Saturday, June 10, 2017

Scams to be Aware Of

This information may not be new to many readers.  We are all being constantly bombarded with phishing emails, fraudulent phone calls, and junk mail from irreputable "businesses."  I think it is appropriate to share such experiences to promote our increasing awareness to these threats.  Listed here are some of these threats that we are aware of.  We can all serve a great public purpose by reporting these types of threats.

Phony Call from IRS (or State Tax Representative)

You answer a call or get a voice mail from someone identifying themself as being with IRS with a message that you owe taxes and need to call them at a number they leave.

IRS does not call taxpayers by phone to discuss their taxes.  If IRS has a problem with your account, they will only notify you by US mail at your last known address on file with them.

If you should want to report such activity, you can go to a special IRS website to enter the details. The address is https://www.irs.gov/uac/report-phishing.

These calls are just rampant.


New IRS Scam related to EFTPS Payments (this is the report from IRS)

WASHINGTON – The Internal Revenue Service today warned people to beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details.

In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS office until after the tax payment is made.

“This is a new twist to an old scam,” said IRS Commissioner John Koskinen. “Just because tax season is over, scams and schemes do not take the summer off. People should stay vigilant against IRS impersonation scams. People should remember that the first contact they receive from IRS will not be through a random, threatening phone call.”

EFTPS is an automated system for paying federal taxes electronically using the Internet or by phone using the EFTPS Voice Response System. EFTPS is offered free by the U.S. Department of Treasury and does not require the purchase of a prepaid debit card. Since EFTPS is an automated system, taxpayers won’t receive a call from the IRS. In addition, taxpayers have several options for paying a real tax bill and are not required to use a specific one.

Tell Tale Signs of a Scam:
The IRS (and its authorized private collection agencies) will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
• 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 the taxpayer the opportunity to question or appeal the amount owed.
• Ask for credit or debit card numbers over the phone.
For anyone who doesn’t owe taxes and has no reason to think they do:
• Do not give out any information. Hang up immediately.
• Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
• Report it to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Please add "IRS Telephone Scam" in the notes.
For anyone who owes tax or thinks they do:
• View your tax account information online at IRS.gov to see the actual amount you owe. You can then also review your payment options.
• Call the number on the billing notice, or
• Call the IRS at 800-829-1040. IRS workers can help.
The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov. Additional information about tax scams is available on IRS social media sites, including YouTube videos.


Phony Call from "Microsoft" or "Technical Support"

I have received calls on my landline at home and also on my cellphone from individuals claiming to be technical support with Microsoft who want to help me with my computer.  I do not have personal experience or knowledge about what would happen if you accept a call like this, but presumably they will ask to take control of your computer or get information from you that will enable them to hack your computer.

I have been able to contact Microsoft by phone before, but it was very difficult.  Just try and you will see.  You just should not answer a call like this unless you have talked to them first and are expecting a return call.


Other Computer Scams - The Scary Page that Won't Shut Down

This one is new to me and I do have personal experience.  You know, sometimes you do a Google search and just wind up finding something that you wish you hadn't.  I recently did a Google search and thought I had found some useful information.  When I tried to print the page, a new window popped up and there was a loud recorded message which said something like this:

"This is a message from Microsoft...your computer has been infected with the (forgot the word) Virus.  Call the number on your screen immediately to have the virus removed...if you shut down this page before the virus is removed we will have to erase your computer to prevent damage to our network."

That will be enough to get your heart racing.  Then you try to shut the page down to prevent anyone else in the office from hearing this repeated message and the page won't shut down.  Then you start sweating.

Then you look at the address bar at the top of the page and you see that this is not a Microsoft site reference. And you ask yourself, how in the Harry Potter did my computer notify Microsoft that I had a virus?

Finally, you start the task manager and shut the page down.  Suddenly things are normal again, but then you have to take time to check your antivirus software to see that it is working and you have to scan your computer to make sure you don't have a problem.

The bottom line is this.  You can't always trust a site that may appear to be innocuous at first glance. There may be dangers lurking.

Phone Call from the Sheriff's Office (Jury Duty Scam)

This one has made it's way around the area lately and we also have a personal experience with this. You receive a phone call from someone who identifies themself as a Deputy.  They say they have a warrant for your arrest for failure to appear for jury duty.  The person says that you need to pay a fine to avoid being arrested immediately.  The caller will reference a judge's name that you may be familiar with from local newspaper articles.

