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IRS, Security Summit partners warn taxpayers, tax professionals to watch out for emerging scams by email, text, phone…
DECEMBER 1, 2023
WASHINGTON — To wrap up National Tax Security Awareness Week, the Internal Revenue Service and the Security Summit partners today reminded taxpayers and tax professionals to stay alert against emerging scams during the upcoming filing season and throughout the year.
With identity thieves constantly changing tactics to try to steal information from taxpayers and businesses, the Security Summit partners remind people to watch out for a variety of aggressive schemes that can surface on email, by text, over the phone or through the mail.
These threats are present year-round, but the approach of tax season means that identity thieves will intensify efforts trying to impersonate the IRS and others involved in tax and financial work to get sensitive information.
Identity thieves also use recent news events, including tragedies, to try tricking taxpayers. And in another common tax season scam, identity thieves will pose as new, potential clients to tax professionals by email or over the phone in hopes of obtaining access to company systems. Ultimately, successful attempts to get this information means fraudsters can try filing fake tax returns with a goal of getting a refund.
Taxpayers should be alert to fake communications posing as legitimate organizations in the tax and financial community, including the IRS and states. These messages can arrive in many ways, including an unsolicited text or email to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft.
Phishing is an email sent by fraudsters claiming to come from the IRS or another legitimate organization, including state tax organizations or a financial firm. The email lures the victims into the scam by a variety of ruses such as enticing victims with a phony tax refund or frightening them with false legal/criminal charges for tax fraud.
Smishing is a text or smartphone SMS message that uses the same technique as phishing. Scammers often use alarming language like, "Your account has now been put on hold," or "Unusual Activity Report" with a bogus "Solutions" link to restore the recipient's account. Unexpected tax refunds are another potential target for scam artists.
The IRS initiates most contacts through regular mail, which means taxpayers shouldn't be getting an unexpected message by email, text or social media regarding a bill or tax refund.
Individuals should never respond to tax-related phishing or smishing or click on the URL link. Instead, the scams should be reported by sending the email or a copy of the text/SMS as an attachment to email@example.com.
The IRS also warns taxpayers to be wary of messages that appear to be from friends or family but are possibly stolen or compromised email or text accounts from someone they know. This remains a popular way to target individuals and tax preparers for a variety of scams. Individuals should verify the identity of the sender by using another communication method; for instance, calling a number they independently know to be accurate, not the number provided in the email or text.
Signs that a scam may be underway
Taxpayers should watch for a number of tell-tale signs that could be an indication that they have been a victim of identity theft or a tax scam. Among some of the signs are:
Taxpayers receiving a tax transcript in the mail from the IRS that was not ordered.
Taxpayers receiving an unrequested Employer Identification Number.
Taxpayers receiving W-2's from an unknown employer.
Taxpayers unexpectedly getting a notice or an email from a tax preparation company that is:
Confirming access to an existing online account.
Disabling an existing online account.
Confirming a new online account.
Getting a letter from the IRS during a year that the taxpayer didn't earn income or a tax return hadn't been filed. In this situation, it's possible an identity thief has submitted a tax return in the honest taxpayer's name. In this situation, where the taxpayer didn't earn money or file a return, the warning sign is a letter showing:
Additional tax is owed.
A refund was offset because of a balance due.
Collection actions have been taken.
Generally, the IRS starts with a mailed paper bill to a person who owes taxes. If a taxpayer wants to verify what taxes they owe the IRS, they should view tax account information. But they should not click on links in email or texts saying they owe a bill.
Reporting scams and tax fraud
Taxpayers should report suspicious IRS, Treasury or tax-related online or email phishing scams to firstname.lastname@example.org. They should not click on any links, open attachments or reply to the sender.
If taxpayers receive an IRS-related phone call, but do not owe taxes, they should hang up immediately and contact the Treasury Inspector General for Tax Administration to report the IRS impersonation scam call. The caller ID and callback number can be reported to email@example.com with the subject line of "IRS Phone Scam."
Taxpayer granted additional time to file tax returns due October 16:
September 25, 2023
WASHINGTON — Taxpayers affected by Hurricane Lee in parts of Massachusetts that began Sept. 15, 2023, now have until Feb. 15, 2024, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announce today.
Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), individuals and households affected by Hurricane Lee that reside or have a business in Barnstable, Berkshire, Bristol, Dukes, Essex, Franklin, Hampden, Hampshire, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, and Worcester counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 15, 2023, and before Feb. 15, 2024, are granted additional time to file.
As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period. This includes 2022 individual income tax returns due on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
The Feb. 15, 2024, deadline also applies to quarterly estimated tax payments, normally due on Jan. 16, 2024. In addition, calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023, also qualify for the Feb. 15, 2024, filing postponement deadline. Penalties on payroll and excise tax deposits due on or after Sept. 15, 2023, and before Oct. 2, 2023, will be abated as long as the tax deposits are made by Oct. 2, 2023.
If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.
The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief.
Taxpayers should hang up if tax season scammers come calling
January 2023 - Washington The tax filing season is a popular time for scammers to call and try to dupe unsuspecting taxpayers. These thieves often make threatening or alarming calls posing as the IRS to try to steal taxpayer money or personal information.
However, it’s easy for people to recognize this scam by knowing how the IRS contacts taxpayers.
The IRS will never:
Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested for not paying.
Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
Call unexpectedly about a tax refund.
Taxpayers who receive these phone calls should:
Record the number and then hang up the phone immediately.
Report the call by visiting the Hotline page of Treasury Inspector General for Tax Administration and using an IRS Impersonation Scam Reporting form or by calling 800-366-4484.
Forms to report fraud are available on the Hotline page of Treasury Inspector General for Tax Administration website. Taxpayers just click the appropriate option under “IRS Scams and Fraud” and follow the instructions.
