IRS Confirms Audit Notification Policy

It was revealed in a recent Taxpayer Advocate Forum in Iowa that in some cases the IRS initiates contact with taxpayers via a phone call. This initial phone call is causing confusion and potential identity theft scam concerns with taxpayers. It is now being reported that the IRS will no longer be making initial taxpayer contact via phone. Phone Scams While the vast majority of IRS notifications are via mail notice, in a few cases the IRS auditor was calling to set up an appointment. The conversation would include the scope of the audit and a request for records to have available for the auditor. The IRS would then send a follow-up confirmation of the interview via mail. Because of the increase in the number and sophistication of IRS phone scams, the telephone contact practice is being stopped. What you need to know Assume initial calls are scams. If you receive a phone call from the IRS without prior notice, treat it as a scam. Never give or confirm your personal information over the phone. Hang up and initiate independent contact. If someone representing the IRS calls you, get their information (name, ID number, and location) and then hang up.Then call for assistance. Consider contacting the IRS directly so you can determine if there is audit activity on your tax account with the IRS. Remember, do not use the contact information provided to you by the person calling you. Never ignore mail notices. If you receive a mailed notice of an audit from the IRS, open the envelope and determine what they are requesting. Immediately call for assistance. While this policy change at the IRS only impacts a few taxpayers, the mail notification consistency helps all of us more readily identify potential scams.

Extension for Form 1095 Reporting

What everyone needs to know Category: What's New

For 2015 tax returns, everyone employed by a company with 50 or more employees will receive a new Form 1095. This form is in addition to the Form 1095’s received by other taxpayers using the Marketplace to purchase their health insurance. You need this form to file your taxes as it provides the necessary proof that you have adequate health insurance for the year. A recent announcement by the IRS provides a delay for the issuing of this form due to complications in creating the proper form by employers and insurers. What is happening You need Form 1095 to file your income taxes for 2015. Without the form, you could be subject to the uninsured tax penalty called the shared responsibility payment. Unfortunately, many businesses do not have enough time to get the correct health insurance information and transfer the data into their other systems to generate the form. So the IRS has granted an extension for Form 1095 B and 1095 C. Here are the old and new dates. Form Purpose Originalduedate Newduedate 1095 B & 1095 C Report to employees of adequate health insurance coverage by month 2/1/2016 3/31/2016 Summary forms 1094 B & 1094 C Summary forms sent to the government confirming employee health care coverage 2/29/2016 (3/31 if filing electronically) 5/31/2016 (6/30 if filing electronically) Note: This delay does not impact the timing of Form 1095 A, Health Insurance Marketplace Statement. 1095 A is the form you receive if you purchase your health insurance through the Marketplace and not through your employer. Nor does this impact those who have their health insurance through other programs like Medicare. What it means to you Since the IRS understands that taxpayers do not wish to wait to file their 2015 tax returns, the service is allowing for you to file your 2015 tax return without receiving this form. Here are some suggestions. Check with your employer. If you work for an employer with more than 50 employees, check with your human resources to find out when you expect to receive the 1095 form. If there is no delay, then wait for Form 1095. Look for other supporting documents. For 2015, the IRS will allow you to support your insurance coverage with means other than Form 1095. Simply collect this proof of insurance and save it in case of a future audit. Wait. If you changed jobs or have a situation that suggests there may be a gap in insurance coverage you may wish to wait until you receive your documents. Please remember there is no corresponding delay granted to file your tax return. So if you still wish to wait, either file your tax return in April or file an extension. Taxes owed are still due on or before April 18th. Considering the Affordable Care Act requires health insurance information to be transferred from insurance carriers into payroll reporting, it is understandably a complex reporting change. Since the shared responsibility tax payment is increasing substantially in 2015 and beyond, you will want to ensure you have adequate proof of qualified health insurance.

Tax scams do not end with the tax season.

The IRS phone scam continues to victimize taxpayers. Fraudsters make phone calls to taxpayers, pretending to be IRS agents, and inform them that they owe back taxes. They instruct the individual to transfer money to them. If a taxpayer refuses or protests, the scammers use intimidation and threats to pressure him or her into acting.

Taxpayers face the threat of this tax scam at any time because it highly profitable for fraudsters year round. Unlike the filing of fraudulent tax returns that typically occurs during the tax season, the IRS phone scam can be carried out any time of the year.

It’s important to understand that the IRS does not make phone calls to taxpayers to inform them that they owe back taxes. They send a notice that includes the debt amount and how it can be paid. The IRS never:

1. Demands immediate payment
2. Demands payment without giving the opportunity to question or appeal
3. Asks for a specific payment method, such as a prepaid debit card
4. Ask for credit or debit card numbers over the phone
5. Threatens law-enforcement action for not paying

Taxpayers should never share any personal, financial or tax information with any unverified sources. It’s critical to keep this type of information secure at all times. Before responding to any information requests, the identity of the party in question should always be verified.

Calls with requests for information should be ended immediately. Report the phone number to a law enforcement agency, TIGTA at 1-800-366-4484 or at www.tigta.gov, the Federal Trade Commission, or the IRS.

If you do owe back taxes or think that you might owe, call the IRS directly at 1-800-829-1040 instead of replying to an unverified communication.  

Don’t get hooked by a tax scam

The IRS has made preventing identity theft and tax refund fraud a top priority.  An important part of the agency’s fraud prevention program is its campaign to inform taxpayers about the many varieties of tax fraud and how they can keep from becoming victims.

n  Typical telephone fraud scenario

Picture this: You’re relaxing at home when your phone rings. You don’t recognize the number on the caller identification, but it’s from your area code, so you answer.