This scam involves how they want you to pay the fee.  They will ask you to buy a prepaid card at WalMart or the drug store.  They will try to keep you on the line as long as possible.  They will give you a cell number to call when you are ready to provide the number off the prepaid card.  The number will have a recorded voice message to answer as the Sheriff's Office and it will ask you to leave your number.  They will return your call and try to get you to give them the card information.

The local authorities will be aware of this scam and probably are working a case on this already.

Another Phone Scam

The caller may call you by name, but not necessarily.  They ask, "Can you hear me OK?" or "Is this (your name)?"  The caller is trying to get you to say "Yes."  What I understand is that they record the call and use the recording as an excuse to add charges to the telephone bill for services you didn't ask for.  I believe this scam originated after the break-up of AT&T when long distance service was opened up to a host of new players.  This scam was used to change your long distance carrier.

The best way to avoid this is to remember not to say "Yes."  Instead, say "Who's calling?" at least until you know who you are talking to.


Nigerian former Government Official or Foreign Lottery Winner

This scam has been around in various forms for at least a decade.  An email notifies you that there is money available from some weird source like confiscated government funds and the sender needs your assistance to get the money into American accounts.  Most everyone has heard of this and knows to avoid this, but the form of the scam has evolved to trap more victims.  You just have to know this will end bad.

Letter Regarding Your Corporate Registration

Junk mail is quite often disguised as being sent by official government offices when the originator is really a shady business operation.  The Virginia State Corporation Commission has a warning posted to its site about this type of scam.  The mail appears to be from the government and has some sort of fee to be paid.  The graphics on the envelope are really what sells this scam.  It does appear to be somewhat official.


Problem with your Credit Account - How You Can Help Report Scams

I get emails fairly regularly telling me there is some problem with my account information on my USAA account.  If I had a USAA account, this one might have gotten more attention from me.

Many banks and internet service providers are eager to stop such scams and they need our help.  A very common way to help fight this type of crime is to forward suspicious emails to your internet service provider or to the institution that is being ghosted.  They are especially interested in fighting this activity if their logos or trademark images are being used to perpetrate the crime.  Most have an easy email address you can use to report these activities.  AOL asks that you forward suspicious emails to abuse@aol.com.

I have also used this abuse address at banks and other institutions successfully.  Just be sure not to enable or click on any links in the message before you forward it.


New Email Scam Directed at Office 365 Users

Just received today, July 14, 2017, an email purporting to be from Microsoft Office 365 notifying me that I have an important document that has been sent to me.  The return address includes the domain name important-document.com.  This is obviously a scam.  I was able to find the originator of this message by looking up the domain name on Godaddy.com and actually found information on the originator of the message as someone in Panama City, Panama.  Godaddy has one of the abuse@godaddy.com  reporting mechanisms.  This has also been reported to abuse@microsoft.com.  Hope somebody can shut this down.










Wednesday, July 1, 2015

When the Punishment Does Not Fit

Small employers beware.  The Affordable Care Act has bite.  We have all heard of the mandate on large employers to provide health insurance for their employees or face some fearsome penalties, however small employers could also find themselves in the crosshairs for maintaining certain types of health plans which have been outlawed by the Affordable Care Act.

Rather than set up group health insurance plans, some small employers have traditionally had the option of a medical reimbursement plan which could be used to reimburse employees for the health insurance premiums they incurred on their individual health policies.  Such medical reimbursement plans have not been forbidden per se, but the reimbursement of individual health insurance premiums by such plans has been forbidden.  

An arrangement whereby the employer reimburses the employee for individual health insurance premiums is referred to as an "employer payment plan."  Whether a particular brand of health plan is subject to the market reform provisions of the Affordable Care Act depends on whether the plan meets the definition of a "group health plan."  IRS has ruled that the employer payment plans are indeed group health plans, and thus are subject to market reforms.  The why and how of the conflict between the market reforms and such employer payment plans is explained, but it takes a familiarity with the jargon of the legislation that frankly I don't possess.  (Something to do with integration.)  

The Penalty

If an employer runs afoul of this prohibition, the penalty amounts to $ 100 per day per employee for every day the employer maintains such a plan, beginning on July 1, 2015.  Hence the timing of this post.  

