Posts Tagged ‘IRS’

Work or Pleasure?

Thursday, June 30th, 2016

Make Traveling for Charity Part Of Your Summertime Tax Savings Strategy

Travelling for Charity - Ohio CPA Firm

Transportation to and from the job site via plane, train or automobile are deductible on your next tax return if you will be volunteering your time and talents this summer. This includes any transportation costs accrued for travel between the airport or train station and your hotel. Read on to learn more!

In addition to planning a fun family get-away this summer, you might want to carve out some time to donate your services to a noble cause as well. For all of you summertime volunteers, listen up and make plans to use some of your travel expenses to help lower your tax bill. Here’s how.

Read Also: Can My Summer Daycare Expenses Earn A Tax Credit?

  • Make sure you are volunteering your services to qualified charities. If you want to deduct your expenses, the IRS needs to know that the charity you are working with is legit. There are several great online resources that can help you determine if the organization you are helping out is qualified. The IRS’s EO Select Check tool and Guidestar are two of my favorites.
  • Track all out-of-pocket expenses. If you are making necessary purchases that are not directly connected with the services you are performing and are not considered personal living or family expenses; and these expenses were directly result of the volunteerism opportunity, then you may be able take a deduction on your tax return. Keep in mind that you also can’t receive reimbursement by any other means. The ability to deduct out-of-pocket expenses, particularly travel expenses, has huge savings implications. Some of the types of expenses you can deduct include:
    • Lodging
    • Meals
    • Transportation to and from the job site via plane, train or automobile. This includes any transportation costs accrued for travel between the airport or train station and your hotel.
  • Roll up your sleeves and make a big impact. If you are only tagging along or if your duties are minimal, you are not going to be able to make a claim on your tax return. According to the IRS, your charity work must be “real and substantial throughout the trip.” In other words, don’t dillydally!

Now that you know what to do to, let’s take a look at what not to do – or rather, what is not tax deductible.

  • Travel expenses for tagalongs are not deductible. Meaning, only the expenses for the individual(s) volunteering their services can be written off at tax time. For example, if you decided to take your children along on the trip but they will not be logging volunteer hours, you cannot deduct their portion of the travel expenses.
  • Your time and services are valuable, but you can’t deduct the value of your time and services. This is particularly true for those who are donating professional services, including medical, financial and legal. You also can’t deduct the income you may have lost while you were working as an unpaid volunteer for a qualified charity.
  • You cannot package work and play into a single deductible expense. That’s not to say that you can’t enjoy yourself or go out to the beach after a long day of building schools in a third-world country; but if a significant part of your trip is reserved solely for recreational purposes or a vacation, your claim will be denied.

For more information about potential summertime tax savings, email Rea & Associates. You may be surprised by how much you can save when you’re on a mission to do work for those in need!

By Maribeth Wright, CPA (Cambridge office)

Check out these articles for more summertime tax strategies:

School’s Out For Summer, But Tax Credits Are Still In

The Do’s And Don’ts Of Summertime Tax Prep

How To Become A Millionaire

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Can The IRS Collect Back Taxes 10-Years After The Original Date Of Assessment?

Wednesday, May 11th, 2016

Greetings Drebit! Please excuse my ignorance when it comes to IRS matters. I read your article about finding the date of assessment on my IRS Transcript. My transcript code is 150-5/29/2006. When can I exercise my right under the 10-year Statutes of Limitations? Thank you. – Wendy

Click here to read the original article

Dear Wendy,

Thank you for taking the time to send in your question. You correctly identified the date of assessment on your account transcript by zeroing in on the “150” Transaction Code. Based on this date, I can determine that your tax return was assessed on “5/29/2006.” Because the statute of limitations almost always begins the day after the taxpayer files their income tax return, the simple answer to your question is that the 10-year statute is set to expire on May 30, 2016.

However, there may be other factors to consider. For example, if you entered into an installment agreement with the IRS to pay any amount that was owed, as identified on your 2005 tax return, it’s highly likely that the 10-year statute of limitations date would have been extended to a date ending after May 29, 2016. While we have no way to know for certain if your assessment date was adjusted, I can tell you that, in this scenario, it is common practice for the IRS to extend the timeline to accommodate their ability to collect taxes owed – particularly if the installment payment period extends beyond the original expiration date.

I recommend that you speak with your financial advisor about this matter or email Rea & Associates to speak with a member of our team’s tax experts. You also might find value in the following articles.

Good luck!

By Christopher Axene, CPA (Dublin office)

Check out these articles for more helpful tax advice:

IRS Says You Owe More? Don’t Write That Check Yet!

How Far Back Can The IRS Go For Tax Auditing

When You Make A Mistake On Your Tax Return

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Protect Yourself From Fake Charity Scams

Wednesday, April 20th, 2016

Questions to Ask Yourself Before Making A Donation

Charity Scams - Ohio CP A Firm

Would you be able to spot the charity scam? Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to ask yourself a few questions. Read on to find out which ones.

From identity theft and tax fraud to criminals finding ways to hack into your company’s network, we are learning every day that it’s simply not safe to let your guard down – for anyone or anything. Unfortunately, that mindset should apply when you are considering gifting a charitable donation as well.

Some fraudsters, in an attempt to prey on the generosity of strangers, have begun to solicit funds for fake charities particularly during and immediately after tax season. But you can shut down these scams by asking yourself these critical questions.

Read also: Join The Fight Against Identity Theft & Income Tax Fraud

Is this the charity I know and love or is it a spin off?

We are a sucker for the brands we know and love, and criminals will invoke similar names, attributes, branding to trip you up and get you to write that check. Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to conduct a quick search online to remove all doubt. Two resources to consider are:

  • The Exempt Organization Select Check Tool – this search tool is designed to help you determine the legitimacy of the not-for-profit in question by providing users with information about the organization’s federal tax status and filings.
  • Guidestar – this online resource is great for users who want to find out about the validity of tax-exempt organizations as well as other faith-based nonprofits, community foundations and other groups that are typically not required to register with the IRS.

