Archive for the ‘Personal Finance’ Category

Cash Continues To Flow From Ohio’s Shale Industry

Thursday, April 23rd, 2015
Companies Eye Mercer County For Fossil Fuel

Current news reports suggest that oil and gas companies will continue to invest in Ohio’s shale industry which could provide more opportunities for land owners.

For many of us, the future of Ohio’s shale industry has become a regular topic of conversation. And as a landowner in the state’s Marcellus and Utica shale regions, you’ve probably wondered what (if any) effect current events, such as the state budget and plunging energy prices, will have on your financial well-being. While nobody can predict the future, I’m optimistic we won’t see any major slowdowns over the next few years. Here are a few reasons why:

Severance Tax Sees The Cutting Room Floor

We recently learned that Gov. Kasich’s plan to increase the state’s severance tax on horizontal drilling to pay for the plan to cut income taxes was removed in the newest rendition of the state’s proposed budget bill.

The governor’s original two-year budget plan called for oil and gas produced by horizontal wells to be taxed at a 6.5 percent tax rate for product sold at the wellhead – while 4.5 percent tax would have been applied to product sold downstream. Earlier this year, Ohio Tax Commissioner Joe Testa told the media that the governor’s proposed tax hike was because Ohio’s horizontal drilling industry has become more developed and that drilling has proved to be less expensive than anticipated. In response, American Petroleum Institute’s Executive Director, Chris Zeigler, argued that the original budget proposal placed the “future development of Ohio Shale at serious risk.”

Now that the proposed tax increase in question has been removed, one could assume that drilling companies are breathing a sigh of relief. However, while there appears to be no new initiatives in play to raise the existing severance tax rate at the moment, the new budget proposal still has a long legislative journey to make before the June 30 deadline.

Shale Investment Appears To Be Untouched By Low Energy Prices

Lower prices at the pump might be a bit unnerving if you are, for example, in the process of finalizing a mineral lease agreement. But have no fear, even though new drilling initiatives in Ohio’s shale regions are slowing, according to Business Journal Daily, “oil and gas exploration continues to have positive ramifications across the region.”

As Ohio’s oil and gas industry matures, it continues to become more efficient, which has helped it persevere at a time when oil producers in the Middle East and elsewhere appear to be maintaining higher production quotas in an effort to price horizontal drillers out of the market. For example, the practice of “super fracking,” by which producers pump higher quantities of sand into the wells they fracture, has increased productivity from 400 barrels a day to 600. The result is a lower break-even cost for producers and, in general, more staying power than experts had initially thought.

To date, Energy In Depth, an oil and gas trade organization, estimates that Ohio’s shale industry has grown to $22.3 billion, and expects it to grow by another $8.1 billion by 2016, with the construction or extension of additional pipeline infrastructure, power plants and processing plants. In other words – don’t expect the Ohio’s oil and gas industry to slow down any time soon. In fact, it could be expanding as landowners from other parts of the state appear to have been approached by companies looking to increase their reserves.

Companies Eye Mercer County For Fossil Fuel

About 10,000 acres of farmland located in the Mercer County area, about 60 miles southwest of Lima, has been leased for 3D seismic oil and gas exploration according to The Daily Standard, a local news publication. The leased property, which is primarily farmland, will be subjected to noninvasive 3D seismic tests that will identify whether “significant amounts of oil and/or gas” are present. The results are expected to be available by June.

The newspaper reports that “[more] than 90 land leases involving thousands of acres have been filed in Mercer County since 2013 between various companies and property owners … the legal documents give companies access to test, drill or perform other action on the land as stipulated in each agreement.” Mercer County Commissioners agreed to test some government-owned property as well.

This news is not only important to the residents of Mercer County, but to residents throughout Ohio. The fact that companies are actively seeking to further their investment within the state is promising for all landowners. And at the very least, this recent move signifies that these companies have no plans packing up and shipping out anytime in the near future.

Email Rea & Associates if you have questions about how current events could affect your leasing options or if you are considering entering into a lease agreement for drilling or exploratory purposes.

