Fraud Alert



IRS Telephone Scam


Several of our clients have been contacted by a caller saying they are the IRS. They use scare tactics and tell you that you owe money and will go to jail if you don't respond. Do not call back! The IRS will notify you by US Mail only. They do not call you on the phone and will not contact you by email. Review the attached article for more information:

IRS Reiterates Warning of Pervasive Telephone Scam
IR-2014-53, April 14, 2014

WASHINGTON — As the 2014 filing season nears an end, the Internal Revenue Service today issued another strong warning for consumers to guard against sophisticated and aggressive phone scams targeting taxpayers, including recent immigrants, as reported incidents of this crime continue to rise nationwide. These scams won’t likely end with the filing season so the IRS urges everyone to remain on guard.

The IRS will always send taxpayers a written notification of any tax due via the U.S. mail. The IRS never asks for credit card, debit card or prepaid card information over the telephone. For more information or to report a scam, go to www.irs.gov and type "scam" in the search box.

 

People have reported a particularly aggressive phone scam in the last several months. Immigrants are frequently targeted. Potential victims are threatened with deportation, arrest, having their utilities shut off, or having their driver’s licenses revoked. Callers are frequently insulting or hostile - apparently to scare their potential victims.

Potential victims may be told they are entitled to big refunds, or that they owe money that must be paid immediately to the IRS. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy.

Other characteristics of this scam include:

Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.

Scammers may be able to recite the last four digits of a victim’s Social Security number.

Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.

Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.

Victims hear background noise of other calls being conducted to mimic a call site.

After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do:

If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue.

If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

You can file a complaint using the FTC Complaint Assistant; choose “Other” and then “Imposter Scams.” If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes.

Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.

The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to This email address is being protected from spambots. You need JavaScript enabled to view it..

More information on how to report phishing scams involving the IRS is available on the genuine IRS website, IRS.gov.

You can reblog the IRS tax scam alert via Tumblr.


Affordable Care Act (ACA)
How will health care reform affect you and your taxes?


It’s massive, and it’s complicated. At more than 2,000 pages, the Affordable Care Act (ACA for short) has left businesses and individuals confused about what the law contains and how it affects them.

The aim of the law is to provide affordable, quality health care for all Americans. To reach that goal, the law requires large companies to provide health insurance for their employees starting in 2015, and uninsured individuals must get their own health insurance starting in 2014. Those who fail to do so face penalties.

Insurance companies must also deal with new requirements. For example, they cannot refuse coverage due to pre-existing conditions, preventive services must be covered with no out-of-pocket costs, young adults can stay on parents’ policies until age 26, and lifetime dollar limits on health benefits are not permitted.

The law mandates health insurance coverage, but not every business or individual will be affected by this requirement. Here’s an overview of who will be affected.

FOR BUSINESSES – It’s all in the numbers

Fewer than 50 employees
Companies with fewer than 50 employees are encouraged to provide insurance for their employees, but there are no penalties for failing to do so. A special marketplace will be available for businesses with 50 or fewer employees, allowing them to buy health insurance through the Small Business Health Options Program (SHOP).

Fewer than 25 employees
Small companies that pay at least 50% of the health insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP.

50 or more employees
For companies with 50 or more full-time employees, the requirement to provide “affordable, minimum essential coverage” to employees has been delayed for one year and is not required until 2015. Originally, employers had been required to file information returns that reported details about the health insurance they provided, with penalties to apply if the insurance did not meet standards. Companies complained that they needed more time to meet the reporting obligations, and in response the IRS made the reporting requirement optional for 2014. Without the reporting, the IRS could not determine penalties, so the penalties also were postponed for a year. Bottom line: the IRS is encouraging companies to comply in 2014 even though there are no penalties for failure to do so.

• The business play or pay penalty
Starting in 2015, companies with 50 or more employees that don’t offer minimum essential health insurance face an annual penalty of $2,000 times the number of full-time employees over a 30-employee threshold. If the insurance that is offered is considered unaffordable (it exceeds 9.5% of family income), the company may be assessed a $3,000 per-employee penalty. These penalties apply only if one or more of the company’s employees buy insurance from an exchange and qualify for a federal credit to offset the cost of the premiums.

