Phone Scams Continue to be Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2015 Filing Season

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain near the top of the annual "Dirty Dozen" list of tax scams for the 2015 filing season, the Internal Revenue Service announced today.

The IRS has seen a surge of these phone scams in recent months as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

"If someone calls unexpectedly claiming to be from the IRS with aggressive threats if you don't pay immediately, it's a scam artist calling,” said IRS Commissioner John Koskinen. "The first IRS contact with taxpayers is usually through the mail. Taxpayers have rights, and this is not how we do business."

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year. Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so. This year for the first time, the IRS will issue the individual Dirty Dozen scams one at a time during the next 12 business days to raise consumer awareness.

Phone scams top the list this year because it has been a persistent and pervasive problem for many taxpayers for many months. Scammers are able to alter caller ID numbers to make it look like the IRS is calling. They use fake names and bogus IRS badge numbers. They often leave "urgent" callback requests. They prey on the most vulnerable people, such as the elderly, newly arrived immigrants and those whose first language is not English. Scammers have been known to impersonate agents from IRS Criminal Investigation as well.

“These criminals try to scare and shock you into providing personal financial information on the spot while you are off guard,” Koskinen said. “Don’t be taken in and don’t engage these people over the phone.”

The Treasury Inspector General for Tax Administration (TIGTA) has received reports of roughly 290,000 contacts since October 2013 and has become aware of nearly 3,000 victims who have collectively paid over $14 million as a result of the scam, in which individuals make unsolicited calls to taxpayers fraudulently claiming to be IRS officials and demanding that they send them cash via prepaid debit cards.

Protect Yourself

As telephone scams continue across the country, the IRS recently put out a new YouTube video with a renewed warning to taxpayers not to be fooled by imposters posing as tax agency representatives. The new Tax Scams video describes some basic tips to help protect taxpayers from tax scams.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you.

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:

• Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Require you to use a specific payment method for your taxes, such as a prepaid debit card.
• Ask for credit or debit card numbers over the phone.
• Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

• If you know you owe taxes or think you might owe, call the IRS at 1-800-829-1040. The IRS workers can help you with a payment issue.
• If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the TIGTA at 1-800-366-4484 or at www.tigta.gov.
• If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add "IRS Telephone Scam" to the comments of your complaint.

Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue involving bills or refunds. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box.

Additional information about tax scams is available on IRS social media sites, including YouTube http://www.youtube.com/irsvideos and Tumblr http://internalrevenueservice.tumblr.com, where people can search “scam” to find all the scam-related posts.

2015 Sales Tax Survival Guide: Challenge #1 - Keep Broadening Definitions of Nexus From Catching You Unaware

This is the first in a series of 11 posts that will be posted here within the next couple of weeks.

Sales tax is a critical  source of revenue in 46 states (North Dakota, New Hampshire, Montana, Alaska, and Delaware don't have sales tax). Other than property and income tax, sales tax is the largest source of state tax revenue, and one frequently leveraged to fill budget gaps.

Calculating, collecting, and remitting sales tax is not only good business, it is a legal obligation placed on merchants by the states in which they conduct business. Doing it properly is not only an obligation, it's the best defense against hungry state auditors.

The tactics needed to survive sales tax in 2015 require preparing for the worst (audit) while achieving the best (streamlined sales tax processes).

Whether a company has a sales tax obligation is the crux of the sales tax challenge. There are approximately 11,000 jurisdictions within the U.S. and 100,000+ rules changes annually. That's a daunting set of variables few manual systems can handle. The connection between a company and a state, in which the company acts as an agent of the tax authority and collects and remits accordingly, is called "nexus." In addition to a significant physical presence such as a warehouse or headquarters, nexus can also mean a virtual connection. Large online retailers such as Amazon and Overstock now collect sales tax in states in which they have neither distribution centers nor warehouses. Many online retailers and other remote sellers are not currently required to collect sales tax in states where they have no physical presence. But states struggling to recover from economic recession see this uncollected tax as a major source of potential revenue.

Property Qualifying for the Energy Credit under Section 48

Notice 2015-04 provides guidance on the energy credit under section 48 of the Internal Revenue Code (Code).  Specifically, this notice provides performance and quality standards that small wind energy property must meet to qualify for the energy credit under section 48.

Notice 2015-04 will be published in Internal Revenue Bulletin 2015-4 on Jan. 26, 2015.

Health Care Law Brings Changes to IRS Tax Forms

This year, there are some changes to tax forms related to the Affordable Care Act. Along with a few new lines on existing forms, there will also be two new forms that will need to be included with some tax returns. While most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2014, there are also new lines on Forms 1040, 1040A, and 1040EZ related to the health care law.

To help navigate these changes, taxpayers and their tax professionals should consider filing their return electronically. Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

Here is information about the new forms and updates to the existing forms:
Form 8965, Health Coverage Exemptions

• Complete this form to report a Marketplace-granted coverage exemption or claim an IRS-granted coverage exemption on the return.
• Use the worksheet in the Form 8965 Instructions to calculate the shared responsibility payment.