Do nonprofit organizations ask for personal information?

Don’t make it easy for a fraudster to steal your identity by willingly providing them with your Social Security Number. Legitimate nonprofit organizations will never need your SSN to complete a transaction and they should never need to retain any of your personal information for their records – this includes passwords.

Should my donation be in the form of a check or is it OK to give cash?

Yes! For your own security, and tax purposes, be sure to establish a paper trail. The best way to do this is to avoid making any type of cash donations. Instead, every time you give money to a charity, consider using a check or credit card to establish proof of the transaction. Not only is it important to establish a paper trail as a safety measure, it will help you when to go to claim the contribution on next year’s tax return.

I’m still not sure if it’s a valid nonprofit organization?

If the questions above don’t provide you with the reassurance you need, reach out to a trusted advisor who can help you identify whether a particular charitable organization is reputable or not while giving you pointers to help you protect your hard-earned dollars as well as your identity.

 By Maribeth Wright, CPA (Cambridge office)

Check out these articles to learn to learn about other fraud scenarios taxpayers should know about.

Stop Criminals From Hijacking Your Identity With These Top 5 ID Theft Prevention Posts

Then & Now: Data Security In America Since The Target Breach

Malware Threat Spreads To Smart Phones

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There’s Nothing Wrong With 3-Year-Old Money

Friday, April 8th, 2016

Time’s Running Out To Claim 2012 Refund Checks

Unclaimed Tax Refunds  - Ohio CPA Firm

Grab your unclaimed cash before it’s too late! The IRS owes taxpayers about $950 million of unclaimed tax refunds from 2012. But the deadline to file your late return is April 18, 2016. Read on to learn more.

If you are one of the nearly one million taxpayers who didn’t file a tax return in 2012, you may be eligible to receive an additional refund check from Uncle Sam. But if you don’t act fast you will miss your chance to claim your portion of the $950 million.

Funds that are not claimed by April 18, 2016 will become the property of the U.S. Treasury.

Were you a student in 2012 or was your income such that you weren’t legally required to file a 2012 tax return? It’s possible that, at that time, you had too much withheld from your wages (or paid higher quarterly estimated payments) than was actually necessary. And now the government owes you a refund. Additionally, depending on your particular circumstances, you could have also been eligible to claim certain tax credits, which are also just sitting there … waiting for somebody to claim them.

Read Also: From Toddler To Teen And Beyond: Tax Breaks For Families

According to IRS estimates, half the potential refunds are for more than $715. Unfortunately, if you don’t claim this money now, you never will. Taxpayers have three years to file a claim for a tax refund. Funds not claimed in time will become government property.

Here are a few other points to remember if you plan on claiming your share of unclaimed funds.

  • You must file a 2012 federal income tax return to claim your refund. The IRS needs to make sure you don’t owe any federal or state taxes for 2013 or 2014 as well, so if you haven’t filed those returns yet, the IRS may hold your refund to satisfy any tax debts that are owed as well as any past due child support or federal debts, such as student loans.
  • To claim your refund, you must properly address, mail and postmark your tax return no later than this year’s tax deadline (April 18, 2016).
  • Be sure to collect any and all necessary forms and include them with your return, including Forms W-2, 1098, 1099 or 5498. If you are missing a form or two, you can request copies from your employer (current and/or previous), your bank or another payer.

If you didn’t file a 2012 tax return and think the government owes you money, you have no time to waste. The IRS provides taxpayers with current and prior year tax forms and instructions on its website or by calling 1-800-TAX-FORM (1-800-829-3676). You can find additional help, such as tax calculators, refund tracker, record retention schedule and more in the financial resources section of the Rea & Associates website. Check it out!

By Lesley Mast, CPA, MAcc-Taxation (Wooster office)

Check out these articles for more last-minute tax help?

How To Trigger An IRS Audit

How To Make Dealing With The IRS Less Stressful

Join The Fight Against Identity Theft & Income Tax Fraud

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Phishing Scam Is A Threat To Ohio Businesses

Monday, March 28th, 2016
IRS Phishing Scam - Ohio CPA Firm

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information.

The Ohio Department of Taxation (ODT) is echoing phishing scam alerts made by the IRS earlier this month in an effort to protect businesses and employees state-wide from identity theft and tax fraud.

Read Also: Payroll, HR Departments Targeted By Cyber Criminals

According to ODT, payroll and human resources offices at companies nationwide – including some in Ohio – reportedly received emailed requests that appear to be sent from a high ranking member of the company’s management team requesting confidential payroll data. While the emails appear to be legitimate, they are actually being sent by cybercriminals who are looking to fool employees into sending them detailed payroll and W-2 information. The imposters then use the information to file fraudulent tax returns.

“The scam has worked on more than 30 companies resulting in the theft of W-2 tax information for thousands of current and former employees,” ODT’s news release states. “The W-2 form contains an employee’s Social Security number, salary and other confidential data. This information enables thieves to create a realistic looking, but fraudulent tax return requesting a tax refund that is then filed with Ohio or other states, and the IRS.”

The frequency of tax fraud and identity theft continues to increase at an alarming rate. This tax season alone, the IRS reported an approximate 400 percent increase in phishing and malware incidents – a surge that was addressed back in February.

“If your CEO appears to be emailing you for a list of company employees, check it out before you respond,” said IRS Commissioner John Koskinen. “Everybody has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information. You can also let them know that they should never send sensitive information until a conversation takes place, either in-person or over the phone, with the member of management seeking the information. You can also check out the information provided here for general insight from ODT that could be used to help your employees identify phishing attempts and email scams.

If your Ohio business has been the victim of or experienced this or any other type of email phishing scheme, contact ODT immediately at 800.282.1780 to protect against potential tax fraud and safeguard Ohio taxpayer dollars.

Those who are interested in learning more about the increasing threat of cybercrime should check out The Columbus Cybersecurity Series. Presentations are scheduled to take place throughout the year and will focus on ways to help business owners learn more about cyber threats. The first installment is scheduled for Wednesday, April 6. The event is free but registration is required to attend. Attendees will walk away with new insight into these attacks as well as tips and advice that will help you protect your business.