By David Shallenberger, CPA (Wooster office)

 

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Retirement Roulette

Wednesday, April 22nd, 2015
Retirement Roulette - Rea & Associates - Ohio CPA Firm

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

It’s difficult to paint a picture that adequately portrays the retirement readiness of the American people. How prepared the average person is for this phase of their life greatly depends on which report you are reading today. As a whole, however, credible sources indicate that as a population we are simply not prepared to take on the financial responsibility of supporting ourselves later in life, which is a problem that has received a lot of attention from our nation’s leaders.

Last year marked the introduction of myRA, a retirement account program that encourages individuals without access to an employer-sponsored retirement plan to save for their retirement. Developed by the United States Department of the Treasury, myRA seeks to offer a solution to those who “face barriers to saving for retirement.” But that’s not the only chatter heard on Capitol Hill these days, with regard to the retirement savings habits of Americans. Members of Congress have proposed other solutions that they hope will make the retirement picture a little bit brighter.

Read:  Retirement Is Knocking … Are You Ready To Answer The Door?

2016 Budget Proposal Addresses Retirement Savings

The U.S. government’s 2016 Budget Proposal includes provisions that target the promotion of retirement goals.

“Millions of working Americans lack access to a retirement savings plan at work. Fewer than 10 percent of those without plans at work save in a retirement account on their own. In 2015, retirement security will be one of the key topics of the White House Conference on Aging. The Budget would make it easy and automatic for workers to save for retirement through their employer – giving 30 million more workers access to a workplace savings opportunity. The Budget also ensures that long-term part-time employees can participate in their employers’ retirement plans and provides tax incentives to offset administrative expenses for small businesses that adopt retirement plans.”

What is important to note is that, in addition to retirement security, the Proposal focuses on generating government revenue, which would (in part) go toward the creation of new tax benefit programs. The impact, according to the Whitehouse, would result in savings for as many as 30 million American taxpayers.

Today, nearly 78 million working Americans are unable to save for retirement simply because they are not eligible to enroll or because their employer doesn’t offer the opportunity to save for retirement. This Proposal introduces a solution for those who would like to begin saving for their golden years.

For example, one possible scenario outlined within the budget calls for all part time workers (those who have worked for their current employer at least 3 consecutive years and who have worked at least 500 hours during each year of their employment), who are not currently contributing to a retirement plan, to be allowed to contribute to the company’s existing retirement plan without requiring the plan sponsor to add matching contributions for such individuals.

Another is for those who do not have access to an employer-based retirement plan, however, would be automatically enrolled in a separate IRA program, which would be funded by payroll withholdings. Of course, the taxpayer would have the option to opt out of the program.

What’s In It for the Employer?

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

This provision would also include an additional credit for small businesses that currently offer retirement plans to include an automatic enrollment feature within their plans.

Employees who are still unable to save for retirement will have a third option available. The Budget Proposal calls for the allocation of $6.5 million to the Department of Labor, which would allow a limited number of states to implement state-based auto enroll IRAs or 401(K)-type programs.

Mind the Cap

President Barack Obama’s 2016 Budget Proposal, while ambitious in its initiative to strengthen Social Security and incentivize retirement savings programs for Americans, also includes a provision that had been proposed (and rejected) before. The additional provision seeks to cap (prohibit additional contributions) on IRAs and other tax-preferred retirement plans once they reach a balance of $3.4 million.

According to the president, this step ensures that the individual secures sufficient annual income in retirement while preventing the “overuse” of existing tax advantages by those who are able to contribute additional funds, creating higher balance accounts. The cap would also help the government generate additional revenue because the funds that exceed the $3.4 million cap would now be taxable under this provision.

As always, when it comes to the future of Social Security and the overall retirement readiness of the American people a lot can change in a short amount of time. The 2016 Budget Proposal still has a long way to go before any of the provisions outlined within become reality. It’s important for you to be aware of these provisions and how they could change our current retirement plan landscape.