Form 8962, Premium Tax Credit

• Complete this form to reconcile advance payments of the premium tax credit, and to claim this credit on the tax return.

Additionally, if individuals purchased coverage through the Health Insurance Marketplace, they should receive Form 1095-A, Health Insurance Marketplace Statement, which will help complete Form 8962.

Form 1040

• Line 46: Enter advance payments of the premium tax credit that must be repaid
• Line 61: Report health coverage and enter individual shared responsibility payment
• Line 69: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments

Form 1040A

• Line 29: Enter advance payments of the premium tax credit that must be repaid
• Line 38: Report health coverage and enter individual shared responsibility payment
• Line 45: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments

Form 1040EZ

• Line 11: Report health coverage and enter individual shared responsibility payment
• Form 1040EZ cannot be used to report advance payments or to claim the premium tax credit

For more information about the Affordable Care Act and filing your 2014 income tax return visit IRS.gov/aca.

Application of Retroactive Increase in Excludable Transit Benefits

Notice 2015-02 provides guidance with respect to issues related to the retroactive increase in the monthly transit benefit exclusion under section 132(f)(2)(A) of the Internal Revenue Code from $130 per participating employee to $250 per participating employee for the period from January 1, 2014 through December 31, 2014.  Due to the timing of the statutory change and in order to reduce administrative burden, the Service is providing a special administrative procedure for employers that treated excess transit benefits as wages and that have not yet filed their fourth quarter Form 941 for 2014 to make necessary corrections on their fourth quarter Form 941.

Notice 2015-02 will be published in Internal Revenue Bulletin 2015-4 on Jan. 26, 2015.

You work. Let EITC work for you!

For the last 40 years, Earned Income Tax Credit made life better for millions of workers. You may have extra money waiting for you. If you qualify and claim the credit, it could be worth $6,143 from the IRS for some workers.

Don’t be the one in five that misses this credit. If you or someone you know earned less than $52,427 from wages, running a business or farm or from Form 1099 Misc, check it out.

It’s easy to find out if you qualify. Use the EITC Assistant, available late January, and answer questions about yourself and other family members to see if you qualify and estimate the amount of your credit.

EITC eligibility depends on several factors, including income and family size. If you don’t have a qualifying child and earned under $20,000, find out if you qualify for a smaller credit, worth as much as $496.

Use the revised Form 656-B booklet, Offer in Compromise, to submit offer applications

The January 2015 revision of IRS Form 656-B, Offer in Compromise Booklet, is now available for download and use. This booklet contains all the current forms and instructions for submitting an Offer in Compromise application. If you use an earlier revision, you may experience delays in the processing and evaluation of your offer application.

General information about the Offer in Compromise program is available at IRS.gov. You or your representative can get a preliminary indication of whether you qualify for an Offer in Compromise by using the IRS Offer in Compromise Pre-Qualifier tool. If you are a good offer candidate, the tool will also provide a preliminary offer amount. You will find a link to the tool on the IRS Offer in Compromise Web page.

If an Offer in Compromise is not a viable option for you, visit IRS.gov/payments for other payment options.

Facts about the Premium Tax Credit for individuals and families

If you — or anyone on your tax return — purchased health coverage from a state or the federally-facilitated Health Insurance Marketplace and are eligible for the premium tax credit, you will have to file Form 8962, Premium Tax Credit, with your federal income tax return in 2015.

When you applied for Marketplace coverage in 2014, you could have chosen to have advance payments of the premium tax credit paid directly to your insurance company to lower your out-of-pocket cost for monthly premiums during the year. If you chose this option, you must file a tax return and attach Form 8962, Premium Tax Credit.

You can electronically file Form 8962, Premium Tax Credit, along with your federal tax return. Filing electronically is the easiest way to file a complete and accurate tax return. By electronically filing your tax return, many common errors may be avoided or corrected by the computer software. Depending on your income, you may even qualify to e-file for free by using Free File tax software.

Claiming the Premium Tax Credit

Only individuals who purchased coverage through the Health Insurance Marketplace may be eligible to claim a premium tax credit when filing a tax return in 2015.

In general, you or anyone on your tax return who enrolled in coverage through the Marketplace in 2014 may be eligible to claim a premium tax credit if you:

o are within certain income limits;

o do not file a Married Filing Separately tax return, unless you meet certain criteria; or

o cannot be claimed as a dependent by another person.

Additionally, the person on your tax return who enrolled must not have been eligible for other qualifying coverage, such as government-sponsored coverage or employer-sponsored coverage for the same months.

