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Tax Preparers Beware: Cybercriminals Are Out to Get You

Cybercriminals are targeting a new group lately: tax preparers. Cybercrime has become serious business in the past few years as new, more sophisticated scams crop up. Cybercriminals have realized – why target one tax payer when you can breach an entire tax office or single tax preparer and hundreds of taxpayer identities?

Be wary of these top tax preparer scams.

Fake Insurance Tax Form Scam

The Insurance Tax Form Scam is the newest of the scams targeting tax preparers. This one is pretty complex. According to the IRS, here’s how the scam works:

“The cybercriminal, impersonating a legitimate cloud-based storage provider, entices a tax professional with a phishing email. The tax professional, thinking they are interacting with the legitimate cloud-based storage provider, provides their email credentials including username and password.”

Once they have access to your account, they steal your client’s email addresses and impersonate you by sending emails to your clients. In the email, they attach a fake IRS insurance form and request that the form be completed and returned.

The subject line and email is usually a variation of the following:

“urgent information”

Dear Life Insurance Policy Owner,

Kindly fill the form attached for your Life insurance or Annuity contract details and fax back to us for processing in order to avoid multiple (sic) tax bill (sic).

E-Services Scam

This phishing scam asks tax preparers to “sign a new e-Services user agreement.” The email will claim to be from the “e-Services Registration” and uses “Important Update about Your e-Services Account” in the subject line. It states that e-Services is rolling out a new user agreement that all users must accept. The tax preparer is directed to a fake website where they are prompted to review and accept the new agreement.

Software Scam

This scam involved impersonating popular software service providers. The subject line is everything from “Software update” to “account shutdown”. The body of the email is generally the same – the scammer wants you to “validate” or “re-authenticate” your login credentials but clicking on their phony link and entering in your username and password.

Scammers are getting very good at mirroring other company’s websites and emails. The email address, at a glance can look legitimate but if you look closer there’s usually something off about it. Maybe it’s there one letter that’s different or maybe the domain name is .net instead of .com.

Once your credentials are stolen, cybercriminals steal your client information to either file fraudulent returns or steal identities.

Taxpayer Impersonation

This scam is a two-step process. First, the tax preparer receives an email seemingly from a taxpayer looking for tax preparation services. Once you respond to the first message, a second email comes with an embedded web address or a PDF attachment that has an embedded web address. You think you’re downloading a potential client’s tax information when in reality your credentials are being stolen.

Be very careful when it comes to unsolicited emails seeking your services. Never respond to or click on a link in an unsolicited email or PDF attachment from an unknown sender.

There are just a few examples of the seemingly endless attempts at stealing taxpayer information. If you suspect a scam, be sure to contact phishing@irs.gov.

Cybersecurity Best Practices

Make cybersecurity an everyday practice by following these tips.

• Be careful of email attachments and web links.
• Use separate personal and business computers, mobile devices and accounts.
• Do not connect personal or untrusted storage devices or hardware into computers, mobile devices or networks.
• Be careful downloading software.
• Watch out when providing personal or business information.
• Watch for harmful pop-ups.
• Use strong passwords.
• Conduct online business more securely.

For more on cybersecurity in the tax industry, check out our IRS Don’t Take the Bait Series Recap. Also, be sure to follow our Tax Scam Roundup. We add to it as new scams pop-up.

 

source http://www.theincometaxschool.com/blog/tax-preparers-beware-cybercriminals-are-out-to-get-you/

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Tax Reform Issues

Speaker Ryan explaining tax reform at 10/4/17 Facebook Event,
holding the postcard form (see my comment below though)

There are a lot of uncertainties in trying to fully understand tax reform with a few pages of ideas where lots of important information is missing. Don't get me wrong, tax reform is needed as our system is too complex, inequitable, inefficient and doesn't collect all of the tax owed (leaves about $385 billion uncollected annually).

