Archive for the ‘Tax’ Category

Be On Guard For IRS Phone Scams

Thursday, July 17th, 2014

You get a call from a man who said he was from the IRS and was informing you that criminal activity was found after the IRS performed an audit on your past taxes. Then he asks if you had a criminal lawyer to represent you. And as you tried to get a word in edgewise, he told you not to interrupt him because the IRS and local authorities were recording your phone call. Pretty unnerving, right?

Well, unfortunately, this phone call actually took place with a client. And these types of phone calls are happening constantly. Back in April, the IRS issued a warning for consumers about phone scams targeting taxpayers. During the 2013 tax filing season numerous phone scams occurred, but the IRS has seen an increase in these scams since then. Because the IRS believes that these incidents will continue to plague taxpayers, it’s important to be vigilant for these kinds of calls.

The 4-1-1 On These IRS Phone Scams

  • Some taxpayers who received these calls were told they’re entitled to a big tax refund, or that they owe a lot of money to the IRS that needs to be paid immediately. Don’t be fooled. The IRS won’t contact you via phone about these matters. If you ever owe the IRS money, you’ll be sent a written notification via mail.
  • The IRS will never ask you for personal financial information over the phone, such as your credit or debit card information. If you’re asked for this information from someone claiming they’re from the IRS, don’t give it and report the incident immediately to the IRS.
  • Some IRS scammers use fake names/surnames (most of the time these names are common) and IRS badge numbers when they identify themselves.
  • It’s possible that a scammer knows and can tell you the last four digits of your Social Security number.
  • The phone number that a scammer calls you from could look like it’s from the IRS toll-free number.
  • If you take one of these scam calls, you may receive a bogus follow-up email to make it look like it is a legitimate inquiry from the IRS.
  • You may be threatened with jail time or driver’s license suspension from one of these scammers. They may then hang up on you and then call back pretending to be the police or DMV, further trying to prove their claim to you.

What Should You Do If You Get One Of These Calls?

So have you received one of these calls? If so, and you’re not sure the next step, here’s what you should do:

  • If you think you might owe taxes or there may be an issue with your taxes, call the IRS at 1.800.829.1040. Someone at the line can help you determine if you indeed have a payment due.
  • If you feel you received this call unexpectedly and know you have no IRS issues, call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

In light of these increasing incidents, be on the lookout and don’t fall prey to these scams. Hang up if you’re uncomfortable with the call. And know that the IRS would never ask for personal financial information over the phone or in an email. If you receive any suspicious emails, forward the email to phishing@irs.gov.

Ohio Tax Help

If you’re ever unsure about anything you received from the IRS, whether it be a letter, a phone call or email, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if the inquiry is legitimate, and assist you with responding.

Author: Maribeth Wright, CPA (Cambridge office)

 

Looking for other articles on how to protect you and your business? Check out these articles:

How Can Heartbleed Affect You and Your Business’s Online Identity?

How Can I Protect My Business From A Data Security Breach?

Are You Secure? Cyber Security Targets Employee Benefit Accounts

 

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Help Is Available For Small Manufacturers Impacted By Foreign Imports

Wednesday, July 2nd, 2014

America is the land of the free, and a place where we’re all supposed to have boundless opportunities. So if you’re the business owner of a small manufacturer, and you’re feeling financially and competitively pinched because of foreign imports, know that there is relief.

Trade Adjustment Assistance

The U.S. Department of Commerce’s Economic Development Administration developed and funds a program to help manufacturing companies become more competitive against foreign imports. The program, “Trade Adjustment Assistance for Firms,” provides up to $75,000 in matching funds to qualifying manufacturers to invest in projects identified during the plan development phase. Qualifying projects must be time-limited and performed by third parties who provide knowledge-based help covering the areas of marketing, industrial and systems engineering or financial and general management consulting.

Examples of “qualifying projects” include:

  • New product development marketing
  • Lean manufacturing implementations
  • Quality certifications (ISO, TS)
  • Enterprise resource planning (system selection, training)

“Non-qualifying” projects include:

  • Capital expenditures (e.g. equipment or software)
  • On-going business expenses (e.g. FTE salaries)
  • On-going business processes

Big Benefit Of Trade Adjustment Assistance for Firms Program

An added benefit of the program is a customized diagnostic survey and comprehensive action plan created for the business by the program’s personnel. There is no fee to apply to the program. Once eligibility for the program is confirmed, the plan development phase typically takes one to three months with the implementation phase able to run for up to five years. Any funds not expended after five years are lost.

