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By Bill
IRS Warns Tax Payers to Watch Out for Phishing Scams
IR-2015-31, Feb. 18, 2015
WASHINGTON — The Internal Revenue Service today warned return preparers and other tax professionals to be on guard against bogus emails making the rounds seeking updated personal or professional information that in reality are phishing schemes.
“I urge taxpayers to be wary of clicking on strange emails and websites,” said IRS Commissioner John Koskinen. “They may be scams to steal your personal information.”
Specifically, the bogus email asks tax professionals to update their IRS e-services portal information and Electronic Filing Identification Numbers (EFINs). The links that are provided in the bogus email to access IRS e-services appear to be a phishing scheme designed to capture your username and password. This email was not generated by the IRS e-services program. Disregard this email and do not click on the links provided.
Phishing made this year’s Dirty Dozen list of IRS tax scams. The full list is available on IRS.gov.
Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.
If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System, report it by sending it to phishing@irs.gov.
In general, the IRS has added and strengthened protections in our processing systems this filing season to protect the nation’s taxpayers. For this tax season, we continue to make important progress in stopping identity theft and other fraudulent refunds.
It is important to keep in mind the IRS generally 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 has information online that can help you protect yourself from email scams.
By Bill
IRS Identifies Five Easy Ways to Spot Suspicious Calls
WASHINGTON — The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.
These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.
“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”
The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five 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:
1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to 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, here’s what you should do:
- If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
- If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
- If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.
Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box.
Additional information about tax scams are available on IRS social media sites, including YouTube http://youtu.be/UHlxTX4rTRU?list=PL2A3E7A9BD8A8D41D. and Tumblr http://internalrevenueservice.tumblr.com where people can search “scam” to find all the scam-related posts.
By Bill
Atlas Shrugged III, the movie is slated for release on Sept 12, 2014.
If you want to see it at your local theatre you need to get involved…
Click on the link to the official movie web site, www.atlasshruggedmovie.com and click the link to ‘Get Involved.’
By Bill
Ten Things to Know About the Taxpayer Advocate Service
1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS and is your voice at the IRS.
2. We help taxpayers whose problems are causing financial difficulty. This includes businesses as well as individuals.
3. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn’t working as it should.
4. The IRS has adopted a Taxpayer Bill of Rights that includes 10 fundamental rights that every taxpayer has when interacting with the IRS:
Taxpayer Bill of Rights
- The Right to Be Informed.
- The Right to Quality Service.
- The Right to Pay No More than the Correct Amount of Tax.
- The Right to Challenge the IRS’s Position and Be Heard.
- The Right to Appeal an IRS Decision in an Independent Forum.
- The Right to Finality.
- The Right to Privacy.
- The Right to Confidentiality.
- The Right to Retain Representation.
- The Right to a Fair and Just Tax System.
Our TAS Tax Toolkit at TaxpayerAdvocate.irs.gov can help you understand these rights and what they mean for you. The toolkit also has examples that show how the Taxpayer Bill of Rights can apply in specific situations.
5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn. And our service is always free.
6. We have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico. You can call your advocate, whose number is in your local directory, in Pub. 1546, Taxpayer Advocate Service — Your Voice at the IRS, and on our website at irs.gov/advocate. You can also call us toll-free at
877-777-4778.
7. The TAS Tax Toolkit at TaxpayerAdvocate.irs.gov has basic tax information, details about tax credits (for individuals and businesses), and much more.
8. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at www.irs.gov/sams.
9. You can get updates at
10. TAS is here to help you, because when you’re dealing with a tax problem, the worst thing you can do is to do nothing at all.
By Bill
Summer Hiring Rules for Sole Proprietors and Partnerships
Sole proprietorships and partnerships100%-owned by parents:
- Children of the owner can work any number of hours or time of day, regardless of their age. If under 16, they cannot do any hazardous work (e.g., work with lawn mowers, sewing machines), work near flammable or hazardous materials, or where food is cooked.
- If a 100% parent-owned sole proprietorship’s or partnership’s only employees are immediate family, the owners’ children need not be paid the minimum wage—but if others are regularly employed, even family must be paid minimum wage.
- If the owner’s children are under 21:
Wages are exempt from FUTA.
- Any children (i.e., not just the owners’ children) who are under 18:
If the business is 100% parent-owned, the children under 18 are exempt from FICA.
If not an owners’ child, obtain an age certificate recognized by the DOL and your state Wage and Hour Division (WHD). DOL often accepts state age certificates, but ask your WHD to be sure. Return it to the worker at termination.
