DON’T BE A VICTIM TO A TAX SCAM

Each year, people fall prey to tax scams. Stay safe and be informed – don’t become a victim.

If you get involved in illegal tax scams, you can lose money or face stiff penalties, interest, and even criminal prosecution. Remember, if it sounds too good to be true, it probably is. Be on the lookout for these scams:

Telephone Scams

Threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation, and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.

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Your Taxpayer Bill of Rights

Every taxpayer has a set of fundamental rights. The “Taxpayer Bill of Rights” takes the many existing rights in the tax code and groups them into ten categories. You should be aware of these rights when you interact with the IRS.   

Publication 1, Your Rights as a Taxpayer, highlights a list of your rights and the agency’s obligations to protect them. Here is a summary of the first four of ten Taxpayer Bill of Rights:

IRS Updates Phone Scam Warnings

The IRS is again warning the public about phone scams that continue to claim victims all across the country. In these scams, thieves make unsolicited phone calls to their intended victims. Callers fraudulently claim to be from the IRS and demand immediate payment of taxes by a prepaid debit card or wire transfer. The callers are often hostile and abusive.

The Treasury Inspector General for Tax Administration (TIGTA) has received 90,000 complaints about these scams. TIGTA estimates that thieves have stolen an estimated $5 million from about 1,100 victims. To avoid becoming a victim of these scams, you should know:

Do You Know What “PCORI” Is?

Well, you had better. It is the Patient-Centered Outcomes Research Institute, and it is a new fee under the Affordable Care Act.

And it is a nit-picking little fee filed on IRS Form 720 for any employer with a self-funded plan. Form 720 is a 6-page form that was originally intended to be an excise tax on gasoline and other gasoline type products. It is filed quarterly, but for PCORI it is filed annually in the second quarter.

You need to count up the number of covered persons (including dependents), and if your plan year ended on or before 10/1/13 you owe $1.00 per person, and $2.00 per person for years ending on or before 10/1/14. However, a plan ending March 31, 2015 does not have to file until July 2016. Yes, 16 months later. And the definition in the official instructions does not easily interpret this. We had to get it in writing from the insurance company.

Tax Tips if You’re Starting a Business

Seldom would I think of quoting the IRS but these tips for start-ups highlight what needs to be done. Unfortunately, there are decisions to be made and who would trust the IRS to help with those? I love to work with start-up businesses. It can be one of the most rewarding projects that I am involved with.

This is from an email I received from the IRS on July 3, 2013…

IRS Summertime Tax Tips – Tax Tips if You’re Starting a Business

If you plan to start a new business, or you’ve just opened your doors, it is important for you to know your federal tax responsibilities. Here are five basic tips from the IRS that can help you get started.

BRIDGE VERSUS OBAMACARE

I love to play Duplicate Bridge.

The game is totally logical. It requires that you be able to count 4 suits of 13 cards each AND 10 points in each suit and after a few plays you can figure out where the rest of the cards lie.

The same thing cannot be said for the Affordable Care Act (ACA). Despite the fact that we were assured that premiums would go down, they are on the rise. Despite the fact that we were assured that if we liked our policy, we could keep our policy, the truth is that the old policies are going to be squeezed out.

INTERNET SALES TAX

Once again, the United States Senate has demonstrated that it comes from another planet.

They have no concept of what it takes to run a business and the havoc that their so-called “good intentions” will bring.

Is it just me, or does anyone else wonder if it is just “good intentions” or if there is some underlying benefit to a political contributor that drives them?

OBAMACARE

At the end of January, both the Internal Revenue Service and the Department of Health and Human Services issued two sets of proposed regulations related to the individual mandate of the Patient Protection and Affordable Care Act.

And here is what jumps off the pages at me.

If two government bureaucracies have written regulations on the same material, who reviewed it to be sure that there are no conflicts?

If there are conflicts, whose version overrides the other?

TO SERVE & PROTECT – Part 2

I’m continuing with historical situations that have occurred in which we discovered that our clients were going to be taken advantage of.

This is a very strange story and those of our readers who have a mortgage and escrow their real estate taxes should be aware of what can go wrong.

One day, our client receives a letter from the people who are servicing his mortgage. The letter tells him that there is a shortage in the escrow account and that he needs to make it up immediately ($6,000) and that the next 12 months of escrow will increase by $500 per month. At this point, what would you have done? Would you have paid it?

The IRS and Their “Do Right” Department

These are tough economic times for everybody.  But when you owe the Internal Revenue Service money, this is especially so.  I thought I would share some advice with you.

I have a client who has been on a pay-out with the IRS for a number of years.  The effect of the pay-out is that he has paid his tax for the year involved, but now owes the penalty and interest for that year.

Nine months ago, he lost his job and he has court ordered payments which leaves him nothing to pay the IRS with.  I wrote to the IRS explaining the situation and asking for the penalties and interest to be expunged.

They ignored my letter and instead, sent a notice of lien, which implied that he violated their agreement.  They ignored subsequent letters that I wrote as well.  I had to take this further and did.

If you find yourself in this situation, as my client did, where the IRS is not listening to you,  be advised there is a Taxpayers Advocates Office within the IRS.   I got resolution through this process.

They have a Form 911 which allows the Advocates Office to step in and try and remedy the situation.

It’s been several weeks since I contacted this Office.  Today, I was informed that not only did I get the current penalties and interest forgiven, but I also received a refund for my client for prior penalties and interest that were previously paid as well.

Do Right or Due Rights?  Doesn’t matter, the problem was handled.

Our government and its affiliated agencies can be big, bureaucratic, and scary to any individual or small business.  But, when you look hard and have the right advice, these too can be navigated so that you can be heard and your problems handled.