But that might not be the end of it as there could also be ERISA to deal with and I won't even go there. 

Limited Relief

There is limited relief from this prohibition on reimbursing individual health insurance premiums. Market reforms do not have to be satisfied by such small employers if the reimbursement arrangement covers only a single employee on the first day of the plan year, or if the arrangement is maintained by an S corporation for the benefit of a 2% shareholder-employee. 

These limited relief provisions are set to extend until the end of 2015.  By that time, IRS expects to have considered whether additional guidance is needed.  (You think?)

The Takeaway

The Affordable Care Act does a lot of good for some people.  Everybody should be able to buy affordable health insurance.  The provisions which mandate individual coverage are intended to stop people without coverage from getting free healthcare in hospital emergency rooms where they can't be turned away and run up the cost of health insurance for everybody else.  I am for that. 

However, some of the provisions of the Act do not make sense and for that reason, maybe it tries to do too much or tries to do it in the wrong way.  This penalty provision is a real stinker.  

Friday, April 24, 2015

When Do It Yourself is Not a Good Idea (Incentive Stock Options)

I am like a lot of people in that I sometimes overreach my abilities when it comes to do it yourself.  Like that time I tried to rehab the bathroom walls and actually ended up worse off than before.  It's like Dirty Harry said, "a man's just got to know his limitations."  This year IRS revised the instructions for a reporting form used by stockbrokers in connection with stock trades, etc., form 1099-B.  The change makes for a confusing situation with regard to exercise of incentive stock options, which is a form of bonus awarded to usually fairly high paid executives.  Now many of these individuals probably already have accountants, but some who are particularly bold and self assured will no doubt try to do their own taxes with Turbo Tax, Tax Cut, or whatever the new thing is.  I expect to meet some of these guys this summer when they figure out they have overpaid on their taxes. 

Doing your taxes with Turbo Tax may be just fine for a great many people and so I don't discourage that for those where it fits, and I will tell people that to my own disadvantage.  However, if you have doubts, don't do it yourself.  With the exercise of incentive stock options, you have a couple of choices.  You can pay the exercise price yourself and buy the stock at a bargain price.  You hold the stock for over a year and you get capital gains treatment, which is favorable to you.  However, if you do as a great many people do and have the stock sold immediately upon exercise so that you don't have to come up with any cash, then the gain is treated as compensation and is included with your salary on your W-2.  The gain is taxed as ordinary income rather than capital gains, and the company gets a deduction no less.  Now here's where it gets interesting. 

The IRS instructed the brokers that they have to report the exercise price as the cost basis in the stock rather than the amount included in your W-2, which is the correct number.  Trust me, this is sneaky stuff.  If you use Turbo Tax and enter the numbers right off the official IRS approved forms, you will wind up reporting the same gain twice on your taxes.  I said it was sneaky, didn't I?

There is a proper way to report this gain, and IRS has provided the instructions to do this, but you have to read very carefully to find the instructions, and then they are written in IRSspeak which is a language in and of itself.  Now I guess here is where I could provide a line or two on how it should be done, that would save the self-assured high paid executive a lot of grief, and it would be the nice thing to do, but noooooooooooo.  

Sometimes it's just better to hire the pro. 



Saturday, October 1, 2011

Strange Things Are Happ'nin' to Me (or What in The Heck is Going on With IRS)

My grandson Andrew loves to watch the Disney classic "Toy Story." I really enjoy watching it with him and re-listening to this Randy Newman song. Recently some strange things have gone on with IRS that are a concern to me. On the other hand, some good things are happening with IRS and that is worth a comment also.

IRS likes to audit smaller returns using computer technology. That is certainly nothing new. However, these applications are becoming more and more prolific and error prone. The computer model is implicitly based on the presumption that the information returns IRS tries to match up to tax returns are accurately prepared. If the W-2s, 1099s, etc. have been prepared contrary to the way IRS expects them to be prepared, the computer will not be able to match them up with your tax return and you will receive an annoying letter most likely accompanied by an assessment that will make you crap your pants.

I recently had a small corporate client with a problem such as this. The IRS computers had adjusted the return and disallowed a special deduction we had claimed. The adjustment wiped out a claim for refund we had claimed. Not only did IRS fail to notify the taxpayer of the adjustment, the IRS had calculated a small balance due on the return and inexplicably marked the account paid in full and that was that. We will be working on this to try to correct and I don't know what to really expect yet.