By Lisa Beamer, CPA (New Philadelphia office)

Want to protect your employees from identity theft and tax fraud or need help recovering? Check out these articles:

How Can You Protect Yourself From Tax Fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

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Readers Were Happy To Leap Into Tax Season This February

Friday, March 4th, 2016

Upon reviewing our most popular blog posts for the month of February we are left to conclude that it is once again that time of year – tax season.

February’s most read blog posts were mostly tax related. From additional insight into the Affordable Care Act, to recommendations about how to report your fantasy football winnings and updates about Ohio’s identity theft quiz; one thing is certain – this is shaping up to be another busy year in the world of taxes.

Read on to find out what others were reading in February.

  1. Are Your Employees Skimming From The Top? A question from one of our readers: As a new business without a cash register, what is the best way (accounting method-wise or other) to protect cash receipts from sales against employee theft or dishonest activity? Want the answer? Keep reading to find out how to prevent fraud in your small business.
  2. Five Reasons To Fall In Love With Your Financial Advisor While your financial advisor is probably the last person you are thinking about during those romantic holidays, you may want to reconsider and here’s why
  3. Don’t Miss Your Chance To Secure Tax-Free Wealth We already know that making contributions to tax deferred retirement accounts (i.e. deductible IRAs, SEPs, SIMPLEs and 401(k) plans) is the most obvious way to reduce your current year taxes, but with a little planning, you could develop a strategy to avoid paying future taxes as well. Take a look at these five tax advantage savings ideas and discover how easy it can be to hold on to more of your money.
  4. How Far Back Can The IRS Go For Tax Auditing? As usual, this is a pretty critical topic for our readers, which is why it’s a top blog post again this month! Read on to learn how far back the IRS can audit your tax return.
  5. Theft Safeguards To Cause Tax Return Delays In Ohio Get ready to watch your mailbox – at least if you want to make sure you get your state tax refund. The Ohio Department of Taxation will once again ask some Ohioans to confirm their identity before their refunds are issued. Why? Keep reading to find out.

We have a lot more tips and tidbits coming up in March, so make sure you have subscribed to our blog so you don’t miss a single post.

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Secure Form 1095-C Help Now And Avoid Penalties

Monday, December 14th, 2015
Form 1095-C Preparation Service | Rea & Associates | Ohio CPA Firm

Finding out you are an Applicable Large Employer is a hard pill to swallow. Finding out you are an Applicable Large Employer after the IRS penalizes you for not filing Form 1095-C is even harder. It’s not too late to get help – yet. Read on to learn more.

If you haven’t made arrangements to complete your company’s Form 1095-C yet, you can’t afford to put it off any longer.

What is Form 1095-C?

Think of the 1095-C like a W-2, but for health insurance instead of wages. It’s a mandatory form applicable large employers (ALEs) must complete. There are non-filing penalties that start small but could lead to larger penalties, such as the pay or play penalty ($2,000 per employee, per year).

Read Also: Make BIG Changes Or Face BIG Fines

Most of the time, it’s pretty easy to tell if your company is an Applicable Large Employer – other times, it’s not as clear. For example, you might have only a few full time employees but lots of part time employees. Every hour a part time worker works counts toward your large employer status. So, if you aren’t quite sure whether your business is actually required to file Form 1095-C, you need to work with an ACA expert immediately.

What Happens If I Don’t File?

The 1095-C is the form that tells the IRS if the employer should be penalized or not, whether the employee should be penalized or not, and if the employee or members of the employee’s family is eligible for premium subsidies. If you don’t file the form, how do you think the IRS will answer these questions? “Yes,” “Yes,” and “No” would be a good guess.

Both the employer and the employees have to do something to avoid being penalized – employer has to offer coverage and employee has to have coverage. If you don’t file, it is likely to cause trouble to both the employer and the employees – and you’ll end up having to file the forms anyway, in addition to the employer paying the late penalties and everyone having to deal with cleaning up all the notices from the IRS.

Am I Too Late?

Unfortunately, business owners nationwide are having problems finding a service provider who can help them locate the information needed to complete the form. Some payroll providers will offer their assistance, but they will likely require you to buy more services than you want or need to do it. Fortunately, you do have another option – Rea & Associates.

Ours is one of only a few firms offering stand-alone 1095-C service. Not only will our experts generate the 1095-C Forms you need, they will help you retrieve the data you already track and have access to or that you would have to retrieve from your service provider anyway.

But time is still of the essence. Don’t wait! Learn more about our Form 1095-C Preparation Services and then call me at 614.923.6577 to talk about your specific needs.

By Joe Popp, JD, LLM (Dublin office)

Want to learn more about your responsibility under the Affordable Care Act? Check out these articles:

The Cost Of Reimbursing Employees For Health Care

Obamacare: Discrimination Is Not An Option

What You Need To Know About Obamacare Employee Dumping

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Like Losing Your Wallet – Only Worse

Friday, July 31st, 2015
Retirement Plan Returns- Ohio CPA Firm

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune.

For most of us, misplacing our keys, losing sight of our shoes and occasionally forgetting to pay the phone bill on time is not a catastrophic phenomenon. It happens; and most likely we will freak out for a minute, find what we were looking for and move on – only to repeat our dysfunctional routine countless times over the course of a lifetime. Forgetting to file your retirement plan returns on the other hand … well, let’s just say that’s typically not a stress-free event.

Read Also: Do You Know What Your Retirement Plan Is Costing You?

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns (Form 5500-EZ) are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune. To be more precise, in years past, those who failed to meet their filing obligation could face a penalty totaling up to $15,000 per return. Fortunately, the IRS recently announced that instead of facing such an extreme late fee, eligible business owners can take advantage of a “low-cost penalty relief program.”

How Much Would You Pay?

The relief initiative, which started as a one-year pilot program in 2014, was tremendously successful, resulting in the collection of about 12,000 late returns. Because of this success, the program secured it’s permanency in May of this year. According to the news release, the program allows eligible business owners and their spouses to file late returns and only pay a $500 penalty for each return submitted with a maximum of $1,500 per plan. Because the IRS caps the maximum penalty at $1,500, applicants are encouraged to include multiple late returns in a single submission.


