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Inflated Refund Claims Again Made the IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season

  Inflated Refund Claims Again Made the IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season   IR-2016-18, Feb. 8, 2016   WASHINGTON — The Internal Revenue Service today warned taxpayers to be on the lookout for unscrupulous tax return preparers pushing inflated tax refund claims. This scam remains on the annual list of tax scams known as the “Dirty Dozen” for the 2016 filing season.   "Be wary of tax preparers that tout outlandish refunds based on federal benefits or tax credits you've never heard of or weren't eligible to claim in the past," said IRS Commissioner John Koskinen. "Taxpayers should choose preparers who file accurate returns."  
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ACA/affordable care act Form 1095-B

  This is the 3rd tax filing season for the ACA/affordable care act. For 2015 health insurance companies are required to report coverage on form 1095-B. If you have medical insurance you've may have received the form already.  This serves as verification that the taxpayer has insurance whereas previously taxpayers were on the honor system.  Please give the form to your accountant.   
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Required Minimum Distributions (RMDs).

  Taxpayers who have reached age 70-1/2 should be sure to take their 2015 RMD from their IRAs or 401(k) plans (or other employer-sponsored retired plans). Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Those who turned age 70-1/2 in 2015 can delay the first required distribution to 2016. However, taxpayers who take the deferral route will have to take a double distribution in 2016 - the amount required for 2015 plus the amount required for 2016.  
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IRS notifying taxpayers “We changed your mailing address”, Notice CP148A.

Recently we have seen frequent correspondence from the IRS notifying taxpayers “We changed your mailing address”, Notice CP148A. The notice states - If you didn’t authorize a change of address, contact us immediately by calling number listed above. Should you receive one of these we suggest calling the IRS early the next morning (assuming you did not request a change of address).    This could be the start of the filing of a fraudulent tax return.  Calling the IRS at 8:00AM yields a quicker response and better results. Also suspicious activity needs to be addressed as promptly as possible.    
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IRA Rollover Rule – One Per Year

IRA Rollover Rule – One Per Year     Beginning in 2015 you can make only one rollover from an IRA to another IRA in any 12 month period regardless of the number of IRA’s you own.  The 12 month period begins to run with the date of the rollover, not the beginning of the calendar year.  If there is more than one rollover within the 12 months the others will be taxable and possibly subject to the 10% penalty.  Doing a “Trustee to Trustee” transfer avoids this rule as well as rollovers from traditional IRAs to Roth IRAs.
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Tax information - paperless reporting

“If you have signed up for paperless reporting, please be sure to print out associated tax documents and put together with your tax information. Schwab sent out an e-mail on or about January 15 that the “realized gain or loss schedule” was available.  I have not seen the tax reporting documents, 1099-DIV, 1099-INT yet.  I would not expect these to be ready until about February 15, 2015.”
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IRS Individual Tax Examinations - self employed

  We recently handled two individual tax audits.  The first could have been a disaster but wasn’t because the client/taxpayer had documentation.  The second should not have been a disaster but was because the client/taxpayer did not have documentation.  Both of these clients are self-employed.  Therefore the focus of the audits was on the Schedule C. All deductions must be substantiated by cancelled checks and/or paid bills. Rent should be supported by a lease.  Business use of the auto and meals and entertainment should be documented in a diary indicating the number of business miles driven, business purpose of the travel/meal, whom you met with, dollar amount of expenses paid out of pocket, (excluding gas).  In one case the client wrote that they commuted to work but claimed 95% business use.  Business use of the auto was reduced to 67% due to this contradiction.        Take these real life...
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Tax Reporting Documents

  Most reporting entities, brokerage houses, mortgage payee’s, banks, etc, are encouraging clients to sign up for paperless delivery of tax documents.  Should you do so, please be sure to print the tax reporting documents as you will not receive them in the mail.  Missing information delays the completion of your return or results in the omission of income or deductions.  In the case where income is omitted there will be subsequent correspondence from the taxing authorities with interest due on the underpayment.  Thank you for helping us get your return done right the first time.  
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IRS Tips, Service Charge Ruling On Automatic Gratuities Raises Taxes On Servers