The good news is that there is a way to monitor what IRS is doing with your account so that situations like this can be investigated and corrected without hours of time on the telephone lines. IRS has a service for professionals it calls "E-services." If your tax professional is not registered with E-services, they should be. By filing a Power of Attorney your tax representative can access your account through E-services and see the status of your account, a transcript of your return, and all wage and income returns (W-2s, 1099s, K-1s, etc.) filed by payors reporting income to IRS under your SSN.

E-services is a great tool for the tax preparer to have in the toolbox because you can find out things without speaking directly with anyone at IRS. You are communicating directly with the computer that causes the problems, so to speak.

This recommendation may be helpful to those who sell on E-Bay. Why, you ask and rightly so. The answer is in new requirements this year that have been imposed on PSEs (Payment Settlement Entities) such as Pay-Pal. The PSEs will be required to report to IRS the total of all payments settled for each customer for the year. So if you sell on E-Bay and have Pay-Pal settle your payments, beware. IRS will know how much you sold on E-Bay. If the total looks like you may be running a business, you should expect IRS to try to match up this total with your tax return.

But it doesn't stop there. There are many such PSEs other than Pay-Pal. Anyone who processes credit card payments and settles the payments for their customers will be required to report them. This might include banks, savings and loans, and other merchant services providers. Most any business will likely have some of this.

The payments will be reported on Form 1099-K. The instructions for this form are not very helpful and so there will be many who try to fill this thing out without having a clue about what they are supposed to be reporting.

I'm really not looking forward to next summer. That's when the IRS computers will be sending out letters.

Sunday, February 27, 2011

Why the Fair Tax Won't Work

Lots of people are convinced that we need to migrate from the income/payroll-based tax system that we have today to a consumption-based tax system. The incentives to do so make some sense in that the consumption-based tax would collect taxes from individuals who otherwise are not paying taxes now. The consumption-based tax is therefore considered a regressive system because tax rates would go down with an increase in the tax base. The tax base would expand to include individuals who make too little money to pay income taxes and it would also include individuals who are otherwise getting some big tax breaks. Everybody has to eat, so everybody would pay tax on money they spend to survive.

The consumption-based system could be designed to be a "fair" tax, but so could the one we have now. I think the name is a complete misnomer in that respect. But I believe the concept is flawed in another way. The income/payroll based system has small and large businesses collecting taxes from their employees and remitting it to the government. There is a reporting system for both income (1099s) and for wages paid (W-2s). If an employer fails to provide an employee with a W-2, the employee can't file his taxes and get his refund and he will squall to IRS. It happens. Likewise if a sole proprietor fails to file his taxes, the 1099s will catch up with him and the IRS will come calling. The system we have is sort of designed to audit itself. IRS would rather audit through computers tracking these forms than calling people to come in with their shoeboxes of receipts.

So if we transition to a consumption-based tax system, small and large businesses will be collecting taxes not from the employees, but from the customers. We have some of that going on with state sales tax and some excise taxes, but not on the scale we would need with a consumption tax. Small businesses can get into financial trouble and fail to remit the sales tax. There is no reporting system to alert the government when this is happening. The government may find that a business has stopped sending the sales tax reports and payments in, or that the amounts have fallen off so that they don't appear to be sufficient, but then the government needs to send out an auditor to check it out. They really don't have a way to know for sure if there is anything broken without sending out a warm body.

As an aside, you may be assured that with the downturn in the economy and state coffers getting low, there is a lot more sales tax audit activity. We are hearing about some aggressive tactics on the part of state governments to replace lost revenues through audit assessment.

My point is that the automated audit system employed by IRS would need to be replaced by a great number of sales tax auditors and tax collectors. And these would be the old style IRS tax collectors with guns on their hips. I don't picture this as being the type of system that fair tax advocates have in mind.

Friday, February 18, 2011

How to get a good credit score.

Point One. Oddly enough, to have a good credit score, you have to use credit. If you live a cash only existence, you will not even generate a credit score at all. And without a credit score, you can't get credit. Catch 22 is already taken, this is Catch 44. But this doesn't mean you have to owe anybody. You just have to use credit accounts.

