Compass Tax Group - Blog

New Scams Target Natural Disaster Relief

9/19/2018

It's a wonderful reminder of how gracious people can be in a world so bogged down with negativity; thousands of people show their generosity when disasters like Hurricane Florence strike. The effort to give and support victims of the hurricane is amazing, but it also creates a breeding ground for scammers. The IRS is now warning of fraudulent schemes from telephone calls, social media, e-mails, or even in person contact. According to the IRS, some of the tactics they use are:

Impersonating charities to get money or private information from well-intentioned taxpayers.
Creating bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information.
Claiming to work for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.
Operating bogus charities to solicit money or financial information by telephone or email.

In IRS Newswire issue IR-2018-188, the IRS explains how you can help legitimately:

Help for disaster victims
Comprehensive information on disaster-related tax issues, including provisions for tax relief, can be found on the disaster relief page on IRS.gov. In the case of a federally declared disaster, affected taxpayers may also call the IRS Special Services Help Line, 866-562-5227, with disaster-related tax questions. Details on available relief can be found on the disaster relief page on IRS.gov.

Donate to real charities
To help taxpayers donate to legitimate charities, the IRS website, IRS.gov, has a search feature, Tax Exempt Organization Search, that helps users find or verify qualified charities. Donations to these charities may be tax-deductible.

Contribute by check or credit card. Never give or send cash.
Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.” More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”

Small Business Week Tax Information Webcasts

4/26/2018

The IRS will be hosting daily webcasts to help small business owners with common tax problems and situations. They announced today what each topic will be on and it is easy to register for a webcast that could help to save you money and trouble. Take a look at what the IRS is offering (below) and follow the links to register.

April 30 – Can I Deduct This?
The discussion will cover the most common tax deductions for entrepreneurs. This includes the requirements for deducting auto expenses, recordkeeping requirements for deducting business travel expenses and the basics of the home office deduction. Speakers will also share valuable IRS resources to help keep businesses “tax healthy.”
To register for a webcast on April 30, go to:

May 1 – Employee vs. Independent Contractor
This presentation will help explain the difference between a common-law employee and an independent contractor, a situation frequently encountered by small businesses. The discussion will include the categories affecting these statuses, including: behavioral control; financial control and relationship of the parties. Speakers will also identify valuable on-line resources to help properly classify workers.
To register for a webcast on May 1, go to:

May 2 – Pay Now? Pay Later? Can’t Pay? (Payment options)
This webcast will discuss IRS payment options. Learn about paperless options to pay business and payroll taxes, how to set up an installment agreement at IRS.gov and how to determine eligibility for an Offer in Compromise.
To register for a webcast on May 2, go to:

May 3 – Small Business Resources
Learn how to find information quickly using the IRS Small Business and Self-Employed Tax Center. Examples will include how to determine the need for an Employer Identification Number (EIN) and best resources specifically for small businesses on the Online Learning and Educational Resource.
To register for a webcast on May 3, go to:

May 4 – Paycheck Checkup
The Tax Cuts and Jobs Act of 2017 could affect how much tax someone should have their employer withhold from their paycheck. Speakers will discuss who should perform a Paycheck Checkup. Taking a few minutes now to make sure people have the right amount of tax taken out of their paychecks for their personal situation may prevent an unexpected surprise at tax time in early 2019.
To register for a webcast on May 4, go to:

Continuing education credit will not be offered for these webcasts. Please email questions about these webcasts to: SBSE.SL.Web.Conference.Team@irs.gov

"IRS Announces Small Business Week Webcasts." IRS Newswire. April 26, 2018. Retrieved from: https://.www.irs.gov/newsroom/irs-announces-2018-national-small-business-week-webcasts

IRS Phone Scams - Beware of New Angles

4/25/2018

Phone scammers are now trying new tactics in order to appear more legitimate. Many scammers are now using computers to generate a phone number that appears to be linked to the IRS. Anyone who questions whether the call is legitimate will be guided by them to the IRS.gov website where they are told to look up the number they called from in order to verify that they are calling from the IRS.

Be careful, though. The calls may appear to be coming from an IRS phone number, but they are not. The IRS warns people to keep in mind the following information:

The IRS does not:

Demand that you use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for your debit or credit card numbers over the phone. If you owe taxes, make payments to the United States Treasury or review IRS.gov/payments for IRS online options.
Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. Generally, the IRS will first mail you a bill if you owe any taxes. You should also be advised of your rights as a taxpayer.
Threaten to bring in local police, immigration officers or other law enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Phone Scam.”

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"IRS, Security Summit Partners warn of new twist on phone scam; crooks direct taxpayers to IRS.gov to "verify" calls." IRS Newswire. April 24, 2018. Retrieved from: https://www.irs.gov/newsroom/irs-security-summit-partners-warn-of-new-twist-on-phone-scam-crooks-direct-taxpayers-to-irsgov-to-verify-calls.

