Scott & Scott, CPAs

IRS Identity Theft Tips

2011-07-26T14:35:00.000-07:00

The following items are IRS reminders to help taxpayers avoid being victims of identity theft:

The IRS does not initiate contact with a taxpayer by e-mail

If a taxpayer receives a scam e-mail claiming to be from the IRS, forward it to the IRS at phishing@irs.gov

Identity thieves obtain personal information by many different means, including stealing a wallet or purse, posing as someone who needs information about the taxpayer through a phone call or email, looking through a taxpayer's trash for personal information, or accessing information a taxpayer provides to an unsecured internet site.

If a website claims to be the IRS but does not begin with http://www.irs.gov,/ forward that link to the IRS as phishing@irs.gov

Taxpayers wishing to learn how to identify a secure website should visit the Federal Trade Commission at www.onguardonline.gov/tools/recognize-secure-site-using-ssl.aspx.

If a taxpayer's SSN is stolen, another individual may use it to get a job. That person's employer may report income earned by them to the IRS using the taxpayer's SSN, thus making it appear that the taxpayer did not report all of his or her income on the tax return.

A taxpayer's identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for the taxpayer or the letter states the taxpayer received wages from an employer the taxpayer does not know. If a taxpayer receives such a letter from the IRS, the taxpayer should respond immediately to the name, address, or phone number on the IRS notice.

A taxpayer whose tax records are not currently affected by identity theft but who believes he or she may be at risk due to a lost wallet, questionable credit card activity, or credit report, the taxpayer needs to provide the IRS with proof of identity. The taxpayer should submit a copy of a valid government-issued identification such as a Social Security card, driver's license, or passport, along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, the taxpayer can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. The taxpayers should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.

Do not routinely carry your Social Security card or other documents that display you SSN.

For more information about identity theft, including information about how to report identity theft, phishing and related fradulent activity, visit the IRS Identity Theft and Your Tax Records Page, which can be found by searching "Identity Theft" on the IRS.gov home page.

In addition to the preceeding IRS list, Scott & Scott, CPAs also recommends that individuals maintain some form of professional credit monitoring that will provide notification of activity affecting credit.

AICPA asks for repeal of burdensome 1099 requirements

2010-11-18T13:43:00.000-08:00

In letters to Congress on Tuesday, the American Institute of CPAs raised concerns about the recently expanded Form 1099 reporting requirements for businesses and taxpayers who receive income from rental property. The AICPA is concerned with the "overwhelming compliance burden" the requirements will impose on taxpayers, and in its letters it urges Congress to repeal the provisions.

Sale of Residence (after 2012)

2010-09-23T11:33:00.001-07:00

High profit sale after 2012 can trigger the special 3.8% Medicare surtax. Starting in 2013, the new health care law imposes a 3.8% tax on investment income of singles with adjusted gross incomes over $200,000 and marrieds above $250,000. Capital gains are treated as investment income. The surtax will be on gains that exceed $250,000 for single taxpayers or $500,000 for married taxpayers. The surtax can take even a bigger bite on sales of second homes where the principal residence exclusions don't apply.

Potential Tax Increases

2010-09-21T08:18:00.000-07:00

From the AICPA -- congressional bickering over the upcoming expiration of tax cuts implemented during the G.W. Bush administration is making small-business owners nervous. Taxpayers should take steps now to prepare for an inevitable long-term tax increase -- no matter which politial party wins control of Congress after midterm elections. Among the steps to consider are revising estate plans and accelerating capital gains, compensation and the exercise of stock options into 2010.

Traditional IRA to ROTH Conversion

2010-09-17T14:30:00.000-07:00

TIPRA provides that for 2010 conversions only, taxpayers can elect for federal income tax purposes to spread the income triggered by conversions evenly over 2011 and 2012 (50% of the conversion income in each year) and thereby defer the related federal income taxes. For conversion after 2010, the conversion taxes owed cannot be stretched out.