The IRS says that businesses with plans that cover the owner or the business’s partners (depending on how the business is set up) and their spouses are eligible to take advantage of this low-cost plan. Complete information about the program can be found by clicking here.

Learn More

Remember, your return must be filed annually no later than the end of the seventh month following the close of your plan year. So, for example, if your plan is governed by the calendar-year, as most are, your 2014 return was due today (Friday, July 31, 2015). Did you fail to file your small business’s annual retirement plan returns? Would you like to find out if you qualify for this program? Email a retirement plan expert at Rea & Associates and take control of your IRS debt now.

By Andrea McLane, QKA (Dublin office)

Want to read more about the importance of Retirement Plan Compliance?
Check out these articles:

401(k) Loans and Keeping Your Plan In Compliance
Retirement Roulette
The ‘Van Halen Philosophy’ of Retirement Plan Compliance

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A Fair Assessment?

Tuesday, July 21st, 2015
Back taxes - Ohio CPA Firm

When a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Bob recently received a copy of his account transcripts from the IRS. Upon reviewing the paperwork, he noticed that the government agency made note of a “date of assessment,” which prompted him to wonder how the date of assessment was determined? Moreover, he wanted to know what role one’s date of assessment plays with regard to the time frame the government has to collect back taxes.

If you ever find yourself in a situation similar to Bob’s, with questions about your tax history, in addition to speaking with your tax advisor, you can request that a copy of your tax return transcript and tax account transcript be mailed to you. Fill out the online form here, but make sure you are making the request for the current tax year’s transcript or transcripts for three years prior.

If you are requesting transcripts for older tax years or you need a wage and income transcript or verification of non-filing letter, you’ll need to complete Form 4506-T and send it to the address listed on the form’s instructions. Due to a recent security breach, your transcripts will not be sent electronically.

How Far Back Can The IRS Go To Collect Back Taxes?

If the IRS is attempting to collect past due taxes, the agency will assign a date of assessment to your IRS account transcript.

Read Also: IRS Says You Owe More? Don’t Write That Check Yet!

Like many of the invoices you see every day, every item on your transcript will be assigned a code. Your date of assessment is no different. To identify the date of assessment on your account transcript for the tax year in question, look for Transaction Code “150.”

As a general rule, the IRS must assess tax, or file suit against the taxpayer to collect the back taxes, within three years after the original tax return was filed. This three-year period of limitation on assessments also applies to penalties. In fact, this rule continues to apply regardless of whether the return was filed on time or not. In general, the statute of limitations will almost always begin the day after the taxpayer files their income tax return.

The Rules May Not Apply

It seems as though there are always exceptions to the rules we work so hard to uphold – taxes are not excluded from this trend. For instance, when a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Parting Shots

While the statute of limitations for assessment is three years after your return has been filed, the IRS still has 10 years to actually collect the assessed tax. Below is an example of the assessment process in action:

  • April 15, 2015 – you filed your 2014 tax return with the IRS
  • March 31, 2018 – the IRS assesses additional taxes on your 2014 tax return
  • The IRS has until March 31, 2028, to collect the additional tax or file suit against you.

While this information may help to shine some light on IRS assessments and statute of limitations rules, every situation is unique and hinges on several specific variables. Your tax advisor can help you sort through codes and details to get you back on the right track. Email Rea & Associates to learn more.

By Christopher Axene, CPA (Dublin office)

Check out these articles to learn more about your responsibilities as a taxpayer:

How Far Back Can The IRS Go For Tax Auditing?

The Truth About Tax Extensions

If Something Happens To me, What Will Happen With My Financial Matters?

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Hackers Target IRS – 100,000 Taxpayer Accounts Breached

Wednesday, May 27th, 2015
Hackers Target IRS – 100,000 Taxpayer Accounts Breached  - Rea & Associates - Ohio CPA Firm

Reports state that cyber-criminals were able to gain access to taxpayer accounts by obtaining specific, personal information, which allowed them to navigate the Get Transcript authentication process. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Just when you thought it was safe to let your guard down, cyber-criminals have blindsided us again. This time they’ve used the Internal Revenue Service’s “Get Transcript” application to gain access to approximately 100,000 taxpayer accounts.

Read: Could A Cyber-Attack Cripple Your Business In 2015?

The IRS released a statement Tuesday stating the government agency is “working aggressively to protect affected taxpayers and strengthen [their] protocols even further going forward,” after learning that hackers used “non-IRS sources” to access data, including Social Security information, dates of birth and street addresses associated with the accounts of nearly 100,000 taxpayers. The IRS said the security breach occurred when criminals gained access to its online Get Transcript application, which has since been shut down pending a full investigation by the Treasury Inspector General for Tax Administration.

According to the IRS, “the online application will remain disabled until the IRS makes modifications and further strengthens security for it.”

The data breach was limited to the Get Transcript application, said an IRS representative. The main IRS computer system that manages tax filing submissions was not affected and remains secure.

Reports state that the criminals were able to gain access to the accounts by obtaining information specific to the certain taxpayers, which allowed them to navigate the Get Transcript authentication process, which includes asking the user to answer several personal questions to confirm their identity. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Expect to receive a letter in the mail if your account was one of the 200,000 accounts targeted. And if your account was one of those that were compromised, your letter will provide additional information, including specific instructions to access free credit monitoring services that will be provided by the IRS to ensure your data is not being used in other financially damaging ways. According to the IRS, the letters started going out this week.

Concerned about identity theft as a result of this breach? Click here to learn what to do if your identity is stolen or if your personal information is compromised.

If you are a business owner, do you have protocols in place to protect your business from a cybercriminal?Email Rea & Associates to learn how you can protect your business from a cyberattack. You can also get some useful tips and information in the related articles below.

