Posts Tagged ‘Credit card’

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Casual Merchants: Expect Underreporting Notices in the Mail

In Accounting & Finances,Business,Taxes on April 2, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900104746The IRS Didn’t Forget about Casual Merchants: Expect Underreporting Notices in the Mail

Casual merchants might have some official ‘splainin’ to do. The IRS is taking a good, hard look at the gross receipts of food cart operators, mom-and-pop shops, swap meet participants, and sellers on online auction sites such as Ebay. If there appear to be any discrepancies, the agency will likely send out “soft letters” requesting additional information from those small business taxpayers.

$10 billsSpecifically, the IRS will be checking whether gross receipts – as reported by credit card companies and third-party networks – match up with income stated on tax returns. Since 2011, certain taxpayers have had credit, debit, and certain electronic transactions reported on Form(s) 1099-K, Merchant Card and Third Party Network Payments. A high amount of receipts that appears on this form, but not in income levels on the tax return, is obviously going to raise eyebrows.

MH900401126Thus, a soft letter means the taxpayer isn’t in trouble (yet), but the IRS wants answers. After all, the IRS knows there are legitimate reasons why a merchant’s numbers might not add up with the third parties’. For example, there could be a difference between parties’ calendar year versus fiscal year accounting systems. Or it could arise from the fact that Form 1099-K does not take into account on sales returns and refunds processed by the merchant, or a merchant’s cost of goods, or other legitimate deductions from gross income.

These valid excuses are exactly why the IRS plans to begin with soft letters of inquiry. If the taxpayer agrees with the assessment of underreporting, the IRS will request that they amend their returns. The goal is not punish taxpayers, but to increase voluntary compliance.

Sufen Wang, M.S.Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

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Articles

AMEX….Refund of $85 Million…..

In Accounting & Finances,Business,Culture on October 15, 2012 by Sufen Wang Tagged: , , , , , , ,

American Express Owes Its Customers Big-Time: $85 Million

American Express: the self-proclaimed world’s largest credit card issuer, the gold standard, the blue chip of credit card providers– well, not anymore. At least, not since the company got caught red-handed using a wide variety of “deceptive consumer practices.” The silver lining is that if you’re one of those consumers, you can expect a refund sometime before March 15th of next year.

That’s because the Consumer Financial Protection Bureau has ordered the credit card company to refund $85 million to 250,000 duped customers, along with paying $27.5 million in civil fines. For example, many applicants for AmEx’s “Blue Sky” credit card program were promised $300 – except all signs of the bonus disappeared into thin air once they signed up. Any victims of this scam will receive a check for their long-lost $300.

Did you know that it’s a violation of the Credit CARD Act to bill late fees on credit cards based on a percentage of the debt? American Express knew that, but did it anyways. Accordingly, any affected customers will have these illegal late fees refunded, with interest.

AmEx also persuaded some customers that they could improve their credit scores by paying off their old credit card debts – except they conveniently forgot to explain that the debts were so old, they really didn’t even need to be paid off. Oh, and then AmEx conveniently forgot to report the payments to the credit bureaus. These customers will be reimbursed the old debt settlement money, with interest.

AmEx’s bamboozling doesn’t stop there, as CFPB Director Richard Cordbray made clear when he stated that the violations took place “at all stages of the game — from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt.” The credit card company even used a credit scoring system that discriminated against applicants based on age.

Eligible, affected customers who are still with AmEx (after reading this, you might be switching companies soon) will have their accounts credited, while anyone who has since left will receive a refund check in the mail by the above date. The fines will hardly make a dent in AmEx’s pocket, considering its $30 billion revenue last year, but hopefully these charges will discredit the credit card giant for awhile.

On the Money, Sufen Wang, Wang Solutions

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Managing Your Tax Records After Filing…

In Accounting & Finances,Business,Human Resources,Taxes on April 23, 2012 by Sufen Wang Tagged: , , , , , , ,

You’re Not Done Yet!

Now that you’ve filed your tax returns, you might be tempted to push your tax documents out of sight, out of mind. That’s not a good idea. Keeping good records after you filed is a good idea, just in case the IRS selects your returns for an audit.
 
In general, any documents relating to your federal tax returns should be saved for at least three years. This includes bills, credit card receipts, invoices, and any other records that support deductions or credits you claim on your return.
 
Don’t pull out the shredder for your whole filing cabinet just yet. To be on the safe side, you should keep any and all real estate refinancing loan docs, exchange calculation, escrow closing statements, inheritance or funds gifted to children, trust-related issues, stocks and bond trades, etc. for more than 3 years. Let’s try 5 to 7 years.
 
Finally, any and all payroll related records should be kept for about 10 years. Yes, you read that right: one whole decade. A few years ago I encountered a case where the State of California Employment Office (EDD) could not reconcile data on an employee, dating back to 1999 and decided to seek out my assistance via an audit. Fortunately, I was able to complete the audit, clean as a whistle, because I had all of the original records on the subject employee. 
 
That just goes to show that employers should make room for keeping records. If you want to save space, go digital and scan all of the employees’ records – but always ensure that their signatures are clear and legible in the scanned images. However you do it, save your records now so you can save yourself some trouble in the future.
 
 
On the Record,
Sufen Wang
Wang Solutions
 

 

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Articles

FILE, FILE, FILE….

In Accounting & Finances,Business,Taxes on April 16, 2012 by Sufen Wang Tagged: , , , , , , ,

 
Can’t Pay? It’s Okay! Don’t Delay, File Your Returns Today
 
 
Tax returns will be due in less than 48 hours. Don’t have a panic attack if you can’t pay all the taxes you owe when you file. There are always solutions to problems…..  But File, File, File – on time. It’s better to file right now and pay as much as you can, than to not file at all. If you don’t, you’ll be looking at a late filing penalty, in addition to a late payment penalty, and accrued interest charges.  Or make sure you file an extension by April 17 with some estimated tax along with it. 
 

This extension will give you an extra 6 months, until October 15.  But remember this extension will only give you extra time, but not to reduce your tax liabilities.  Interest and penalty will continue to accrue during this 6 months extended period on your tax responsibilities.    Folks, DO NOT wait until October 15 to seek another extension, because there is NO extension on your extension… 

Business Extension Form 7004.

Personal Extension Form 4868.

 
If you are not able to pay your taxes right now, still file your returns on time, and then request for an installment payment agreement from the IRS (for a fee, of course). You can also use this option when your bill arrives from the IRS.  Remember the IRS also accept credit cards…  In any case, File, File, File… 
 
 
On the Money
Sufen Wang
Wang Solutions
 
 

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