revised Form W-4 and how to avoid under- and over-withholding of tax.
  2. USE the IRS Withholding Calculator to help make sure you have the right amount of tax withheld from your paycheck.
  3. FILE a new Form W-4 Employee’s Withholding Allowance Certificate with your employer to adjust your withholding if a change is needed.
  4. FIND answers to Frequently Asked Withholding Questions, including the withholding calculator.

(Please consult your employer or tax advisor If you have additional questions about your withholding)

 


Tags:  income  IRS  small business  taxes 

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IRS Updates & News Releases

Posted By Lisa Novack, IRS, Friday, February 16, 2018

IRS Updates & News Releases:

Did you know? One of the best ways to get information is by visiting the IRS Small Business Tax Center where you can learn everything from how to get an Employer Identification Number (EIN) online to how to best navigate an audit.

 

Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency

https://www.irs.gov/newsroom/scam-alert-irs-urges-taxpayers-to-watch-out-for-erroneous-refunds-beware-of-fake-calls-to-return-money-to-a-collection-agency

The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.

 

IRS: Avoid the Rush over Presidents Day Holiday; Online Tools, Resources Can Help

https://www.irs.gov/newsroom/irs-avoid-the-rush-over-presidents-day-holiday-online-tools-resources-can-help

With the surge of tax returns expected during the upcoming Presidents Day weekend, the Internal Revenue Service is offering taxpayers several tips and various time-saving resources to get them the help they need from the IRS quickly and easily. The IRS receives more phone calls on the day after Presidents Day than on any other day of the year. This year, that’s Tuesday, Feb. 20. So, ahead of the Presidents Day weekend, the IRS is reminding taxpayers to “Avoid the Rush,” detailing online options taxpayers and tax professionals can use to get information quickly to avoid busy signals and long wait times on the IRS toll-free hotline. Nearly every tax issue can be resolved from the convenience of a home or office.

 

Avoid the Rush: Track Tax Refunds Online at IRS.gov

https://www.irs.gov/newsroom/avoid-the-rush-track-tax-refunds-online-at-irsgov

With millions of tax refunds being processed, the Internal Revenue Service reminds taxpayers they can get fast answers about their refund by using the “Where’s My Refund?” tool available on IRS.gov and through the IRS2Go app.

 

To Help Taxpayers, IRS Clarifies Some Common Early Filing Season Myths

https://www.irs.gov/newsroom/to-help-taxpayers-irs-clarifies-some-common-early-filing-season-myths

With the 2018 filing season in full swing, the IRS offers taxpayers some basic tax and refund tips to clear up some common misbeliefs.

IRS YouTube Videos:
Claiming EITC or ACTC? Your Refund May Be Delayed --
English | Spanish

 

Key IRS Identity Theft Indicators Continue Dramatic Decline in 2017; Security Summit Marks 2017 Progress Against Identity Theft

https://www.irs.gov/newsroom/key-irs-identity-theft-indicators-continue-dramatic-decline-in-2017-security-summit-marks-2017-progress-against-identity-theft

The Internal Revenue Service announced steep declines in tax-related identity theft in 2017, attributing the success to the Security Summit initiatives that help safeguard the nation’s taxpayers. Key indicators of identity theft dropped for the second year in a row in 2017. This includes a 40 percent decline in taxpayers reporting they are victims of identity theft in 2016. Since 2015, the number of tax-related identity theft victims has fallen by almost two-thirds and billions of dollars of taxpayer refunds have been protected.

 

Tax Pros Urged to Step Up Security as Filing Scheme Emerges, Reminded to Report Data Thefts

https://www.irs.gov/newsroom/tax-pros-urged-to-step-up-security-as-filing-scheme-emerges-reminded-to-report-data-thefts

Seeing the emergence of a new filing season scam, the Internal Revenue Service urges tax professionals to step up security and beware of phishing emails that can secretly download malicious software that can help cybercriminals steal client data. In a new twist, the fraudulent returns in a few cases used the taxpayers' real bank accounts for the deposit. A woman posing as a debt collection agency official then contacted the taxpayers to say a refund was deposited in error and asked the taxpayers to forward the money to her.

 

IRS Announces 2018 Pension Plan Limitations Not Affected by Tax Cuts and Jobs Act of 2017

https://www.irs.gov/newsroom/irs-announces-2018-pension-plan-limitations-not-affected-by-tax-cuts-and-jobs-act-of-2017

The Internal Revenue Service today announced that the Tax Cuts and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64.

