Can employees be paid in cryptocurrency?

Bloomberg

Can your small business clients start paying employees with cryptocurrency? In a short answer, yes. And companies are already doing it.

So what does that look like for the average employee? What can they do with these cryptocoins? How do they pay their mortgages? Do supermarkets take these currencies? Seriously, how do people live real life on digital coins?

Let’s find out.

When a company first approaches its employees about paying them in cryptocurrencies, like Bitcoin and Ether, employees might be a bit apprehensive. It might take some good, old fashioned education to get people on board with receiving digital coins instead of pay check or cash. And that’s fine. Change takes time to be accepted. It helps to know that there are other companies already doing this and it’s working out for them. What also helps is the growing list of corporations and businesses that actually accept cryptocurrencies, such as Bitcoin.

While there are many pros to paying employees with cryptocurrency, there are also a number of drawbacks for the employee.

Some of the pros associated with this practice highlight cheaper payroll runs, ease of implementation, and ease of international transfer without high conversion fees. Cryptocurrency can also be used to buy other cryptocurrencies for future profit potential.

Some of the cons associated with paying employees cryptocurrencies, however, include capital gains tax: Employees would have to pay tax on any profits they saw above and beyond what you paid them. While it’s great if the coins go up in value, the employee might not appreciate losing most of it to the taxman. Another con associated with paying employees with cryptocurrency is the risk of losing money. Sure, a lot of cryptocurrencies are stable and do well, but markets are volatile and employees could end up with less than what you intend to pay them.

Still, working for a living has always had its risks and there is no guarantee that your fiat currency is going to be worth the same amount tomorrow. If your client is a startup looking to draw out some really great talent, offering cryptocurrency payments might attract the tech-savvy applicant that is looking to break into a new and upcoming field. Cryptocurrency also provides startups with an easy way to pay people.

What’s more, ICOs (initial coin offerings) can fund companies to get their business and technology off the ground, freeing up cryptocurrency to pay employees with the digital currency. Operating capital is vital to the success of a new company, and certainly an ICO is a great way to build a nest egg for operations.

The bottom line? We used to talk in terms of decades when we would reference the future. But big changes, like paying employees with cryptocurrencies, are already happening. If business owners continue to think and operate like nothing is changing, they are going to find themselves left out in the cold, holding money that is worthless, and scrambling to change their ways when it might already be too late.

Source: Accounting Today

IRS warns of Harvey scams

Hurricane Harvey flooded Rockport, Texas

Alex Scott/Bloomberg

The IRS is warning about possible fake charity scams emerging due to Hurricane Harvey.

Criminals may look to take advantage of the outpouring of support for victims of the hurricane by impersonating charities to get money or private information from taxpayers, the agency said.

Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations. Criminals often send emails that steer recipients to bogus Web sites that appear to be affiliated with legitimate charitable causes. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

The IRS suggests never giving out personal financial information such as Social Security numbers or credit card and bank account numbers and passwords to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s ID and money. Also, the service warns donors never give or send cash: For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.

The IRS Web site has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.

The free IRS Publication 526, “Charitable Contributions,” describes the tax rules that apply to making legitimate tax-deductible donations and provides complete details on what records to keep.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”

Source: Accounting Today

IRS Computer Security Incident Response Center needs improvement

IRS
Bloomberg

The Internal Revenue Service’s Computer Security Incident Response Center is preventing some cybersecurity violations, but could use some improvements, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, noted that the CSIRC is responsible for preventing, detecting, reporting, and responding to cybersecurity incidents, such as computer related threats and attacks targeting the IRS’s technology assets. As the IRS holds tax information on all taxpayers, the agency presents an attractive target for hackers. But weaknesses in the CSIRC program could prevent the timely detection, prevention, or reporting of unauthorized access and disclosure of taxpayer data.

In general, according to the report, the CSIRC prevented, detected, reported and responded to a number of cybersecurity incidents. TIGTA took a sampling of 100 incidents out of a total population of 368 incidents during fiscal years 2015 and 2016, through April 30, 2016. It found the CSIRC properly identified and documented the type, nature and scope of all 100 incidents, including the systems and applications affected, the source of the incident, and the specific kind of lost equipment. However, TIGTA found several areas in which the CSIRC could improve its operations.