The workers may not do hazardous work.
- Workers of 14-15 years of age who are not theowners’ children can work 8 hrs./day, 40 hrs./wk., June 1-Labor Day, between 7 a.m.-9 p.m. if school is not in session.
Exceptions: Limits do not apply to news carriers or children employed exclusively by a parent/sole proprietor. For agricultural jobs, contact the DOL.
· Other children under 14cannot be hired unless they work for a parent/sole owner.
By Bill
Notable Quotes About Taxation
“The hardest thing in the world to understand is the income tax.” — Albert Einstein
“Like mothers, taxes are often misunderstood, but seldom forgotten.” — Lord Bramwell, 19th Century English jurist
“Taxation with representation ain’t so hot either.” — Gerald Barzan, humorist
“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist
Taxation should not be a joke. Its time to get on board with the Fair Tax Plan… Please take time to learn and understand what passage of this tax reform plan will do for the American economy and every single individual living in this country.
By Bill
The Individual Shared Responsibility Provision
More commonly known as the ObamaCare Tax
Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. Many people already have qualifying health insurance coverage (called minimum essential coverage) and do not need to do anything more than maintain that coverage.
The individual shared responsibility provision requires you and each member of your family to either:
- Have minimum essential coverage, or
- Have an exemption from the responsibility to have minimum essential coverage, or
- Make a shared responsibility payment when you file your 2014 federal income tax return in 2015.
You will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015.
Minimum Essential Coverage
If you and your family need to acquire minimum essential coverage, you may have several options. They include:
- Health insurance coverage provided by your employer,
- Health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance,
- Coverage provided under a government-sponsored program for which you are eligible (including Medicare, Medicaid, and health care programs for veterans),
- Health insurance purchased directly from an insurance company, and
- Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.
U.S. citizens who are residents of a foreign country for an entire year, and residents of U.S. territories, are deemed to have minimum essential coverage. See questions 11 and 12 of our Questions and Answers for more information.
For purposes of the individual shared responsibility payment, you are considered to have minimum essential coverage for the entire month as long as you have minimum essential coverage for at least one day during that month. For example, if you start a new job on June 26 and are covered under your employer’s health coverage starting on that day, you’re treated as having coverage for the entire month of June. Similarly, if you’re eligible for an exemption for any one day of a month, you’re treated as exempt for the entire month.
For more information about minimum essential coverage, check this minimum essential coverage chart and see questions 14-20 of our Questions and Answers.
You can learn more at HealthCare.gov about which health insurance options are available to you, how to purchase health insurance coverage, and how to get financial assistance with the cost of insurance. If you purchase health insurance through the Marketplace and you meet certain requirements, you may be eligible for a premium tax credit to help pay your premiums. Learn more about the premium tax credit. The deadline for the initial open enrollment period is March 31, 2014. You may also qualify for a special enrollment period (e.g., you move to a different state). See HealthCare.gov to learn about special enrollment periods.
Exemptions
You may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment when you file your 2014 federal income tax return in 2015, if you meet certain criteria.
You may be exempt if you:
- Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
- Have a gap in coverage for less than three consecutive months, or
- Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.
Because of the Affordable Care Act, more Americans have access to coverage that is affordable. However, if there is no coverage available to you and your family that costs less than eight percent of your household income, you can qualify for an exemption.
An exemption applies to individuals who purchase their insurance through the Marketplace during the initial enrollment period for 2014, which runs through March 31, 2014. This hardship exemption will apply from January 1, 2014, until the start of your health care coverage, which if you enroll between March 16 and March 31 would generally be May 1. (See this HHS Question and Answer for more information.) Another hardship exemption may apply if you have been notified that your health insurance policy will not be renewed and you consider the other plans available to you unaffordable. (See this HHS guidance and Questions and Answers for more information.)
How you get an exemption depends upon the type of exemption for which you are eligible. You can obtain some exemptions only from the Marketplace, others only from the IRS, and yet others from either the Marketplace or the IRS.
Learn more about exemptions in this chart and in questions 21-24 of our Questions and Answers. Also, see Healthcare.gov for more information on hardship exemptions.
Reporting Coverage or Exemptions
The individual shared responsibility provision goes into effect in 2014. You won’t need to report minimum essential coverage or exemptions or make any individual shared responsibility payment until you file your 2014 federal income tax return in 2015. Information will be made available later about how to report your coverage or exemption (or make a payment) on your 2014 income tax return.