 

IRS Issues Guidance on Changes in Accounting Periods Related to the Transition Tax

https://www.irs.gov/newsroom/irs-issues-guidance-on-changes-in-accounting-periods-related-to-the-transition-tax

The Treasury Department and the IRS announced modifications to the procedures for changing the accounting period of foreign corporations owned by U.S. shareholders that are subject to the transition tax under the Tax Cuts and Jobs Act.

 

Tax Issues for Alaska Native American Corporations and Alaska Native Settlement Trusts

https://www.irs.gov/newsroom/tax-issues-for-alaska-native-american-corporations-and-alaska-native-settlement-trusts

The Internal Revenue Service reminds Alaska Native Corporations and Alaska Native Settlement Trusts that they may be able to take advantage of certain benefits in the recently enacted tax reform legislation.

 

IRS Names 8 New IRPAC Members

https://www.irs.gov/newsroom/irs-names-8-new-irpac-members

The Internal Revenue Service announced the selection of eight new members and 14 reinstated members for the Information Reporting Program Advisory Committee (IRPAC), which provides a forum for IRS officials and members of the public to address information reporting issues.

 

IRS Statement on Retroactive Extender Provisions

https://www.irs.gov/newsroom/irs-statement-on-retroactive-extender-provisions

The IRS is reviewing the legislation signed Feb. 9 that retroactively extended and modified numerous tax provisions covering 2017. We are assessing these significant changes in the tax law and beginning to determine next steps. The IRS will provide additional information as quickly as possible for affected taxpayers and the tax community.

 

Tax Tips

https://www.irs.gov/uac/irs-tax-tips

The Right to Be Informed – Taxpayer Bill of Rights #1

Taxpayers with Expired ITINs Should Renew Them Now to File Their 2017 Taxes

Five Things to Remember About Exemptions and Dependents for Tax Year 2017

Six Reasons to E-file

Tax Filing Season is Here – Things for Taxpayers to Consider

How Taxpayers Across the Country Can Have their Taxes Prepared for Free

Tax Preparers: Take these Steps After a Data Loss 

Tags:  IRS  Small Business  Taxes 

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Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency

Posted By Lisa Novack, IRS, Friday, February 16, 2018

IR-2018-27, Feb. 13, 2018

WASHINGTON — The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.

Following up on a Security Summit alert issued Feb. 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme.

These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers' real bank accounts for the deposit.

Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.

Different Versions of the Scam

In one version of the scam, criminals posing as debt collection agency officials acting on behalf of the IRS contacted the taxpayers to say a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency.

In another version, the taxpayer who received the erroneous refund gets an automated call with a recorded voice saying he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security Number. The recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.

As it did last week, the IRS repeated its call for tax professionals to step up security of sensitive client tax and financial files.

The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. The IRS also encouraged taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.

Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will reject because a return bearing their Social Security number is already on file. If that’s the case, taxpayers should follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers unable to file electronically should mail a paper tax return along with Form 14039, Identity Theft Affidavit, stating they were victims of a tax preparer data breach.

Here are the official ways to return an erroneous refund to the IRS.

Taxpayers who receive the refunds should follow the steps outlined by Tax Topic Number 161 - Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.

If the erroneous refund was a direct deposit:

  1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.

If the erroneous refund was a paper check and hasn't been cashed:

  1. Write "Void" in the endorsement section on the back of the check.
  2. Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
  3. Don't staple, bend, or paper clip the check.
  4. Include a note stating, "Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check)."

The erroneous refund was a paper check and you have cashed it:

  • Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
  • If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS assistor that you need information to repay a cashed refund check.
  • Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
  • Include a brief explanation of the reason for returning the refund.
  • Repaying an erroneous refund in this manner may result in interest due the IRS.

IRS mailing addresses for returning paper checks

For your paper refund check, here are the IRS mailing addresses to use based on the city (possibly abbreviated). These cities are located on the check’s bottom text line in front of the words TAX REFUND:

  • ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810
  • ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341
  • AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741
  • BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742
  • CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011
  • FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727
  • KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302
  • MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118
  • OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201
  • PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104

 

To view the original article, please visit the IRS website here.