By Lesley Mast, CPA (Wooster office)


Related Articles 

How Much Is Your Data Worth To Criminals?
When Scammers Demand That You Pay Up, IRS Says You Should Hang Up
8 Tips For Crafting A Strong Password
How Do You Protect Yourself From Identity Theft?

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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
  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 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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Ready, Set, Download: IRS2Go Mobile App

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Is Simplicity Worth The Cost Of Peace Of Mind?

Wednesday, March 25th, 2015
New Final Tangible Property Regulations - Ohio CPA Firm

Just because the IRS says you are no longer required to file Form 3115 to comply with its final tangible property regulations doesn’t mean it’s a good idea to stop. Read the article and find out why.

The IRS recently made the road on which business owners must travel to comply with final tangible property regulations a little less bumpy.  Currently, most businesses that buy, depreciate, or repair property were required to file Form 3115 basically telling the IRS that the business had changed its accounting methods to comply with the new IRS rules and safe harbor, regardless of whether the change actually impacted their income.

Today, now that Revenue Procedure 2015-20 (15-20 relief) is in effect, small business taxpayers have the option of foregoing that extra paperwork. This relief removes the requirement to file a 3115 or statement with the tax return just to tell the IRS that you are making the changes. But, is that a good idea?

The main reason that you might still want to file a 3115 is if you have favorable tax adjustments from the past that you can harvest and take on your tax return this year. Filing the form is the only way to get at those. You also waive the audit protection for prior years that would be available with filing the 3115.  But, you do get to save some money on tax prep fees and paperwork.

Here’s a brief “true-or-false” quiz to help you decide what to do.  Of course you have to be eligible for the 15-20 relief, so the eligibility statements must be true. You should also consider filing a 3115 if you answer false to the later items.


  • True or False? Your small business’s assets total no more than $10 million or, over the last three years, your gross receipts have totaled no more than $10 million. (only need one of these to be true).
  • True or False? You will not file Form 3115 for any other business activity or any other change in accounting method for the year.


  • True or False? You get no benefit (or you don’t care about the benefit) from harvesting favorable 481(a) adjustments as a result of partial dispositions made in previous years.
  • True or False? You don’t care about prior year audit protection.
  • True or False? You believe that adequate records will otherwise be maintained with regard to what you have done (and are going to do) to protect against an audit. For example, if you have chosen not to do repair X, Y and Z because of your obligation to list it on Form 3115, will you continue to maintain that information in the event an audit were to occur?

Better Safe Than Sorry

Because it’s the only way to harvest prior year benefits and because most taxpayers desire the audit protection on these issues for prior years, we will likely continue to file Form 3115 for many of our clients.

Email Rea & Associates to learn more about Revenue Procedure 2015-20 and to find out if the new simplified method of reporting property changes is right for you.

By Joe Popp, JD, LLM (Dublin office)


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Ready, Set, Download: IRS2Go Mobile App 2014

Monday, October 20th, 2014

In June, the Internal Revenue Service (IRS) made the 2014 version of IRS2Go available to mobile users. This free app can help you stay on top of your federal income tax refund. You can also request your tax return or account transcript or receive tips and updates from the IRS via the app.

Benefits of IRS2GO App

Compatible with Apple and Android devices, the IRS2Go mobile app has been redesigned and includes several new and updated features, such as:

  • IRS2Go makes it easier for individuals to check their refunds at a time that’s convenient for them. To get there, just click on “Refund Status,” enter your Social Security Number (which is masked for security purposes), then select your filing status and the amount of your anticipated refund. The new “status tracker” allows users to identify where their return is in the tax return process. NOTE: Returns filed electronically can be viewed 24 hours after the return was received by the IRS. Paper returns take longer to process and can take up to four weeks before their status is available to view.
  • Another helpful feature is your ability to request your tax records or your account transcript. While, for security reasons, the records cannot be viewed immediately on your Smartphone or device, the request will be processed and your records will be delivered promptly to the address on record.
  • If you need help preparing your tax return, IRS2Go helps users find IRS Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs by simply entering a ZIP code and mileage range.
  • Users also have the opportunity to stay connected, view more content and interact directly with IRS on Twitter, YouTube, Facebook or by signing up for email updates.

To download the IRS2Go app on your Apple iPhone, iPad or iPod Touch device, visit the iTunes app store. To download IRS2Go on your Android devise, visit the Google Play store.
By Kelly Leslie, CPA (Cambridge office)


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IRS Says You Owe More? Don’t Write That Check Yet!

Tuesday, September 23rd, 2014

Tax season can be rough for any business. Just about the time you allow yourself to move on to something else and breathe a sigh of relief … it happens. You sift through your mail and find yourself staring face-to-face with a letter from the Internal Revenue Service (IRS). In a matter of seconds your adrenaline levels are through the roof. You know that what’s inside the envelope isn’t a simple thank-you note for filing your taxes on time. You carefully tear it open.

Nobody likes to hear that they have to pay more to the IRS than they originally thought. But, before you jump to conclusions and quickly write out a check for the amount the letter says you owe:

  • Stop
  • Take a deep breath
  • Call your financial advisor

4 Tips For Resolving Your Tax Dispute

Believe it or not, the IRS does make mistakes. Agents can accidentally input incorrect information, computers can misread data and tax codes can be inadvertently overlooked or misinterpreted. It happens. If you believe that the IRS was wrong in a decision it made about your business’s tax returns, follow these four steps to reach a resolution.