Making a Payment
If you or any of your dependents don’t have minimum essential coverage and don’t have an exemption, you will need to make an individual shared responsibility payment on your tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won’t be protected from the kind of very high medical bills that can sometimes lead to bankruptcy.
If you must make an individual shared responsibility payment, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependent(s) don’t have either coverage or an exemption.
For 2014, the annual payment amount is:
- The greater of:
- 1 percent of your household income that is above the tax return filing threshold for your filing status, or
- Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
- But capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014.
Check out these basic examples of the payment calculation and the federal tax filing requirement thresholds. For more detailed examples, see the individual shared responsibility provision final regulations.
The percentages and flat dollar amounts increase over the first three years. In 2015, the income percentage increases to 2 percent of household income and the flat dollar amount increases to $325 per adult ($162.50 per child under 18). In 2016, these figures increase to 2.5 percent of household income and $695 per adult ($347.50 per child under 18). After 2016, these figures increase with inflation.
Information will be made available later about how you will account for the payment on your 2014 federal income tax return filed in 2015.
More Information
More detailed information about the individual shared responsibility provision is available in our Questions and Answers. The Department of the Treasury and the IRS have issued the following legal guidance related to the individual shared responsibility provision, including detailed examples of the payment calculation:
- Final regulations on the individual shared responsibility provision.
- Notice 2013-42, which provides transition relief from the individual shared responsibility provision for employees and their families who are eligible to enroll in employer-sponsored health plans with a plan year other than a calendar year if the plan year begins in 2013 and ends in 2014.
- Proposed regulations on minimum essential coverage and other rules regarding the shared responsibility provision.
- Notice 2014-10, which provides transition relief for individuals enrolled in coverage under certain limited-benefit Medicaid and TRICARE programs that are not minimum essential coverage.
Additional information on exemptions and minimum essential coverage is available in final regulations issued by the Department of Health & Human Services.
By Bill
New Email Phishing Scam
The IRS has been alerted to a new email phishing scam. The emails appear to be from the IRS Taxpayer Advocate Service and include a bogus case number and the following message:
“Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance.”
The recipient is directed to click on links that supposedly provide information about the “advocate” assigned to their case or that let them “review reported income.” The links lead to web pages that solicit personal information.
Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at phishing@irs.gov. For more information, visit the IRS’s Report Phishing web page.
The Taxpayer Advocate Service is a legitimate IRS organization that helps taxpayers resolve federal tax issues that have not been resolved through the normal IRS channels. The IRS, including TAS, does not initiate contact with taxpayers by email, texting or any social media.
By Bill
Ten Facts about Capital Gains and Losses
When you sell a ’capital asset,’ the sale usually results in a capital gain or loss. A ‘capital asset’ includes most property you own and use for personal or investment purposes. Here are 10 facts from the IRS on capital gains and losses:
1. Capital assets include property such as your home or car. They also include investment property such as stocks and bonds.
2. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.
3. You must include all capital gains in your income. Beginning in 2013, you may be subject to the Net Investment Income Tax. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above statutory threshold amounts. For details see IRS.gov/aca.
4. You can deduct capital losses on the sale of investment property. You can’t deduct losses on the sale of personal-use property.
5. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.
6. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a ‘net capital gain.’
7. The tax rates that apply to net capital gains will usually depend on your income. For lower-income individuals, the rate may be zero percent on some or all of their net capital gains. In 2013, the maximum net capital gain tax rate increased from 15 to 20 percent. A 25 or 28 percent tax rate can also apply to special types of net capital gains.
8. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.
9. If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened that year.
10. You must file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses with your return.
For more information about this topic, see the Schedule D instructions and Publication 550, Investment Income and Expenses. They’re both available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
By Bill
IRS Tips about Taxable and Nontaxable Income
Are you looking for a hard and fast rule about what income is taxable and what income is not taxable? The fact is that all income is taxable unless the law specifically excludes it.
Taxable income includes money you receive, such as wages and tips. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.
Some types of income are not taxable except under certain conditions, including:
- Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
- Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.
- If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some types of income that are usually not taxable:
- Gifts and inheritances
- Child support payments
- Welfare benefits
- Damage awards for physical injury or sickness
- Cash rebates from a dealer or manufacturer for an item you buy
- Reimbursements for qualified adoption expenses
For more on this topic see Publication 525, Taxable and Nontaxable Income. You can get it at IRS.gov or call to have it mailed at 800-TAX-FORM (800-829-3676).