Deadline to File Personal Taxes or Extension

4/18/2018

Today is the deadline to file IRS forms 1040 for personal income taxes, or an extension*. The IRS extended the deadline to April 18th (instead of the 17th) due to system issues that arose on the 17th. So, if you worried that you missed the initial deadline to file, don't worry - its not too late. You have until midnight tonight, April 18, to submit your taxes without penalty.

*Please remember that filing an extension to file is not an extension to pay. You must pay all estimated taxes owed by the filing deadline to avoid failure to pay penalties.

Extensions for Victims of Hurricane Matthew

10/11/2016

The IRS has announced filing and payment extensions for those affected by Hurricane Matthew. This is currently mainly in effect for Residents of North Carolina, but is expected to extend to other affected areas soon. At this time, North Carolina storm victims that have filed extensions, or have payments that would have been due after October 4, 2016, will have until March 15, 2017 to file and/or pay anything that was due during this timeframe. Many business tax deposit and filing dates are affected by this ruling as well. Click here to read the full issue of the IRS Newswire explaining the details.

Amy Lee, EA

IRS to Begin Utilizing Private Collection Agencies

9/26/2016

The IRS has announced its plans to begin utilizing private collection agencies to assist in collecting on overdue federal tax balances. The new program has been authorized by a law enacted by Congress in December of 2015. The IRS states that taxpayer rights will still be protected and accounts being sent to these agencies will receive written notice in advance. The four contractors the IRS has selected are:

CBE Group, 1309 Technology Pkwy, Cedar Falls, IA 50613
Conserve, 200 CrossKeys Office park, Fairport, NY 14450
Performant, 333 N Canyons Pkwy, Livermore, CA 94551
Pioneer, 325 Daniel Zenker Dr., Horseheads, NY 14845

These private contractors will identify themselves as being contracted by the IRS to collect the taxes. These companies must still abide by the Fair Debt Collection Practices Act and again, respect taxpayer rights.

A large concern about this is that with rampant phone scams, one may be wary of receiving calls from an agency attempting to collect a tax debt. The IRS has stated that they will do everything possible to help avoid confusion.

Remember that one of the taxpayer rights is your right to a representative. If you are confused about your tax account and/or the representatives contacting you, it may benefit you to hire professional representation. Please call Compass Tax Group for a free consultation to see how we can help at 720-420-7996.

Amy Lee, EA

IRS Notice E-mail Scam

9/22/2016

The IRS has just announced a new scam that involves e-mails with falsified tax bill attachments. These scams should be easy to spot because the IRS will never send you a statement via e-mail. If the IRS does send you a tax bill, it will always be via mail. Taxpayers or tax professionals who receive this scam email should forward it to phishing@irs.gov and then delete it from their email account.

IRS Newswire Issue Number IR-2016-123 provides further information on this matter stating:

Generally, the scam involves an email that includes the fake CP2000 as an attachment. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

The CP2000 is a notice commonly mailed to taxpayers through the United States Postal Service. It is never sent as part of an email to taxpayers. The indicators are:

These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by email or through social media platforms;
The CP 2000 notices appear to be issued from an Austin, Texas, address;
The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage;
The payment voucher lists the letter number as 105C.

The fraudulent CP2000 notice included a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the email itself.

IRS impersonation scams take many forms: threatening telephone calls, phishing emails and demanding letters. Learn more at Reporting Phishing and Online Scams.

Let's Demystify Tax Resolution Company Fee Policies

9/21/2016

Anyone looking to hire a tax resolution firm for help is going to be looking at price and fee structure when determining who to hire. I’m hoping to shed some light on the common practices within our industry. You may be talking to multiple people, all who tell you to, “Watch out for…”, but what should you really be looking for?

First, let’s start with the most common practice in the industry: hourly billing against the fee or retainer paid. Before hiring anyone, you will be asked to sign a service agreement. That agreement will most likely outline an hourly billing rate for the team handling your case. They will be asked by the firm to bill against the fee you paid anytime they do any kind of work on your case. This can range from opening mail, leaving messages, sending faxes, etc. If you pay a fee of $1,750, it may take only 10 hours of work to completely use that fee. That may sound like a lot, but it can add up quick when you consider letters to be faxed, phone calls to be made, financial statements to be prepared, and the sheer volume of mail the IRS likes to send. 10 hours can be used within a very short period of time. In this circumstance, if things aren’t resolved very quickly (which, let’s face it, with the IRS is a rare circumstance), you will be asked to replenish your service fee account for the work remaining on your file.

Please know, that I have nothing inherently against hourly billing. Many view this as the fair way to work on a case since no one can know exactly what it will take to resolve a balance until they begin to get involved. A lot of times, it does take a lot more work to resolve an account than anyone can be prepared for. Everyone’s circumstances vary and I believe that the associates who work hard on your case should be compensated for their time and knowledge. However, this can be stressful from a client’s perspective when their finances are already very tight. A surprise bill from the Attorney or EA working your case who says they won’t move forward until your account is replenished can add a lot more stress to an already stressful situation.

