Brian McFarren

The Internal Revenue Service and its Security Summit partners issued a warning to taxpayers and tax professions of fake IRS tax bills related to the Affordable Care Act.

The warning states that the IRS has received numerous reports of scammers sending a fraudulent version of a notice- labeled CP2000 – for tax year 2015. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

According to the IRS, this scam may arrive by email, as an attachment, or by mail. It has many signs of being a fake:

• The CP2000 notices appear to be issued from an Austin, Texas, address;
• The letter says the issue is related to the Affordable Care Act  and requests information regarding 2014 coverage;
• The payment voucher lists the letter number as 105C;
• Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a post office box.

 An authentic CP2000 notice is used when income reported from third-party sources such as an employer does not match the income reported on the tax return. Unlike the fake, it provides extensive instructions to taxpayers about what to do if they agree or disagree that additional tax is owed. A real notice requests that checks be made out to “United States Treasury.”

For more information, please contact our office or read the announcement on the IRS website.

In Rev. Proc. 2016-47, the IRS announced that a taxpayer who fails to meet the requirement to roll over distributions from retirement accounts within the normal 60-day period can make a written self-certification to an IRA trustee or plan administrator that a contribution meets one of the 11 specific reasons listed in the revenue procedure for excusing the missed 60-day deadline.

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Back to School.

Like many parents, you may be anticipating this time of year. After weeks of summer vacation, it is time to get back to a routine. You cannot wait for scheduled bedtimes and less “I’m bored” pleas.

However, for others, back to school means back to work, tuition payments, or expensive school supplies.

Whether you are excited or not, Back to School time is here. The CPA Practice Advisor discusses that now is the time to starting thinking about back to school tax breaks and deductions available for qualifying expenses.

The article offers 11 Back to School tax tips for parents.

• Private school tuition and school uniforms are not deductible.
• Before and after school childcare, for a child under 13, may qualify for a tax credit.
• Tax deductions for school fundraisers are limited to the amount over market value of the goods or services received.
• Moving expenses to go to college are not deductible.
• Earnings in 529 plans are not federally taxable. The money grows tax free and withdrawals used for eligible college expenses are not taxable.
• Tax-deferred accounts can be used to pay for educational expenses (e.g. Coverdell Educational Savings Accounts).
• Student loan interest is deductible above the line.
• American Opportunity Credit (AOC) can amount to $2,500 in tax credits per eligible student and is available for the first four years of post-secondary education.
• Lifetime Learning Credit provides up to $2,000 credit per year for qualified education expenses for a student enrolled in an eligible educational institution. As of now, there is not limit to the amount of years this may be claimed.

• A Roth IRA can be used for student’s income earned. Up to $5,5000 of income earned can be contributed to a Roth IRA, which grows tax-free.  

To read the full article, click here. For more information back to school tax breaks, please contact Brian McFarren.

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The IRS has just announced that its “Get Transcript Online” site is now available for taxpayers to access a copy of their tax transcripts and other documents that summarize important tax return information.

This service was disabled last spring after hackers gained access to hundreds of thousands of taxpayers’ sensitive information. However, the IRS states that it has been relaunched with a new, more secure structure.  The new framework features a two-step authentication process for all online tools and applications.

According to the IRS, to use the Get Transcripts Online, a taxpayer must have:

• A readily available email address;
• Your Social Security number or Individual Tax Identification Number;
• Your filing status and address from your last-filed tax return;
• Access to certain account numbers for either:

• credit card, or
• home mortgage loan, or
• home equity (second mortgage) loan, or
• home equity line of credit (HELOC), or
• car loan

• A readily available mobile phone. Only U.S-based mobile phones may be used. Your name must be associated with the mobile phone account. Landlines, Skype, Google Voice or similar virtual phones as well as phones associated with pay-as-you-go plans cannot be used;
• If you have a “credit freeze” on your credit records through Equifax, it must be temporarily lifted before you can successfully complete this process.

For more information on this IRS feature, please visit the IRS website, or contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com

Learn more about our tax services.

The IRS has recently issued a warning to taxpayers about scam phone calls from an IRS impersonator demanding payment for a non-existent “Federal Student Tax”.

The scammer typically has a piece of personal information, such as the last four digits of a Social Security number or the name of a school attended, which makes the call seem legitimate.

The Federal Student Tax is fake; and, if you receive such a call, it should be reported.

Reminder, 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 a bill.
• Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
• 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.

For more information on the scam, please visit the IRS website or contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com.

Learn more about our tax services.

On Wednesday, May 18, The U.S. Department of Labor announced the Final Rule updating the exemption of executive, administrative, and professional employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA). This update will affect 4 million workers in its first year of implementation.