FOR INDIVIDUALS – It’s all about coverage

Currently, attention is focused on the health insurance exchanges or “Marketplace” that opened for business on October 1. Confusion about the Affordable Care Act has left many people thinking everyone has to deal with the exchanges. The fact is that if you are covered by Medicare, Medicaid, or an employer-provided plan, you don’t need to do anything.

Also, if you buy your health insurance on your own and are happy with your plan, you can keep your coverage (assuming that your plan is still offered by the insurance company). However, the only way to get any premium-lowering tax credits based on your income is to buy a plan through the Marketplace.

The exchanges (Marketplace)
Each state will either develop an insurance exchange (Marketplace) or use one provided by the federal government. The Marketplace will allow those seeking coverage to comparison shop for health plans from private insurance companies. There will be four types of insurance plans to choose from: Bronze, Silver, Gold, and Platinum. The more expensive the plan, the greater the portion of medical costs that will be covered. The price of each plan will depend on several factors including your age, whether you smoke, and where you live. Many individuals will qualify for federal tax credits which will reduce the premiums they actually pay. Each state’s Marketplace will have a calculator to assist individuals in determining the amount, if any, of their federal tax credit.

• The individual play or pay penalty
If you’re one of the 45 million or so Americans without health insurance, you will need to get coverage for 2014 or pay a penalty of $95 or 1% of your income, whichever is greater. Low-income individuals may qualify for subsidies and/or tax credits to help pay the cost of insurance.

The penalty increases to $325 or 2% of income for 2015 and to $695 or 2.5% of income for 2016. For 2017 and later years, the penalty is inflation-adjusted. Those who choose not to be insured and to pay the penalty instead will still be liable for 100% of their medical bills. NOTE: If you will be shopping for health insurance on the Marketplace, be aware that there’s no need to rush to enroll; the enrollment period runs from October 1, 2013, through March 31, 2014. Take the time you need to review your options and select what’s best for you and your family.

MORE ABOUT THE LAW AND YOUR TAXES

In addition to the penalties required by the Affordable Care Act, the law made other tax changes that could affect you. Among them are the following:

• Annual contributions to flexible spending accounts are limited to $2,500 (indexed for inflation).

• The 7.5% adjusted gross income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older can use the 7.5% threshold through 2016.

• The additional tax on nonqualified distributions from health savings accounts (HSAs) is 20%, an increase from the previous 10% penalty.

• The payroll Medicare tax increases from 1.45% of wages and self-employment income to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. This rate increase applies only to the employee portion, not to the employer portion.

• A 3.8% Medicare surtax is imposed on unearned income (examples: interest, dividends, capital gains) for single taxpayers with income over $200,000 and married couples with income over $250,000.

The Affordable Care Act may be one of the most complicated and confusing laws ever passed, but one thing is very clear: the law will affect the taxes of most Americans. In order to manage your tax bill, you will have to factor the new health care rules into your overall personal and business tax planning. For guidance, contact our office.

To begin checking out your state’s exchange (Marketplace), start at www.healthcare.gov – the federal government’s website on the Affordable Care Act. Unfortunately, at this time the government’s website is not functioning well, with significant problems and long delays. You might get better results by calling 800-318-2596 or filling out a paper application and mailing it to the address given on the form. (For proof of filing, mail the application “Return Receipt Requested.”)

NOTE: This Memo is intended to provide you with an informative summary of the tax issues connected with the Affordable Care Act. This massive package of legislation contains varying effective dates, definitions, limitations, and exceptions that cannot be summarized easily. Also be aware that in the political environment surrounding this law, changes could be made at any time. For details and guidance in applying the tax provisions of this law to your situation, seek professional assistance.


2014 UPDATE: Affordable Care Act (ACA)

The Affordable Care Act, the health care reform legislation passed in 2010, originally mandated health insurance coverage for everyone starting January 1, 2014. But the law’s complexity soon made it evident that the requirements would have to be revised. The first change was the one-year delay in the requirement that companies with 50 or more full-time employees provide “affordable, minimum essential coverage” to their employees. When the October 1 launch of the government website setting up an insurance Marketplace for individuals proved to be a disaster, even more changes to the law were announced. Here’s an overview of those changes.