  1. Follow Instructions. Sometimes the easiest way to resolve the issue is to follow the instructions. Sounds easy enough, but not everybody gets this part right. If the IRS sent you a notice, look for the section that explains what to do if you disagree with their decision and follow directions. Additionally, be sure to attach any supporting documentation and mail it back to the address given by the deadline requested. After the IRS has made its decision, you will be notified via U.S. Mail. When in doubt, opt to send inquiries to the IRS via certified mail and request a receipt.
  2. Make The Call. If your initial challenge was rejected, your next step is to follow up with a phone call. The rejection notice you received should have included another important piece of information: the contact name and number of the IRS employee who rejected your challenge. When you call, in a polite and professional manner, ask to speak to the employee’s manager. Even though you are passing over the employee on the chain of command, take care not to say anything about why you are asking to speak with their supervisor. The last thing you need is to create animosity. When you finally have the opportunity to speak with a supervisor, your case should be laid out in much the same way as your original challenge. You should be clear and concise in your explanation while taking care to address any concerns that were noted by the original employee in their rejection letter. If your letter didn’t include an employee’s name and phone number, send another certified letter to a general supervisor with the agency and request that they reconsider your case.
  3. Appealing To A Higher Office. If you still haven’t convinced the IRS to change its mind, don’t give up – even if you have already mailed several letters and racked up a lot of call time with the agency. Further up the chain of command is the Office of Appeals, an independent office within the IRS. This is just one more step you have to take on your journey to find an IRS employee who agrees with your. To get your case to the Office of Appeals, follow the instructions that were found in the earlier notices. If you are unable to locate these instructions, you can find them on the IRS website.
  4. Welcome to U.S. Tax Court. Sometimes a resolution can’t be achieved in the first three steps of the appeal process. If you find yourself in this situation your final option is to take the case to the U.S. Tax Court. At this point you may be discouraged and may even question whether you should continue on with the fight, but if you still believe that the IRS is wrong it is probably in your best interest to see it out to the end.

If your dispute is less than $50,000 you will have the option to represent yourself. Similar to how a small-claims court operates, there is no jury and the judge will not hold your inexperience against you. Once court is in session you will state your case again, provide evidence and answer any questions a judge may ask about the claim. Be advised, however, that once a decision is made at this phase it is final and cannot be appealed.

Sometimes, even though you have decided that you want to move forward, an IRS attorney may offer to settle out of court for a figure less than what the IRS says you owe. If this happens, you need to decide whether you will accept the settlement or if you will move forward with presenting your case to the judge. The choice is yours.

If you find yourself at odds with the IRS over a tax issue and are not sure how to proceed, email Rea & Associates for more information.

Author: Clayton W. Rose, III, CPA


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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 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
  • 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)

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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.

By: Trista Acker, CPA, CFP (Dublin office)


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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

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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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)


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Why Did The IRS Delay The Start Of The 2014 Tax Season?

Wednesday, November 6th, 2013

Recently the Internal Revenue Service (IRS) announced that due to the 16-day government shutdown, they will begin processing tax returns one- to two-weeks later than planned. The original start date was Jan. 21, 2014. With this delay, the tax season could begin no earlier than Jan. 28 or as late as Feb. 4. The IRS will not process paper returns until the official start date, even if they are received before the official start date.  (more…)

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What Is The Difference Between Fixed Asset Expensing And Capitalization?

Thursday, October 17th, 2013

If you’re about to acquire, produce or improve real or tangible personal property, and then turn around and use the property in a trade of business for income, stop right there. Under the Internal Revenue Code, you’re required to capitalize certain amounts of money you invested into the property.  (more…)

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What’s The IRS Up To During The Government Shutdown?

Tuesday, October 1st, 2013

We’ve read for weeks that a government shutdown was possible, but at 12 a.m. this morning, it happened. It has been 17 years since the last government shutdown, and you, along with the rest of the American people, are probably wondering how the shutdown will impact their lives. Fortunately, last week the Internal Revenue Service published “FY 2014 Shutdown Contingency Plan (During Lapsed Appropriations) Non-Filing Season,” a set of guidelines that explains what will go on at the IRS during a shutdown.  (more…)

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What are the Consequences of Having Misclassified Workers?

Thursday, August 29th, 2013

My co-worker, Maribeth Wright, recently wrote a blog post titled, “Are You Properly Classifying Your Workers?”. The post explained how to determine whether a worker is an employee or an independent contractor. The article mentioned that this is a hot button issue with the IRS, as well as other government agencies.  In fact, according to The Kiplinger Tax Letter, the IRS is currently in the process of conducting 6,000 random audits, which are focusing on several payroll and fringe benefit issues – one of which is worker misclassification. (more…)

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Are You Properly Classifying Your Workers?

Wednesday, August 7th, 2013

You may employ hundreds, if not thousands of employees. Or maybe you only employ three to five. Regardless of the number of employees you have, the way you classify your workers is important to the federal government. Worker status is a hot button issue at the Internal Revenue Service (IRS), and Ohio Job and Family Services, Ohio Bureau of Workers’ Compensation and the U.S. Department of Labor are also challenging the way businesses report their payments to “independent contractors.”  (more…)

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Need Some Cash Now?

Friday, July 19th, 2013

Are you in the market for a new home? Or maybe you’re looking to purchase a new car for your daughter or son? Don’t have enough cash for a down payment? No problem. There’s a nice workaround that can provide short-term relief for your immediate need.  (more…)

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Part 2 | What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule?

Wednesday, June 5th, 2013

In the last issue of Illuminations, you read about some initial consequences you may face if you find that your 401(k) plan is out of compliance with an IRS or DOL rule. In this week’s issue, check out the second part of the article that explains the statute of limitations and how you can work to rectify any issues you may have with your business’s retirement plan. To refresh your memory, you can read the first part of the article here(more…)

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What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule?

Wednesday, May 22nd, 2013

With all of the rules in the business world, it sometimes can be difficult to know and understand all of the rules we need to follow – there are a lot of them. So what happens if you find yourself in an unintended situation where your business’s 401(k) plan is out of compliance? Simply put, a plan out of compliance with Internal Revenue Service (IRS) or Department of Labor (DOL) rules is subject to disqualification. But what does that mean? It is very important that you fix any compliance issues when they are identified – whether they are document-related issues, government reporting issues (5500) or plan operational issues. (more…)

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How Does Getting Divorced Impact Your Taxes?

Friday, March 15th, 2013

Like so many Hollywood couples these days, maybe you are finding yourself a newly divorced person. With all the legal shenanigans that can happen during a divorce proceeding, have you taken the time to consider some of the more practical matters related to your finances? There are several tax-related items and helpful advice tidbits to be discovered after a change in your marital status. (more…)

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Employee Welfare Benefit Plans Making Your Head Spin?