Report the number to firstname.lastname@example.org and put "IRS Phone Scam" in the subject line.
IRS DELAYS REPORTING OF $600 PAYMENTS UNTIL 2023
DEC 22, 2022 - WASHINGTON — The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.
As a result of this delay, third-party settlement organizations will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount enacted as part of the American Rescue Plan of 2021.
As part of this, the IRS released guidance today outlining that calendar year 2022 will be a transition period for implementation of the lowered threshold reporting for third-party settlement organizations (TPSOs) that would have generated Form 1099-Ks for taxpayers.
"The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan," said Acting IRS Commissioner Doug O'Donnell. "To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements."
The American Rescue Plan of 2021 changed the reporting threshold for TPSOs. The new threshold for business transactions is $600 per year; changed from the previous threshold of more than 200 transactions per year, exceeding an aggregate amount of $20,000. The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill.
Under the law, beginning January 1, 2023, a TPSO is required to report third-party network transactions paid in 2022 with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of transactions. TPSOs report these transactions by providing individual payee's an IRS Form 1099-K, Payment Card and Third-Party Network Transactions.
The transition period described in Notice 2023-10, delays the reporting of transactions in excess of $600 to transactions that occur after calendar year 2022. The transition period is intended to facilitate an orderly transition for TPSO tax compliance, as well as individual payee compliance with income tax reporting. A participating payee, in the case of a third-party network transaction, is any person who accepts payment from a third-party settlement organization for a business transaction.
The change under the law is hugely important because tax compliance is higher when amounts are subject to information reporting, like the Form 1099-K. However, the IRS noted it must be managed carefully to help ensure that 1099-Ks are only issued to taxpayers who should receive them. In addition, it's important that taxpayers understand what to do as a result of this reporting, and tax preparers and software providers have the information they need to assist taxpayers.
Additional details on the delay will be available in the near future along with additional information to help taxpayers and the industry. For taxpayers who may have already received a 1099-K as a result of the statutory changes, the IRS is working rapidly to provide instructions and clarity so that taxpayers understand what to do.
The IRS also noted that the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions will remain in effect.
MASSACHUSETTS TO ISSUE REFUNDS NOVEMBER 1, 2022
BOSTON: In this past fiscal year, Fiscal Year 2022 (FY22), Massachusetts tax revenue collections exceeded the annual tax revenue cap set by Chapter 62F of the Massachusetts General Laws by $2.941 billion. In accordance with the statute, this excess revenue is being returned to taxpayers.
In general, eligible taxpayers will receive a credit in the form of a refund of 14.0312% of their Massachusetts personal income tax liability for Tax Year 2021. This percentage was finalized by the Department of Revenue after the 2021 individual tax return filing extension deadline of October 17, 2022. Please note that credits may be reduced due to refund intercepts, including for unpaid tax liability, unpaid child support, and certain other debts.
Distribution of refunds will begin on November 1, 2022 – eligible taxpayers will receive their refund automatically through direct deposit or as a check sent through the mail. If you have already filed your 2021 tax return and you had a tax liability, no action is needed, and you should receive your refund by mid-December of 2022. If you have not yet filed your 2021 return, you are still eligible if you file by September 15, 2023 and, if eligible for a refund, you should receive it approximately one month after you file.
WASHINGTON MARCH 2022
This year, more than ever before, those who don't normally have to file a tax return may wish to do so to get child-related tax credits that were expanded by the American Rescue Plan. These include the Child Tax Credit and the Child and Dependent Care Credit.
Filing electronically and using direct deposit is the safest and fastest way to file an accurate return and receive a tax refund. Taxpayers can use Where's My Refund? to start checking their refund status within 24 hours after an e-filed return is received or four weeks after the taxpayer mails a paper return.
The tool's tracker displays progress through three phases:
Refund Approved and
Most tax refunds are issued within 21 days, however, some may take longer. There are several reasons this can happen:
The return includes a claim for the Earned Income Tax Credit or Additional Child Tax Credit.
The time between the IRS issuing the refund and the bank posting it to an account may vary since many banks do not process payments on weekends or holidays.
The return may require additional review.
The return may include errors or be incomplete.
The return could be affected by identity theft or fraud.
The IRS will contact taxpayers by mail if more information is needed to process a return.
Earned Income Tax Credit and the Additional Child Tax Credit
Due to changes to the tax law made by the Protecting Americans from Tax Hikes Act (PATH Act), the IRS can't issue Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) refunds before mid-February. This includes the entire refund, not just the part that's related to the credit claimed on a tax return.
If a filer claimed the EITC or the ACTC, they can expect to get their refund March 1 if:
They file their return online,
They choose to get their refund by direct deposit and
No issues were found with their return.
Ignore refund myths
Some taxpayers mistakenly believe they can expedite their refund by ordering a tax transcript, calling the IRS or calling their tax preparer. Ordering a tax transcript will not help a taxpayer get their refund faster or find out when they'll get their refund. The information available on Where's My Refund? is the same. inf
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Scott M. Sawyer, is an Attorney admitted to practice in Massachusetts. He is also a Certified Public Accountant licensed to practice in Massachusetts, Vermont and New York.
Scott M. Sawyer is a graduate of Western New England University School of Law.
He received his Master’s Degree in Business at the Franklin W. Olin Graduate School of Business from Babson College in Wellesley, Massachusetts and his undergraduate degree from the University of Massachusetts, Lowell.
His experience includes more than thirty five years of working with businesses in such diverse industries as non-profit organizations, municipalities, retailers, wholesalers, manufacturers, law firms, real estate, forestry, aviation, and many others.
Please contact Scott M. Sawyer, Attorney at Law -CPA for a complimentary review of your business or personal legal, accounting and tax compliance needs.
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