To illustrate, my parents shopped at Leggett for many, many years. They had a Leggett account based on my father's credit. My mother could charge on the account, but it was based on his credit, she didn't work outside the home. When my father passed, the Leggett account was closed by the company. My mother did not have a credit score. She was pissed, and still is.

So you have to have credit accounts with somebody. You can have a Sears card or a JC Penney, but you should also have one of the major credit cards. You wouldn't have to use it much and you could pay it off monthly, just have it and use it responsibly.

Point Two. Don't have too many accounts. This is sort of common sense, but the reason may not be. The more accounts you have, the more inquiries there are into your credit rating. And the more inquiries there are into your credit rating, the lower your score.

Point Three. Pay on time and pay more than the minimum payment. If you want to pay over time, pay at least double the minimum payment and have a plan on how long it will take you to pay the balance off. If the plan is longer than two to three years, you should scale back.

Point Four. Don't use more than 70% of your available credit for each account. This is not really a magic number, but I have heard it quoted as a measure that is used in credit analysis. I have also found others who suggest using even less of your available credit, even down to 10%. The more of your available credit you use, the more irresponsible you appear.

Point Five. Monitor your credit report. There can be bad information in it. You can ask for corrections to be made. You may have to be assertive about it. Know your rights. (The Clash were on this years ago.) If there is negative information in your credit report that is over seven years old, you can have it removed.

If one of your accounts reports a late payment and you can prove it was timely, you can have this corrected. My thinking is that this would be rare, but it is possible.

I have known cases where the same information was duplicated in a credit report. If your mortgage is reported twice, that is a major problem, but it is among the easiest to resolve. Guano happens.

Monday, August 23, 2010

Identity Theft: What to Do

You mean you didn't get a $ 500 tatoo in L.A. this morning?

You've just had a nice lunch and then your waitress informs you that your credit card was denied and you know your account was current the last time you checked. Or... you are receiving phone calls from companies you don't normally do business with. Alarms should be going off. Somebody has been trying to live off your credit. There is a lot of this going on these days. What to do? Call your creditors, call the state police, call your friends, call you mom, call freecreditreport.com! Fortunately, credit card companies are very proactive on this and if your credit card was denied they are likely already on the case. They suspend charges when they see suspicious activity.


You still need to call them and work on this yourself, however, because the fraud units of the credit card companies have a lot of cases to work and you may have exposure to other losses. The violator may be applying for credit elsewhere with information he has obtained on you. One recent case involved a violator who subscribed to Monster.com so that he could obtain resumes and personal information to match up with accounts he had stolen. So beware how much information you share on Monster.com and other web vehicles, ie. Facebook, My Space, etc. Also, get a copy of your credit report and check it out. If the violator has applied for credit in your name, you can have the credit reporting agency remove that from your record. The number on inquiries into your credit history can be a factor in your credit rating. Inquiries caused by fraudulent activity are required to be removed upon your request.

Calling the state police is important for a couple of reasons. First of all, hopefully it could lead to the apprehension of the violator and the removal of a threat to the security of other accounts. Secondly, the state police can be very helpful to you in substantiating your efforts to correct your credit record and any other damage caused by the violator. A client of mine once found that his identity had been stolen through correspondence from IRS. The IRS was dunning him for unpaid taxes which resulted from a W-2 omitted from his return. Upon further investigation, my client found that the identity thief had actually worked a job using my client's identity. The state police investigation was helpful in the effort to substantiate my client's story and help him convince IRS that he did not owe the taxes. The state police investigation was also helpful in the effort to close unwanted credit accounts the perpetrator had established.

How does this happen? There are a number of possibilities. The number of unsecure home wireless networks in this country is incalculable. Anyone within the range of your unprotected router can a) get internet service for free, 2) use bandwith allocated to your house thereby slowing down your usage, and c) possibly send malicious e-mails or other attacks which would for all intents and purposes look like they originate with you. These are undesirable results, but consider the even more undesirable exposure of your private internet usernames and passwords to theft by the interloper. Secure your home network with an encrypted password and don't use public computers for your personal business transactions.

Other possibilities for leaks of your personal identity to criminals include unscrupulous use of your information by employees or others with access to the records on the creditor's side of the transaction. Not much you can do about those risks. That's the job of law enforcement.

By working with the authorities and your creditors to do what you can to track down these deadbeats, you will help to make the internet safe for the rest of us.