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IRS Working Hard To Detect Fraudulent Tax Returns

According to a new report from the Treasury Inspector General for Tax Administration (TIGTA), the IRS has improved their investigations in fraudulent tax returns involving identity theft, but they need to be more factual with their identity theft estimates.

To determine the efficiency of the IRS when it comes to detecting and preventing identity theft, tax problems, and how they work with other agencies and tax industry partners to coordinate information, the TIGTA performed an audit.

Through this report, they found that 568,329 undetected fraudulent tax returns with refunds totaling more than $1.6 billion for tax year 2013, dropping more than $523 million from the prior year.

To reduce these fraudulent activities, the TIGTA believes the new Jan. 31 deadline for employers to file their W-2 forms with the Social Security Administration will be helpful.

Here are six recommendations that the TIGTA provided from investigating the audit, sourced from Accounting Web:

  • Include all accelerated W-2s to compare with tax returns for possible identity theft.
  • Identify and evaluate potential fraud in tax returns by creating a principle.
  • Use state lead data to help evaluate tax returns
  • Use tax return data to find the refund amount associated with electronically filed tax returns that were rejected when computing revenues
  • Review revenues to ensure that duplicate tax returns are deleted.
  • Tax returns with mismatched income because of duplicated income documents should not be considered for potential identity theft.
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Is The IRS Calling, Or Is It A New Scamming Approach?

As the tax season is approaching, so are an increasing number of IRS scams. According to WBIW, the Washington County Sheriff’s Department is reporting a significantly higher number of scams with newer techniques and advanced technology. From threats to fake caller IDs, scammers are quickly misleading everyday people.

Sheriff Roger Newlon states, “One of the more common scams involve callers, who threaten to arrest or prosecute if money is not immediately paid.” In other cases, scammers might attempt to use technology to mask a caller ID to make it seem like the call is coming from the IRS. The majority of these calls come from overseas phone services.

There are a variety of ways to prevent yourself from being scammed. Scammers may use cunning means to deceit you, however, their approach does not reciprocate to actual IRS demands. Therefore, it can be an obvious catch if you observe the following signs:

The IRS will Never:

  • Call to demand immediate payments for back taxes.
  • Call about taxes owed without first having MAILED you a tax bill
  • Deny you an opportunity to question or appeal their claim for IRS tax relief.
  • Require you to use a specific payment method for paying your taxes such as iTunes cards, Greendot Pre-paid cards or wire services such as Western Union or MoneyGram.
  • Threaten to bring in the local police or other law enforcement groups to have you arrested for not paying.
  • Ask for your banking information over the telephone.
  • Send you an email.

Once you are aware of these signs and you encounter one of these attempts, it is important to immediately hang up and contact the IRS. You can also report the incident to your local law enforcement agency and also file a complaint with the Federal Trade Commission. This will ensure efficiency to putting a stop to these scammers.

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Major W-2 Scam Spreading Rapidly, Targeting Schools, Restaurants, Hospitals, And More

All government tax organizations such as the IRS, the state tax agencies and the tax industry sent an important notification to all employers that the W-2 Phishing scan has progressed, dispersing to other regions such as school districts, nonprofits and group organizations. The scammers are conjoining this new scheme with an old scheme of wire transfers that is hurting organizations double time. IRS Commissioner John Koskinen stated, “This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”

The IRS, the tax industry and the state tax agencies work together to provide safety precautions to taxpayers, which makes it extremely difficult for cybercriminals to proceed with fraudulent activities. These criminals use different hoaxing methods to conceal the email they are sending and make it seem like it is an email from a boss or executive leader from your organization. This con is referred to as business email spoofing (BES) or business email compromise (BEC). The email gets sent to the human resources department or payroll department asking for a list of all employees W-2 for tax purposes. Since it is a disguise, the employees send the requested information without confirming if the email was actually sent from their executive leaders. However, when an employer reports this con to the IRS, they can take the necessary steps to protect their employee’s private information and advise the employer on how to proceed.

Although the Security Summit has notified taxpayers of this scam last week, they are seeing an increase in identity theft within a week. They urge all employers to be attentive to the W-2 scam because it is evolving and spreading to school districts, casinos, restaurants, staffing agencies, healthcare, shipping and freight and many more businesses. Businesses who received the email last year have reported that they are receiving the email again this year, but earlier in the tax season. Employers should proceed with caution and notify all their employees about the scam that is circulating and cultivating day by day.

