HoffmanPicture4

A Benefit-Boosting Social Security Strategy

douglas mcalpineAlthough “file and suspend” is no longer available as a Social Security planning tool (expired on April 30, 2016), there is one spousal strategy that still exists. A restricted application called “file as a spouse first” can be filed when you reach full retirement age (FRA) if you turned 62 by January 1, 2016 (born in 1953 or earlier).

Read more

Another Reason to Have a Valid General Power of Attorney (GPOA)

douglas mcalpineMost married couples file their tax returns as Married Filing Jointly (MFJ) which is generally tax advantageous when compared to the other alternative which is Married Filing Separately (MFS).  It needs to be noted though, that filing jointly is an annual election by both spouses and cannot be used if one spouse does not agree to sign (a frequent issue during divorce proceedings).

Read more

IRS Phishing Scams

douglas mcalpineIn  keeping with our ongoing effort to make you aware of security issues surrounding your tax returns and interaction with the IRS, we are posting the Service’s most recent bulletin regarding security.  Please do not hesitate to contact us with any questions or concerns at 404-255-7400.

IRS, Security Summit Partners Remind Taxpayers to Recognize Phishing Scams

WASHINGTON –The Internal Revenue Service and its Security Summit partners cautioned taxpayers today to avoid identity theft by watching for phishing scams that can increase around the tax season.   The IRS, state tax agencies and the tax industry – all partners in the fight against identity theft- reminded taxpayers that the easiest way for an identity thief to steal taxpayer information is by simply asking for it. As a result, each day people fall victim to phishing scams through emails, texts, or phone and mistakenly turn over important data. In turn, cybercriminals try to use that data to file fraudulent tax returns or commit other crimes.

This is the second reminder to taxpayers during the “National Tax Security Awareness Week.” This week, the IRS, states and the tax community are sharing information to taxpayers and tax professionals as a part of the ongoing Security Summit effort to combat refund fraud and identity theft.

Surge in Email, Phishing and Malware Schemes

The IRS saw an approximate 400 percent surge in phishing and malware incidents during the 2016 tax season.

Scam 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. These phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to tax refunds, filing status, confirming personal information, ordering transcripts, verifying PIN information and asking people to verify their tax software account.

Variations of these scams can be seen via text messages, and the misleading communications can be seen in every section of the country.

When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to help file false tax returns. The sites also may carry malware, which can infect people’s computers and allow criminals to access your files or track your keystrokes to gain information.

For more details, see:

  • IR-2016-28, Consumers Warned of New Surge in IRS Email Schemes during 2016 Tax Season; Tax Industry Also Targeted
  • IR-2016-15, Phishing Remains on the IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season

As part of the “Taxes. Security. Together.” campaign aimed at encouraging taxpayers to take stronger measures to protect their financial and tax data, the IRS and its Security Summit partners urged people not to give out personal information based on an unsolicited email request.

The campaign calls for taxpayers take the time to examine, identify and avoid emails that:

  • Contain a link. Scammers often pose as the IRS, financial institutions, credit card companies or even tax companies or software providers. These scams may claim they need the recipient to update their account or request they change a password. The email offers a link to a spoofing site that may look similar to the legitimate official website. Taxpayers should follow a simple rule: Don’t click on the link. If in doubt, they should go directly to the legitimate website to access the account.
  • Contain an attachment. Another option for scammers is to include an attachment to the email. This attachment may be infected with malware that can download malicious software onto the recipient’s computer without their knowledge. If it is spyware, it can track the recipient’s keystrokes to obtain information about their passwords, Social Security number, credit cards or other sensitive data. Remember, taxpayers shouldn’t open attachments from unknown sources.
  • Are from a “government” agency or “financial institution.” Scammers attempt to frighten people into opening email links by posing as government agencies, financial institutions and even tax companies. Thieves often try to imitate the official organizations, especially tax-related ones during the filing season.
  • Are from a “friend.” Scammers also hack email accounts and try to leverage the stolen email addresses. Recipients may receive an email from a “friend” that just does not seem right. It may be missing a subject for the subject line or contain odd requests or language as the underlying content. If the email seems “odd,” taxpayers should avoid clicking on any links or opening attachments.
  • Contain a false “lookalike” URL. The sending email may try to trick the recipient with the URL or web address. For example, instead of www.IRS.gov, it may be a false lookalike such as www.irs.gov.maliciousname.com. To verify the authenticity, a recipient can place their cursor over the text to view a pop-up of the real URL.

Learning to recognize and avoid phishing emails – and sharing that knowledge with family members – is critical to combating identity theft and data loss.

Multi-State Record Keeping

Doug Image CroppedAs our society becomes increasingly mobile and the economy causes taxpayers to work in multiple locations, it is important to understand the impact of state income taxation when you live and work in different states.  Many retirees establish their state residency in Florida or one of the other states without state income taxes.  Successfully managed, it keeps their non-earned income from being taxed at the state level.

Read more

IRS Warns of 2016 Tax Scams

douglas mcalpineWe posted last year about bogus phone calls claiming to be from the IRS.  The article below highlights the more recent techniques being used as the scammers adapt their methods and provides information on what you should do if contacted. Please do not hesitate to contact us with any questions or concerns at 404-255-7400.

Consumer Alert: Scammers Change Tactics, Once Again

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.

The latest variation being seen in the last few weeks tries to play off the current tax season. Scam artists call saying they have your tax return, and they just need to verify a few details to process your return. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.

“These schemes continue to adapt and evolve in an attempt to catch people off guard just as they are preparing their tax returns,” said IRS Commissioner John Koskinen. “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

The IRS reminds taxpayers to guard against all sorts of con games that continually change. The IRS, the states and the tax industry came together in 2015 and launched a public awareness campaign called Taxes. Security. Together. to help educate taxpayers about the need to maintain security online and to recognize and avoid “phishing” and other schemes.

