Taxes

On May 26, 2015, the IRS released the following statement:
IRS Statement
The IRS announced today that criminals used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information on approximately 100,000 tax accounts through IRS’ “Get Transcript” application. This data included Social Security information, date of birth and street address.

These third parties gained sufficient information from an outside source before trying to access the IRS site, which allowed them to clear a multi-step authentication process, including several personal verification questions that typically are only known by the taxpayer. The matter is under review by the Treasury Inspector General for Tax Administration as well as the IRS’ Criminal Investigation unit, and the “Get Transcript” application has been shut down temporarily. The IRS will provide free credit monitoring services for the approximately 100,000 taxpayers whose accounts were accessed. In total, the IRS has identified 200,000 total attempts to access data and will be notifying all of these taxpayers about the incident.

As always, the IRS takes the security of taxpayer data extremely seriously, and we are working aggressively to protect affected taxpayers and continue to strengthen our protocols.

Additional information
The IRS announced today it will be notifying taxpayers after third parties gained unauthorized access to information on about 100,000 accounts through the “Get Transcript” online application.
The IRS determined late last week that unusual activity had taken place on the application, which indicates that unauthorized third parties had access to some accounts on the transcript application. Following an initial review, it appears that access was gained to more than 100,000 accounts through the Get Transcript application.

In this sophisticated effort, third parties succeeded in clearing a multi-step authentication process that required prior personal knowledge about the taxpayer, including Social Security information, date of birth, tax filing status and street address before accessing IRS systems. The multi-layer process also requires an additional step, where applicants must correctly answer several personal identity verification questions that typically are only known by the taxpayer.

The IRS temporarily shut down the Get Transcript application last week after an initial assessment identified questionable attempts were detected on the system in mid-May. The online application will remain disabled until the IRS makes modifications and further strengthens security for it.

The matter is under continuing review by the Treasury Inspector General for Tax Administration and IRS offices, including Criminal Investigation.

The IRS notes this issue does not involve its main computer system that handles tax filing submission; that system remains secure.

On the Get Transcript application, a further review by the IRS identified that these attempts were quite complex in nature and appear to have started in February and ran through mid-May. In all, about 200,000 attempts were made from questionable email domains, with more than 100,000 of those attempts successfully clearing authentication hurdles. During this filing season, taxpayers successfully and safely downloaded a total of approximately 23 million transcripts.

In addition, to disabling the Get Transcript application, the IRS has taken a number of immediate steps to protect taxpayers, including:

*Sending a letter to all of the approximately 200,000 taxpayers whose accounts had attempted unauthorized accesses, notifying them that third parties appear to have had access to taxpayer Social Security numbers and additional personal financial information from a non-IRS source before attempting to access the IRS transcript application. Although half of this group did not actually have their transcript account accessed because the third parties failed the authentication tests, the IRS is still taking an additional protective step to alert taxpayers. That’s because malicious actors acquired sensitive financial information from a source outside the IRS about these households that led to the attempts to access the transcript application.

*Offering free credit monitoring for the approximately 100,000 taxpayers whose Get Transcript accounts were accessed to ensure this information isn’t being used through other financial avenues.

Taxpayers will receive specific instructions so they can sign up for the credit monitoring. The IRS emphasizes these outreach letters will not request any personal identification information from taxpayers. In addition, the IRS is marking the underlying taxpayer accounts on our core processing system to flag for potential identity theft to protect taxpayers going forward – both right now and in 2016.

These letters will be mailed out starting later this week and will include additional details for taxpayers about the credit monitoring and other steps. At this time, no action is needed by taxpayers outside these affected groups.

The IRS is continuing to conduct further reviews on those instances where the transcript application was accessed, including how many of these households filed taxes in 2015. It’s possible that some of these transcript accesses were made with an eye toward using them for identity theft for next year’s tax season.

The IRS emphasizes this incident involves one application involving transcripts – it does not involve other IRS systems, such as our core taxpayer accounts or other applications, such as Where’s My Refund.

The IRS will be working aggressively to protect affected taxpayers and strengthen our protocols even further going forward.