“I’m with the IRS,” the caller says. “You owe back taxes. A warrant will be issued if you do not pay, and your local police will arrest you.”

The caller knows your name and may even know the last four digits of your social security number. He tells you how much you owe, and adds that this is a serious matter. “You must submit a payment voucher within the next hour to avoid arrest. We suggest you buy a prepaid debit card immediately.”

The caller gives you a phone number to call once you have acquired a prepaid card so you can settle your debt and the arrest warrant can be canceled.

Can you identify four indicators in the above scenario that tell you this call is the latest addition to the “Dirty Dozen” list of tax scams compiled by the IRS?

Here are the tip-offs:

·   An unexpected phone call. The IRS makes initial contact regarding tax issues in a written letter, sent to you via U.S. postal mail.

·   The threat of arrest. Warnings of arrest or other police action are designed to frighten you into agreeing to send money or disclose personal financial information such as your social security number. Local police departments will not threaten to arrest you for federal tax-related issues.

·   Request for immediate payment. If you actually owe money for any type of federal tax, payment options are available. You’ll receive notices in the mail detailing the amount due and you’ll have time to respond.

·   Payment via prepaid debit card. The IRS does not require you to purchase prepaid cards to pay any tax you may owe, and will not call to ask for personal identification numbers.

The “red flags” seem obvious as you read this. However, tax-related fraud plays on your natural inclination to avoid trouble with official agencies, and the actual phone call will come from a practiced con artist armed with a script and the element of surprise. Under those circumstances, your skepticism might take a back seat to understandable confusion and fear.

How can you protect yourself?

·   Advance warning gives you an advantage. Being aware of tax fraud schemes makes it likely you’ll recognize common techniques used by fraudsters, such as threats, multiple calls, and repeated demands for an immediate decision.

·   Be assertive. You have no obligation to answer your phone, engage in conversation, or provide information to anyone who calls you. Let contacts from unknown numbers go to voicemail. If you do answer and the caller’s requests make you uncomfortable, disconnecting immediately is neither rude nor impolite.

·   If you choose to contact the IRS directly concerning the call, do not use the phone number the caller gave you. Why? In this latest scam, the number provided will connect you with another con artist in the same organization.

n  Phony IRS e-mails and websites

The crooks create IRS e-mails and websites that appear to be legitimate. They are designed to look like genuine IRS communications, but they are schemes designed to steal your identity. One of the newest scams is tax refund fraud where your personal data is stolen and used to file a tax return in your name in order to claim a refund. When you then file your return, the IRS rejects it and notifies you that you have already filed.

Another example of these bogus e-mails: You receive a message confirming IRS receipt of your tax return, but the IRS needs more information to process your return. The e-mail looks official and completely legitimate. But it isn’t.

Here’s what the IRS wants you to know about bogus e-mails:

·   The IRS does not initiate contact with taxpayers by e-mail or social media to request financial information.

·   The IRS never asks taxpayers for detailed personal financial information.

·   The address of the official IRS website is www.irs.gov; don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org, or anything else.

·   If you receive an e-mail claiming to be from the IRS or directing you to an IRS site, do not reply to the message, open any attachments, or click on any links.

·   To help the IRS fight identity theft and refund fraud, report any bogus correspondence and forward any suspicious e-mail to phishing @ irs.gov.

n  The IRS strategy

The IRS has developed a comprehensive identity theft strategy that is focused on preventing, detecting, and resolving identity theft cases as soon as possible. Though these scams proliferate during tax filing season, they continue throughout the year as the thieves continue to create new ways to steal identities for financial gain.

The IRS has made numerous announcements in the past to help protect taxpayers from these scams. It repeats the message that it never uses an e-mail, text message, social media, or a phone call to initiate a contact about your tax information. So if you receive what looks like an official IRS e-mail, you should forward it to phishing @ irs.gov. Do not reply to the sender, and do not open any attachments. And if you get a scam phone call, hang up.

Please let us know any time you’re contacted about your tax information. We’re here to keep you safe and informed.

You Say You Have Health Insurance?

Providing proof to the IRS is the new reality Category: The Audit

New for tax year 2014 is the requirement to have health insurance. If you do not have qualified health insurance coverage AND you do not fit into one of the limited exemptions you will need to pay a fine, tax, or as the government calls it, an “individual shared responsibility” payment. So how do you prove you have the required health insurance? It is not a simple thing. Can you prove you had health insurance all twelve months? Can you prove your health insurance covered ALL your dependents? Can you prove your health insurance policy qualifies to meet the minimum coverage requirements? Can you prove you are exempt from the coverage requirement? Here are some ideas to help prove your coverage if you are ever challenged in an audit. Letter from your employer or insurance company. A letter from your employer or health insurance provider showing full year health insurance coverage, who is covered and the type of policy is ideal documentation. While neither employers nor insurance companies are required to provide this to you in 2014, it does not hurt to ask them for this confirmation. Medicare/ insurance card. Keep a copy of your insurance card or Medicare coverage card. Insurance bill. Keep copies of insurance payment summaries of medical expense reimbursement. Payments by your insurance company to medical providers can be used to show you have coverage. Other tax forms. Retain W-2s, Form 1095-As, and other forms that can provide proof of health insurance coverage. Keep a copy of payroll stubs that show your medical expense contribution.