Archive for the ‘Tax’ Category

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Monday, August 18th, 2014

More than 1,000 American taxpayers have collectively lost about $5 million as a result of a recent phone scam that has been reported to be active in virtually every corner of the nation. The Internal Revenue Service (IRS) reminds everybody to be vigilant, to never give personal financial information to anybody over the phone, and to report instances of phone scams to the IRS and/or to the Treasury Inspector General for Tax Administration (TIGTA).

According to IRS Commissioner John Koskinen, “Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail. A big red flag for these scams are angry, threatening calls from people who say they are from the IRS and urging immediate payment. This is not how we operate. People should hang up immediately and contact TIGTA or the IRS.”

To date, more than 90,000 complaints regarding the scam have been made to the IRS and TIGTA.

Signs of An IRS Phone Scam

A media release, sent Aug. 13, reports that scammers will use fake names and IRS badge numbers, are able to recite the last four digits of a victim’s social security number, and spoof the IRS’ toll-free number on caller IDs so that the calls appear legitimate. Victims reported that they were threatened with jail time or driver’s license revocation if they refused to comply with demands. After hanging up, scammers call back claiming to be local law enforcement or a DMV representative. The second phone call is supposed to reinforce their original claim and demands.

Don’t Be An IRS Phone Scam Victim

  • If you think you might owe taxes or that there may be an issue with your taxes, call the IRS directly at (800) 829-1040. An authorized IRS representative can help you determine if you have a payment due.
  • If you get a suspicious call from someone claiming to be from the IRS and you know that you have no IRS issues, report the incident to TIGTA at (800) 366-4484. You should also contact the Federal Trade Commission and use its “FTC Complaint Assistant” at FTC.gov. Be sure to add “IRS Telephone Scam” to the comments of your complaint.
  • Don’t let scammers catch you off your guard with questions about your tax history. Call your CPA and be confident about whether you owe money to the IRS or not. When it comes to your financial security, take a proactive approach.

Email Rea & Associates if you’re ever unsure about anything you received from the IRS, whether it is a letter, a phone call or an email. We can help you determine if the inquiry is legitimate.

By Maribeth Wright, CPA (Cambridge office)

 

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Obtaining Tax-Exempt Status Just Got Easier

Tuesday, August 12th, 2014

Many individuals want to know how easy it is to obtain tax-exempt status. About a month ago, you would have been told that the application process alone was rather lengthy. In fact, the standard Form 1023, which is the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is 26 pages in length. On July 1, the Internal Revenue Service introduced a significantly shorter application form – Form 1023-EZ – which is just three pages long.

What Is Form 1023-EZ?

Form 1023-EZ is a simplified version of Form 1023 and its use is limited to organizations with gross receipts of $50,000 or less and total assets of $250,000 or less. The IRS says that 70 percent of new applicants should be able to use the new form, but to ensure that the right organizations are using the right form; the IRS has outlined factors that may disqualify larger organizations from using the new form. Be sure to read the instructions carefully.

The IRS says it currently has more than 60,000 backlogged 501(c)(3) applications. The new, streamlined application form is anticipated to speed up the approval process for smaller groups, which means the agency will have more resources available to review applications submitted by larger organizations.

What You Need To Know About The 1023-EZ Form

If you are planning to fill out the new EZ form, here are three things you need to know:

  • The new EZ form must be filed online.
  • A $400 user fee is due at the time the form is submitted and must be paid through pay.gov.
  • Users must complete an eligibility checklist, which is included in the instructions for Form 1023-EZ, before filing the form.

Obtaining Tax-Exempt Status and Creating A Tax-Exempt Organization

The new EZ form makes it very easy to create a tax-exempt organization, but applicants should always seek professional assistance to ensure that their organization is operating, and will continue to operate, in accordance with their tax-exempt purpose.

Email Rea & Associates and ask if your organization qualifies to use Form 1023-EZ. Our team of business accounting and consulting professionals can answer your questions and guide you on your path to formally establishing your tax-exempt organization.

Author: Lisa Beamer, CPA (New Philadelphia office)

 

Want more best practices for nonprofit organizations? Check out these blog posts:

How Effective Is Your Nonprofit Organization?

How Do You Build A Strong Not-for-Profit Board?

How Do You Protect Your Non-Profit’s Donations From Fraud?

 

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The Do’s and Don’ts of Summertime Tax Prep

Thursday, August 7th, 2014

It’s the beginning of August and you’re probably not keeping yourself up at night thinking about your taxes. Frankly, who has time to think about itemized deductions and tax-free distributions when you would rather be grilling out, soaking in the sun, or enjoying your family vacation? April 15, 2015, may be more than 260 days away, but now is a great time to look at your taxes and make necessary adjustments to effectively sidestep any potential problems that might cause problems when tax season does arrive.

Consider These Tax Prep Do’s and Don’ts

  • Don’t assume that filing your taxes will be the same as the year before. More than 50 tax provisions expired on Dec. 31.
  • Do make yourself aware of any changes that have occurred since last tax season. Click here to view the most up-to-date list. Some of the most common expired provisions include:
    • Itemized deduction for state and local general sales tax
    • Itemized deduction for mortgage insurance premiums (PMI)
    • Tax-free distributions from individual retirement plans for charitable purposes
    • 50 percent accelerated tax depreciation (“Bonus depreciation”).
    • Increased expensing. (This provision allows businesses to deduct the full purchase price of qualified equipment.) Current 2014 provisions are $25,000 deduction with a $200,000 limitation on purchases.
  • Do take time to manage your files. It’s much more manageable to file six months’ worth of receipts vs. a whole years’ worth in January. Are you looking for inspiration? Now is a good time to start organizing medical and charitable contribution receipts.
  • Do make a note as to whether the size of your household changed.
  • Don’t forget to review your withholdings. Did you receive a large refund in 2013? Did you owe the IRS in April? To adjust your withholdings, speak with your payroll representative and complete a new W-4.
  • Do send your estimated payments for income to the IRS every quarter to avoid charges and penalties for underpayments. If you forgot to make a payment or you underpaid in April or June, don’t worry. There’s still time to catch up on your September and January payments.
  • Don’t underestimate the short-term value of retirement contributions. Aside from the long-term savings benefits, many retirement accounts are a great tax deferral. If you are participating and not maxing out, consider increasing your contribution. Contributions to a Traditional IRA are another consideration.
  • Do set aside some time to review your health insurance situation. Alternatively, if you did not maintain health care coverage (and were not exempted) you will owe a penalty with your 2014 1040.
  • Do confirm that you comply with the new repair/capitalization regulations.

Tax Prep Help

A few minutes of work and organization now could save you some major headaches in April. Don’t miss out on your opportunity to jump start your tax prep. Want more tax prep tips? Contact Rea & Associates. Our team of Ohio tax professionals can help you determine what you need to do now to ensure tax time goes smoothly for you.

Author: Meredith Mullet, CPA (Wooster office)

 

Want more tax prep tips? Check these blog posts out:

What Should You Do After Tax Season?

How Can A Small Business Owner Keep More Money In Their Pocket?

So Is It a Tax Credit Or a Tax Deduction?

 

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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)

 

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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?

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