Furthermore, scammers are emailing the employees and asking not only for the employees W-2 list, but they are also requesting a wire transfer of a certain amount be made promptly. Employees who succumb to the con are costing their employers thousands of dollars on top of their employee’s private information being released. The IRS and related tax governments are encouraging all employers to discuss these issues with their employees and urge them to ignore all emails that ask for such information. They are also insisting employers to create a policy that prohibits employees to release private information about other employees.

If an employer is unfortunate enough to go through something like this they should email to phishing@irs.gov and place “W2 Scam” in the subject line. They can also file a compliant to with the Internet Crime Complaint Center (IC3,) run by the FBI

Taxpayers should also be advised to be safe online. Searching certain things such as “tech support” may also have a scam embedded within it, so if any information is required before gaining access to the information you want to receive, the IRS urges taxpayers to disregard it. We encourage you to research on this issue and go IRS’s website for more information on what options you have if you are a victim of W-2 identity theft.

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Owe The IRS? You Could Lose Your Passport.

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Are you finally cashing in your vacation time to take a Euro trip? Well, if your travel plans include a passport and an airplane, then you need to be mindful about a new law that could prevent you from enjoying your time off from work, according to Forbes.

The FAST Act (Fixing America’s Surface Transportation) was implemented as a law on December 4, 2015. The purpose of the FAST Act was to create funding for highways, roads and other means of transportation. In this act, a new clause is implemented that allows the State Department to seize passports of “seriously delinquent” taxpayers. Because the IRS does not have the authority to seize passports, they must advise with the State Department about the taxpayers who have not paid their dues. Previously, the State Department had the authority to seize passports, but they did not have the authority to gain access to taxpayer information because of the breach of privacy laws.

The IRS has found a loophole to stop taxpayers from enjoying leisure time if they owe money to the government. Therefore, now the State Department has the ability to refuse to issue or renew passports for anyone who owes the government over $50,000, which includes any interest and penalties. Along with the State Department, the Secretary of the State is also allowed to invalidate a passport that has been already issued to a delinquent taxpayer. The amount for a “seriously delinquent” tax debt may change each year due to cost of living and inflation, however there are some exceptions to this law.

If you have settled an Installment Agreement or an Offer in Compromise, then this newly implemented law will not affect you. You are also in the safe zone if you are scheduled for a Collection Due Process hearing that has to do with a levy or an innocent spouse claim, where the tax debt has been suspended. Unfortunately, there is no grace period for the State Department to revoke an existing passport if you are a delinquent taxpayer. The IRS does however notify you when they list you as a “delinquent taxpayer” to the State Department. They then give you 90 days after seizing your passport to either make the payment, resolve any errors that were made or enter yourself into a payment plan.

It does not stop there! If you’re a taxpayer who is stuck in this situation and say to themselves, “Okay, I just won’t travel out of the country! Walla! Problem solved!” You are wrong! There is another law implemented called the REAL ID Act that prohibits federal agencies from accepting driver licenses or identification cards from taxpayers who have a debt travelling domestically. Well, this puts you in a sticky situation! Now you can’t even travel in state! This Act was implemented to encourage taxpayers to settle their debt before enjoying a vacation. After all, if you can pay for a vacation, then you should be able to pay your debts!

As of January 22, 2018 taxpayers who have a debt and are traveling with an identification card or drivers license must have another form of identification, usually a passport, which is acceptable for TSA (Transportation Security Administration). The only exception is if the state has extended the right to the traveler, otherwise all other travelers must have alternative proof of identification. In the upcoming years, the rules will be reinforced strictly and proficiently. In October 1, 2020 every traveler will need a REAL-ID compliant license to travel domestically. Alterative forms of identification such as passport will also be acceptable.

Why let the government dictate when or if you can take a trip, or enjoy time off with your loved ones. Filing your taxes accurately and on time is crucial for your credit, your freedom and your sanity. Go on that Euro trip and travel the world because you only have one life and you shouldn’t let the government prevent you from creating unforgettable memories.

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You May Qualify For Earned Income Tax Credit

Earning 53k or less? If you are, you may be eligible to qualify for Earned Income Tax Credit (EITC). EITC is an income tax credit for rural taxpayers, who are living paycheck to paycheck. Since it’s a refundable credit, there are certain criteria you must meet before you can apply. If you do qualify and claim it, you are capable of paying less on federal tax, paying no tax or receiving a large tax refund. EITC refunds can be as large as about $6,000 or as small as $500 depending on your qualifications, family size, and children’s qualifications. The following is some basic information about how you know if you are qualified for EITC.