For example, the report noted the CSIRC could improve some aspects of its incident case work. TIGTA found that not all cybersecurity incidents were properly reported. Some of the supporting documentation on the document was deemed insufficient, incident costs weren’t captured, and reporting procedures were inconsistently applied. Sixty-four of the 100 incidents were required to be reported to the Treasury Department’s CSIRC because the incidents were confirmed to have compromised the confidentiality, integrity or availability of a federal government information system. Of the 64 incidents, 22 were not reported as required. On Feb. 15, 2017, after bringing the noncompliance to the IRS’s attention, the 22 incidents were reported to the Treasury Department’s CSIRC.

The IRS has suffered a number of high-profile data breaches in recent years that led to shutting down several of its online applications for the public, including its Get Transcript app, its Identity Protection Personal Identification Number service and its data retrieval tool for the Free Application for Federal Student Aid.

CSIRC employees and contractors didn’t always meet training guidelines, and the skill assessments indicated a need for more training. Not all CSIRC employees complied with the Federal Information Security Modernization Act, and they needed internal specialized security training for fiscal years 2015 and 2016. The employees took courses the IRS considered specialized; however, TIGTA disagreed with the designation after a closer review of the courses’ objectives. In addition, there was no documentation that contractors met the same requirements for the same periods.

Finally, the Incident Response Plan, which provides the organization with a roadmap for implementing its incident response capability, was developed, but was not updated to fully comply with federal guidelines.

The IRS corrected several of the issues before TIGTA completed the report, but TIGTA made five recommendations to the IRS’s chief information officer. The recommendations included correcting reporting inconsistencies of incidents and ensuring the costs of handling and responding to incidents are captured. The IRS should also ensure CSIRC employees and contractors comply with specialized security training requirements, TIGTA recommended, and it should remove contractor access privileges to IRS systems when contractors don’t comply with training requirements. The IRS should also ensure employees receive the necessary training to move toward high proficiency levels.

The IRS agreed to correct reporting inconsistencies and ensure that CSIRC employees and contractors comply with specialized security training requirements. The IRS partially agreed to remove system access by removing network access and ensure its employees receive training to achieve high and intermediate proficiency levels.

But the IRS disagreed with TIGTA’s recommendation that it capture the costs of handling and responding to an incident because it is not required by federal standards. TIGTA agreed that capturing costs is not explicitly required, but pointed out that doing so can help determine if additional funding is needed for the incident response team and can be used to measure the success of the team and effect of changes to capabilities on performance.

“The IRS is committed to continuous improvement to ensure the IRS CSIRC operates at the highest level of effectiveness,” wrote IRS chief information officer S. Gina Garza in response to the report. “To achieve this objective, we have enhanced the documentation and reporting of incidents involving lost/stolen cell phones. We have also implemented new technology, policies and processes to provide, gather, track and monitor all security training for both contractors and employees.”

Source: Accounting Today

Financial Gravity hosts AI design challenge for tax planning software

CEO of Financial Gravity John PollockFinancial Gravity / YouTube

Financial Gravity, a tax services and wealth management firm in Dallas, is sponsoring an AI design challenge for the creation of an an artificially intelligent tax advisor.

The AI-enabled automated tax planning assistant software, as it’s being called, will be named Odele; and its target end users are business owners, entrepreneurs and high net worth families with multiple sources of income, some investments, and the ability to save for the future.

Odele should be able to:

• Present and compare taxes and income for a business owner for a variety of tax configurations, assumptions, and projections;
• Calculate lost income by comparing taxes paid for a previous year with taxes that would have been paid under an optimal configuration;
• Recommend optimal tax-planning configuration for the upcoming year, based on the business owner’s goals, preferences, personal lifestyle and logistics of implementing different tools and services; and
• Learn and upgrade its algorithms based on each case it handles, new tax regulations, tax court cases, IRS rulings, etc. It should also able to alert users who may be using a strategy that is no longer optimal.

Financial Gravity reports that it has a database of ideal tax scenarios that maximize take-home income. The firm wants Odele to connect individuals to their most ideal scenario.

The firm is offering a total prize pool of up to $125,000, which may be split by up to five winners. The minimum prize is expected to be $20,000. FInancial Gravity also expects to invite competitors to partner with the firm, to share proprietary data to create a new and potentially jointly owned proprietary tool.