In the meantime, don’t just wait for changes to happen. Take steps today that will maintain the flexibility of your existing benefit plan while optimizing your company’s current and future ROI. Email the Benefit Plan Audit team at Rea & Associates to learn more.

By Darlene Finzer, CPA, QKA, CSA (New Philadelphia office)

 

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Six Things You Can Do Now To Protect Your Loved Ones’ Assets

Tuesday, April 14th, 2015
Making Moments Count: Family Financial Challenges

Bright Idea: Make sure everyone in your family has their financial information organized in one place. The organizer you’ll find in the financial resources section of our website is a great place to start. Click here to view our Personal Financial Records Document and get started today.

The value of our existence is measured by an infinite collection of meaningful moments that have shaped our lives and the lives of those around us. Perhaps our most precious moments occur when we positively impact the lives of our loved ones. We are all capable of initiating these moments and, sometimes, a simple conversation is all that is needed to provide insurmountable relief – now and for years to come.

Find out what else you can do now to improve your personal and financial well-being.
Read: Take Control Of Your Financial Wellness In 2015.

Even if they have never expressed their concern about the realities of aging before, it is almost certain that your parents are worried about their own mortality. Because this topic doesn’t typically find its way into casual conversation, it is your responsibility to broach the subject. Your parents will be grateful you did.

Here are five things you can do now to actively protect your loved one’s assets:

1. Overcome Your Discomfort

The first conversation about your loved ones’ finances is probably the most uncomfortable one, but it’s also the most important. It’s uncomfortable to talk to our parents about their death. Mom and Dad don’t find it thrilling either because they don’t want to be a burden. But as awkward as it is to discuss, you may eventually be shouldered with responsibility of managing the affairs your parents leave behind.

2. Set Up A Power Of Attorney

In order for you to assume this important role, you must be named as your parents’ power of attorney. This step gives you legal authority to pay their bills, maintain their residence, complete tax returns and review their financial investments.

If your power of attorney was established more than two years ago, verify that it was issued properly by today’s standards. Even though powers of attorney never expire, some have reported having problems with establishments that have updated their forms. The new forms no longer identify powers of attorney that were named several years ago.

Your parents can name multiple powers of attorney. But to avoid possible disputes, make sure that you and your siblings have your own, clearly defined responsibilities. Also, if your parents have decided to name a power of attorney, and it’s not you, make a point to respect their decision – even if you don’t agree with it. As long as a plan is in place, you and your family are on the right track.

3. Understand Your Responsibilities

Being a power of attorney is a big responsibility. Not only are you empowered to make tough decisions, your actions are now able to be scrutinized by everybody from the IRS to other family members. To avoid problems, carefully track how much money is coming in and going out and maintain thorough records. And call in the professionals if you feel like you’re in over your head.

4. Send In The Team

In the past, did your parents work with a team of professionals to manage their finances, legal affairs or anything else? If so, make it a priority to talk to them before moving any money or assets around. You will need to know if your parents set up a will, trusts, or anything else over the course of their lives. This team will not only be able to compile the information you need, they can answer your technical questions, which will make the entire process go smoother.

5. Compile An Inventory

To manage anything well you must have a clear picture of what it is you are managing. To that end, make it a point to compile a complete inventory of your parent’s assets and liabilities to create a clearer plan of action.

Do you know how the value of real property is determined?
Read: How Do You Value Property For An Estate In Ohio to learn more.

6. Simplify, Simplify, Simplify

Once you understand your responsibilities, simplify everything. For example, if your parents have seven or eight open bank accounts throughout the county or state, consolidate them into one – and don’t stop there. From assets to investments, consolidating these affairs will make your job easier and less confusing as you try to track expenses.

It’s not easy to manage your loved ones finances, but with the right approach, plan and team of advisors, you can do it – and do it well. Once you get your ducks in a row, you can focus on other, more important things – like making every moment with your loved ones count.

