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Whistleblowers Wanted:

In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: Fraud, Identity theft, Internal Revenue Service, irs, Social Security number, Tax, Tax avoidance and tax evasion, Tax return (United States)

Report Suspected Tax Fraud

To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.

Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.

Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.

Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.

If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.

Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower. Do the right thing, it is hard, but it is very, very rewarding!!!

Sufen Wang, M.S.Accountancy

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

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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The Return of the Dirty Dozen…

In Accounting & Finances,Business,Taxes on March 2, 2012 by Sufen Wang Tagged: Dirty Dozen, Identity theft, Internal Revenue Service, irs, IRS tax forms, Social Security number, Tax, United States

Another Dirty Dozen: The Top 12 Tax Scams of 2012

As long as there are taxes, there are going to be scams. A lot of money gets moved around in April and a lot of people want to get their hands on it – illegally. If you’re one of those people, you’ll probably be in jail sometime soon. Luckily, the IRS’ “Dirty Dozen” – the list ranking scams taxpayers are most likely to get sucked into – is back. Let’s see how things have changed since we brought you the “Dirty Dozen” last year.

The new leader of the IRS’ “Dirty Dozen” is Identity Theft. This is a growing problem in which somebody uses a real taxpayer’s personal information to file a return and then receives the refund. If that sounds like a good idea to you, just know that the IRS is cracking down on this particular scam with law-enforcement. There’s even a special web page to help taxpayers spot when somebody is pretending to be them. So how do you know if your name is being used elsewhere? If you get an IRS notice telling you that you filed more than one return, you could be a victim of identity theft.

Close behind is Phishing. This does not have to do with going out on a boat and catching things in the water. This is actually when a scammer uses a fake website or email to steal your personal information – which they can then use for the big bad identity theft. Always check that you’re on the real IRS site (the address should contain irs.gov) and since the IRS doesn’t send out any e-mails, don’t open anything that is supposedly from the agency or the Electronic Federal Tax Payment System (EFTPS). Oh, and don’t post your social security number on the “IRS” Facebook page.

Remember that post a few weeks ago about finding the right preparer? It was supposed to help you avoid becoming a victim of scam number three, Return Preparer Fraud. These corrupt preparers will do anything, from stealing part of your return, to charging you outrageous fees. Make sure your preparer includes his/her signature and PTIN on your return, and walk away if they tell you to include false information.

You really can’t get away from Hiding Income Offshore. The number one scam on last year’s “Dirty Dozen” list, evading taxes by storing your assets out of the United States, continues to be a huge problem. That’s not to say that you can’t keep stuff overseas – you just have to tell the IRS about it. If you’ve had a change of heart and want to stop being a scammer, the Offshore Voluntary Disclosure Program is still going on.

The above are the most prevalent issues, but there’s still a lot of scamming going on at the bottom of the list. Don’t pay attention to people offering advice – for a fee – about how to get “Free Money” from the IRS & Tax Scams Involving Social Security. You’ll be paying money for a claim that is eventually going to get rejected by the IRS. And don’t think you can get away with penning in False/Inflated Income and Expenses on your tax return. Although it might seem easy to claim income or expenses you didn’t really pay, so that you can receive refunds like the EITC, you’ll face interest and penalties when you do get caught.

The same goes for False Form 1099 Refund Claims. Filing a fake information return to verify a fake refund claim will result in real problems for you. And don’t listen to Frivolous Arguments about why you don’t need to pay taxes. Pay first, and then if you have a problem, bring it up in court later. You also need to pay the correct amount that you owe, so don’t Falsely Claim Zero Wages.

Perhaps the dirtiest scam on the Dirty Dozen is Abuse of Charitable Organizations and Deductions. Yes, people will do things like “improperly shield income or assets from taxation” and “maintain control over donated assets.” Charities are for you to help other people – not yourself. The penultimate scam, Disguised Corporate Ownership, is when the true ownership of a business is obscured. Last but not least is Misuse of Trusts. Promoters will convince taxpayers to transfer their assets into trusts, promising less income subject to taxation or reduced estate taxes. In reality, this is just a fancy way of avoiding tax liability.

The IRS is watching you.

On the Money,

Sufen Wang

Wang Solutions

First Time Homebuyer Credit Accounts Moved to the Web

In Accounting & Finances,Business,Taxes on February 23, 2012 by Sufen Wang Tagged: First-Time Homebuyer Credit, First-Time Homebuyer Credit Account, Internal Revenue Service, irs, IRS Form 5405, IRS tax forms, Social Security number, Tax

The IRS is reminding individuals who received the First Time Homebuyer Credit not to wait for a repayment reminder in the mail. All account information has officially gone digital. Recipients of this credit must now go online to check their total credit and repayment amounts.

How do you know if you should log on to the First Time Homebuyer Credit Account Look-Up page? Well, you must have received a First Time Homebuyer Credit! The credit was introduced in 2008 at a maximum $7,500 – with the footnote that all of the money had to be paid back over 15 years. However, 2010 first time buyers got an even better deal: their credit doesn’t need to be repaid unless the house is sold within three years.

If the credit applies to you, you’ll want to log on for tax reference purposes. Make sure you have your current information ready, including your SSN, date of birth, and street address. The IRS site is secure and encrypted, so you don’t have to worry about your info ending up in the wrong hands. Once you’re in, you’ll be able to see your original credit amount, what you’ve paid back so far, what you still owe, and the amount of each annual repayment.

Now for the hard part. To actually repay your First Time Homebuyer Credit, just add the amount that you are told to repay to the other taxes that you owe on your return. Then use line 59b on Form 1040 to report repayment of the credit. You only need to attach Form 5405, First Time Homebuyer Credit and Repayment of the Credit, if you are repaying because the house is no longer your main home. You can access the First-Time Homebuyer Credit Account Look-Up tool all day, everyday, so there’s no excuse for not knowing how much you owe!

Summary of the First-Time Homebuyer Credit by Year

2008: up to $7,500, the credit is paid back over 15 years.

Jan – Nov 2009: up to $8,000, the credit does not need to be paid back.

Dec 2009 – April 2010: up to $8,000 for first-time buyers, the credit does not need to be paid back.

Nov 7, 2009 – April 2010: up to $6,500 for “long-term residents” buying a new home, the credit does not need to be paid back.

On the Money,

Sufen Wang

Wang Solutions

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Posts Tagged ‘Social Security number’

Whistleblowers Wanted:

The Return of the Dirty Dozen…

First Time Homebuyer Credit Accounts Moved to the Web

Summary of the First-Time Homebuyer Credit by Year