For more information on the challenge, click here.

Source: Accounting Today

Tipalti introduces touchless invoice data capture

Tipalti, which makes payments technology, is introducing “touchless” invoice data capture and artificial intelligence (AI)-based approval routing technology to its accounts payable platform. These new features are meant to fully automate invoice capture, eliminating this task from an accountant’s job list.

With these new in-built tools, Tipalti scans invoices from emails and automatically populates the required fields such as invoice number, supplier, quantity, and rate, and can recognize data in 27 languages. If the invoices scanned through optical character recognition (OCR) aren’t a 100 percent match, an escalation layer provided by Tipalti automatically routes the invoices to a managed service that manually reviews invoices, checks fields for accuracy and populates any missing fields. Machine learning of past invoice history is designed to improve OCR match rates over time.

The AI-based approval routing engine’s role is to then assign the bill approval sequence based on patterns learned from historical approval sequences. Email notifications are automatically routed to the appropriate approvers to action, in order to comply with an organization's existing internal control processes.

“Manual invoice processes stymie today’s finance organization and hold back the CFO from helping the business scale rapidly and be more successful,” said Chen Amit, CEO of Tipalti, in a statement. “By applying the latest OCR and AI technologies, along with managed services to address any exceptions, businesses can finally modernize their finance operations with a touchless invoice process. Directly integrating these features within the end-to-end supplier payments process means that AP teams will have significant time freed to focus on other business critical tasks.”

Source: Accounting Today

IRS warns of new ransomware scam

IRS Commissioner John KoskinenBloomberg News

The Internal Revenue Service sent an urgent warning Monday about a new phishing scheme in which a scam email purporting to originate from the IRS and the Federal Bureau of Investigation is actually part of a ransomware effort to take computer information hostage.

The bogus email actually includes the emblems of both the IRS and the FBI. It tries to convince users to click on a “here” link to download a fake FBI questionnaire. Instead, the hyperlink downloads malware that prevents a victim from accessing the data stored on their device unless they pay money to the cybercriminals.

“This is a new twist on an old scheme,” said IRS Commissioner John Koskinen in a statement. “People should stay vigilant against email scams that try to impersonate the IRS and other agencies that try to lure you into clicking a link or opening an attachment. People with a tax issue won’t get their first contact from the IRS with a threatening email or phone call."

The IRS, along with state tax authorities and companies in the tax prep industry, have been collaborating on a partnership known as the Security Summit and are conducting an awareness campaign called Don’t Take the Bait warning tax professionals about different kinds of phishing scams, including ransomware.

The IRS cautioned victims not to pay a ransom, as it only encourages the criminals, and frequently the scammers won’t provide the decryption key even after a ransom is paid.

Victims should instead immediately report any ransomware attempt or attack to the FBI at the Internet Crime Complaint Center, www.IC3.gov, and forward any IRS-themed scams to phishing@irs.gov.

The IRS doesn’t use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, see the “Tax Scams and Consumer Alerts” page on IRS.gov. 

Source: Accounting Today

Currently Not Collectible Status

There are times where you agree with the IRS that you owe taxes, but you can’t pay due to your current financial situation. If the IRS agrees that you can’t both pay your taxes and your reasonable living expenses, it may place your account in Currently Not Collectible (CNC) (hardship) status.

While your account is in CNC status, the IRS will not generally engage in collection activity.  For example: It won’t levy on your assets and income. However, the IRS will still charge interest and penalties to your account, and may keep your refunds and apply them to your debt. 

Before the IRS will place your account in CNC status, it may ask you to file any delinquent tax returns.

If you request CNC status, the IRS may ask you to provide financial information, including your income and expenses, and whether you can sell any assets or get a loan.

If your account is placed in CNC status, during the time it can collect the debt the IRS may review your income annually to see if your situation has improved . Generally, the IRS can attempt to collect your taxes up to 10 years from the date they were assessed, though the 10-year period is suspended in certain cases. The time the suspension is in effect will extend the time the IRS has to collect the tax.

Because the IRS won’t suspend interest and penalty charges, even if it stops trying to collect the balance due, you may want to consider other possible payment options within your means before asking the IRS to place your account in CNC status.

Source: IRS Taxpayer Advocate Services