How do I know if I am qualified for EITC?

  • You have earned income and adjusted gross income within certain limits; AND
  • You meet certain basic rules; AND
  • You either: meet the rules for those without a qualifying child; OR
  • Have a child that meets ALL the qualifying child rules for you, or your spouse if you file a joint return.

Some of the Basic Rules

  • You or your child must have a social security number
  • Must file either one of these: married filing jointly, head of household, qualifying widow or widower, or single.
  • Your tax year investment income needs to be $3,400 or less for the year.
  • Must not file Form 2555 (see IRS website for more information about the form)
  • You must earn an income that is greater than $1
  • Both your earned income and adjusted income needs to be under a certain amount (see IRS website for more details)

Contact Tax Defense Partners today for additional details.

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2017 Tax Filing Season Has Officially Opened

The IRS is successfully beginning to accept 2016 income tax returns with over 153 million returns estimated to be filed. You have until April 18,2017 to file your taxes before you have the IRS knocking on your door, unless you have already filed for an extension. The deadline to file your taxes for those who have been granted an extension is October 16, 2017. The IRS has extended its due date to file your taxes because the usual April 15 deadline is on a Saturday, which would be beneficial because it would give taxpayers until the following Monday, but April 17th, is a holiday. Last year, about 111 million dollars in refunds was issued to taxpayers, but the IRS expects more than about 70% of taxpayers to receive their refund in 2017.

If you experience a refund delay

Refunds are normally issued in less than 21 days, however a new law passed that now requires the IRS to withhold tax refunds for taxpayers who claimed Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until February 15,2017. Even if some of the portion of the refund is not a part of EITC or ACTC, the IRS must hold the entire refund. This gives the IRS time to process the paperwork and detect and prevent fraud.

Let Tax Defense Partners file your tax returns

The IRS and State Taxing Agencies will not allow any Taxpayer to establish a formal agreement until all their returns are filed.  Unless you file your 2016 Tax Return on time, you may be jeopardizing your current or future agreement.  Don’t let the IRS get the upper hand.

If you secure Tax Defense Partners as your tax preparer right away you will get first pick on your tax preparation appointment day and time. Our expert tax preparation team will make sure you get every credit and deduction you deserve. Call us today to get started.

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Alabama Taxpayers Beware: Broadband Consultants Collect Hefty Fees

Consultants recommending the construction of expensive broadband networks are inundating local governments across the country, according to Yellow Hammer News. Unfortunately, these broadband networks are built using taxpayers’ money. Consultants believe that these new and improved networks will attract business money and improve the quality of life for the residents. This is all true, but who is flipping the bill on this stuff?

According to critics, these consultants are just telling the bureaucrats what they want to hear. These bureaucrats represent the local governments. CTC Technology & Energy consultants managed to wiggle their way into constructing a $57 million broadband network with the help of Huntsville Utilities.

Consultants in various cities and counties across the country have done research regarding these taxpayer subsidized broadband networks, and have found that it’s hard to find a government that hasn’t been offered high-speed internet in some capacity. Both fully-fledged broadband networks and backbones are the most popular options being pushed by consultants. With a backbone, the internet providers can connect to it and then provide high speed internet for all of their customers.

Community Broadband LLC are expecting profits of around $400,000 by the fifth year if the city of Midway, GA built it’s $3.2 million network. The most favorable responses to this proposition are coming from business-owners since they can then subscribe to the high-speed internet service to conduct business faster.

Peachtree City decided to scrap it’s government broadband project and go with local providers to serve the citizens’ broadband needs. The city continues to use Community Broadband as a consultant on communication issues. Consultants cannot be held liable for what the voters decide on.

Marietta sold its FiberNet broadband network at a loss of $24 million in 2004. The network had 180 customers along its 210 mile stretch from Kennesaw to Alpharetta. The city couldn’t keep up with the equipment upgrade costs, so they had to let it go.

The promises made to local governments by consultants are very seductive. The consultants and network builders profit handsomely while the taxpayers are caught in the mess. Local taxpayers are stuck with mountains of debt after municipal broadband networks go down. They have the odds stacked against them.