That brings me to the second type of practice; a specific and straight forward fee for a certain job. Some call this a “flat fee." However, it is important to understand how this fee structure works. An associate will quote you a fee based on the job you are hiring them for. Many factors go into the fee quote, so it is important to be as honest with the associate you are speaking with as possible. Someone who owes $50,000 and wants an Installment Agreement may be quoted a lesser fee than someone who owes $50,000 and qualifies for an Offer in Compromise. Also, amount of liability can be a factor, so be truthful when advising your associate of the amount that you owe. If you hire a company using a straight forward fee for negotiation of an Installment Agreement on a $50,000 and you pay $3,000 for that service, that company will not bill against your fee, but will instead work until they receive a determination on their Installment Agreement proposal and negotiations, regardless of how long it takes, as long as you continue to work diligently with your firm’s team to help them move the case forward. This means you need to stay in compliance, meet deadlines, and keep in communication with the team working for you.

Please note, though, that even if you hear the term “flat fee”, it does not necessarily mean that circumstances won’t arise that can add work, and thereby require additional funding. A “flat fee” does not mean that you’ve hired them for life, for any matter that may arise for you. You wouldn’t pay a mechanic to fix your transmission and then expect them to change your oil for free. On that same note, if additional work is added for your team, you will be expected to fund them for that work. For example, if your team is working diligently towards a resolution, but you, as a client, continue to grow liability and/or miss multiple deadlines (thereby hindering their ability to resolve the account), this can be considered additional work and you will be asked for additional funds for that. This should be clearly outlined in your agreement. Another example is if you hire your team specifically to handle your IRS case work, but then you ask them to also take on State tax representation. This is added work above and beyond what was in your contact, and you will be asked for additional funding. You may hire a company for business representation, and then add personal representation down the road. That is also considered additional work. However, you will likely be quoted another straight forward service fee for the added job. That being said, as long as you maintain the terms of any agreement you have, no additional funds should be asked for to complete the specific job for which you hired that company.

Compass Tax Group has opted to use the straight forward service fee policy. Our view is that our client, who is doing everything they can to help bring their account to resolution, should not be put in more of a financial hardship by being asked for more funding simply because the job is taking longer than expected. You may have an unresponsive Revenue Officer, or your account may be in queue to be assigned to someone which can take anywhere from 30 days to 1 year. In these circumstances, we won’t ask for additional funding where someone who bills on an hourly basis probably will, simply because of the amount of time it is taking to resolve your case. Some companies who do practice hourly billing may try to sell you their services by stating that companies who sell a straight forward fee policy have hidden agendas, or will come up with ridiculous reasons to ask for additional funding. I can't speak for all companies who practice this policy, but Compass Tax Group will always be clear about what our fee covers and will only discuss additional funding if the subject of additional work has arisen (such as for the reasons outlined above).

Ultimately, it is up to you as the consumer to determine which fee policy you are more comfortable with. Are you someone who truly wants to get the job done and are willing to work hand in hand with your representative to make sure that happens? If so, you should probably opt for the straight forward service fee policy and work with a company who will not bill against that fee. Regardless, I am not saying that there aren’t good companies out there who will do good work for you that bill hourly for their time; I know they are out there. You will just want to diligently research these companies to make sure you will be getting the results you want for the fee(s) you will be paying.

Amy Lee, EA

New 2016 IRS Interest Rates

3/24/2016

The IRS will be raising their interest rates starting April 1, 2016. The new interest rates will be:

four (4) percent for overpayments [three (3) percent in the case of a corporation];
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000;
four (4) percent for underpayments; and
six (6) percent for large corporate underpayments.

As always, it's best to pay off your IRS liability as quickly as possible to limit the interest that will continue to accrue. But, if you need help getting into a manageable payment plan, we'd love to go to work for you! Call us at 720-420-7996 for a free consultation!

Relief for Kentucky Storm Victims

9/21/2015

Victims of the Kentucky storms in July may qualify for certain tax relief. Certain filing deadlines have been postponed and penalty relief may also be granted for failure to deposit taxes timely. You may also be able to request copies of older tax returns without paying the normal fee in case any of your records were lost.

Please visit http://www.irs.gov/uac/Tax-Relief-for-Victims-of-Storms-Tornadoes-Winds-Flooding-Landslides-and-Mudslides-in-Kentucky for more information.

-Amy Lee, EA

Important Contact Information

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Compass Tax Group, LLC
9769 W 119th Dr., Suite 28
Broomfield, CO 80021

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Photos used under Creative Commons from Alexandra E Rust, Damian Gadal, CarbonNYC [in SF!], GotCredit