Few things strike more fear in a business owners heart than having an IRS agent knocking on the door of their business. If you have ever wondered what to do in this situation, follow these tips:

1. Ask to see the individual’s credentials.  You will learn a great deal about the nature of the visit based on who is standing before you.  A Revenue Officer will most likely be there to collect unpaid income or payroll taxes.  A Revenue Agent will be there to audit you or your business.  A Special Agent will be there to investigate you or your business for criminal activity.  Special Agents are required to identify themselves and notify you if you are under criminal investigation.
2. Tell the agent as little as possible, but do not lie.  The agent will likely want to engage you in discussion as soon as possible.  Despite what the agent suggests, he or she is almost never going to go away just because you give them a little information.
3. Tell the agent you wish to consult a lawyer…and do it!!! As soon as you tell an agent that you wish to first consult with a representative, he or she should suspend the interview.  This will enable you and your representative to determine the correct strategy for dealing with the IRS.  Also, your tax preparer or an experienced tax lawyer will be better able to explain your position to the IRS.
4. Do not let the agent into nonpublic areas.  An IRS agent has the right to come into public spaces such as your business’s waiting room or a public dining room. The agent may not come into private areas such as your home, business office, warehouse, kitchen, or factory without your permission, a warrant, or a court order.  Don’t invite them in.
5. Do not give the agent business records or other documents.  The agent may ask to see your business records or other documents, even if you’ve told him or her that you wish to terminate the interview.  Repeat your desire to get professional representation, and decline to give them any paperwork.

If an IRS agent has called on your business or you want to prepare for such an event, contact the attorneys at Wilson Ratledge.

The Internal Revenue Service (IRS) is warning taxpayers of a sophisticated nationwide phone scheme that has become “the largest scam of its kind that we have ever seen.” The scheme reportedly involves individuals telephoning taxpayers claiming they represent the IRS and demanding immediate payments with a pre-paid debit card or wire transfer.

Reportedly thousands of victims — taxpayers — have already paid more than $1 million to the fraudulent individuals posing as IRS agents, according to Treasury Inspector General for Tax Administration (TIGTA) Russell George. He stated that his agency has received more than 20,000 reports of contact. Government officials also said that the perpetrators often know the last four digits of the victims’ Social Security numbers and threaten arrest, deportation and removal of driver’s licenses — something the IRS is not authorized to do.

If you feel you have been a victim of this scam, contact Wilson Ratledge and let one of our attorneys assist you.

An excise tax is a tax on the manufacture, sale or use of goods, or on the carrying on of an occupation or activity. The federal government imposes excise taxes on a variety of activities, including the manufacture or sale of certain products; the operation of certain kinds of businesses; and the use of various kinds of equipment, facilities and products.
Although there are excise taxes on a variety of activities, the excise taxes that affect most consumers and small business owners are on:

• Fuel (gasoline, diesel, kerosene and compressed natural gas)
• Communications
• Air transportation
• Gas-guzzler automobiles
• Sport fishing equipment
• Vaccines

Fuel Taxes
Fuel tax is a common excise tax. Entities involved in blending, refining, transporting, using or selling fuel may be required to register with the government and pay excise taxes. The excise tax imposed on the sale, refining and blending of fuel is complex, with specific requirements for each entity involved in the process. Special rules also apply to different types of fuel. Generally, the tax is imposed at the time the fuel is removed from a storage terminal, upon entry into the United States or upon the sale of the fuel.

Communications Taxes
There is a 3 percent communications tax on amounts paid for local telephone service or teletypewriter exchange service. There are certain exemptions from this communications tax for particular services, such as bundled services and prepaid telephone cards, and for certain users, including nonprofit hospitals and educational institutions.

Air Transportation Taxes
Air transportation taxes apply to amounts paid for the air transportation of people and property and the use of international travel facilities. The tax on air transportation of people has two components: a percentage tax of 7.5 percent on amounts paid for air transportation and a domestic segment tax, which is a flat fee for each segment (a single takeoff and a single landing) of transportation. For 2009, the domestic segment tax is $3.60. There is also an international arrival/departure head tax. In addition, amounts paid for air transportation of property are subject to a 6.25 percent tax. There are exemptions to the air transportation tax for certain situations, including military personnel on international flights, sky diving and particular uses of helicopters.

Other Excise Taxes
The federal government imposes excise taxes on the manufacturers, producers and importers of gas-guzzler automobiles; sport fishing equipment; bows and arrows; tires; heavy trucks, trailers and tractors; coal; and vaccines. The tax is imposed at the time the item is sold by the manufacturer, producer or importer, and title passes.