By: David K. McCarthy, CPA, CSEP (Medina office) and Frank L. Festi, Jr. CPA, CFP (Medina office)

This article was originally published in The Rea Report, a Rea & Associates print publication, Winter 2015. If you don’t already receive The Rea Report, our quarterly print newsletter, in your mailbox, click here and start your subscription today!

 

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The Truth About Tax Extensions

Friday, April 10th, 2015

We find ourselves, once again, at the end of another income tax season. A time of year that many American taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, there is still plenty of tax work to be done.

The first four months of the year is a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension.

Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!


The Truth About Tax Extensions – Created with Haiku Deck, presentation software that inspires

Myth 1:

Filing a tax extension increases your chance of an audit.

Truth:

First and foremost, your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In fact, in the event that you are chosen to undergo an audit, you will be able to go into the process with more confidence. Tax extensions can be great for businesses that were simply overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the files and information necessary to make tax return prep as seamless and thorough as possible.

Myth 2:

Tax extensions burden accountants.

Truth:

On the contrary, fling an extension not only gives your accountant extra time to check and double check the work, it gives them the added time needed to provide better service. For example, we pride ourselves on our work ethic, attention to detail and client service – especially during busy season. However, as trusted financial advisors, we are able to better serve our clients better when we have a chance to help them understand the opportunities they qualify for and how they can use certain tax strategies to help plan for the future. Believe me when I tell you that we do not look at extensions as burdens.

Myth 3:

There is nothing to gain by filing a tax extension; it’s just a way to prolong the inevitable.

Truth:

Filing a tax extension not only gives you more time to file your return with the IRS and the state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time pay your profit sharing plan, defined benefit, or your SEP IRA as part of your retirement plan contribution, which is an excellent short- and long-term benefit! Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.

Email Rea & Associates to learn more about the benefits of filing income tax extension with the IRS and the state.

By Tiffany Crawford, JD (Lima office)

 

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Preserve Ohio History While Filing Your Taxes

Wednesday, April 8th, 2015

We’re down to the wire. Just another week to go before April 15 – Tax Day. If you’re still working on your taxes, and are looking for an opportunity to make a donation on your state tax return – consider supporting the Ohio History Connection’s efforts. Read on to find out how you can support history preservation efforts throughout Ohio and even in your community.

 

Guest blog post by Emmy Beach of the Ohio History Connection:

The Ohio History Connection has developed an innovative way to help Ohioans support history preservation efforts across the state and in their communities. The best part: it can all happen in a matter of seconds.

It’s called the History Fund. The History Fund creates grants to help support local history and preservation-related projects in communities throughout Ohio. The History Fund is supported by Ohio taxpayers that select “Ohio Historical Society” as a donation fund on their state tax returns (the state tax form hasn’t caught up with their recent name change yet.).The entire process takes just seconds to complete.

The impact of donations can last for generations. Over the last three years, the History Fund has received nearly $300,000 in voluntary funding from Ohio taxpayers. This allowed the Ohio History Connection to green light more than 30 historic preservation projects that wouldn’t have received funding otherwise. History organizations have been able to accomplish important projects that have been on their wish-lists for years.

The History Fund impacts organizations big and small. This year, Cleveland’s Rock and Roll Hall of Fame received a grant to preserve the work of Plain Dealer rock and roll reporter Jane Scott; in Athens, the Dairy Barn Arts Center received a grant to repair the structure of their community’s popular arts venue. In each case, the generosity of Ohioans helped preserve a chapter of Ohio’s more than 200-year-old story.

“The History Fund helps us share and preserve Ohio’s story by supporting local projects and programs in communities throughout the state,” said Burt Logan, executive director and CEO for the Ohio History Connection. “The work of local history organizations is helping to strengthen our heritage and ensure Ohio’s story is told for years to come.”

The History Fund needs to receive at least $150,000 this coming tax season to stay on Ohio’s tax forms for the next two years.

The grant program received $165,000 last year, with average donations of around $10.

“Small donations can make a big difference,” said Andy Verhoff, History Fund grants manager. “If every donor who gave last year gives just $10 from their refund, we’ll cross over the $150,000 threshold easily and have even more to grant in the future.”