NOVEMBER 14 – Insurance companies had cancelled a number of plans that did not meet the law’s requirements for affordable, essential coverage. People who had these plans and were happy with them objected to losing their coverage. President Obama announced that states could allow a one-year extension of these plans. Insurance regulators in many states have refused to allow the extension.

NOVEMBER 21 – Originally the deadline for signing up for insurance to be effective January 1, 2014, was December 15, 2013. On November 21, it was announced that the deadline would be extended to December 23, 2013.

DECEMBER 13 – President Obama urged insurers to be flexible in dealing with those trying to buy coverage and allow people to sign up later in January 2014 for coverage retroactive to January 1. Insurers were also asked to cover care by any doctor or hospital in January and to cover prescription refills in January regardless of policy restrictions. In response to these requests, the insurance industry said it would allow payment for January 1 coverage as late as January 10, 2014. (Some insurers extended the payment deadline to January 31.)

DECEMBER 19 – The government announced that individuals whose insurance policies were cancelled because they did not meet the ACA’s requirements would be allowed to apply for hardship exemptions from the coverage mandate for 2014. Those qualifying for the hardship exemption may go without health insurance for 2014 without paying a fine or choose bare-bones “catastrophic” coverage. Catastrophic plans were originally intended for those under age 30. These plans usually have the lowest premiums and are not eligible for federal subsidies. DECEMBER 23 – As this deadline for buying coverage arrived, the deadline was moved again – by one day to December 24.

The complexities of the Affordable Care Act remain, and it seems very likely that additional rule changes will be made as the law’s provisions continue to roll out. We will make every effort to keep you informed about changes that could affect your tax situation.


Tax Law Changes for 2011 Federal Tax Returns

Before you file your 2011 federal income tax return in 2012, you should be aware of a few important tax changes that took effect in 2011. Check www.IRS.gov before you file for updates on any new legislation that may affect your tax return.

Due date of return. File your federal tax return by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

New forms. In most cases, you must report your capital gains and losses on the new Form 8949, Sales and Other Dispositions of Capital Assets. Then, you report certain totals from that form on Schedule D (Form 1040). If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets, with your return.

Standard mileage rates. The 2011 rates for mileage are different for January 1 through June 30 than for July 1 through December 31. For business use of your car, you can deduct 51 cents a mile for miles driven the first half of the year and 55 ? cents for the second half. Medical and moving mileage are both 19 cents per mile for the early half of the year and 23 ? cents in the latter half.

Standard deduction and exemptions increased.

  • The standard deduction increased for some taxpayers who do not itemize deductions on IRS Schedule A (Form 1040).
  • The amount depends on your filing status. The amount you can deduct for each exemption has increased $50 to $3,700 for 2011.

Self-employed health insurance deduction. This deduction is no longer allowed on Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).

Health savings accounts (HSAs) and Archer MSAs. The additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses increased to 20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified medical expenses.

Roth IRAs. If you converted or rolled over an amount from a traditional IRA to a Roth IRA or designated Roth in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

Alternative motor vehicle credit. You can claim the alternative motor vehicle credit for a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.

First-time homebuyer credit. The credit expired for most taxpayers for 2011. Some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.

Health coverage tax credit. Recent legislation changed the amount of this credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65 percent tax credit in any month from March to December 2011 may claim an additional 7.5 percent retroactive credit when they file their 2011 tax return.

Mailing a return. The IRS changed the filing location for several areas. If you're mailing a paper return, see the Form 1040 instructions for the correct address. Detailed information on these changes can be found on the IRS website – www.irs.gov.

Links:

  • Fact Sheet 2012-01 2011 Changes Offer Tax Benefits to Almost Everyone
  • Form 1040 instructions (PDF 941K)
  • 1040 Central
  • Form 8949, Sales and Other Dispositions of Capital Asset