Tips to help taxpayers recognize tax scams

New versions of well-known tax-related scams appear every year…and 2019 is no different. No matter what time of year, taxpayers should be on the lookout for scams. Here are some things taxpayers should remember to help them spot scams and avoid becoming a victim.

Phone scams

  • The IRS does not leave pre-recorded, urgent or threatening messages.
  • In many versions of phone scams, potential victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation and revocation of licenses.
  • Criminals can fake or “spoof” caller ID numbers to appear to be anywhere in the country. Scammers can even spoof an IRS office phone number, or the numbers of various local, state, federal or tribal government agencies.

Email phishing scams

  • The IRS does not initiate contact with taxpayers by email to request personal or financial information.
  • The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
  • There are special circumstances when the IRS will call or come to a home or business. These visits include times when a taxpayer has an overdue tax bill, a delinquent tax return, or a delinquent employment tax payment.
  • If a taxpayer receives an unsolicited email that appears to be a scam, they should report it to the IRS. They can forward the email message to phishing@irs.gov. They should not open any attachments, click on any links, reply to the sender, or take any other actions that could put them at risk.

Telltale signs of a scam

Taxpayers should remember that the IRS generally first mails a bill to a taxpayer who owes taxes. The IRS and its authorized private collection agencies will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments.
  • Ask for checks to third parties. The IRS has specific instructions on how to pay taxes. All tax payments should only be made payable to the U.S. Treasury.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

If a taxpayer receives a phone call, but doesn’t owe taxes and has no reason to think they do, they should:

If a taxpayer owes tax or thinks they do, they should:

 

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Taxpayers should be on the lookout for new versions of these two scams

With scam artists hard at work all year, taxpayers should be on the lookout for a surge of evolving phishing emails and telephone scams.

Taxpayers should watch for new versions of two tax-related scams. One involves Social Security numbers related to tax issues. The other threatens taxpayers with a tax bill from a fictional government agency. Here are some details about these scams to help taxpayers recognize them:

The SSN scheme

  • The latest twist includes scammers claiming to be able to suspend or cancel the victim’s Social Security number. This scam is similar to and often associated with the IRS impersonation scam.
  • It is yet another attempt by con artists to frighten taxpayers into returning robocall voicemails.
  • Scammers may mention overdue taxes in addition to threatening to cancel the taxpayer’s SSN.

Fake tax agency

  • This scheme involves a letter threatening an IRS lien or levy.
  • The scammer mails the letter to the taxpayer.
  • The lien or levy is based on bogus overdue taxes owed to a non-existent agency.
  • The fake agency is called the “Bureau of Tax Enforcement.” There is no such agency.
  • The lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate agency.

Both these schemes show classic signs of being scams. The IRS and its Security Summit partners – the state tax agencies and the tax industry – remind everyone to stay alert to scams that use the IRS or reference taxes. Being alert is especially important in late spring and early summer as tax bills and refunds arrive.

Share this tip on social media — #IRSTaxTip: Taxpayers should be on the lookout for new versions of these two scams. https://go.usa.gov/xyYHB

 

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Tax transcript tips for those filing a FAFSA for the 2019-2020 college semesters

When filling out financial aid applications, students and families may need to get tax information to complete the Free Application for Federal Student Aid form. The IRS Data Retrieval Tool is available to use with the 2019‒2020 FAFSA Form. This tool is the fastest, most accurate way to input tax return information into the FAFSA form.

Students and parents who are eligible to use the IRS Data Retrieval Tool can access it from within the Free Application for Federal Student Aid.

Here is some information for applicants to help get tax return information for the FAFSA form.

  • Applicants filing a 2019-20 FAFSA must use data from their 2017 tax returns.
  • Taxpayers should always keep a copy of their tax return. Whether they keep it electronically or on paper, they should keep it in a secure place.

Here are some options for taxpayers who did not keep a copy of their tax return. They can:

  • Access the tax software product used to prepare and file their 2017 return. They may be able to access their account to download and print a copy.
  • Contact the tax preparer or provider who filed their 2017 return.
  • Download their tax transcript at Get Transcript Online. They should remember to review the identity authentication requirements for Secure Access before attempting to register.
  • Use Get Transcript by Mail. The IRS will mail a transcript to the address on their return within five to 10 days.
  • Call the IRS’s automated line at 800-908-9946 to order a transcript by mail.
  • Taxpayers who filed an amended tax return, Form 1040X, should use the adjusted gross income and earned income listed on their revised tax return.

