IR-2016-34, March 1, 2016
WASHINGTON — The Internal Revenue Service today issued an alert to payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees.
The IRS has learned this scheme — part of the surge in phishing emails seen this year — already has claimed several victims as payroll and human resources offices mistakenly email payroll data including Forms W-2 that contain Social Security numbers and other personally identifiable information to cybercriminals posing as company executives.
“This is a new twist on an old scheme using the cover of the tax season and W-2 filings to try tricking people into sharing personal data. Now the criminals are focusing their schemes on company payroll departments,” said IRS Commissioner John Koskinen. “If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”
IRS Criminal Investigation already is reviewing several cases in which people have been tricked into sharing SSNs with what turned out to be cybercriminals. Criminals using personal information stolen elsewhere seek to monetize data, including by filing fraudulent tax returns for refunds.
This phishing variation is known as a “spoofing” email. It will contain, for example, the actual name of the company chief executive officer. In this variation, the “CEO” sends an email to a company payroll office employee and requests a list of employees and information including SSNs.
The following are some of the details contained in the e-mails:
The IRS recently renewed a wider consumer alert for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season and other reports of scams targeting others in a wider tax community.
The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
The IRS, state tax agencies and tax industry are engaged in a public awareness campaign — Taxes. Security. Together. — to encourage everyone to do more to protect personal, financial and tax data. See IRS.gov/taxessecuritytogether or Publication 4524 for additional steps you can take to protect yourself.
For your PA 529 College Plan, we’ve been asking for your year-end statement showing the calendar year contributions.
Apparently, that statement only shows your contributions for the last quarter of the calendar year.
You can get the info that we need by logging into your account at www.PA529.com
Go to <account overview>
Go to <transaction history>
Go to <contributions>
Instead of asking for the last 12 months, specify your dates from 01/01/20XX – 12/31/20XX, where XX is the year of your tax return that we are working on.
The report will NOT show the student’s social security number (SSN).
BUT, the Pennsylvania Department of Revenue wants the entire SSN of each student to whom you contributed, (even if they’re your grandchildren, or anyone else that might not be listed on your return).
if you have given us their SSN before, we don’t need it again.
(1) fax the calendar year report to us at 610.446.0441, or
(2) email the report to Steve@SteveClott.com , or
(3) mail the report to us at 2024 Darby Rd, Havertown, PA 19083-2305.
(Try not to send SSN’s via email. Either call them in, or mail them in to us.)
Last year’s income tax season was marked by an explosion of refund theft. Will this year be any different?
Increased protections may cut down on fraud but will likely draw out the wait for your money. Changes will be visible when you use tax preparation firms and filing software, with warnings akin to those from your bank if you try to log in from a new device or change account information. Less visible will be broader changes, such as revamped fraud-sniffing programs used by the IRS, states, and the tax prep industry, as well as new information-sharing agreements among all three.
Whether these measures will make it appreciably harder for someone to use your identity to claim your refund isn’t clear. — But the best defense is to set your deductions ahead of time so that you get no refund at all.
Here’s what taxpayers can expect this season:
More identity verification
Yes, this means wider use of those multiple-choice questions about where you lived 30 years ago if you’re filing electronically. It also means “a lot more reactive warnings to users that something has been changed, and making sure it was them that changed it,” said JoAnn Kintzel, chief executive of Tax Act, a tax software firm. “If an e-mail address changes, a message will go both to the new e-mail and the old e-mail.”
Taxpayers will also get a notice if bank deposit information or their home address is changed, said Julie Miller, a spokesperson for tax software company TurboTax, and companies will check to see if more than one account is using the same Social Security number.
Leading tax prep and software companies, as well as payroll and tax financial payment processors, working with states and the IRS, have all agreed to a set of minimum security measures. Companies and states may put in place additional measures, — requiring anyone filing electronically in that state to provide information from a driver’s license or state ID card.
Though complex passwords are commonplace on other consumer and bank websites, the tax industry has finally joined the club. The passwords must now include a lowercase letter, an uppercase letter, a symbol, and a number (for example, #H8This). A new timed lockout feature will kick in after repeated failed login attempts.
The IRS launched a consumer education and awareness campaign this past November about security basics. They include not using the same password for multiple accounts, using anti-virus protection, and encrypting sensitive data.
Looser refund timing
There will be less certainty about when taxpayers can expect state refund checks, said Verenda Smith, deputy director of the Federation of Tax Administrators. “In the past, there was a political imperative to get refunds out the door, and that has certainly changed,” she said. “You may have a perfectly fine return, but the state will take just a little longer to confirm that it’s you who is filing it.”