An updated tax rule is causing restaurants to rethink the practice of adding automatic tips to the tabs of large parties. Starting in January 2014, the Internal Revenue Service will begin classifying those automatic gratuities as service charges which it treats as regular wages, subject to payroll tax withholding instead of tips, which restaurants leave up to the employees to report as income.   The change would mean more paperwork and added costs for the restaurants and a potential financial hit for waiters and waitresses who live on their tips but don't always report them fully.
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NYS Sales Tax - Equipment Sales

A registered vendor for sales tax must charge sales tax on any equipment sold to a third party if the equipment is picked up or delivered to/from a New York location.  Although equipment sales may not be in the ordinary course of business, i.e.: a masonry/home improvement contractor, as a registered vendor, the seller would be required to collect sales tax on the sales price unless an appropriate exemption form is received from the purchaser.    New York State is requiring purchasers of equipment from “private parties” to obtain a bulk sales certificate from New York State which will be approved upon the State approving the sale.  Specifically the Tax Department will be reviewing the vendors status with respect to sales tax.
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Report of Foreign Bank and Financial Accounts (FBAR)

Report of Foreign Bank and Financial Accounts (FBAR) Due on or before June 30, 2013 http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-(FBAR)  
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Overview of the tax provisions in the 2012 American Taxpayer Relief Act

Overview of the tax provisions in the 2012 American Taxpayer Relief Act Dear Client, The recently enacted 2012 American Taxpayer Relief Act is a sweeping tax package that includes, among many other items, permanent extension of the Bush-era tax cuts for most taxpayers, revised tax rates on ordinary and capital gain income for high-income individuals, modification of the estate tax, permanent relief from the AMT for individual taxpayers, limits on the deductions and exemptions of high-income individuals, and a host of retroactively resuscitated and extended tax breaks for individual and businesses. Here's a look at the key elements of the package: ·         Tax rates. For tax years beginning after 2012, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets from the Bush tax cuts will remain in place and are made permanent. This means that, for most Americans, the tax rates will stay the same. However, there will be a...
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IRS Offers Tax Tips for “The Season of Giving”

  ·       Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity. Donations charged to a credit card by Dec. 31 are deductible for 2012, even if you pay the bill in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible. http://www.irs.gov/uac/Newsroom/IRS-Offers-Tax-Tips-for-“The-Season-of-Giving”  
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Identity Theft Scams

The IRS has issued several consumer warnings about the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity and assets. Scamsters will use the regular mail, telephone, fax or email to set up their victims. When identity theft takes place over the Internet (email), it is called phishing. The IRS does not initiate taxpayer communications through email. Unsolicited email claiming to be from the IRS, or from an IRS-related component such as EFTPS, should be reported to the IRS at This email address is being protected from spambots. You need JavaScript enabled to view it.. Additionally, clicking on attachments to or links within an unsolicited email claiming to come from the IRS may download a malicious computer virus onto your computer.  
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New York State Sales Tax

New York State Sales Tax has new reporting requirements effective June 1, 2013 which require businesses, subject to sales tax, to report Non-Taxable and Exempt Sales separately.  In the past the required entries were for Gross Sales and Taxable Sales.  This reporting requirement dovetails into the states increased analysis of tax filings which enables the monitoring of consistency with similar businesses in a geographic region and consistency over time.   An example of a non-taxable sale is a deli that sell groceries which are non-taxable, (as opposed to a prepared sandwich which is taxable).  An example of an exempt sale would be a sale t a not-for-profit religious, charitable, educational or other 501(c)(3) organization.  In addition sales tax filers will have the option of reporting deposits to their bank accounts made by credit and debit card processors.  These stringent filing requirements entail a change in the information provided to the preparer of...
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