Finally, here’s some information about getting alternative documentation for IDR applications.

  • IRS Data Retrieval plan applicants must submit alternative documentation of income.
  • The applicants submit this documentation to their federal loan servicers after completing and submitting the online IDR application.
  • The process for submitting the alternative documentation of income is explained to borrowers as part of the online IDR application.
  • Alternative documentation of income usually consists of copies of pay stubs or most recently filed tax returns.

More information:
www.studentaid.gov
Get Transcript FAQs

 

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Taxpayers have the right to appeal an IRS decision

A taxpayer might at some point see the IRS make a decision about their taxes. If the taxpayer disagrees with this decision, they have the right to appeal it. The right to appeal an IRS decision in an independent forum is one of 10 basic rights known collectively as the Taxpayer Bill of Rights.

Here are some facts taxpayers should know about the right to appeal an IRS decision:

  • Taxpayers have the right to a fair administrative appeal of most IRS decisions.
  • There is an independent office called the IRS Office of Appeals. This office is separate from the IRS office that first reviewed the case.
  • Generally, the Office of Appeals will not discuss a case with the IRS.
  • Taxpayers also have the right to receive the Office of Appeals’ decision in writing.
  • Taxpayers generally have the right to take their cases to court.
  • Your Appeal Rights and How to Prepare a Protest if You Don’t Agree is a publication that explains how a taxpayer can appeal a tax case when they disagree with the IRS’s findings.
  • If the IRS sends a notice proposing that the taxpayer owes more money, the taxpayer may want to dispute it. If so, the taxpayer may file a petition with the United States Tax Court.
  • Some taxpayers may have a claim for a refund. These taxpayers may take their case to their United States District Court or to the United States Court of Federal Claims. Generally, the taxpayer must file this claim two years from the date of the IRS notice denying the taxpayer’s refund.

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

All taxpayers should plan ahead for natural disasters

Floods, wildfires, hurricanes, tornados and other natural disasters happen quickly and often with little warning.  No one can prevent these disasters from happening, but people can prepare for them.

Here are some things taxpayers can do to help protect their financial safety should a disaster occur. Taxpayers should:

Update emergency plans.
A disaster can strike any time. Personal and business situations are constantly evolving, so taxpayers should review their emergency plans annually.

Create electronic copies of documents.
Taxpayers should keep documents in a safe place. This includes bank statements, tax returns and insurance policies. This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers should scan them. They should save them on a DVD or CD, or store them in the cloud.

Document valuables. It’s a good idea to photograph or videotape the contents of any home. This is especially true when it comes to items of value. Documenting these items ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes. The IRS has a disaster loss workbook. Using this can help taxpayers compile a room-by-room list of belongings.

Remember the IRS is ready to help. In the case of a federally declared disaster, affected taxpayers can call the IRS at 866-562-5227. The taxpayer can speak with an IRS specialist trained to handle disaster-related issues. Taxpayers can request copies of previously filed tax returns and attachments by filing Form 4506. They can also order transcripts showing most line items through Get Transcript on IRS.gov. They can also call 800-908-9946 for transcripts.

Know what tax relief is available in disaster situations
Taxpayers should be aware that the Tax Cuts and Jobs Acts modified the itemized deduction for casualty and theft losses. After Dec. 31, 2017, net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.

Additional IRS Resources:

IRS YouTube Videos:

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Closing your Tax Office for the Year?

If you are planning to close your tax office for the year, here are some reminders:

  1. Update your IRS e-file Application to allow the IRS to communicate with you and prevent your Electronic Filing Identification Number (EFIN) from being inactivated. Verify and if needed, update your firm’s Principals, Responsible Officials, addresses and telephone numbers.
  2. Keep all Forms 8879 and acknowledgment reports for three years.
  3. Keep copies of all clients’ tax returns until the end of the calendar year as the electronic return originator (ERO).
  4. Check your EFIN status page to verify the number of returns you filed matches the number of returns received by the IRS. While your office is closed, it is a good practice to periodically verify your EFIN is not being used by anyone else.