More paper checks
There may also be more refunds that come in paper checks, even for those who request direct deposit. That may prove particularly true for first-time filers, said Smith.
Last year, many fraudsters changed a taxpayer’s preferences in favor of direct deposit to a prepaid debit card account created before filing the false return. So this year, Utah will directly deposit a refund only into a bank account or prepaid debit card issued by a taxpayer’s financial institution. Alabama also changed its policy so that its Department of Revenue can send paper checks to your mailbox even if a taxpayer requested direct deposit, which will be done on a case-by-case basis.
“Prepaid cards are the currency of criminals,” IRS Commissioner John Koskinen told 60 Minutes in 2014. “Our problem is you can’t distinguish the number of a prepaid card from a legitimate bank account.”
This announcement is meant for all of our self-employed clients (Schedule C), and all of our landlord clients (Schedule E).
There are penalties for not filing form 1099 to the government and to your subcontractors who are not incorporated, regarding your payments to them during the year. These payments would be for either services performed by them, or repairs and improvements made by them. Both the IRS and your state accept these filings.
This is our way of making sure that we can answer IN THE AFFIRMATIVE, the question on your tax return that you DID COMPLY with the 1099 filing requirements. By making this announcement to notify you of the filing requirements, now we can affirm that you did so, within the deadline limits, when we prepare your returns. This question has been on the forms every year, for both schedules C and E.
Reporting Payments to Independent Contractors:
Online service for annual 1099 reporting:
Avalara will take care of notifying the government and your subcontractors.
If you do not want to pay Avalara’s fee ($2 per form ?), you can do it yourself by requesting from us the actual forms that you must complete and file, and then mail them yourself, to the government and to your subcontractor(s). These forms WON’T be in our Tax Organizer packets because they have an earlier due date than your Form 1040.
In the end, you need to make sure that your subcontractors report their proper income to the government. If you haven’t completed the forms yet, let your subcontractors know ASAP that you will be reporting their payments that you made, so they will report and pay their fair share of taxes.
Maribel Valencia, 22, and her husband, Luis, became parents in 2015. And again in 2016. Maribel Valencia delivered twin babies at San Diego Kaiser Permanente Zion Medical Center over the weekend but the twins have different birthdays. Jaelyn, a girl, was delivered at 11:59 p.m. on December 31, 2015, while her brother, Luis, was delivered at 12:02 a.m. on January 1, 2016.
The babies were scheduled to be delivered by Cesarean section a week later, on January 6, 2016, but the twins apparently had something else in mind, making a surprise appearance a bit earlier. Fortunately, the babies are healthy: both 18.5 inches long. Jaelyn weighed four pounds, 15 ounces, while Luis weighed five pounds, nine ounces.
The pair has an older sister. But what about their Uncle… Sam? When it comes to tax time, the fact that little Jaclyn and Luis were born minutes apart doesn’t matter. The fact that they are born in different years does matter.
By law, you are allowed one exemption for each person you can claim as a dependent. A dependent can be either “qualifying child” or a “qualifying relative.” To be considered a “qualifying child,” the child must meet the following criteria:
Of course, this being tax, there are exceptions and special rules that apply. One of the special rules is that a child who is born (or has died) during the calendar year is still considered to be a qualifying child if he or she meets all of the other criteria.
That means a baby born on December 31, 2015, would be considered a qualifying child for 2015. A baby born on January 1, 2016, would not be considered a qualifying child for 2015: that child would be a qualifying child for 2016.
In other words, assuming all of the other criteria are met, baby Jaelyn would be considered a dependent for 2015 – and little Luis would not. That’s a tough break for the Valencia’s, who, since they both work (according to the hospital, Maribel works as a cashier and Luis is a diesel mechanic for the United State Navy), could likely benefit from the extra exemption in 2015: the amount you can deduct in 2015 is $4,000.
by Kelly Phillips Erb Forbes Staff
Technically speaking, an amateur gambler must report the full amount of each and every win on the miscellaneous income line on page 1 of Form 1040.
Use this for your LOG, and enclose it with the rest of your tax info, and Tax Organizer.
There are two basic statutes of limitation.
First is the statute of limitations, which provides that the IRS has three years to assess an additional tax due.
For example, for a taxpayer who filed a 2012 tax return on April 15, 2013, the IRS has until April 15, 2016, to assess an additional tax.
This rule has two major exceptions. The three-year statute is extended to six years in a case where the taxpayer has omitted more than 25% of gross income.
Second, there is no statute of limitation in cases where no return has been filed, or where the taxpayer has filed a fraudulent return.
These two exceptions permit the IRS to assess an additional tax at any time.