Reconciling advance payments of the Premium Tax Credit

If you chose this option, you must file your tax return and attach Form 8962, Premium Tax Credit, to reconcile any advance payments made directly by the government to your insurance provider during the year, even if you do not otherwise have to file a tax return. You do this by comparing any advance credit payments with the amount of the premium tax credit actually allowed on the federal income tax return.

If the premium tax credit computed on your federal income tax return is more than the advance credit payments, the additional amount of the credit will increase your refund or lower the amount of tax you owe.

If the credit on the tax return is less than the amount paid in advance, you will have to repay excess advance payments, which will increase the amount you owe or result in either a smaller refund or a balance due.

The Marketplaces are required to send Form 1095-A, Health Insurance Marketplace Statement, to individuals by Jan. 31, 2015. This form includes information about your coverage and any advance credit payments made directly to your insurance provider in 2014. Contact the Marketplace directly if you did not receive your Form 1095-A. You need Form 1095-A to accurately complete your tax return.

Reporting qualifying health care coverage

If you have minimum essential coverage, you will check a box indicating that you do have minimum essential coverage when you file your 2014 federal income tax return. If you — or anyone on your return — purchased a health plan through the Marketplace, this means you have minimum essential coverage. In addition to filing Form 8962, Premium Tax Credit, with your tax return, you will simply need to check a box on your tax return to indicate that you and your dependents had qualifying coverage for each month of 2014.

IRS.gov has up-to-date information that can help you right away. This includes easy-to-use tools to help answer tax questions, such as the Interactive Tax Assistant or the IRS Tax Map, each designed to help find answers to tax questions quickly and easily. You can also enter your topic or question in the search box on IRS.gov.

For more information about the premium tax credit, download Publication 5187, The Health Care Law: What’s New for Individuals & Families, or visit IRS.gov/aca. For more information about the Marketplace, visit HealthCare.gov or your state Marketplace website.

Facts about the Individual Shared Responsibility provision for individuals and families

Almost everyone will need to do something new when they file their tax return this year.

The Individual Shared Responsibility provision, which is an important part of the Affordable Care Act, calls for taxpayers to have qualifying health care coverage, qualify for a health coverage exemption or make a payment.

Reporting health care coverage

Qualifying coverage — also called minimum essential coverage — includes most employer-sponsored coverage, coverage through most government-sponsored programs like Medicare, Medicaid and CHIP, and coverage purchased through the Health Insurance Marketplace.

If you and everyone else on your tax return had qualifying health care coverage, you will simply check a box to report that coverage when filing your return in 2015. For each month in 2014 that anyone on your return does not have qualifying health care coverage or qualify for a health coverage exemption, you will need to make an individual shared responsibility payment.

Everyone on your return needs to maintain their qualifying health care coverage in 2015.

Claiming a health coverage exemption

You may qualify for a health coverage exemption if you meet one of the following:

• You did not have access to coverage that is considered affordable because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,

• You had a gap without coverage of less than three months, or

• You qualify for one of several other exemptions, including having a hardship that prevented you from obtaining coverage or you were a member of a group explicitly exempt from the health coverage requirement.

How you obtain a health coverage exemption depends upon the type of exemption. You must apply for some exemptions through the Marketplace in the area where you live. Other exemptions are claimed only when filing an income tax return. Finally, some exemptions may be granted by the Marketplace or claimed when filing a tax return.

Unless you must obtain your health coverage exemption through the Marketplace, you can claim the exemption on your 2014 income tax return filed in 2015. You will use Form 8965, Health Coverage Exemptions, to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.

Making an Individual Shared Responsibility payment

If anyone on your tax return does not have qualifying health care coverage for each month of the year and does not qualify for an exemption, you must make an individual shared responsibility payment when filing your federal income tax return in 2015.

In general, the annual payment amount is the greater of:

• One percent of your household income above the filing threshold for your filing status (e.g., unmarried, married filing jointly, etc.), or

• $95 per person without coverage or an exemption ($47.50 per individual under age 18), but limited to a family maximum of $285.

You will owe 1/12 of the annual payment for each month you or another person on your tax return doesn’t have either qualifying health care coverage or a coverage exemption. Your individual shared responsibility payment cannot exceed the national average premium for a bronze-level health plan available through the Marketplace which, for 2014, is $204 per month per person.

The instructions for Form 8965 provide the information you will use to calculate the payment that will be reported on your federal income tax return.

You can electronically file Form 8965. Filing electronically is the best way to file a complete and accurate return. By electronically filing your tax return, many common errors may be avoided or corrected by the computer software. Depending on your income, you may even qualify to e-file for free by using Free File tax software.

IRS.gov has up-to-date information that can help you right away. This includes easy-to-use tools to help answer tax questions, such as, the Interactive Tax Assistant or the IRS Tax Map, each designed to help find answers to tax questions quickly and easily.

More information about the Individual Shared Responsibility provision can be found in Publication 5187, The Health Care Law: What’s New for Individuals & Families or at IRS.gov/aca.