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Beware of Phony IRS Email Scam

3/2/2015

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Beware of Phony IRS Email Scam

Today a client forwarded an email to us that purported to be from the IRS.  The message contained the official IRS logo, and showed “Identity Verification” in the subject line.  The body of the email asked:

“Kindly verify your information from a 1040 tax form that you filed within the last six years.  Follow the reference below to verify your identity.  This information is use for identity verification purposes only.”

The email included a bogus link to an IRS website – the link read “www.irs.gov”, but the underlying address was something much different, as we could tell by hovering a mouse pointer over the address.  And there were at least two other problems with the email:

1.     IRS almost never uses email to communicate with taxpayers.

2.     The return address was not an IRS email address.

We learned through our local CPA forum – again just today – that this has happened to clients of other tax preparers.

So, if you receive an email from IRS, you should neither respond to it nor click the link.  If you want to report the email to IRS, go to: http://www.irs.gov/uac/Report-Phishing (which is the real thing.)

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Bizarre Controversy Affecting All Businesses

1/31/2015

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There is a big controversy in the tax preparation world right now concerning anybody who runs a business or has property for rent (which is a lot of people). IRS has changed the rules about how repairs should be deducted. Anybody who owns business property is required to comply with the new rules going forward - which includes folks with rentals or business vehicles, and also corporations with desks and equipment. The point is that these new rules apply to a TON of people and businesses, and they ALL have to comply.

But here is the controversy: Since the rules are new, complying with the them means a change in the way we account for these costs, known as a 'CHANGE OF ACCOUNTING METHOD' and that it requires PERMISSION. The permission will be granted automatically, but it still has to be requested by filing a complicated Form 3115 - Change of Accounting Method. If all this holds up, this will mean a huge number of hours for tax preparers, and thus a significant increase the fees charged to their clients.

So (a) we have to comply, but (b) we have to ask permission to comply. This is so obviously absurd that it shouldn't even be taken seriously, right? But the frightening thing is that all the bright CPAs and tax lawyers AND the bright lights at IRS seem to be agreeing this is exactly what we have to do. Or they are saying that they aren't quite sure, but that we had better file the forms just to protect our clients from potential penalties and ourselves from malpractice claims.

I'll keep you posted.  

Sheesh!

Randy



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Beware of scam:  Phony IRS Collection Calls

12/9/2014

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One of our clients picked up the phone recently and was told by a man on the other end of the line that he was with the IRS, that our client owed several thousand dollars in back taxes, and said that if the money wasn’t paid, someone would be sent to arrest him. 

This has become a familiar story.  It is the fourth time we have heard it in the past couple of years, and the second time in the past few months.  And a tax attorney of our acquaintance told us that three of her clients have reported such cases within the past week.  We’re not sure what would have happened next if our client had been cooperative.  So far none has been tricked into turning over any cash, at least as far as we are aware.  But all of the victims or potential victims with whom we are familiar were, understandably, very frightened by the experience. 

Here is the rule to go by if you suspect you are talking to one of these people:  First, understand that the IRS always writes to you before they call you.  So, if you have not previously received at least one written notice of tax due from IRS, the call is almost certainly a scam.  After several notices of tax due have been sent, with no reply received, then IRS gets on the phone.  (And of course, if you do receive a notice, you probably should run it by us before paying it in the first place.)

This has become a national problem, and IRS has even established a web page to deal with it:
http://www.irs.gov/uac/Newsroom/IRS-Reiterates-Warning-of-Pervasive-Telephone-Scam

According to the IRS web page, some of the characteristics of the scam calls include:
·         Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
·         Scammers may be able to recite the last four digits of a victim’s Social Security number.
·         Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
·         Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
·         Victims hear background noise of other calls being conducted to mimic a call site.
·         After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you have been contacted by a scammer, you may want to refer them to us, and tell them that we are handling your tax matters.  If you feel more spitefully aggressive, you may want to string them along by agreeing to go along with it – but without actually making a payment – and then contacting IRS to let them know you have a crook on the hook.  I’m not sure what they will do, but it couldn’t hurt.  But in no case should you give away personal information that could endanger you or your money.

Whether or not you string the scammer along, you can click the link below to report him to the Federal Trade Commission:
http://apps.irs.gov/app/scripts/exit.jsp?dest=https://www.ftccomplaintassistant.gov/FTC_Wizard.aspx?Lang=en&OrgCode=IRS  


- by Randall Kilgore, CPA

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Foreign Account Reporting-FBARs:  Report them!

8/15/2014

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If you fail to file a required Foreign Bank Account Report (FBAR), that failure can result in penalties so steep that they would mean the loss of most of the investment in question.  But many who should have filed FBARs in the past have been reticent to start filing because that might alert IRS to the prior failures, leading to a ugly things.  But now there is good news for many delinquent FBAR filers.  IRS has recently clarified its rules, and indicated that there will be no penalty assessed if the following conditions have been met:

1.      Income tax has been duly paid on any earnings of the foreign account.
2.      There is no IRS audit already underway for the pertinent year.
3.      No demand has been sent by IRS that the delinquent FBARs be filed.

The statute of limitations on FBAR penalties is six years, and the statute for income tax assessment is three years, so this means there are two three-year periods to be concerned about, the most recent three-year period, and the three-year period before that.

First, the most recent three years:  If you didn’t report all of your foreign income during the past three years, then you should start by amending your income tax returns for those years to correct that omission and pay the tax on the additional income.  Then you will need to file the related FBARs.  (I am writing in July 2014, so this would presumably mean tax years 2011 to 2013.) 

For the earlier three-year period (presumably 2008 to 2010), you would merely file the FBARs but not amended income tax returns.  This is because of the fact that no additional income tax can be assessed for those years – they are beyond the three-year income tax statute. 

Under this plan, no penalties will apply to any of the FBARs for the past six years since your income tax is (or will soon be) paid, and because the FBAR filing will have been initiated by you.  BUT if you wait for IRS to demand your FBARs, penalties could be very heavy indeed.

If you are a delinquent FBAR filer, contact us for help in understanding what years should be filed.  Also, you can read more on the subject at: http://www.forbes.com/sites/stephendunn/2014/07/20/all-you-need-to-do-is-file-your-delinquent-fbars/

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    Randall Kilgore is the president of Kilgore & Co. Accountancy

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Kilgore & Co. Accountancy

3001 El Camino Ave.
Sacramento, CA 95821
(916) 648-1040
Fax: (916) 648-1072
kilgorecpa@broadly.com
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