The IRS continues to hear reports of phone scams as well as e-mail phishing schemes across the country.

“These schemes touch people in every part of the country and in every walk of life. It’s a growing list of people who’ve encountered these. I’ve even gotten these calls myself,” Koskinen said.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 phone scam contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam. Just this year, the IRS has seen a 400 percent increase in phishing schemes.

Protect Yourself

Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email. They’ve even begun politely asking taxpayers to verify their identity over the phone.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

Here are some things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

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 several bills.
  • Call or email you to verify your identity by asking for personal and financial information.
  • 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 or email.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money or to verify your identity, here’s what you should do:

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

  • Call the IRS at 800-829-1040. IRS workers can help you.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

 

 

IRS Warns of Latest Tax Scams

Hoffman12Please be aware that a few of our Hoffman & Associates clients were recently contacted by scammers threatening arrest and demanding payment for apparent taxes owed. Thankfully these clients contacted our office right away and were not adversely affected by these criminals posing as IRS agents. My own home answering machine recently contained a message threatening me with arrest if I did not contact them immediately to arrange payment.  The statement below is from the IRS and nicely summarizes the latest IRS scams and provides information on what you should do if contacted.  Please do not hesitate to contact us with any questions or concerns at 404-255-7400.


Don’t Fall for New Tax Scam Tricks by IRS Posers

Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

The real IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe taxes:

  • Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.

Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

IRS YouTube Videos:

The IRS Withdraws Proposed Reg Covering IRA Rollovers

Douglas McAlpineThe IRS has withdrawn proposed regulations covering IRA rollovers.  The change is significant because it supports a Tax Court interpretation of the rollover rules creating a possible “gotcha” for the unwary.  If you are considering doing a rollover where you actually withdraw the funds then deposit them into a new IRA within the 60 day window, you need to be aware of this change.  Custodian to custodian direct transfers are not affected.

Starting January 1, 2015, a non-custodial rollover is limited to one per year regardless of how many IRA accounts you have.  Previously, you could make one such rollover per year from each separate IRA.

The IRA rules are complicated and often unforgiving.  You should discuss any IRA transfers and withdrawals with your tax advisor before you make any changes to your IRA accounts.   Here is the excerpt from the Federal Tax Weekly, Issue 29,  July 17, 2014:

IRS Withdraws Proposed Reg To Reflect Bobrow’s One-Rollover-Per-Year Limit On IRAs

NPRM REG-209459-78

Reflecting the Tax Court’s decision in Bobrow, TC Memo. 2014-21, CCH Dec. 59,823(M), the IRS has withdrawn Prop. Reg. §1.408-4(b)(4)(ii).  This withdrawal makes good on its announced intention earlier in Ann. 2014-15 to follow this pro-government decision.  In Bobrow, the Tax Court found that a taxpayer could make only one nontaxable rollover contribution within each one-year period regardless of how many IRAs the taxpayer maintained.

  • CCH Take Away. “The Bobrow decision affects only IRA to IRA rollovers,” Rob Kaplan, Ballard Spahr LLP, Philadelphia, told CCH.  Bobrow does not affect the ability of an IRA owner to transfer funds from one IRA trustee or custodian directly to another, because a transfer is not a rollover and is not subject to the one-rollover-per-year limit, Kaplan explained. Bobrow also does not apply to rollovers from a 401(k) plan to an IRA. For example, an individual can take a 401(k) distribution from a former employer, roll it over to an IRA and subsequently roll it over to a plan with a new employer without violating the one-rollover-per-year rule, Kaplan noted.

Background

Generally, Code Sec. 408(d)(3)(A)(i) allows a tax-free rollover of an IRA if the funds distributed to the taxpayer are rolled over into an IRA for the taxpayer’s benefit within 60 days, subject to the one-rollover per-year limit of Code Sec. 408(d)(3)(B).  The Tax Court found in Bobrow that the one-year limitation under Code Sec. 408(d) (3)(B) is not specific to any single IRA maintained by an individual but instead applies to all IRAs maintained by a taxpayer. A taxpayer who maintains multiple IRAs may not make a rollover contribution from each IRA within one year, the court held.  After the Tax Court announced its decision, the IRS issued Ann. 2014-15, indicating it “anticipates that it will follow the interpretation of §408(d)(3)(B) in Bobrow and, accordingly, intends to withdraw the proposed regulation and revise Publication 590 to the extent needed to follow that interpretation.”

  • Comment. At press time, the IRS has not yet issued new regs.  The IRS has indicated that it will not apply the Bobrow ruling before January 1, 2015, Kaplan told CCH.

Withdrawn reg

In 1981, the IRS issued a proposed reg that would have provided that the rollover limitation of Code Sec. 408(d)(3)(B) would be applied on an IRA-by-IRA basis. The proposed reg is contrary to the Tax Court’s decision in Bobrow. Under Bobrow, an individual cannot make an IRA-to-IRA rollover if the individual has made an IRA-to-IRA rollover involving any of the individual’s IRAs within the preceding one-year period. As a result, the IRS has withdrawn the proposed reg.

Publication 590

The taxpayers in Bobrow asked the Tax Court to reconsider its decision based on the IRS’s published guidance (Publication 590). The court denied the motion for reconsideration and reminded the taxpayers that the IRS’s published guidance is not binding precedent.

  • Comment. The IRS has apparently not yet updated its online version of Publication 590 to reflect Bobrow.

References: FED ¶49,620 ; TRC RETIRE: 66,702 

 

For more information regarding this or any other tax planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.