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Obama’s New Executive Order Will Turn New U.S. Presidents Into Taxpayers

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Obama’s recently signed Executive Order now requires that the President of the United States be a federal taxpayer. According to Andy Borowitz from NewYorker.com, President Obama exclaimed that “Since the President has such a large say in how federal taxes are spent, it only makes sense that he or she contribute to those taxes too.”

Moreover, President Obama reiterated that people should not look too much into the timing of this Executive Order being signed, saying that “it just seemed like the right thing to do”. Andy Borowitz declares that the signing of this executive order was met with opposition by Republicans on Capitol Hill. Paul Ryan, one of the more prominent opponents to the Executive order, claimed that “This is nothing less than an attack on the American Dream of paying no taxes”.

Accordingly, this didn’t phase the President, as he is getting another Executive Order ready that would require all cabinet members to have held at least a summer job relevant to their posts, Borowitz states.

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2017 Tax Season Begins January 23rd

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The Internal Revenue Service had already dropped a bombshell in recent news when they announced that some taxpayers will face a delay in receiving their tax refund with the deadline to file taxes being on April 18th. Recently, the IRS just announced that the next tax season will officially begin on January 23, 2017.

The IRS predicts that 153 million individual tax returns will be filed next year, with 75% of those being submitted electronically using tax software. With that being said, taxpayers can begin submitting electronic tax returns on January 23rd. You can also submit returns to tax preparers before the official start date. That way, when January 23rd comes around the corner, they will be able to submit it to the IRS’ system.

During this upcoming tax season, as mentioned before, taxpayers who claim the Earned Income Tax Credit, or the Additional Child Tax Credit, should expect a slight delay of just a few days to receive their tax return. If you fall into this category, your return will be held until at least February 15th. Unfortunately, if you count the holidays during the month of February, and the weekends, you may not be swimming in cash until late February.

IRS Commissioner John Koskinen urges all taxpayers to plan ahead when planning a date and time to file their taxes. He encourages all taxpayers to hold onto their prior-year tax returns for 3 years at a minimum. This is due to the fact that many taxpayers will be switching things up by using different tax software programs this tax season, and that may require their gross adjusted income from 2015 to file electronically. Anyone looking forward to using the electronic filing pin for this filing season is out of luck, since it is no longer an option.

The filing deadline this year doesn’t fall on April 15th as it usually does, it falls on Tuesday April 18th, 2017. This is due to the fact that  April 15th is on a Saturday this year, and the Monday after is Emancipation Day in the District of Columbia. In the meantime, Koskinen, and the rest of the IRS are preparing for more than 150 million returns this year. “Our systems require extensive programming and testing beforehand”, he states.

Identity theft and tax refund fraud is a big issue for the IRS that they are working tirelessly to prevent. They are constantly adding new procedures to reduce this issue and continue the progress they have made in previous years regarding identity theft and tax refund fraud.

Although this filing season is seeing a few changes being made, it is still best for all taxpayers to file their taxes the way they regularly file them. Just remember that January 23rd is when it all begins, and April 18th is when it all ends.

(Photo by David McNew/Getty Images)

IRS To Lower Standard Mileage Rates

(Photo by David McNew/Getty Images)

(Photo by David McNew/Getty Images)

The IRS has issued an option of using standard mileage rates to calculate costs associated with operating vehicles for business, charitable, medical, or moving purposes in order to calculate deductible costs, according to Jeff Stimpson from AccountingToday.com. Beginning January 1st, standard mileage rates for the use of cars, vanes, pickups, or panel trucks, will be 53.5 cents per mile (down from 54 cents per mile in 2016), 17 cents per mile for medical or moving purposes (down from 19 cents per mile in 2016), and 14 cents per mile driven in service of a charitable organization.

Accordingly, Donna Koppensteiner, senior vice president of business development for Runzheimer, claims that the drop in cents per mile was due to the declining fuel prices. Ironically enough however, such a drop was largely offset by rising vehicle insurance and vehicle maintenance costs.

Stimpson claims that the IRS reiterated the fact that using standard mileage rates is only an option and taxpayers can choose the actual costs of using their vehicles rather than using the standard mileage rates. Stimpson states that “A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost recovery System (MACRS), or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.”

Thus, Stimpson states that these and other requirements that fall under Rev. Proc. 2010-51 Notice 2016-79 “contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate” along with the cost to taxpayers for computing the allowance under both a fixed and variable rate plan.