Friday, December 28th, 2012

Every year, we receive questions regarding whether a filing requirement exists for a client’s welfare benefit plan. Clients want to ensure that their plans remain ERISA compliant without taking on the burden of any unnecessary paperwork.  Here are answers to some of the most frequently asked questions about employee welfare benefit plans. (more…)

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What Changes Do Pension Plans Need by Year-end?

Thursday, November 29th, 2012

In the midst of the publicity surrounding the new ERISA fee disclosures requirements, it is important not to lose sight of the fact that other recently enacted legislation may impact your retirement plan.  Changes to IRS regulations may require plan’s to adopt amendments before the end of the year.  (more…)

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How Do You Get a Handle on Your Inventory?

Wednesday, November 28th, 2012

Inventory management can have a very direct impact not only on your profit but also the cash flow of your business. Inaccurate inventory will directly affect your business profit. If the inventory is too high, you may be paying tax on higher profits than you actually have. If it is too low, you run the risk of understating taxable income and, if audited, the IRS can hit you with back taxes and penalties. (more…)

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How Does the IRS Treat Property Repair Expenses?

Wednesday, November 21st, 2012

Tax treatment of property repairs has long frustrated business owners and accountants alike. The system has been confusing, hard to follow and seemingly eternally inconsistent. Recent changes to the Internal Revenue Code have streamlined the treatments of property repairs, but not all the changes are as taxpayer-friendly as you may have hoped. (more…)

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What are the Tax Rules for Gamblers?

Thursday, October 25th, 2012

With the new Cleveland Horeshoe Casino, gaming is becoming big business in Ohio.  From occasional slot machine players to poker pros, Ohioans are experiencing gambling and all the wins and losses that come with it.  While residents of Las Vegas may already be familiar with the IRS’s tax treatment of gambling wins and losses, Ohio gamers might not be  The IRS has special rules for gaming income and losses, which I’ll describe below, but the general rule is this: gambling winnings are taxable. (more…)

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How Do Your Avoid IRS Penalties on Your IRA?

Friday, September 21st, 2012

With our government requiring more cash each year, there is growing sentiment is the financial community that the IRS is becoming more vigilant in obtaining all revenue available related to Individual Retirement Accounts (IRAs). According to a recent article, the Treasury Inspector General for Tax Administration estimates that the IRS failed to collect as much as $286 million of revenue in 2006 and 2007 alone. From a political aspect, it is easier to raise revenue by simply enforcing the existing rules, than it is to cut spending or pass a new tax increase. (more…)

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You Got a Tax Notice… Now What?!

Wednesday, September 19th, 2012

You know the feeling well… you’re just going about your business, walking out to the mailbox to pick up the daily mail. For some reason, the pile feels a bit heavier today. And as you sort through the junk and the magazines and the bills, you find that you’ve received a little love note in the form of a tax notice from the Internal Revenue Service (IRS). No wonder the mail is so heavy today… the IRS is looking for more of your well-earned money. (more…)

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Are Tax Credits Available for Hiring Veterans?

Friday, May 25th, 2012

Memorial Day is a great time to think about our veterans and what we can do to show our thanks for all that they’ve done for our country. One way to show your thanks: hire a veteran. All too often, our men and women returning from active duty come home to a weak economy and limited job prospects. But, as an employer, you have the unique ability to help ease their transition to civilian life – by giving them a job and a chance.

Hiring a veteran can be good for the veteran, the community and your business. The VOW to Hire Heroes Act of 2011 provides work opportunity tax credits to businesses that hire certain veterans. (more…)

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What if you can’t pay your taxes?

Friday, April 13th, 2012

The April 17th tax deadline is looming closer and you know that you’ve got to get your payment in soon.  But, what if you don’t have the cash on hand?  Don’t panic, there are ways to file your taxes and avoid penalties – even if you can’t pay everything that you owe right away. (more…)

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Do you need to report large cash payments to the IRS?

Wednesday, April 4th, 2012

$10,000 in cash is the same as a $10,000 check, right?  Not from the perspective of the IRS.  If your business receives $10,000 in cash from a single transaction (or multiple related transactions), you’re required to report it to the IRS. (more…)

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Did you send a wedding announcement to Social Security?

Tuesday, April 3rd, 2012

When you’re newly married, there’s so much to think about.  Did you remember to thank Aunt Joan for that silver tray?  Did you remember to have your mail forwarded to your new address?  One thing that may not make the list: Did you remember to notify the Social Security Administration of your name change? (more…)

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What red flags might get you audited?

Wednesday, March 21st, 2012

The IRS may audit only 1 percent of all tax returns annually, but if you’re one of the unlucky few, you may be wondering “Why me?” Since the agency doesn’t have enough personnel to closely review each and every tax return they receive, they rely very heavily on their computer systems flag items of “interest”.. Here are six of most common “red flags” that may impact a business owner filing a personal return. (more…)

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How can you protect yourself from tax fraud?

Friday, March 16th, 2012

Tax identity theft is an increasingly enormous problem. The IRS has been bombarding us with warnings of identity theft and scams this tax season.

Here’s a summary of some of the latest information you should know. (more…)

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How do you follow IRS regulations when gifting a business interest?

Friday, February 17th, 2012

Lately we’ve been surprised by how many people are thinking about filing a gift tax return without a business valuation. We’ve had a few conversations with people who are under the impression that they don’t need to attach a valuation of their business interest to the gift tax return.

Before you file your return without a valuation from a professional, consider the consequences: (more…)

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When Can You Expect to Receive Your Tax Refund?

Thursday, February 16th, 2012

If you’re expecting a federal tax refund this year, it could be delayed. The agency reports that new anti-fraud measures could slow the refund process by approximately one week. (more…)

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Are You Ready for Tax Time? Have More Than a Shoe Box

Wednesday, February 8th, 2012

So it’s tax time. While that thought might conjure up images of lots of receipts in a shoe box, you don’t want to be that person. With a little preparation, you can help make your visit to your accounting professional less expensive and more enjoyable. Here are a few tips to help you prepare. (more…)

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Does New 1099 Reporting Affect You?