Funding for this program was recently renewed so now is the time to invest 30 minutes of your time to speak with a program representative to see if you qualify.

Ohio Small Manufacturer Help

If you’re an Ohio Small Manufacturer that’s having trouble keeping up with foreign imports and competition, and needs assistance with strengthening your business’s bottom line, contact Rea & Associates. Our Ohio manufacturing service team can help you evaluate your business’s current financial state and determine what steps you need to take to get back in the game.

Author: Christopher E. Axene, CPA (Dublin office)

 

Looking for more Ohio manufacturing-related articles? Check these blog posts out:

How Can Manufacturers Deal With Competition?

How Can I Solve My Staffing Woes In The Manufacturing Industry?

How Do You Take Your Business to the Next Level?

 

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Supreme Court Obamacare Ruling Provides Religious Exemption To For-Profit Companies

Monday, June 30th, 2014

Obamacare is back in the news as a top story! Why? Because the U.S. Supreme Court ruled today that closely held, for-profit companies can claim religious exemption to avoid providing health insurance coverage for contraceptives.

An Obamacare provision stated that businesses with more than 50 employees must cover preventive care services, including birth control and morning-after pills to female employees. Today’s Supreme Court ruling provides relief for many U.S. for-profit companies by giving way to this religious exemption. Now companies that feel offering health insurance the covers contraceptives goes against their religious beliefs can opt out of providing this kind of coverage. Check out this New York Times article which provides a more in-depth look at the today’s U.S. Supreme Court ruling.  Of course, its too early to tell the practical impact of this decision – insurance companies are free to choose which kind of coverage is covered by their insurance plans, and the relative pricing of those plans, after all.

Obamacare Help

Do you feel like today’s Supreme Court ruling could impact your business and the health insurance coverage you offer to your employees? If it does, and you need help, contact Rea & Associates. Our health care reform tax experts can help you determine how it affects you and your business.

Author: Joe Popp, JD, LLM (Dublin office)

 

Interested in other Obamacare-related blog posts? Check these out:

What You Need To Know About Obamacare Employee Dumping 

Health Insurance Options: SHOP, Drop, Roll, or Self-insure?

How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses and Consumers?

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How Far Back Can The IRS Go For Tax Auditing?

Friday, June 20th, 2014

As a CPA I am frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax.

Typically, the statute of limitations is three years for the IRS to include a tax return in an audit. This means the statute of limitations likely ran out on the majority of 2010 returns. The 2010 returns would have been due on April 15, 2011 … three years from that date was April 15, 2014. So most taxpayers are out of the woods for 2010 tax returns and all prior years. This same statute of limitations applies to the taxpayer when they would request a tax refund – you can only go back three years’ worth of returns to request a tax refund.

IRS Statute of Limitations Can Be Extended

But wait, before you start high-fiving everyone around you … that statute of limitations can be stretched out to six years if a substantial error is identified. A substantial error is defined as an omission of 25 percent or more of gross income. This may also apply to basis overstatements whenever property is sold.  Basis generally means the amount of capital investment in a property for tax purposes.

The U.S. Tax Court has given mixed results on whether or not basis overstatements constitute understatements of gross income. The Federal, Washington D.C., 7th  and 10th circuits have ruled in favor of the IRS, supporting the concept that basis overstatements open up the six-year statute. However, the 4th, 5th, and 9th circuits have ruled in favor of the taxpayer, holding that basis overstatements do not constitute substantial understatements of gross income.

When The IRS Statute of Limitations Doesn’t Expire

There are situations when the statute of limitations never expires. The most common is when a return never is filed. The other situation is when the IRS sues for civil tax fraud. Civil tax fraud cases are extremely rare because the burden of proof is so high for the IRS. The older the fraud, the colder the trail gets.

The IRS has stated that it tries to audit tax returns as soon as possible after they are filed. But in my professional experience, most audits are typically of returns filed within the last two years.