The tax check-off process is a win-win for taxpayers and the state. History and preservation organizations across Ohio are revitalizing their communities, one project at a time.

To learn more, visit the Ohio History Connection History Fund page. You can also see historic Ohioans Annie Oakley and the Wright Brothers promote the History Fund in public service announcements videos below.

 

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How To Pay Your Tax Bill In 6 Easy Steps

Wednesday, April 1st, 2015
Pay Your Tax Bill With Direct Pay - Rea & Associates

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances.

By now, you probably have a good idea whether you have an outstanding tax bill from the government, but did you know you can settle your balance online? Since May 2014, Direct Pay, a free and secure payment option, has provided millions of taxpayers with the option of making payments to the Internal Revenue Service at a time, and in a place that is convenient for them.

Late last year, employers learned that they were expected to file their taxes and make payments exclusively online. Click here to read more.

According to the IRS, four months after the initial launch of the payment program, more than a million payments, totaling more than $1.7 billion, were successfully processed. The web site currently accepts payments for current year tax returns, estimated tax payments, extension payments and prior year balances.

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances. Those who make payments receive an instant confirmation message that their payment has been submitted. Or, if you need a little more time, you can schedule your payment up to 30 days in advance as well as choose if you would like your payment to be withdrawn directly from a checking or savings account. Making a payment is as easy as following six simple steps.

How To Make An Online Tax Payment

  1. Visit the government website at www.irs.gov/payments
  2. Click on the blue box labeled: “IRS Direct Pay”
  3. Choose the reason for making your payment. Your choices are that you are making an installment agreement payment, a tax return payment, an estimated tax payment, an amended return payment or “other” type of payment. Be sure to choose the applicable year.
  4. Next, verify your identity by confirming your filing status, social security number, address and date of birth. ID verification is required for each payment requested.
  5. Then, you must enter the amount you plan to pay and your bank information. (The IRS does not retain any routing or account numbers.
  6. Finally, you will be directed to a “final authorization” page, which will provide you with an online confirmation.

Once your payment has been submitted using Direct Pay, allow two business days for processing. Note: Payments submitted after 8 p.m. EST will be processed on the next business day. And if you need to make a change to your scheduled payment, you can edit or cancel the payment up to 11:59 p.m. EST two business days before the payment is scheduled payment date.

Ohio Online Tax Payments

If you owe taxes to the State of Ohio, you can make your payments online as well by visiting www.tax.ohio.gov. The state’s online payment system also allows for advance payments and does not require registration.

Online payment options are another way government entities are making an effort to provide more user friendly services. By using Direct Pay, or the state’s web-based payment option, you can avoid a trip to the post office and, better yet, have more control over when your payment is made and received. Your tax preparer can help you determine if online payments make sense for you and can answer any questions you may have. Email Rea & Associates to learn more.

By Wendy Shick, CPA (Mentor office)

 

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How To Avoid The Retirement Culture Shock

Tuesday, March 24th, 2015
Retirement Doesn't Have To Hurt Contact Rea & Associates To Learn More - Ohio CPA Firm

When many of us start thinking about the realities of retirement, it’s already too late. Don’t let the “retirement culture shock” sneak up on you, these three tips will help as you attempt to navigate the road to retirement.

If you’re a newly retired American, then you are embarking on a new, exciting phase of your life. For many of you, increased travel, spending more time with grandchildren or pursuing a new hobby may be ways to enjoy this new journey.

Read: How Can I Make The Most of My Retirement?

But before you pack up your things and hop that next plane to Florida, here are three tips to help you avoid the retirement culture shock.

1. Taxes Don’t Vanish At 65

When you were an employee, your taxes were likely withheld from your paycheck. Today, however, is a new day. As a retiree, you no longer have a paycheck from which taxes can be withheld. But there are a few things you can do to make sure you won’t get hit with a large tax bill in April. For example, if you receive a regular pension payment or an annuity, consider withholding your tax payments from those. You also have the option of simply making quarterly estimated tax payments if withholding is not an option.

