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What the IRS Wants You to Know | Tax Tip of the Week | No. 195 April 24, 2013

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Don’t be Scammed by Cyber Criminals

The Internal Revenue Service receives thousands of reports each year from taxpayers who receive suspicious emails, phone calls, faxes or notices claiming to be from the IRS. Many of these scams fraudulently use the IRS name or logo as a lure to make the communication appear more authentic and enticing. The goal of these scams – known as phishing – is to trick you into revealing your personal and financial information. The scammers can then use your information – like your Social Security number, bank account or credit card numbers – to commit identity theft or steal your money.

Here are five things the IRS wants you to know about phishing scams.

1. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts.

2. The IRS does not initiate contact with taxpayers by email to request personal or financial information. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site:

• Do not reply to the message.     

• Do not open any attachments. Attachments may contain malicious code that will infect your computer.     

• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit the IRS website and enter the search term ‘identity theft’ for more information and resources to help.

3. The address of the official IRS website is www.irs.gov. Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on the suspicious site and report it to the IRS.

4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence.  You can forward a suspicious email to phishing@irs.gov.

5. You can help shut down these schemes and prevent others from being victimized. Details on how to report specific types of scams and what to do if you’ve been victimized are available at www.irs.gov. Click on “phishing” on the home page.

As always, give us a call with any questions or concerns you may have.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Thank You! | Tax Tip of the Week | No. 194 April 17, 2013

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The Week After Tax Season

Aaaah……The week after tax season (and the first full weekend home in two and half months) is the best week in a tax accountant’s life!

We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax Tip of the Week.  Thank you!  A referral is the best compliment we can ever receive.

Even though tax season is over—we will continue our Tax Tip of the Week mailing for the rest of the year.  We will keep you updated on the constant changes as well as spotlighting specific tax planning ideas.

If there are any special tax topics you would like us to cover, just send us an email or give us a call.

Again, thank you for making this one of most rewarding tax seasons yet.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

It is Better to Extend vs. Not Filing on Time | Tax Tip of the Week | No. 193 April 10, 2013

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Filing For Extensions

If you haven’t filed your tax return by now, you should probably consider filing for an extension.  It is a lot easier to file for an extension than it is to amend a return later for a mistake you made trying to rush your return to completion.  A hastily filed return is even more costly if the IRS finds a mistake you made and assesses underpayment penalties and interest. 

To file for an extension, you simply need to submit Form 4868.  After submitting this form, you then have until October 15, 2013 to timely file your return.  Note, however, that an extension of time to file is not an extension of time to pay.  If you suspect you will owe some taxes, you must send a payment along with the extension.  This is true for your federal, state and city returns. 

Ohio will automatically accept the federal extension.  Some cities, however, require a special city extension form.  Also, some cities will not allow extensions if you only have W-2 income.  Be sure to check with your work and/or resident cities before April 15th. 

Another reason to file for extension is that some speculate your chances for an audit decreases for extended returns.  How?  One of the methods the IRS uses to select a return for audit is to select a random sample of returns filed by April 15th.   If your return is not in that sample—then you don’t get picked! 

Editor’s Note:  One of the pledges I make to all my clients is that my personal return will be the last one filed each year. When my most procrastinating client’s return is filed on October 15th —-mine is right behind it!  And has been that way for nearly 20 years!

As always, give us a call with any questions or concerns you may have. 

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

IRS Proposes Truncated Taxpayer Identification Numbers to Curb Identity Theft | Tax Tip of the Week | No. 192 April 3, 2013

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Identity Theft Update

The Internal Revenue Service has issued proposed regulations to create a new taxpayer identification number known as the IRS Truncated Taxpayer Identification Number, or TTIN, that can be used instead of a Social Security number, in response to the growing problem of identity theft related tax fraud. 

The TTIN would provide an alternative to using a Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), or IRS Adoption Taxpayer Identification Number (ATIN). The filer of certain information returns would be able to use a TTIN on the corresponding payee statements to identify the individual being furnished a statement. The TTIN would display only the last four digits of an individual’s identifying number and is shown in the format XXX-XX-1234 or ***-**-1234.

The IRS has been struggling to curb identity theft. From 2008 through the middle of 2012, the IRS identified more than 600,000 taxpayers who have been affected by identity theft. Last tax season, the IRS added filters to its system to check for signs of identity theft, stop suspicious tax returns and contact the taxpayer before the return is processed, but that in turn led to delayed tax refunds for millions of taxpayers. The IRS has also enhanced the use of Identity Protection Personal Identification Numbers for identity theft victims. 

In 2011 the IRS protected $1.4 billion in refunds from being erroneously sent to identity thieves, according to the IRS Advisory Council. Through mid-April 2012, the IRS had stopped over 325,000 questionable returns with $1.75 billion in claimed refunds using filters specifically targeting refund fraud.

However, the impact of identity theft on tax administration is significantly greater than the amount the IRS detects and prevents, according to the Treasury Inspector General for Tax Administration. TIGTA’s analysis of tax returns using characteristics of IRS-confirmed identity theft has identified approximately 1.5 million tax returns with potentially fraudulent tax refunds totaling in excess of $5.2 billion. TIGTA estimates that the IRS could potentially issue $21 billion in fraudulent tax refunds over the next five years as a result of identity theft.

The IRS’s proposed regulations would affect the filers of certain information returns who will be permitted to identify an individual payee by use of a TTIN on the payee statement furnished to the individual, and those individuals who receive payee statements containing a TTIN. The TTIN can be used in payee statements on 1099, 1098 and 5498 series forms, except for the 1098-C. The IRS has already begun testing the use of the TTIN under a 2011 pilot program.

We will keep you posted if this becomes a final regulation.

As always, give us a call with any questions or concerns you may have. 

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.