On 10/10, Speaker Ryan noted 5 ways that tax reform will save people taxes in 2018. Each seems correct, but each has uncertainty connected with it because we don't have legislative language yet or hides that the framework, despite suggestions of modernization, doesn't fully modernize our tax system. Here are his five items:

1. Bigger standard deductions - He says it will be "nearly doubled." The framework indicates, for example, that the standard deduction for a single person will be $12,000. It is $6,300 today. What he doesn't say though is that the personal and dependency exemptions go away. Today, that's $4,050 per person. While the child credit is supposed to increase and apply to more families, today, it only applies to children under age 17 while the dependency exemption can cover some children up to age 23. So, not enough details yet to indicate that any individual paying income tax today will see lower income taxes in 2018, particularly if they have a few children and lose itemized deductions that would have been larger than the new standard deduction.

2. Lower individual rates - The framework suggests rates of 12%, 25% and 35% and perhaps a higher rate for high income individuals. Today, the lowest rate is 10%.  Actually, the lowest rate today and under the plan is 0%. If someone today has income too low to pay income taxes, that should continue under the framework. These folks - about 45% of individual filers, won't see bigger paychecks. There is no talk of lowering the 15.3% payroll tax. Some of these zero bracket filers might be getting a larger refundable child credit, but they won't see that until they file their tax return. Also, we don't know where the rate brackets start and end so we don't know for sure if everyone drops income into lower rates.

3. Capped rate on small business of 25% - Leading up to the release of the framework, there was talk that this would not apply to all businesses and perhaps some personal services, such as accounting, would not get the cap. Again, depending on where the individual rates start and end, most small business owners should not be in the 35% rate because they are not today. [TaxProToday, 9/13/17]

4. Immediate write-offs for business investments - The framework suggests allowing expensing of capital investments. Ideally, this would also include intangibles and both acquisition of new and used depreciable property.  Details are missing.

5. Increased child tax credit - Apparently, this is to adjust for repeal of the dependency exemption. The dependency exemption though can apply to more than your child. Also, the current child credit covers a narrower age range than the dependency exemption.

Speaker Ryan also notes that if compliance costs go down, that is also a tax cut. I'm not sure we'll see a significant drop in compliance costs. There are still complexities such as the child tax credit and hopefully, the Earned Income Tax Credit remains. Promotion of IRS VITA sites and other low-income tax preparation clinics would help keep compliance costs down for many.

Caution - A postcard size return doesn't say anything about the complexity level of a system. We could file on postcards today if the IRS would take less information on the components of our taxable income. The postcard in the Republican blueprint of June 2016 didn't have a place to sign or a penalty of perjury statement or information about the taxpayer or where to deposit any refund.  AND, why are we modernizing our tax system to fit on a postcard rather than to use today's technology to not even have to file for most people because the system already has enough information to just sent a bill or deposit the overpaid taxes in your account or send you a secure debit card?

There is a lot of good about tax reform and it would be good to hear more about that rather than claims that don't seem completely accurate or complete.  And there is a lot of information often missing such as the effect on the deficit and debt, distribution of the tax cuts among different income levels, transition, timing, and more. Speaker Ryan's 10/10 post includes a video of him explaining the tax system and notes many good ideas, we just need to be critical listeners and watch for missing pieces.

source http://21stcenturytaxation.blogspot.com/2017/10/tax-reform-issues.html

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IRS Nationwide Tax Forum Recap

Our team had such a great time this year attending the IRS Nationwide Tax Forums! We were in Orlando, Las Vegas, Dallas, National Harbor, and San Diego meeting with tax preparers and talking about tax education.

We love meeting new people, answering questions, and reconnecting with our “Road Family” – people we see year after year. Here are some highlights from our travels.

Outstanding Connections

In San Diego, Wally Michael (the exhibit contractor) had one of his employees set up our booth for us at no charge.  We have known Wally since the IRS Tax Forums began some 25 years ago. 

Marilyn and I had a nice conversation with Tabby of CTEC, several Intuit managers, the executive director of the National Society of Tax Professionals (NSTP), and the National Society of Tax Professionals (NATP).

Larry Gray, a highly-regarded speaker for the tax forum and tax professional groups came to our booth and bought a copy of my newly released book, Guide to Start and Grow Your Tax Business. In fact, there was a lot of interest to buy or carry my new book, which was very encouraging! 

I was also excited to meet Richard Marshall, Director of Sales for Tax Slayer, our new tax software provider.  

