Monthly Archives: January 2012

IRS Wants to Know About Fake Emails Using IRS Name

Obviously, you use the Internet or you wouldn’t be reading this article. Since you use the web, you know about phishing scams or should. Some scams are now using fake IRS identification.

IRS Wants to Know About Fake Emails Using IRS Name

The IRS has sent out numerous press releases and warning about phishing scams involving tax and IRS logos and fake sites. Now the IRS wants to have a go at hunting down the scam artists. Obviously, it can only do this if it sees the fake emails being sent out. If you receive one of these email messages, the IRS is asking that you forward it to phishing@irs.gov.

The IRS does not send unsolicited emails to taxpayers. Indeed, the IRS doesn’t even know your email address, so how could it? When you receive email messages from something @irs.gov, it is a scam trying to fleece your private information in one form or another. Do not respond to these email messages. Instead, forward them to the IRS at the email address provided above.

An example of a fishing email using the IRS identity might read something like:

[IRS logo or fake link to IRS web site in header]

Pursuant to our automatic tax return review process, we have determined you are due a tax refund of $xxx.xx. Please submit a request for the issuance of your tax refund by clicking HERE.

Once you click through to the page, you are asked to provide a variety of personal information such as social security number and bank account number. The purported reason is to verify your identity as well as issue the refund to your bank account. This is all completely fake. The scam artists are just trying to get your information so they can open accounts under your name or swipe money from your bank account.

Importantly, you must understand that domain names are really just representations of numbers. The fact you see “irs.something” does not mean it is from the IRS. If you think the IRS might really be trying to contact you, get on the phone and call them. Do not use any phone number in the phishing email.

IRS Simplifies Reporting Requirements for Corps and Shareholders

The IRS is heavily promoting electronic filing options. This promotion has run into problems with corporations because of complex regulations. The IRS is now moving to correct this problem.

IRS Simplifies Reporting Requirements for Corps and Shareholders

Corporate tax filings are legendary for their complexity, number of forms that must be filed and general burden they create. Large, publicly traded corporations make every effort to file the proper forms, but the burden is such that when all is said and done, one corporation reported it had to file the equivalent of three tax forms for every working hour of the year. For small corporations and shareholders, the burden is not much less.

Given this massive tax burden, the idea of a corporation filing electronic tax returns is laughable. The IRS has finally realized as much. In response, it is making an effort to simplify or do away with regulations. In fact, the service has changed over 20 different regulatory groups to massively simplify a variety of tax situations.

One area of simplification has to do with the transfer of interest in certain types of corporate share transfers. Known as a section 351 transfer, the regulations previously required both the corporation and shareholder to file up to 18 different information items. Yes, 18! To simplify this mess, the IRS is now requiring the filings only for individuals that own more than five percent of a publicly traded company or one percent of a private company. Those still required to file will now only have to provide very basic information. This is a vast improvement on the old system.

One of the big red tape problems for corporate and shareholder filings is a simple one. The IRS has historically required everything to be physically signed by certain shareholders. This was essentially a method for forcing shareholders to come forward regardless of the corporate planning being done. The IRS is now de-emphasizing the signature requirements and allowing the same forms to simply be filed electronically. It sounds like a small thing until you go through the experience of sending a form to 15 different shareholders around the country.

The effort of the IRS to simply corporate and shareholder filings should be applauded. It is a small step in dealing with a large problem.

IRS Simplifies Reporting Requirements for Corps

The IRS is heavily promoting electronic filing options. This promotion has run into problems with corporations because of complex regulations. The IRS is now moving to correct this problem.

IRS Simplifies Reporting Requirements for Corps

Corporate tax filings are legendary for their complexity, number of forms that must be filed and general burden they create. Large, publicly traded corporations make every effort to file the proper forms, but the burden is such that when all is said and done, one corporation reported it had to file the equivalent of three tax forms for every working hour of the year. For small corporations and shareholders, the burden is not much less.

Given this massive tax burden, the idea of a corporation filing electronic tax returns is laughable. The IRS has finally realized as much. In response, it is making an effort to simplify or do away with regulations. In fact, the service has changed over 20 different regulatory groups to massively simplify a variety of tax situations.