2. Transfer Your Pension To Avoid Added Tax Cost

If you do have retirement income from a pension plan, make sure to structure the transfer of your pension into an IRA as a direct rollover to avoid an additional tax. Basically, you want to make sure that the check is made out to your IRA and not directly to you, which will ensure that the funds are deposited into your IRA instead of your personal bank account. If you don’t structure your pension plan to disperse your money in this way, the company responsible for your pension payments is required to withhold 20 percent of the funds for the Internal Revenue Service (IRS). When this happens, the IRS will likely see fit to assess a tax to this 20 percent, effectively shrinking your retirement nest egg.

3. Don’t Miss Exclusive Tax Benefits

Retirees are eligible to receive a few nice tax incentives – perhaps to offset your new responsibility of paying your own quarterly estimated taxes and transferring your pension plan payments. Either way, these tax breaks are nothing to grumble about. Here are three tax facts to get you started:

  • If you turned 65 during 2014, your standard deduction increased by $1,550. This means that you can claim $7,750 instead of the $6,200 standard deduction allowed for those younger than 65.
  • For the next three years, taxpayers older than 65 are eligible to receive a reduced phase out of their medical expenses. Those who are older than 65 can deduct qualifying medical expenses to that exceed 7.5 percent of their adjusted gross income. Those younger than 65 can deduct qualifying medical expenses that exceed 10 percent of their adjusted gross income.
  • Self-employed individuals who have Medicare Part B, Part D or supplemental Medicare policies are eligible to claim an above-the-line deduction for these costs.

You have spent so many years putting in long hours, stressing over money and putting your wants and needs second. Retirement is your time. Make sure you are in control of your finances – and your future. Email Rea & Associates to learn how to make your money go further in retirement.

By Dana Launder, CPA (Cambridge office)

 

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How To Recover From Identity Theft & Refund Fraud

Wednesday, March 18th, 2015
How To Recover From Identity Theft & Refund Fraud

Have you been (or suspect you’ve been) a victim of identity theft and refund fraud? Rea & Associates recently compiled a variety of information that will help you recover from this nightmarish scenario.

Suspecting, and then confirming, that you’ve had your identity stolen is a nightmarish scenario. It combines one of your worst fears, losing your wallet or purse, with all of the work of replacing the things that were lost. It can be so overwhelming you might be wondering: “Where do I even start?”

An increasing number of identity thefts are first identified when a thief attempts to file a tax return on your behalf and claim a federal or state tax refund. To help you navigate some of the issues you may be confronted with, we recently released a compilation of documents and resources.

The documents that are included are intended to help you navigate some of the issues you may be confronted with if you find that you’ve been an identity theft and fraudulent tax return victim.

Read “How To Recover From Identity Theft & Refund Fraud

Beat The Identity Thieves

The guidance includes a variety of valuable information for those who have been (or suspect they’ve been) a victim of identity theft and refund fraud. The following is a brief synopsis of information included in this guide.

The IRS has provided a short list of items for you to complete, which is substantially similar to the items the Federal Trade Commission (FTC) covered in its longer, checklist-style guidance.

  • The primary item to complete for the IRS is Form 14039 which initiates the IRS fraud protection procedures.
  • Also included is a form letter, one of several, the IRS may send to a taxpayer if tax return fraud is suspected to be occurring on the account.
  • The IRS has published a number of articles related to identify theft and how to protect yourself. A master page with links to all these topics is included in this packet. You may also check out some of our recent articles on the topic, which can be found in the “Related Articles” portion of this post.

The process of reporting fraud in Ohio is similar to the IRS procedures.

  • Ohio also sends form letters to the taxpayer.
    • Ohio recently added an identity quiz for roughly 50 percent of taxpayers requesting a refund. This letter simply asks the taxpayer to complete a quiz specifically used to prove their identity. Note: This request doesn’t indicate that your identity has been stolen (unless you haven’t filed your tax return for the year yet).
    • If the Ohio Department of Taxation suspects fraudulent activity on the account, the taxpayer will receive a second letter that will indicate these suspicions.
  • Ohio includes an affidavit (Form IT TA) that must be filled out to initiate their protection procedures, similar to Federal.

