Tuesday, June 27, 2017
There’s a new tax scam on the rise that is being reported across the country. Fraudsters are getting extremely creative and will stop at nothing to fool the public into getting what they want: your money. In these new scams, criminals are calling taxpayers over the phone and demanding they make an immediate payment via prepaid debit card, claiming it’s linked to the EFTPS (Electronic Federal Tax Payer System). The person will claim to be from the IRS and insist that they have already sent two certified letters that have been returned as undeliverable. They threaten arrest if they do not pay immediately. The victim is also warned not to contact their tax preparer, an attorney, or the local IRS office until after the payment is made.
We know, reading this sounds so bogus but remember, lots of people fall for scams. We wrote about this recently: Would You Take the Bait? Why Phishing Scams Should Concern You.
The common denominator for tax related scams is the instruction to make a payment, usually to a debit card.
According to IRS Commissioner John Koskinen, “Scams and schemes don’t take the summer off.” It’s important to stay vigilant and to keep your clients in the loop about the latest scams. That’s why we created the Tax Scam Roundup, a list of scams as they come up (we’ll be adding this recent one to the list). Check it out here: Tax Scam Roundup: Know What You’re Up Against.
Here are some facts to share with your clients:
While the EFTPS is a system for paying federal taxes, it does not require the purchase of a prepaid debit card. The system is automated and taxpayers will never receive a call from the IRS about it.
Making payments electronically is risky. If you make a payment to the IRS by mail, make sure to verify the IRS address in Washington, DC and make the check payable to “Internal Revenue Service” (not “IRS”). A check issued to IRS might be changed to a different name, such as MRS MARY JONES.
The IRS will never angrily demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
For more on protecting yourself and clients from tax scams, check out this post: Protect Yourself and Clients from Cybercrime.
Monday, June 26, 2017
Sunday, June 25, 2017
On June 24, 2016, the House Republicans released their "A Better Way" blueprint for tax reform. Obviously as part of an election strategy. On November 9, 2016, with Republican victories all around, I thought there would be fast track activity to draft legislative language to be released early in the 115th Congress. We haven't seen any legislative language yet although I suspect some exists.
The details of the plan can be found in the full report of the Republicans and a July 2016 article I have on it. The blueprint seems to have hit a few roadblocks, most notably the tax on imports. Note that this is not a tariff. Instead, imports are taxed by not allowing a deduction for them. Likewise, exports are tax-free by removing export revenue from the tax base. The goal is to make the business tax a consumption tax that can be border-adjustable (per the report).
Many taxpayers are not in favor of the import treatment, most notably retailers with lots of imports, as well as oil companies (and others). For example, see the National Retail Federation's website on "BAT is a Bad Tax." [BAT = Border Adjustable Tax]
The import tax though generates a lot of revenue to help pay for lowering the corporate tax from 35% to 20% and the maximum tax on passthrough business income from 39.6% to 25%. So, it is an important part of tax reform.
The blueprint includes several simplifications and several open questions to be resolved. Drafting legislative language is difficult as changes have effects on several other parts of the law, transition rules must be addressed, and there were several questions left open in the report.
Meanwhile, it it not identical to President Trump's plan and the Senate doesn't yet have a formal plan. However, this past week, Senate Finance Committee Chairman Hatch formally asked for suggestions - due by July 17.
Also, on June 20, Speaker Ryan delivered a speech on tax reform to the National Association of Manufacturers. He would like to see tax reform by the end of 2017 [CNBC, "Speaker Paul Ryan tries to save 'crown jewel' of GOP agenda: Tax reform," 6/20/17.]
There are additional agenda items for Congress and President Trump for this year, including work on the Affordable Care Act, passing a budget, and dealing with the debt ceiling.
What do you think? Will we see tax reform by the end of the year?