Tags:  IRS  Scam  Security  Small Business  Taxes 

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IRS Updates

Posted By ASBA, Friday, June 17, 2016

Did you know? One of the best ways to get information is by visiting the IRS Small Business Tax Center where you can learn everything from how to get an Employer Identification Number (EIN) online to how to best navigate an audit.

IRS Launches More Rigorous e-Authentication Process and Get Transcript Online

https://www.irs.gov/uac/irs-launches-more-rigorous-eauthentication-process-and-get-transcript-online
With the assistance of top digital experts at U.S. Digital Service and other security authorities, the Internal Revenue Service launched a more rigorous e-authentication process for taxpayers that will significantly increase protection against identity thieves impersonating taxpayers to access tax return information through the IRS Get Transcript online service.  This enhanced authentication process will also provide a foundation for additional IRS self-help services in the future. After being disabled last spring, Get Transcript Online is now available for all users to access a copy of their tax transcripts and similar documents that summarize important tax return information.

As part of the new multi-factor process, the IRS will send verification, activation or security codes via email and text. The IRS warns taxpayers that it will not initiate contact via text or email asking for log-in information or personal data. The IRS texts and emails will only contain one-time codes. See Fact Sheet 2016-20 for details on what you need to successfully access Get Transcript Online.

Winners of “Tax Design Challenge” Announced; Taxpayer Experience of the Future Illustrated with Creative Displays of Tax Data
https://www.irs.gov/uac/winners-of-tax-design-challenge-announced-taxpayer-experience-of-the-future-illustrated-with-creative-displays-of-tax-data

The Internal Revenue Service announced the winners of its first crowdsourcing competition, called the “Tax Design Challenge,” that encouraged innovative ideas for the taxpayer experience of the future. The three-week competition invited the public to imagine the taxpayer experience of the future and specifically design an online experience that better organizes and presents a person’s tax information.  The goal was to make it easier for a person to manage their tax responsibilities, and use their own tax data to make informed and effective decisions about their personal finances.

IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”
https://www.irs.gov/uac/newsroom/irs-warns-of-latest-scam-variation-involving-bogus-federal-student-tax
The Internal Revenue Service today issued a warning to taxpayers about bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.”  The scammers try to convince people to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.

Remember, the IRS will never:

Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.

Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

Require you to use a specific payment method for your taxes, such as a prepaid debit card.
Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do: Do not give out any information. Hang up immediately.
Contact TIGTA to report the call. Use their IRS Impersonation Scam Reporting web page or call 800-366-4484.

Report it to the Federal Trade Commission by visiting FTC.gov and clicking on “File a Consumer Complaint.” Please add “IRS Telephone Scam” in the notes.
If you think you might owe taxes, call the IRS directly at 1-800-829-1040.
More information on how to report phishing or phone scams is available on IRS.gov.

IRS Explains Application Process for New Certified Professional Employer Organization Program

https://www.irs.gov/uac/irs-explains-application-process-for-new-certified-professional-employer-organization-program

The Internal Revenue Service today released further details on how a business entity can become certified under the tax agency’s new certified professional employer organization (CPEO) program. These organizations handle various payroll administration and tax reporting responsibilities for their business clients and are typically paid a fee based on payroll costs. To become and remain certified under the new program, CPEOs must meet tax status, background, experience, business location, financial reporting, bonding and other requirements. Under the revenue procedure, interested applicants will be able to apply electronically (paper applications will not be accepted) and submit supporting documents through a new online system. For more information, see Revenue Procedure 2016-33.

Health Care Tax Tips

http://www.irs.gov/uac/Newsroom/Health-Care-Tax-Tips2
Check out the tax tips for your health care questions on this page.
Online Tools Help Individuals and Employers Estimate Health Care Law’s Effect on Taxes
Five Facts about the Small Business Health Care Tax Credit

Small Business Health Options Program (SHOP) Marketplace
https://www.healthcare.gov/small-businesses/
The Small Business Health Options Program (SHOP) Marketplace helps small businesses provide health coverage to their employees. The SHOP Marketplace is open to employers with 50 or fewer full-time equivalent employees (FTEs). This includes non-profit organizations. You can enroll in SHOP any time of year - there’s no restricted enrollment period. For more information, visit HealthCare.gov.


The Affordable Care Act and Employers

Information on Key Tax Provisions Affecting Employers

Tags:  IRS 

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