The FTC is the primary federal government agency dealing with identity theft.

  • The FTC has put together a very detailed, checklist to help you with the identity theft process. The guidance includes information on most forms of identity theft – of which tax identity theft is just one. While this may be more information than you need, if the fraud has gone beyond your tax returns and includes false credit activity (or you are concerned this may happen), this guide will be very useful for you.
    • The guide includes a wealth of information, such as sample letters and a variety of websites and contact information to relevant organizations that can help you. It also guides you through the process of making a police report in response to the theft of your personal information. Check it out here.
  • Note: The IRS and the FTC generally do not share data with each other. Therefore if you have completed the IRS identify theft notification procedures, don’t assume that the FTC, credit bureaus, etc., are also aware of your situation.

Check Your Mail, Not Your Caller ID

Remember, the first contact taxpayers will have with the IRS regarding any issue will be in the form of an official mailed letter – not a phone call. These scammers appear to be determined to steal your money and/or your identity and reports of these types of scams continue to be on the rise. By educating yourself, your friends and your family, you are taking a proactive stance against these criminals.

If you would like to learn more about how you can protect yourself against, and recover, from Identity Theft & Refund Fraud, click here to view our compilation of documents and resources. You may also email Rea & Associates for more information.

By Joe Popp, JD, LLM (Dublin office) and Lesley Mast, CPA (Wooster office)

 

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How Much Is Your Data Worth To Criminals?

Friday, March 13th, 2015
Ransomware

There is no way to completely protect yourself and your network, but there are ways to preempt an attack against you and your business.

How much would you pay to regain access to your company’s network if it was compromised and held for ransom? Are you willing to shell hundreds of dollars to take your information back from a cybercriminal, or are you willing (and able) to just walk away and start anew? I wish I were asking hypothetical questions but, unfortunately, the increased popularity of Ransomware has made the risk of such an attack a very, very real possibility.

Sandra Ponczkowski, a manager of the IT security company KnowBe4, recently shared Your Money or Your Life Files, a whitepaper that details the history and real threat of Ransomware, a computer infection that encrypts all files of known file types on your local computer and server shared drives. Once infected, it becomes impossible for you to access your documents or applications that use these encrypted files. The only way to recover from such an infection is to either restore your machine by using backup media, or accommodating the hacker’s demands and paying their ransom.

Unfortunately, I know of several situations where the businesses involved in a Ransomware attack had no choice but to pay ransom demands to the cybercriminal. The silver lining for these companies was that, upon paying the ransom, they were able to obtain the assailant’s encryption key code, which allowed them to unencrypt their data and regain access to their data.

Long-term protection, however, cannot be guaranteed and there is a chance that your data can be held for ransom again.

The literature provided by KnowBe4 details the fluency with which the popular Ransomware infection CryptoLocker changes and adapts once a solution to unencrypt infected data files becomes available. When this happens, the CryptoLocker infection will evolve into a new strain, thus making the previous solution unusable.

While there is no way to completely protect yourself and your network, there are ways to preempt an attack against you and your business. I recommend the following best practices.

  1. Train yourself and your employees about computer safety practices.
  2. Complete a yearly review of your employee’s access rights to company-owned computers, server folders and backup media. For example, only a few, strategic employees should have access to the company’s folders and data. As a general rule, employee access should be restricted to include only the programs and software required for them to do their jobs. This also applies to work-from-home employees who typically attach a USB drive to their machines for backup protection.
  3. If you don’t already, put a disaster recovery in place and test it ever year to ensure accuracy and completeness.

Following these practices should make your business’s Ransomware prevention and recovery much easier. Email Rea & Associates to learn find out more about the importance of protecting your company’s online security.

By Joe Welker, CISA (New Philadelphia office)

 

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