Wednesday, January 25th, 2012

If your business has paid at least $600 in professional services or other payments in 2011, you may be subject to a new 1099 reporting requirement as you begin to file your 2011 taxes. (more…)

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Wrong Worker Classification? IRS Offers Voluntary Settlement

Thursday, October 6th, 2011

Employers who have erroneously treated workers as nonemployees or independent contractors now have an opportunity to get into compliance with the IRS through a low-cost, voluntary reclassification program. (more…)

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Have You Received an IRS Notice? Nine Things to Know

Monday, October 3rd, 2011

The Internal Revenue Service sends millions of letters and notices to taxpayers for a variety of reasons each year. Here are some things to know if you receive one. (more…)

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So the Grass Wasn’t Greener? Time to Reverse Your Roth IRA Conversion

Tuesday, September 27th, 2011

If you converted a traditional IRA to a Roth IRA account last year, you may be facing an account that is worth much less than when you converted it. But you might also be facing a tax bill on value you no longer have. You do have an option, but only if you act quickly – reverse your 2010 Roth conversion.

If you converted your traditional IRA to a Roth IRA last year, the transaction triggered a taxable distribution from the traditional IRA, followed by a contribution to your Roth account. That tax will be based on the value of the traditional IRA on its conversion date. That means if your account is worth less now, you will owe taxes on money that no longer exists.

How to Reverse Your Roth IRA

Thankfully, the Roth conversion regulations allowed for the ability to reverse the conversion – but only if you do so before October 17. This involves completing the proper paperwork with your IRA custodian or trustee. When properly filed, the IRS considers your account as being “recharacterized” from a Roth account back to traditional IRA status. It’s as if the conversion never happened, and your tax liability disappears.

You’ll need to amend your 2010 tax return to allow for the reversal, or adjust your 2010 return if you have filed for an extension. Your reversal of the Roth conversion this year will also trigger some additional documentation requirements for your 2011 tax return.

Reconverting to Roth

Now that you’ve lessened your tax liability on phantom income that vanished due to the market’s versatility, you might consider using the down market to your advantage. You can reconvert your now traditional IRA back to a Roth – and pay less tax on it than you would have paid last year. You must wait 30 days after the reversal to reconvert it. Reconverting your traditional IRA account to a Roth can make sense if you expect your assets to appreciate quickly.

Your tax professional can assist you in amending your 2010 tax return or adjusting your extended 2010 return. He or she can also walk you through the reporting process that will be required should you decide to reconvert your IRA.

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Have Offshore Income? Time is Running Out for Voluntary Disclosure

Friday, August 26th, 2011

If you have undisclosed income through offshore accounts, time is running out to voluntarily disclose it and bring your taxes current. The IRS is winding down a voluntary disclosure program that began February 8 and will end on August 31. (more…)

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Higher Gas Prices Mean Higher Business Mileage Deduction

Friday, June 24th, 2011

In a nod to higher gas prices, the IRS has increased the business mileage rate deduction to 55.5 cents per mile.   The new rate becomes effective July 1 and raises the rate 4.5 cents.   The deduction for medical and moving expenses also increases 4.5 cents to 23.5 cents per mile.  (more…)

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Want to Look Back in Time? See an 1864 Tax Return

Friday, June 3rd, 2011

Recently blogger Paul Caron, a professor of law at Cincinnati College of Law, shared an IRS tax form from 1864. The form was two pages, and 10 questions. As our country considers ways to simplify our current tax laws, it may make sense to look at where and how our tax laws began nearly 150 years ago. (more…)

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Overwithheld FICA taxes in 2011? Here’s how to fix it

Thursday, May 5th, 2011

What is the proper procedure for those who over-withheld Social Security taxes early on in 2011, but failed to make the proper adjustment prior to the March 31 filing deadline? How should the first quarter 2011 Form 941 be filed?  Should adjustments be made as soon as possible?  I am unable to find any help on the government sites. (more…)

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What’s the Latest on 1099 Reporting?

Friday, April 15th, 2011

When it comes to 1099 reporting rules, it’s out with the new and in with the old. (more…)

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Is This Really A Message From The IRS?

Tuesday, April 5th, 2011

It’s that time of year when unsuspecting taxpayers receive suspicious emails, phone calls, faxes or notices claiming to be from the IRS. Many of the scams use the IRS name or logo to appear more authentic. (more…)

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How can you avoid a tax audit?

Thursday, February 10th, 2011

There really is no way to totally prevent an IRS audit of your business income tax return. However, there are things you can do to lessen the chances. Here are a few tips published recently by the Wall Street Journal. (more…)

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Did the IRS revise the federal tax deadline and date to accept itemized returns?

Wednesday, February 2nd, 2011

The IRS will not accept federal returns from taxpayers who claim itemized deductions until February 14. The delay is necessary for the IRS to program its systems to accommodate tax breaks included in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. (more…)

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Does the IRS Tax Filing Delay Mean A Delay For You?

Tuesday, January 4th, 2011

You probably heard by now that the IRS won’t begin processing several types of tax returns, including tax returns with itemized deductions, until mid- to late February. Why? It needs time to reprogram its processing systems to accommodate the tax law changes that the lame duck session of Congress passed late last month. (more…)

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Why can’t federal agencies communicate with us more clearly?

Monday, November 1st, 2010

Actually, federal agencies will soon be required to communicate more clearly with us. Earlier this month, President Obama signed the Plain Writing Act, which will require federal government agencies, including the IRS, to write public documents in easy-to-understand language. This means items such as tax forms, federal student aid applications, Veteran’s Administration forms and even form letters from the IRS will receive a makeover. (more…)

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Recently Married, Divorced or Adopted? Remember to Notify Social Security

Friday, July 9th, 2010

Since we’ve just completed the month known for weddings in June, it’s a good time to make sure the name on your tax return matches the name registered with the Social Security Administration. Here’s what to do. (more…)

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