Telephone Scams Continue

Owing taxes to the IRS can be very scary.  Scammers take advantage of your fear to separate you from your money by dishonest means.  Scammers are very good at making themselves seem real.  The can make a fake website look real, they can alter their telephone number in your caller ID to look like the caller is from IRS, often with a Washington, DC area code.

Many people have received phone calls claiming to be from the IRS, demanding payment of some kind of tax debt.   Here are some ways you can quickly spot a scam from what might be the real thing:

  • Their caller ID shows a Washington DC area code (202).  National office personnel don’t try to collect taxes – local Revenue Officers, ACS Call Sites and Service Centers work on these cases.  Often these calls show as “blocked” on caller ID.
  • They require payment instantly, especially by payment card over the telephone (IRS does not accept direct payment by credit card – credit card payments are processed by an independent 3rd party and service fees are charged to you.
  • Payment is required through an unusual method (bitcoin, bank wire, prepaid debit card, etc.)  These payment methods are difficult if not impossible to trace and/or reverse.
  • The local police are referenced – federal tax laws are not enforced by local police (although sometimes, local police might be used for support security purposes when agents expect a physically dangerous situation.)
  • They threaten to sue you – local courts do not enforce federal tax law, IRS does not need to sue you to be able to seize property for a legitimate tax debt.  The IRS can bring suit against you to reduce your debt to a judgement in the US District Court, but you would be formally served notice of such a proceeding, and you’d have known it was coming for a long time.

BUT If you’re not sure, tell them that our firm represents you in all tax matters and give them our number to call.  HANG UP.   If there’s any possibility that you really owe a tax debt, call the IRS toll free at: 1-800-829-1040 between the hours of 7AM and 7PM, Monday thru Friday.

IRS will ALWAYS make their initial contact by US Mail.  Their first contact will not be by telephone and will never be by email.  The few situations where IRS will use email with the public are always non-account related issues.

Watch for Important NEW Tax Reporting Forms

By March 31, 2016 anyone covered by qualified health care for any month during 2015 should receive a Form 1095-A; or Form 1095-B or Form 1095-C.  These forms are due by January 31, 2017 for 2016 coverage.  

By January 31, 2015 anyone who has purchased health insurance through an exchange (Obamacare) for any part of 2014, should receive a new tax reporting form in the mail, Form 1095-A.  

If you acquire health insurance from another source (e.g.: your employer; or purchase it yourself directly from the insurance company) you will NOT receive Form 1095-A.  You MAY receive either Form 1095-B or 1095-C; but these additional two forms are not mandatory for 2014 health coverage.  If you do receive one or more of these forms make sure that you bring the form(s) to your tax return preparer at the time of your appointment.

If you are supposed to receive Form 1095-A, it is VITAL to the correct preparation of your 2014 income tax return.  DO NOT LOSE THIS FORM.  Make sure you bring this form to your tax return preparer at the time of your appointment.  You may not be able to file your tax return until you have access to that form.

Remember – only those taxpayers who purchased health insurance through an exchange have any possibility of receiving or having already received a “premium tax credit.”  This credit simply does not apply to health insurance acquired through your employer or purchased directly from the insurance company.

Remember also that if you do not meet one of the exemption requirements, you may be subject to a tax penalty for not having had “minimum essential coverage” for yourself or any of your dependents during 2014.  The penalty may be as low as $8 for one single adult with low or moderate income subject to the penalty for only one month ($95 for the whole year), to as high as $2,448 per person for very high income family units.

New for 2014 taxes (and for all years into the future), if you acquired health insurance through an exchange, your tax preparer will need income information for every dependent that you claim on your tax return in order to properly compute credits and/or penalties.

Many Businesses Misunderstand Michigan Personal Property Tax Changes.

In August 2014, Michigan voters approved changes to the state’s Personal Property Tax law.  This tax applies to businesses and not to individuals.  The changes that were approved are misunderstood by many businesses.  The Michigan Personal Property Tax has NOT BEEN REPEALED.

1) an $80,000 exemption, first applicable for 2014 was made permanent, however businesses that qualify for this exemption must file the exemption affidavit every year, not later than February 10.  Failure to file the exemption affidavit timely results in the business having to pay personal property tax in July and December  based to “true cash value” on the prior December 31.

2) A new exemption for “Eligible Manufacturing Property” begins a multi-year phase-in beginning in 2016.  The rules for applying this exemption are complex and won’t be discussed here.  Businesses who are primarily involved in manufacturing will ultimately see an exemption from the personal property tax for all qualified property by 2023 – however non-exempt property remains subject to the tax.

3) for 2015 every business that does not qualify for the small taxpayer exemption ($80,001) of value – or fails to timely file for the exemption will continue to file and pay personal property taxes just as in prior years.

4) for 2016 and subsequent years, any business that does not qualify for the small taxpayer exemption and which also does not meet the rules for the new manufacturing property exemption will continue to file and pay personal property taxes just as in prior years.  Businesses that do meet the new qualified manufacturing property exclusion will begin to see some of their qualified and previously taxable property drop off of the tax rolls; more each year through 2022.

A quick example:  On December 31, 2013 a dentist’s office had total property with a (depreciated) true cash value of $70,000.  That dentist filed a small taxpayer exemption affidavit with their local assessor before February 10, 2014.  The dentist owed no personal property tax in 2014.   However, during 2014, that same dentist acquires several new chairs and equipment at a financed cost of $140,000.  As of 12/31/2014 the (depreciated) true cash value of all property is greater than $80,001 and the dentist will not qualify for the small taxpayer exemption for 2015.  The dentist must file a personal property tax return and pay personal property taxes in 2015  Beginning in 2016, the true cash value remains well above $80,001 and also does not qualify as manufacturing property. No property is exempt for 2016 or any future year, and the dentist will pay personal property taxes on the true cash value of business property determined on 12/31 of the each prior year.   Replace the dentist with an insurance agency or a retail store — or any other business not principally engaged in manufacturing and you’ll get the same result.