If you are planning to permanently close your tax office, here are some reminders:

  1. The easiest way to notify the IRS of the closing is to use the “Close Office” feature on your IRS e-file Application.
  2. Providers may not sell or transfer EFINs, other identification numbers, or passwords when selling, transferring or otherwise discontinuing an IRS e-file business.

 

If you need assistance, please contact the e-help desk toll-free at (866) 255-0654.

 

For more information, refer to Publication 3112.

 

 

 

 

*This message was distributed by IRS Newswire, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Tax Preparers: Register for 2019 IRS Nationwide Tax Forums

The IRS reminds tax professionals to sign up for this summer’s 2019 IRS Nationwide Tax Forums. Tax professionals attending can earn up to 19 continuing education credits.

The forums are three-day events featuring presentations by tax experts from the IRS and association partners. Topics on important tax issues currently facing tax professionals include cybersecurity, changes to the tax law, and ethics. Attendees have access to the Case Resolution Program and dozens of exhibitors. They also have the opportunity to hear directly from IRS Commissioner Chuck Rettig, who is scheduled to deliver the keynote speech at all the forums.

Tax professionals can visit www.irstaxforum.com for more information and to register.

There are five IRS Nationwide Tax Forums in cities across the country. Each Forum features more than 40 seminars and workshops.

The IRS Nationwide Tax Forums are designed specifically for tax professionals, including:

  • Enrolled agents
  • Certified public accountants
  • Certified financial planners
  • Annual Filing Season Program participants
  • Uncredentialled tax professionals

Here are the dates, locations and registration deadlines for the five forums this year:

  • National Harbor, Maryland, near Washington, D.C. – July 9-11
    • Registration deadline: June 25
  • Chicago – July 23-25
    • Registration deadline: July 9
  • New Orleans – Aug 6-8
    • Registration deadline: July 23
  • Orlando – Aug 13-15
    • Registration deadline: July 30
  • San Diego – Sept. 17-19
    • Registration deadline: Sept. 3

Tax professionals who pre-register by June 15, 2019 will receive an early bird rate of $235 per person. The standard rate of $255 is available starting June 16, and ends two weeks prior to the start of each forum. Attendees registering on-site or after the deadlines will pay $370.

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Some taxpayers may need to amend their tax return

Taxpayers who discover an error after filing may need to amend their tax return. Taxpayers should file an amended return if there’s a change in filing status, income, deductions or credits.

The IRS may correct mathematical or clerical errors on a return. They also may accept returns without certain required forms or schedules. In these instances, there’s no need to file an amended return.

Taxpayers who need to amend should remember these simple tips:

  • Use the Interactive Tax Assistant.  The ITA titled Should I File an Amended Return? can help taxpayers determine if they should file an amended return to correct an error or make other changes to their original return.
  • Wait to file for corrected refund for tax year 2018. Taxpayers who are due refunds from their original 2018 tax return should wait to get it before filing Form 1040X to claim an additional refund. Amended returns may take up to 16 weeks to process.
  • File on paper. Taxpayers use Form 1040X, Amended U.S. Individual Income Tax Return, to correct their tax return. Taxpayers can’t file amended returns electronically. Taxpayers will mail Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to an IRS notice, should mail it to the address shown on the notice.
  • Amend to correct errors. Taxpayers should file an amended tax return to correct errors or make changes to an original tax return. For example, taxpayers should amend their return to change their filing status. They should also file a 1040X to correct their income, deductions and credits.
  • Don’t amend for math errors. Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS will automatically correct these.
  • Don’t amend for missing forms. Taxpayers also don’t need to file an amended return if they forgot to attach tax forms. The IRS will mail a request to the taxpayer for missing forms.
  • File within three-year time limit. Taxpayers usually have three years from the date they filed the original tax return to file Form 1040X to claim a refund. Taxpayers can file it within two years from the date they paid the tax, if that date is later.
  • Pay additional tax as soon as possible. Taxpayers who will owe tax should file Form 1040X and pay the tax immediately to avoid potential penalties and interest on the unpaid taxes. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account at no cost.
  • Track amended return. Generally, taxpayers can track the status of their amended tax return three weeks after they file, using ‘Where’s My Amended Return? on IRS.gov.