One area of simplification has to do with the transfer of interest in certain types of corporate share transfers. Known as a section 351 transfer, the regulations previously required both the corporation and shareholder to file up to 18 different information items. Yes, 18! To simplify this mess, the IRS is now requiring the filings only for individuals that own more than five percent of a publicly traded company orone percent of a private company. Those still required to file will now only have to provide very basic information. This is a vast improvement on the old system.

One of the big red tape problems for corporate and shareholder filings is a simple one. The IRS has historically required everything to be physically signed by certain shareholders. This was essentially a method for forcing shareholders to come forward regardless of the corporate planning being done. The IRS is now de-emphasizing the signature requirements and allowing the same forms to simply be filed electronically. It sounds like a small thing until you go through the experience of sending a form to 15 different shareholders around the country.

The effort of the IRS to simply corporate and shareholder filings should be applauded. It is a small step in dealing with a large problem.

IRS Owes You Money If You Paid Long Distance Phone Taxes

The IRS has decided to give up the fight on an ongoing legal issue regarding taxes it has collected on long distance telephone services. Here is the scoop.

The IRS Owes You Money If You Have Paid Long Distance Phone Taxes

Every one of us pays for some form of long distance telephone service. The more you use the service, the more you start hunting for better rates. Whatever choice you make, however, you are always stuck paying a federal tax on the bill. For those of you with large long distance phone bills, this tax can add up quickly given the fact it is calculated at three percent of your total bill.

The tax in question is known as the federal excise tax on long distance telephone service. It was created in 1898. Yes, this tax arose well over one hundred years ago. As you might image, a few people started to wonder how a tax established in 1898 could possibly apply today, particularly given the advancement of telephone technologies. Turns out it doesn’t apply! Given a chance to review the situation, five appellate courts have ruled the tax invalid.

After contemplating the situation, the IRS has decided not to challenge the legal rulings. Instead, it has voluntarily agreed to issue credits or refunds for the excise taxes paid the past three years. Specifically, you will be able to claim a refund of all taxes paid from February 28, 2003 till the date the IRS stopped collecting them.

To collect the refunds, the IRS will create a new box on all 1040 filing forms for the 2006 tax year. In practical terms, this means you will be able to check a box and get a refund when you prepare your 2006 tax return in 2007. The IRS will pay interest on these funds.

It should be noted the refund is applicable only to the long distance excise tax. You still must pay local service taxes and the refund does not apply to taxes collected by states and such. Still, any refund is a good refund in my opinion.

IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters

The IRS has obtained civil injunctions against more than 100 promoters of illegal tax avoidance schemes and fraudulent return preparers in an ongoing crackdown that began in 2001. Many of the injunctions, obtained in cooperation with the Department of Justice, also order the promoters to turn over client lists and to cease preparing federal income tax returns for others.

Signaling a renewed fight against tax fraud, the federal government stepped up the use of civil power four years ago. Civil injunctions have subsequently been used to stop:

1. Abusive trusts that shift assets out of a taxpayer’s name but retain that taxpayer’s control over the assets.

2. The misuse of “Corporation sole” laws to establish phony religious organizations.

3. Frivolous “Section 861” arguments used to evade employment taxes.

4. Claims of personal housing and living expenses as business deductions.

5. “Zero income” tax returns.

6. Abuse of the Disabled Access Credit.

7. The claim that only foreign-source income is taxable.

The IRS identifies abusive tax promoters through a variety of means, including ongoing examinations, Internet and media research or referrals from external sources such as tax professionals. If the findings of an investigation support a civil injunction, the IRS refers the case to the Department of Justice.

If the Justice Department concurs, it files suit against the promoter requesting that the court order the promoter to refrain from the fraudulent activity. Depending on the facts and circumstances of the case, the court may issue a temporary restraining order, a temporary injunction or a permanent injunction.

At present, the courts have issued injunctions against 99 abusive scheme promoters 81 permanent injunctions and 18 preliminary injunctions. They have issued permanent injunctions against 17 abusive return preparers. The Justice Department has filed an additional 49 suits seeking injunction action 28 against scheme promoters and 21 against return preparers.

The IRS is currently investigating more than 1,000 additional promoters for possible referral to the Justice Department and conducting individual examinations on thousands of tax scheme participants.