IRS warns of latest Tax scams

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.”

Even though the tax deadline has come and gone, scammers continue to use varied strategies to trick people, in this case students. In this newest twist, they 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.

“These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,” said IRS Commissioner John Koskinen. “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Some examples of the varied tactics seen this year are:

Demanding immediate tax payment for taxes owed on an iTunes gift card.
Soliciting W-2 information from payroll and human resources professionals--IR-2016-34
“Verifying” tax return information over the phone--IR-2016-40
Pretending to be from the tax preparation industry--IR-2016-28
The IRS urges taxpayers to stay vigilant against these calls and to know the telltale signs of a scam demanding payment.

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.

Courtesy of IRS

Depreciation and Capitalization Regulations

Over the last few years one of the most dynamic portions of the tax code has been depreciation and capitalization regulations.
Between the changes to capitalization rules, updates to bonus depreciation and limits to Section 179 expensing, many professionals have had a hard time keeping up with the current rules. Now that we are through another tax season, it is a good time to sit back and review where we stand as it relates to capitalization and depreciation and how to utilize the rules for tax planning.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

5 IRS scammers arrested in Miami

Treasury Department investigators have filed criminal complaints against five individuals in three states, accusing them of fleecing nearly $2 million from more than 1,500 victims as part of a scheme to impersonate IRS agents.
According to criminal complaints filed in Minnesota, Arkansas and Texas, the five individuals pretended to be IRS agents, threatening jail time if their victims didn't pay up.
CNN first reported on these scams a year ago with the story of a radio talk show host and former NFL player who lost thousands of dollars.
The criminal complaint filed in Minnesota says two of the alleged scammers managed to collect nearly $250,000. They got $180,000 in just four days at MoneyGram locations in the state.
The five suspects were arrested in Miami on May 23, according to the Treasury's Inspector General for Tax Administration.
"The scammers are relentless but so are we," said Inspector General J. Russell George.
Officials say they have documented taxpayer losses of more than $36 million in recent years. Many of the scammers are based overseas, with a concentration in India, CNN's initial reporting found.
The new arrests show the scams have moved onshore.
Senator Susan Collins, a Maine Republican, said the arrests stemmed from a hotline established after Congressional hearings last fall.
Both Collins' office and Treasury say it's the largest action taken against IRS impersonators. The defendants were charged with wire fraud and conspiracy to commit wire fraud. The five arrested and their attorneys could not be reached for comment.

Courtesy of CNN

Webinar to assist International Taxpayers

The Internal Revenue Service on Wednesday will hold a free online, web-based information session to assist U.S. overseas taxpayers in understanding their filing obligations.
The webinar will take place on May 25, 2016, from 1-3 p.m. EDT, (18:00-2100 hours UTC-0). To attend this webinar, taxpayers or tax professionals interested in learning more about these requirements, should log in using the Overseas Taxpayers webinar link. It is recommended attendees log in 10 minutes prior to the start time.
The session will be recorded and made available at a later time.
The IRS also today reminded U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2015, that they may have a U.S. tax liability and a filing requirement in 2016. The IRS encourages taxpayers with foreign assets, even relatively small amounts, to check if they have an FBAR and/or FATCA filing requirement.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999.

To attend click here

Take time to review your e-file application

As you are transitioning into the next filing season, remember to take time to review your e-file application information through e-services. Your e-file application information should be updated within 30 days of any changes, such as individuals involved, addresses or telephone numbers. Failure to do so may result in the inactivation of your EFIN.
Your application should only include individuals as Principals who are authorized to act for the entity in legal and/or tax matters. For example:

Sole Proprietor is the Principal
Partnership should list each partner who has 5% or more interest in the partnership
Corporation should list the President, Vice-President, Secretary and Treasurer
Your application should also include a Responsible Official.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Paying your child can be a smart tax strategy

Can your children help out with some of the tasks connected with your business? Then a savvy way to take care of their allowances or spending money – at the expense of the IRS – is to pay them wages for work they do on behalf of the business. This is a perfectly legal way to keep income in the family while shifting some out of your higher bracket and into their lower bracket.

For this business expense to withstand IRS scrutiny, your children must actually render services. Also, wages paid to them can’t be more than the going rate for unrelated employees who perform comparable tasks.

The IRS doesn’t require you to be a parsimonious paymaster who doles out only the minimum wage. But you must treat your children the same as any other employee and keep the usual records showing amounts paid and hours worked.

Give them W-2 forms, even if they qualify to exempt their wages from withholding for income taxes, and use checks drawn on business accounts to evidence the payments. Otherwise, the IRS might contend that the payments exceeded the going rate or that your youngsters weren’t bona-fide employees; they merely rendered the token kinds of services that parents expect their children to perform.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999.

Courtesy of AccountingWeb

Tax Benefits for Members of the Military

May is National Military Appreciation Month, and the Internal Revenue Service wants members of the military and their families to know about the many tax benefits available to them.

Each year, the IRS publishes Publication 3, Armed Forces Tax Guide, a free booklet packed with valuable information and tips designed to help service members and their families take advantage of all tax benefits allowed by law. This year’s edition is posted on IRS.gov.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999