More information:
Tax Topic 308 – Amended Returns

 

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

IRS expands retirement plan Determination Letter Program and Self- Correction Program

WASHINGTON — The Internal Revenue Service today announced the expansion of areas for issuing determination letters for certain retirement plans. Revenue Procedure 2019-20 details the addition of two areas for which retirement plan sponsors may now request determination letters.

In addition, through recently issued guidance, the IRS is also making it easier for plan administrators to correct plan errors.

Highlights of these changes:

Determination Letter Program

The Treasury Department and the IRS received numerous requests to expand the determination letter program. Revenue Procedure 2019-20 expands the determination letter program for two specific categories:

  • Statutory Hybrid Plans – plan sponsors may submit determination letter applications for statutory hybrid plans for the 12-month period beginning Sept.1, 2019, and ending Aug. 31, 2020.
  • Plan Mergers – plan sponsors may submit determination letter applications for certain merged plans on an ongoing basis.

As provided in prior guidance, plan sponsors will continue to be able to submit a determination letter application for initial plan qualification and for qualification upon plan termination.

Employee Plans Compliance Resolution System

On April 19, 2019, the IRS issued Revenue Procedure 2019-19, which expands the Self-Correction Program for retirement plans to enable plan sponsors to fix certain plan document and operational failures (including plan loan issues) without having to file a Voluntary Correction Program submission with the IRS.

Starting on April 19, the Self-Correction Program permits the self-correction of certain plan document failures, provides correction options and possible relief from deemed distributions associated with certain failures involving plan loans made to participants, and provides additional opportunities for correcting certain operational failures by plan amendment.

The IRS provides three correction programs for employee plans:

  • Self-Correction Program (SCP) – permits plan sponsors to correct certain plan failures without contacting the IRS or paying a user fee.
  • Voluntary Correction Program (VCP) – allows plan sponsors to correct failures not eligible for self-correction or to obtain the IRS’s written agreement that specified failures were properly corrected.
  • Audit Closing Agreement Program – enables plan sponsors to resolve failures discovered during an IRS audit.

 

 

*This message was distributed by IRS Newswire, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.

Six things taxpayers should know about the sharing economy and their taxes

From renting spare rooms and vacation homes to car rides or using a bike…name a service and it’s probably available through the sharing economy. Taxpayers who participate in the sharing economy can find helpful resources in the IRS Sharing Economy Tax Center on IRS.gov. It  helps taxpayers understand how this activity affects their taxes. It also gives these taxpayers information to help them meet their tax obligations.

Here are six things taxpayers should know about how the sharing economy might affect their taxes:

  1. The activity is taxable.
    Sharing economy activity is generally taxable. It is taxable even when:
  • The activity is only part time
  • The activity is something the taxpayer does on the side
  • Payments are in cash
  • The taxpayer receives an information return – like a Form 1099 or Form W2
  1. Some expenses are deductible.
    Taxpayers who participate in the sharing economy may be able to deduct certain expenses. For example, a taxpayer who uses their car for business may qualify to claim the standard mileage rate, which is 58 cents per mile for 2019.3. There are special rules for rentals.
    If a taxpayer rents out their home or apartment, but also lives in it during the year, special rules generally apply to their taxes. Taxpayers can use the Interactive Tax Assistant tool, Is My Residential Rental Income Taxable and/or Are My Expenses Deductible? to determine if their residential rental income is taxable.

    4. Participants may need to make estimated tax payments.
    The U.S. tax system is pay-as-you-go. This means that taxpayers involved in the sharing economy often need to make estimated tax payments during the year. These payments are due on April 15, June 15, Sept. 15 and Jan. 15. Taxpayers use Form 1040-ES to figure these payments.

    5. There are different ways to pay.
    The fastest and easiest way to make estimated tax payments is through IRS Direct Pay. Alternatively, taxpayers can use the Electronic Federal Tax Payment System.

    6. Taxpayers should check their withholding.
    Taxpayers involved in the sharing economy who are employees at another job can often avoid making estimated tax payments by having more tax withheld from their paychecks. These taxpayers can use the Withholding Calculator on IRS.gov to determine how much tax their employer should withhold. After determining the amount of their withholding, the taxpayer will file Form W-4 with their employer to request the additional withholding.

IRS YouTube Videos:
Your Taxes in the Sharing Economy – English | ASL

 

 

*This message was distributed by IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov.