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

Changes in Circumstances?

If you purchased 2016 health care coverage through the Health Insurance Marketplace, you may have chosen to have advance payments of the premium tax credit paid to your  insurance company to lower your monthly premiums. If this is the case, it’s important to let your Marketplace know about significant life events, known as changes in circumstances.

These changes – such as those to your income or family size – may affect your premium tax credit. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.  Getting too little could mean missing out on premium assistance to reduce your monthly premiums. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. If your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation.   Changes in circumstances that you should report to the Marketplace include:

an increase or decrease in your income
marriage or divorce
the birth or adoption of a child
starting a job with health insurance
gaining or losing your eligibility for other health care coverage
changing your residence

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

Universal Availability Rules in a 403(b) Retirement Plan

Don’t forget to register for the free webcast about Understanding the Universal Availability Rules in a 403(b) Retirement Plan

When: May 19, 2016; 2 p.m. (Eastern)

Learn about:
Basic universal availability rules

Treatment of adjunct faculty at universities

Treatment of part-time, seasonal, and temporary employees

The 20 hours per week and the 1,000 hours rules

Controlled group situations and concerns

Mayo ruling on medical residents and its impact

The required notice to employees each year

Ways to find, fix, and avoid universal availability errors

Register here

For more help on this topic contact Neikirk, Mahoney & Smith at 502-896-2999

Taxes are done, now time to get rid of the clutter

Now that you have filed your taxes it can be a good time to organize your financial life and cut down on clutter.

Here are some steps to consider:
Deal with tax documents
One question many people have this time of year centers on how long they should retain tax returns. The basic rule is to keep returns, receipts and other relevant records for at least three years.

Pare paper statements
If you're missing something, you usually can retrieve bank, brokerage, credit card and other statements online. It's not a bad idea to retain some annual paper statements, but  once you have the yearly statement in hand, shred prior monthly or quarterly updates.

Develop a system
Half the clutter battle is not shuffling papers around any more than necessary. There are plenty of documents you probably don't need; it might be time to discard some of this paperwork, especially since you can find almost all of it online. Not everything that looks official is all that important.

Heed electronic precautions
Keeping and accessing records in the digital age means using strong, lengthy passwords and changing them often — and using unique passwords for each sensitive online account.
To deal with all those passwords, you might want to make a backup list that a spouse or trusted relative or friend could access in a pinch.

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

IRS to return OIC application if no tax return filed

Beginning immediately: The IRS will return any newly filed Offer in Compromise application where the taxpayer has not filed all required tax returns. Any fees included with the OIC will also be returned. This new policy does not apply to current year tax returns if there is a valid extension on file.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship.

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

Correcting Information Returns

The Internal Revenue Service has posted a new webinar that provides the latest information for employers and health coverage providers.  The webinar explains how to identify and correct errors on information forms.

If you are a business owner, tax manager, employee benefits manager, health coverage provider, or software developer or transmitter, you can access and review this video on the IRS Video Portal at your convenience.

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

May 16th deadline for many Tax-Exempt Organizations

With the May 16 filing deadline facing many tax-exempt organizations, the IRS today cautioned these groups not to include Social Security numbers (SSNs) or other unneeded personal information on their Forms 990, and consider taking advantage of the speed and convenience of electronic filing.
Form 990-series information returns and notices are due on the 15th day of the fifth month after an organization’s tax year ends. Many organizations use the calendar year as their tax year, making May 15 the deadline for them to file for 2015. However, because May 15 falls on a Sunday, the deadline this year moves to Monday, May 16.

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

3 Ways to save money on your Taxes

Here are three ways you could save money on your taxes.
Save for retirement:
By far, the best way to lower your taxes is to save more for your retirement. Not only do you get a lower tax bill now, you're also creating your own financial security in the process.
Buy a house:
There are several tax breaks that come along with homeownership, and they can combine to save you a good chunk of money on your taxes.
Give generously:
Another great way to save on your taxes is to contribute to causes near and dear to you. The IRS lets itemizers deduct donations to qualified non-profit organizations and charities, including cash donations as well as property.

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

Time for a PTC check up

When you applied for assistance to help pay the premiums for 2016 health coverage through the Marketplace, the Marketplace estimated the amount of your premium tax credit. Advance payments are based on an estimate of the premium tax credit that you will claim on your federal income tax return. You may be receiving the benefit of monthly advance payments to lower what you pay out-of-pocket for your monthly premiums.  Doing a PTC check-up now will help you avoid large differences between the advance credit payments made on your behalf and the amount of the premium tax credit you are allowed when you file your tax return next year.

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

IRS Issues Rules on Self-Employment Taxes for Partners

The Internal Revenue Service has released final and temporary regulations on the self-employment tax treatment of partners in a partnership that owns a disregarded entity and whether they can participate in employee benefit plans.The regulations take effect Wednesday. The Tax Code states that, except as otherwise provided, a business entity that has a single owner and is not a corporation is disregarded as an entity separate from its owner, thus making it a “disregarded entity.” However, the Tax Code also says a disregarded entity is treated as a corporation for purposes of employment taxes. Therefore, the disregarded entity, rather than the owner, is considered to be the employer of the entity’s employees for purposes of employment taxes.

For more information on how this may affect you contact Neikirk, Mahoney, & Smith at 502-896-2999

Employers and Coverage Providers: Access Webinars to Learn about ACA Provisions

Employers and health coverage providers have access to newly updated webinars from the IRS.  These recorded webinars explain the employer provisions, information reporting, and related tax requirements that are part of the Affordable Care Act. If you are a business owner, tax manager, employee benefits manager, or health coverage provider, you can access and review these videos on the IRS Video Portal at your convenience.

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

Tax guidance for child care providers

The IRS is highlighting some of its most popular educational products, videos and webinars to help your small business thrive. A good example is the webinar: “Tax Related Guidance for Child Care Providers.” The online resource can help business owners and operators learn how to report common tax items linked with this type of business. Here are some of the topics included in the webinar:
Child Care Income.
Child Care Expenses.
Special Rules.
Other Expenses.

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

IRS webinars for small businesses

The Internal Revenue Service is marking National Small Business Week, May 1 to 7, by encouraging small business owners and self-employed individuals to check out several products to help them understand and meet their tax obligations.

The products include a series of educational webinars to help them not only be tax compliant, but also to help their businesses thrive. The webinars start at 2 p.m. Eastern (11 a.m., Pacific; noon, Mountain; 1 p.m., Central). Topics include the following :

Tax Tips for your New Business, May 2
Staying Afloat: Planning for Emergencies Before they Happen, May 3
Worker Classification: Employee or Independent Contractor? (in Spanish), May 4
Tip Reporting and Tips vs. Service Charges, May 5

You can register for these at irs.gov ; and for all your tax questions contact Neikirk, Mahoney & Smith at 502-896-2999