If an audit is not finished, the taxpayer may be asked to extend the statute of limitations for assessment of his or her tax return. Extending the statute will allow additional time to provide additional documentation to support a position, request an appeal if there is a disagreement with the audit results, or to claim a tax refund or credit. The extension will also allow the IRS time to complete the audit and provide additional time to process the audit results. It’s not mandatory to agree to extend the statute of limitations date. However, if the taxpayer does not agree, the auditor will be forced to make a determination based upon the information on hand at the time, which may not be favorable.

Tax Audit Help

If you’re concerned you’re at risk of an IRS audit or are looking for some clarity on the IRS statute of limitation for tax auditing, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if you could be facing an audit, and can walk you through the process.

Author: Matt Pottmeyer, CPA (Marietta office)

 

Looking for additional articles about managing your taxes? Check these blog posts out:

What Tax Liabilities Accompany Inherited Real Estate?

What Should You Do After Tax Season?

How Can You Best Prepare For The Upcoming Tax Season?

 

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What You Need To Know About Obamacare Employee Dumping

Thursday, June 5th, 2014

You may have heard some buzz lately about the Obama administration and/or the IRS barring employers from “dumping” employees onto the health care exchanges – with some truly severe cash penalties for doing so. But is this really “new” news? What exactly does this mean? It might surprise you to know that employee dumping is not all it seems.

A recent New York Times article explains that “employee dumping” is the practice where an employer drops health insurance coverage to its employees, the employees go to the health care exchange to buy insurance, and then the employer on a pre-tax basis reimburses its employees for their premiums. This “have-your-cake-and-eat-it-too” approach (with various ways to accomplish it) was one of the leading responses to this legislation that Obamacare consultants developed. The administrating agencies (IRS, HHS, DOL) shut this option down when they issues guidance in September 2013. ANY attempt by an employer to pay an employee a pre-tax benefit for health insurance has since then been a very dangerous approach, although some exceptions exist (e.g. retirees only). This current “news” is simply a clarification that these things are indeed busted.

Can You Still Drop Health Care Insurance Coverage?

What if you want to drop your coverage, send employees to the exchange, and then increase their after-tax pay so that they can pay for exchange insurance? That’s OK, it doesn’t conflict with the rules. It’s only pre-tax benefits you should be concerned with.

What if you increase worker pay as I just described, and then the employee sinks that cash into an HSA that they get from a bank (for free)? That gets them a tax deduction (up to certain limits) … is that OK?  Yes! Remember that what the IRS is looking to prevent is employers trying to give pre-tax benefits without offering insurance – that is the “evil” that these regulations are designed to combat. Once the employer pays taxable wages to an employee, the employee is free to use whatever means they have available to be tax efficient.

A Pit Trap For The Unwary

So is “employee dumping” limited to the situation where employers are trying to push tax-free cash to employees? Actually no, and this is why I refer to this as “a pit trap for the unwary.” Dumping also refers to the practice of employers encouraging workers with high medical bills to go to the exchange.

What exactly does this mean? Think of it this way … As an employer, you have an insurance plan that still takes into account the health and claims of your workforce (they still exist). If you can get an employee to the exchange that has $400,000 of medical costs a year, you could potentially save a large sum of money and your employee is not harmed because they can get quality coverage on the exchange for no more than a healthy individual can.

Some companies throw a cash kicker on top for the employee to voluntarily drop coverage (what’s an extra $10,000 in cash if you are saving $100,000+). Everybody wins, right?  Well, not the Exchange. If it’s discovered that you – the employer – are doing this, there are administrative rules in place that can throw that cost back at you. Insurance companies have a duty to report suspected employee dumping, so be careful!

Obamacare Help

Have you considered “dumping” or are you unsure if you’re heading down this path? If so, contact Rea & Associates. Our team of Ohio tax professionals can help you determine what path is best for you to take, as well as help you stay in compliance with Obamacare rules and avoid any pitfalls along the way.

Author: Joe Popp, JD, LLM (Dublin office)

 

Interested in reading more on how Obamacare will impact you and your business? Check out these posts:

Peeling Back The Onion: Answering 3 Popular Obamacare Questions

Health Insurance Options: SHOP, Drop, Roll, or Self-insure?

How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses and Consumers? 

 

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