Beware of Tax Scams!

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Did you know that con artists posing as Internal Revenue Service representatives frequently try to scam people out of their money? While this is a long-standing problem, the IRS has issued a new warning against thieves who may contact people on the phone or via email or a letter and try to trick them into divulging personal financial information, such as their Social Security or bank account numbers, or sending cash. And the scams can be tough to spot. Potential victims may see a fake caller ID that identifies the call as coming from the IRS or receive mail or email that appears to have the IRS letterhead or one like this that resembles the IRS website. The scammers typically try to intimidate victims into acting quickly—by, say, sending a payment to what they claim is an IRS address—by threatening arrest or some other consequence.

If you receive an IRS communication that seems suspicious or doesn’t make sense, please call our office. Whether you are facing a legitimate tax issue or a scam, we can help you sort through the details and determine how to respond. You can report incidents to the Treasury Inspector General for Tax Administration at 800-366-4484 or online. Remember, too, that the IRS website is www.irs.gov, so be on alert if you’re directed to another similar site that ends in .com or .net instead of .gov.

Pennsylvania plans Tax Amnesty

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Pennsylvania Department of Revenue recently announced a tax amnesty program for tax years ending 2015 and before. The program will allow delinquent taxpayers to pay tax between April 17, 2017, and June 19, 2017, without penalty and only 1/2 of the interest charges.

More than 30 taxes administered by the PA DOR are eligible for the program. Taxpayers who participated in the PA DOR amnesty program in 2010 are ineligible for this program.

If you have questions about the program, you can contact our office to determine your best course of action and eligibility.

Many Popular Tax Rules Now Permanent

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Frequent revisions in tax laws can make planning tough. Fortunately, a law passed late in 2015 changed some popular tax provisions from temporary to permanent. One is the American Opportunity Tax Credit, which provides a dollar-for-dollar credit of some qualified tuition and related expenses. Another is a deduction for college tuition. The rule that allows you to deduct state and local sales taxes is also now permanent, as is a deduction of up to $250 in unreimbursed classroom expenses for elementary and secondary school administrators and teachers. People over age 70½ who must take required minimum distributions from their IRAs can now depend on being able to use that money to make qualified charitable contributions if they choose—and avoid tax on the apportionment. These are just a few examples of the provisions that were made permanent.

What’s the status of the tax rules that have the most substantial impact on your return? And which tax-saving opportunities are you missing? We can help you answer these and any other questions you have about your tax situation. Contact our office today for personalized advice and information.

Are there any benefits to filing early?

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This article is part of our 2017 Tax Season FAQ Series – If you have a question submit it to FAQ@rmfcpallc.com, and it may become part of a future post.

There has always been a myth that folks who file earlier are less likely to be audited, or in particular, those who file an extension are more likely to be reviewed. Our experience and the data collected in various studies doesn’t show any connection in audit rate between those who file with an extension and those whose returns are in way ahead of the filing deadline. However, taxpayers must remember that filing for an extension does not extend the time to pay. Therefore an estimated calculation needs to made, and the full tax liability paid with the extension or penalties and interest will accrue.

But back to the original question, there are certainly benefits to filing early. Obviously, if you are due a refund the sooner you file, the sooner you will get your money back. But new laws have mandated that returns that include an Earned Income Credit or an Additional Child Credit will not have refunds issued until after February 15th.

The volume of returns the IRS is processing in late January and early February are not as high as the amount later in the filing season. So returns filed earlier may be completed by the IRS within a 7-10 day period, while returns filed at the peak of the season could see a processing time closer to 3-4 weeks long.

Still, there are reasons to be cautious about filing early. Despite our efforts there always seems to be at least one client who gets a corrected 1099 after submitting their return. Consequently, an amended return is often necessary to adjust for the additional information.

So there are certainly benefits to filing early, but there are also genuine concerns as well. In most cases, it depends on the taxpayer’s individual situation and their personal preference.