Tax laws are full of unintended consequences. That became painfully clear during the COVID-19 pandemic, when a variety of tax relief provisions were created to help individuals and businesses deal with the virus' economic effects. Such was the case with the Employee Retention Credit, or ERC. "The ERC provided a financial lifeline to millions of businesses and exempt organizations during the pandemic," said IRS Commissioner Danny Werfel in his prepared testimony for the Feb. 15 hearing before the House Ways and Means Committee. "The IRS has worked hard to implement this credit, and we have processed about 3.6 million ERC... