Scammers Impersonating IRS Agents Called You Yet?

The Treasury Inspector General for Tax Administration (TIGTA) is making significant progress in its investigation of the IRS impersonation scams that are sweeping the nation. These scams have caused reported taxpayer losses of more than $36 million and averaging more than $5,700 per taxpayer. To date, TIGTA has logged approximately 1.2 million calls reported by taxpayers, and nearly 6,400 people have reported that IRS impersonators have fleeced them.

In one instance, a taxpayer was so convinced the scammer was an IRS agent he rushed off to make a payment and was involved in a traffic accident. He was so worried about the scammer’s threats of legal action that he actually left the scene of the accident so he could promptly get the funds wired to the scammer. In this case TIGTA was able to trace the victim’s wire transfer and ultimately nabbed a ring of five scammers.

But these stories generally don’t have happy endings. It is important for everyone to understand that the IRS never demands payment by wire, MoneyGram, debit cards etc., and always makes initial contact by mail.

Protect Yourself and Loved Ones from Being a Scam Victim:

  1. Hang up on callers claiming to be IRS agents, IRS collection agents or state taxing authorities demanding immediate payments. They are not legitimate.
  2. Take the time to educate your loved ones, especially those who might be vulnerable, about these scams and take steps necessary to protect them from scams.
  3. Call this office if you need assurances or wish to confirm you do not have an outstanding balance with a tax authority.
  4. Report scams and attempted scams on the TIGTA website.

Protect Against Identity Theft

In addition to scammers, watch out for those ID thieves out there looking for vulnerable IDs to steal. You may think it will never happen to you, but if it does, it could take years to straighten out. Protect yourself against ID theft by limiting the exposure of your personal and financial information as much as possible.

What do ID thieves need to create havoc for you? Your name, Social Security number and birth date!

Here are some tips to limit your ID exposure:

  • Don’t carry your Social Security card – or any document that includes your Social Security number – in your wallet, purse or briefcase. Your Social Security card combined with your driver’s license provides scammers with the three pieces of information they need.
  • Don’t give out either your SSN or your birth date without questioning the need and making sure it is a legitimate request and really necessary.
  • Limit the number of credit cards and credit accounts you have. Each account has your SSN, so the more accounts you have, the greater the chance you’ll be caught up in a data breach and your ID will be compromised. It is far easier to deal with one credit card company than several if your ID is breached.
  • Be proactive and periodically change the passwords for your online accounts that include sensitive financial information. It is a pain, but it could avoid you a major headache.
  • Although only the last four digits of your SSN are used on most financial documents, you should still pay close attention to documents that include your full SSN or birth date. Limit their duplication and distribution and ensure they are properly disposed of when you discard them.
  • Never include your SSN, birthdate or other sensitive financial information in an e-mail or in documents attached to an e-mail.

Use common sense and follow the “need-to-know” rule when disclosing your financial information. Careless safeguarding of your information can lead to big problems.

Think Your ID Has Been Compromised? You should immediately:

  • File a complaint with the Federal Trade Commission at www.identitytheft.gov and complete a report. The site will develop an ID Theft Affidavit that you can use when reporting the ID theft to creditors and others. The site will also walk you through various steps to be taken depending upon the specifics of your ID theft.
  • Contact one of the three major credit bureaus to place a “fraud alert” on your credit records and review your credit report for fraudulent activity:
    o Equifax, www.Equifax.com, 1-800-766-0008
    o Experian, www.Experian.com, 1-888-397-3742
    o TransUnion, www.TransUnion.com, 1-800-680-7289
  • Contact your financial institutions and close any financial or credit accounts opened without your permission or tampered with by identity thieves.
  • Report any fraud to your local police and retain a copy of the police report to use when reporting fraud to other agencies or creditors.

Contact us

Steps can be taken to avoid fraudulent returns being filed using your SSN. Even if someone has already e-filed a return and claimed a refund under your SSN, your refund may still be safe.

However, you cannot e-file and instead must file a paper return with the proper documentation. You will ultimately receive the refund you are due, but it will be severely delayed. Once the IRS recognizes that your SSN was used to file a fraudulent return, it will block your SSN from filing. You’ll be assigned an alternative filing number for the subsequent year.

For more information on how and what to file when someone else has filed using your SSN, please contact this office.

Don’t Panic if You Receive an IRS Notice

Complications If it is not your refund check in the mailbox, that letter from the IRS will probably increase your heart rate a little. Don’t panic; many of these letters can be dealt with simply and painlessly.

Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account, or to request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what needs to be done to satisfy the inquiry.

However, the letters also must advise you of your rights and other information required by law. Thus, these letters can become overly lengthy and sometimes difficult to understand. That is why it is important to either call this office immediately or forward a copy of the letter or notice so it can be reviewed and handled accordingly.

Do not procrastinate or throw the letter in a drawer hoping the issue will go away. Most of these letters are computer generated and, after a certain period of time, another letter will automatically be produced. And, as you might expect, each succeeding letter will become more aggressive and more difficult to deal with.

Most importantly, don’t automatically pay an amount the IRS is requesting unless you are positive it is correct. Quite often, you really do not owe the amount being billed, and it will be difficult and time consuming to get your payment back. It is good practice to have this office review the notice prior to making any payment.

Unfortunately, many taxpayers are issued these letters and don’t know it because they have moved and left no forwarding address. Even though the IRS will register your address change when you file your annual tax return, that may not be timely enough, especially if your return is on extension or you are behind in your filings. It is always better to notify the IRS, and your state if applicable, that you have a new address, just as you would your family and financial and business affiliations. You may not want to receive correspondence from the IRS, but it is easier to deal with the first notice. The complications can only increase as the notices go unanswered. The IRS provides Form 8822 – Change of Address for taxpayers who have relocated between tax filings.

It is important for any IRS correspondence to be dealt with promptly and correctly. This office can handle these matters for you; so please call for assistance.

How Long Are You on the Hook for a Tax Assessment?

A frequent question from taxpayers is: how long does the IRS have to question and assess additional tax on my tax returns? For most taxpayers who reported all their income, the IRS has three years from the date of filing the returns to examine them. This period is termed the statute of limitations. But wait – as in all things taxes, it is not that clean cut. Here are some complications:

You file before the April due date – If you file before the April due date, the three-year statute of limitations still begins on the April due date. So filing early does not start an earlier running of the statute of limitations. For example, whether you filed your 2014 return on February 15, 2015 or April 15, 2015, the statute did not start running until April 15, 2015.

You file after the April due date – The assessment period for a late-filed return starts on the day after the actual filing, whether the lateness is due to a taxpayer’s delinquency, or under a filing extension granted by IRS. For example, say your 2014 return is on extension until October 15, 2015, and you actually file on September 1, 2015. The statute of limitations for further assessments by the IRS will end on September 2, 2018. So the earlier you file those extension returns, the sooner you start the running of the statute of limitations.

If you want to be cautious you may wish to retain verification of when the return was filed. For electronically filed returns, you can retain the confirmation from the IRS accepting the electronically filed return. If you file a paper return, proof of mailing can be obtained from the post office at the time you mail the return.

You file an amended tax return – If after filing an original tax return you subsequently discover you made an error, an amended return is used to make the correction to the original. The filing of the amended tax return does not extend the statute of limitation unless the amended return is filed within 60 days before the limitations period expires. If that occurs, the IRS generally has 60 days from the receipt of the return to assess additional tax.

You understated your income by more that 25% – When a taxpayer underreports his or her gross income by more than 25%, the three-year statute of limitations is increased to six years. In determining if more than 25% has been omitted, capital gains and losses aren’t netted; only gains are taken into account. These “omissions” don’t include amounts for which adequate information is given on the return or attached statements. For this purpose, gross income, as it relates to a trade or business, means the total of the amounts received or accrued from the sale of goods or services, without reduction for the cost of those goods or services.

You file three years late – Suppose you procrastinate and you file your return three years or more after the April due date for that return. If you owe money, you will have to pay what you owe plus interest and late filing and late payment penalties. If you have a refund due, you will forfeit that refund and perhaps get stuck with a $135 minimum late filing penalty. No refunds are issued three years after the filing due date.

10-year collection period – Once an assessment of tax has been made within the statutory period, the IRS may collect the tax by levy or court proceeding started within 10 years after the assessment or within any period for collection agreed upon by the taxpayer and the IRS before the expiration of the 10-year period.

Remember not to discard your tax records until after the statute has run its course. When disposing of old tax records, be careful not to discard records that prove the cost of items that have not been sold. For example, you may have placed home improvement records in with your annual receipts for the year the improvement was made. You don’t want to discard those records until the statute runs out for the year you sold the home. The same applies to purchase records for stocks, bonds, reinvested dividends, business assets, or anything you will sell in the future and need to prove the cost.

If you are behind on filing your returns and would like to get caught up, please give this office a call. If you discovered you omitted something from your original return and would like to file an amended return, we can help with that as well.

Important Times to Seek Assistance

Waiting for your regular appointment to discuss current tax-related issues can create problems or cause you to miss out on beneficial options that need to be timely exercised before year-end. Generally, you should call this office any time you have a substantial change in taxable income or deductions. By doing so, we can advise you about how to optimize your tax liability, avoid or minimize penalties, estimate and pre-pay required taxes, document deductions, and examine and explore tax options. You should call this office if you or your spouse:

  • Receive a large employee bonus or award
  • Become unemployed
  • Change employment
  • Take an unplanned withdrawal from an IRA or other pension plan
  • Retire or are contemplating retirement
  • Move or otherwise change your address
  • Exercise an employee stock option
  • Have significant stock gains or losses
  • Get married
  • Separate from or divorce your spouse
  • Sell or exchange a property or business
  • Experience the death of a spouse during the year
  • Turn 70½ during the year
  • Increase your family size through birth or adoption of a child
  • Start a business or acquire a rental property
  • Receive a substantial lawsuit settlement or award
  • Get lucky at a casino, lotto, or game show and receive a W-2G
  • Plan to donate property worth $5,000 ($500 if a vehicle) or more to a charity
  • Plan to gift more than $14,000 to any one individual during the year

 

In addition, you should call whenever you receive a notice from the government related to your tax return. You should never respond to a notice without first checking with this office.