Here’s what you need to know:

Starting December 1, 2016, any salaried employee earning less than $47,476 per year (approximately $913 per week) will qualify for overtime pay when they work over 40 hours per week. The current threshold is $23,660 annually ($455 per week).

To qualify, an employee must also pass the “job duties” test, which includes those performing executive, professional, and administrative responsibilities.

For more information on the new overtime regulations, please visit the U.S. Department of Labor website or Brian McFarren at (231) 726- 5815 or bmcfarren@brickleydelong.com.

Learn more about our payroll, bookkeeping, and business consulting services.

A recent article by Kelly Phillips Erb, published in Forbes, discusses the latest trend in identity theft, new account fraud. The article cites a report from Javelin Strategy and Research which states that identity thieves have stolen $112 billion over the past six years. Broken down, this equals $35,600 stolen each minute. Fraud is ever-evolving. This makes it difficult for law enforcement to fix the problem. Data suggests that new account fraud increased by 113% last year.

What is new account fraud?

The author states that new account fraud is when thieves use your personal information, such as a Social Security Number (SSN), to open new credit cards or apply for mortgages. New account fraud leads to a delay in reporting, since you will not find out right away if a new account has been created in your name, compared to when someone steals your credit card information.

Personal Identifiable Information

When data hacks and security breaches happen, taxpayers’ personal identifiable information (PII) becomes compromised. PIIs are used by fraudsters and many times can be purchased or sold on the black market. PIIs can be used to steal your tax refund.

How to protect you identity during tax season?

The author offers seven tips to help protect you identity, which are:

• Guard your SSN
• Remain alert to announcements regarding security threats
• Avoid phishing emails and scams
• Use a legitimate tax preparer
• Pay attention to passwords and security features
• Take data breach notifications seriously
• File early and plan ahead

To read the full referenced article, click here. For more information on combating or recovering from identity theft, please contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com.

Learn about our individual tax services.

Alistar Nevius, in a recent article published in the Journal of Accountancy, discusses how taxpayers can resolve an IRS dispute through audit reconsideration.

What is audit reconsideration?

According to the IRS, audit reconsideration is “the process the IRS uses to reevaluate the results of a prior audit where additional tax was assessed and remains unpaid, or a tax credit was reversed.”

Nevius articulates that the goals of audit reconsideration are to ensure:

1. The amount of assessed tax is correct;
2. The collection process is suspended while the reconsideration request is being considered;
3. That procedures support the abatement of assessments in appropriate situations; and
4. That cases are handled in a consistent manner.

For more information on audit reconsideration or how to request audit reconsideration, please read the full referenced article, or contact Brian McFarren at (231) 726-5880 or bmcfarren@brickleydelong.com.

Learn more about our individual and business taxation services.

The IRS has published questions and answers in regards to health care information forms for individuals (Forms 1095-A, 1095-B, and 1095-C).

The questions they answer are:

1. Will I receive any new health care tax forms in 2016 to help me complete my tax return?
2. When will I receive these health care tax forms?
3. Must I wait to file until I receive these forms?
4. What are the health care tax forms that I might receive and how do I use them?
5. How will I receive these forms?
6. My employer or health coverage provider has suggested that I opt to receive these forms electronically rather than on paper.  Are they allowed to ask me that?
7. Will I get at least one form?
8. Will I get more than one form?
9. Will I get a Form 1095-C from each of my employers?
10. How are the forms similar?
11. How are the forms different?
12. What do I need to do with these forms?
13. What should I do if:
    1. I have a question about the form I received,
    2. I think I should have gotten a form but did not get it,
    3. I need a replacement form, or
    4. I believe the form I received has an error?
14. Can I file my tax return if I have not received any or all of these forms?
15. Am I required to file a tax return if I receive one of these forms?
16. Should I attach Form 1095-A, 1095-B or 1095-C to my tax return?

To view the answers to these questions, click here.  For assistance in using these forms, please contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com.

Learn about our individual taxation services.

The IRS recently made an announcement of an error on their December 2015 Identity Protection PIN letters (IP PIN).

The letters stated that the IP PIN was for the 2014 tax year, when they are actually for the 2015 tax year.

An IP PIN is a unique 6-digit number assigned to taxpayers that have experienced identity theft. They help the IRS verify a taxpayer’s identity and prevent someone from filing a fraudulent return under another person’s Social Security number. For identity theft victims, a tax return will be rejected if it is missing or contains an incorrect IP PIN.

The IRS emphasized that taxpayers and preparers should still use the IP PIN numbers when filing 2015 returns despite the wrong date on the letter.

To read the announcement by the IRS click here. For more information on identity theft and IP PINs, please contact Brian McFarren at (231) 726-5815.

Learn more about our individual tax services.