IRS: Now is the Time for a Mid-Year Premium Tax Credit Checkup

If you have insurance through the Health Insurance Marketplace (the Exchange), you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Changes in your income or family size may affect your premium tax credit. If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving. You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.

Changes in circumstances that you should report to the Marketplace include, but are not limited to:

  • an increase or decrease in your income
  • marriage or divorce
  • the birth or adoption of a child
  • starting a job with health insurance
  • gaining or losing your eligibility for other health care coverage
  • changing your residence

Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing out on premium assistance to reduce your monthly premiums.   Reporting the changes could mean that the health insurance premium you pay may change for the remainder of the year.

Repayments of excess premium assistance may be limited to an amount between $400 and $2,500 depending on your income and filing status. However, if advance payment of the premium tax credit was made but your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.

Changes in circumstances also may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find Information about special enrollment at HealthCare.gov.

Find out more about the premium tax credit and other tax-related provisions of the health care law at IRS.gov/aca.

If you purchase health insurance from a source other than the Health Insurance Marketplace, an employer or privately purchased policy for example, this article does NOT APPLY to you.     The IRS is the source of the information contained in this article.

For a Smile…

Scientists at CERN in Geneva have announced the discovery of the heaviest element yet known to science.

The new element is Governmentium (Gv). It has one neutron, 25 assistant neutrons, 88 deputy neutrons and 198 assistant deputy neutrons, giving it an atomic mass of 312.

These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lefton-like particles called peons.

Since Governmentium has no electrons or protons, it is inert. However, it can be detected, because it impedes every reaction with which it comes into contact.

A tiny amount of Governmentium can cause a reaction normally taking less than a second to take from four days to four years to complete.

Governmentium has a normal half-life of 2 – 6 years. It does not decay but instead undergoes a reorganisation in which a portion of the assistant neutrons and deputy neutrons exchange places.

In fact, Governmentium’s mass will actually increase over time, since each reorganisation will cause more morons to become neutrons, forming isodopes.

This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical morass.

When catalysed with money, Governmentium becomes Administratium, an element that radiates just as much energy as Governmentium since it has half as many peons but twice as many morons. All of the money is consumed in the exchange, and no other by-products are produced.

I Got a Letter from the IRS

The information below offers good advice for dealing with correspondence from the IRS.  4square clients should notify our office whenever ANY IRS correspondence is received, in many cases we may already have received a copy; but make sure that we have gotten a copy (from either you or the IRS) before you ask questions about the contents!
You can fax all pages of your notice to 810-433-6020 or scan and attach to an email.

IRS Offers Tips for Dealing with Notices

Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Here are ten things you should know about IRS notices in case one shows up in your mailbox.

1. Don’t panic. Many of these letters require a simple response.

2. There are many reasons why the IRS sends correspondence. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify you of changes to your account or ask you to provide more information.

3. Each notice offers specific instructions on what you need to do to satisfy the inquiry.

4. If you receive a notice advising you that the IRS has corrected your tax return, you should review the correspondence and compare it with the information on your return.

5. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You should be able to resolve most notices that you receive without calling or visiting an IRS office. If you do have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your inquiry.

8. Remember to keep copies of any notices you receive with your other income tax records.

9. The IRS sends notices and letters by mail. The agency never contacts taxpayers about their tax account or tax return by email.

10. For more information about IRS notices and bills, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. The publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

General Information

Some general information of use:

1)    IRS considers email to be an insecure method of communication.  The IRS NEVER initiates contact with any taxpayer about their individual tax account by email.  If you get an email purportedly from the IRS about your tax return, refund, contact, etc.  NO MATTER HOW GENUINE IT LOOKS – it’s not real.  Delete it immediately and DON’T CLICK ON ANY LINKS contained in the email.

2)    For 2012 and 2013 individual taxes are going up.  It’s not yet clear exactly where or by how much, but plan on it.  Depending of course on the outcome of the election this November 6th, it’s possible if not likely that Congress will not act before the end of 2012 to reverse tax benefits that expired at the end of 2011 or to extend benefits that are scheduled to expire at the end of 2012.  If patches to the “Alternative Minimum Tax” that expired on 12/31/2011 are not ultimately extended expect to pay thousands more on your 2012 individual income tax return.

3)    Expect to have to wait longer to file your 2012 income tax return.  If you’re used to filing in late January or early February, the IRS computers may not be ready for you, and depending on what and when Congress does, forms may not be available until later in the season.  If past history continues, no extension to the “back end” filing deadline is likely to compensate either.

4)    YOUR REFUND WILL TAKE LONGER in 2013.  The IRS has been faced with serious identity theft problems and has instituted much tighter controls to get on top of this.  A directly deposited refund on an electronically filed return used to be as quick as 8 days.  Expect that may now be 4 to 6 weeks, longer if the IRS computer checks tag anything on your return for further examination.

Larry Talks Tax

Welcome to my BLOG.

This is my resignation that I never will actually produce the regular printed or emailed newsletter that I’ve wanted to do for several years now; and I’ve not liked the ones I could purchase.

What I will attempt to do in this space is provide news, analysis, insight and practical guidance for dealing with federal and state taxes.  My entries are intended to spur you to think about and be more tax-wise in your everyday transactions.  Ask questions. Continue reading