Our team connected with Canopy, HD Vest, the president of TaxAct, Plain Language Seminars, ERO Cyber Security and the team reps from Textellent.

Common Questions

We had a lot of questions about recruiting and training your own tax preparers. That’s something we offer for tax business owners looking to train their own preparers rather than hire experienced tax preparers. [See the video below]

 

We also had a lot of questions about becoming an Enrolled Agent. We told them all about how our CTP program is a pathway to Enrolled Agent. 

Overall, we got to reconnect with partners, meet with customers, and talk to companies about potential partnerships. We also met a number of tax professionals who had never heard of ITS. As always, we had a great time at the tax forums. How about you? What were your highlights?

 

source http://www.theincometaxschool.com/blog/irs-nationwide-tax-forum-recap/

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Middle class tax relief will be major hurdle for tax reform

Who's in the middle class will determine in large part whether that group of Americans gets Republican-promised middle class tax relief.

One of the big debates about any tax reform is whether or how much it will benefit the middle class. That was a question in today's #TaxBuzzChat about the recently released Republican framework for tax reform.

First, however, we need to decide what is and who is part of the United States middle class. There are several ways to define the middle class.

Some say it is based on income. Other define it by lifestyle. Still others say middle class is a state of mind.

Those different definitions also depend on who's using the term.

Economists, think tanks, federal agencies, politicians and the media, including me and my tax blogging colleagues who participated in today's tax reform chat, all have slightly different views on who is part of the almost mythical middle class.

Middle class dead, booming, taxed: Since middle class tax benefits will depend largely on how much money a taxpayer makes, let's go with the income definition for this blog post's purposes.

We're still waiting to see what amount of earnings will fall into which of the, for now, three proposed tax brackets. But some recent U.S. government data seems to indicate that America's middle class is far from dead.

Depending on your definition of middle class and personal financial situation, you may or may not agree that the American middle-class is dead. (Photo by Donkey Hotey via Flickr)

A U.S. Census Bureau report released Sept. 12 shows that between 2015 and 2016, the country's median household income rose 3.2 percent from $57,230 to $59,039. 

This is the second consecutive annual increase in median household income.

It's also the highest income year on record, beating the previous high (when adjusted for inflation) of $58,655 in 1999.

Many middle classes: Since the median income means that half of Americans earn more and half earn less, then can we call $59,039 the middle class definition? Uh, no.

Why not? Because median incomes are different in different states and regions. What looks rich to some folks seems poor to those in other parts of the country.

Earlier this year, the Pew Research Center, which defines a middle class household income as two-thirds to double the national median, provided CNBC with data for all 50 states and Washington, D.C., for various household sizes.

That financial news outlet took that data and then broke it down state-by-state into how much money one-, three- and five-person families must earn to be considered middle class throughout the country.

Here in Texas, for example, CNBC says middle class income is:

• $23,249 to $69,745 for one person,
• $40,267 to $120,802 for a household of three and
• $51,985 to $155,954 for a five-member household.

If we still lived in Maryland, we could make a bit more and still be considered middle class:

• $26,663 to $79,987 for a one-person household,
• $46,180 to $138,541 for a household of three and
• $59,619 to $178,855 for a family of five.

Gross vs. taxable income: CNBC apparently used gross income in its median income calculations.

Since it's just me and the hubby, I shaved a few dollars off the three-person household amounts. And being a tax geek, I like to look at what's taxable income.

Based on that taxable amount under current tax laws, we're solidly middle-class.

Some in our families, however, think we're rich. So it again comes down to definitions and perceptions.

These are the kind of calculations that members of Congress and their constituents are going to have to deal with in the crafting of any substantial tax reform package. Good luck to us all!

Are you a middle-class resident of your state based on CNBC's income calculations? Do you feel like those or the correct income ranges? Or do you consider yourself middle-class even if you make more or less than the ranges shown by CNBC?

You also might find these items of interest:

• Timing is among unanswered tax rewrite questions
• Mnuchin's tax promise looks like it was made to be broken
• Congress blamed for middle class woes; Public opinion of 2012 lawmakers at new lows

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source http://www.dontmesswithtaxes.com/2017/10/middle-class-tax-relief-will-be-major-hurdle-for-tax-reform.html

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