• The gas-guzzler tax is a tax on the sale of automobiles that have a fuel economy standard of less than 22.5 miles per gallon. Individuals that import automobiles for personal use may be liable for this tax.
• There is a 10 percent tax on the sale of sport fishing equipment.
• The tax on tires is based on weight.
• The tax on vaccines is a fixed amount (75 cents) per dose of certain vaccines, including common vaccines for measles and mumps, sold by manufacturers in the United States.
• A producer of coal mined in the United States is liable for tax on the first sale of such coal.

The federal government also imposes excise tax on many less common products and activities. State and local governments may impose excise taxes as well. Failure to file the required returns and pay excise taxes may result in the imposition of penalties, interest and other sanctions.

Contact Wilson Ratledge and let one of the attorneys assist you with your excise tax needs.

Whether you are meeting with a tax attorney for help with tax planning or because the IRS has informed you that you will be audited, it is crucial for you to assist your attorney in the preparation. One of the first steps in preparation is a review all of your tax information, including your returns, IRS forms or schedules, and all documents relied upon in the preparation of your return. In addition, it is important that you bring all documents related to the issue that you will be discussing with your attorney. Here is a list of some specific documents you may want to bring:

A copy of your current and past years’ tax returns

Any correspondence you have had with the IRS regarding the issue about which you are
seeking advice

Documents showing your income from a job such as your Form W-2, pay stubs and bank statements

Documents showing other sources and amounts of income from investments, dividends, interest, business income, capital gains and losses, annuities, unemployment compensation, prizes and awards, gambling winnings and Social Security benefits

Documents relating to your home such as closing statements, purchase and sales contracts, mortgage interest statements and document that show the cost of any improvements to the home

Records relating to your investments (stocks, bonds, mutual funds, IRAs) that show purchase price, sales price, interest and commissions

Documents reflecting your expenses and possible deductions

If you have a tax issue related to your business, bring incorporation documents, documents showing your business’s structure and employees, balance sheets and its tax I.D. number

Documents reflecting your expenses and possible deductions can be broken down into numerous subcategories. Such documents might include sales slips, receipts and canceled checks.

If you have any of the following expenses, you should bring the listed documents to your meeting:
Medical expenses exceeding 7.5% of your adjusted gross income — hospital bills, doctor bills, therapy bills and records of all other medical expenses that you incurred

Alimony — divorce decree and separation agreement
Charitable contributions — cancelled checks and receipts from the organization that show how much you gave; records showing fair market value of property you donated; and records showing your out-of-pocket expenses when you perform services for a charitable organization

Mortgage interest — Form 1098 (you will receive it if you paid more than $600 of interest)

Taxes — records that show how much you paid in real estate tax, state income tax (your state income tax return or Form W-2, which shows how much state income tax was withheld) and other kinds of taxes

Business use of home — documents showing the part of your home that is used and expenses related to your business use

Business expenses such as travel and entertainment — receipts and other documents that show the cost of hotels, meals, rental cars, taxis, tips and other fees

Casualty and theft losses —records that show the type of loss (flood, hurricane, theft), what you lost, photographs of damage, appraisals and proof of ownership

Child care expenses — documents showing the name, address and taxpayer identification number for all persons or organizations that provide care

Education expenses — documents showing your qualified educational expenses, including tuition

Contact Wilson Ratledge and let one of the attorneys assist you with your tax needs.

At some point in their lives, people may find themselves in over their head in debt, that’s where we can help. You may not expect to need it, but bankruptcy is a viable solution for many people if handled correctly. Our professional staff of Florida and North Carolina attorneys and debt relief experts is dedicated to giving each client’s case the attention they deserve. One of our specialty areas of practice here at Wilson Ratledge is Chapter 7 bankruptcy.

 

Chapter 7 bankruptcy is usually quicker than Chapter 13 bankruptcy, most debtors keep all or most of their property, and filers do not have to pay back a portion of their debts. Unlike Chapter 13, Chapter 7 bankruptcy is usually recommended to people who cannot qualify for a repayment plan based on income, expenses, and debt burden.

 

In a Chapter 7 bankruptcy a court-appointed “bankruptcy trustee” examines your assets and financial transactions to recover anything that can be paid to your creditors. In many cases, property owned by the filer is either exempt or invaluable for the purpose of paying the creditors.

 

At Wilson and Ratledge, our goal is to settle your debt with as little inconvenience to you and your family as possible. We work with you and the trustee to make sure that your rights are protected and your comfort is provided for. When you need aggressive bankruptcy representation with sensitive attention, click here or call Wilson Ratledge today at (919) 787-7711.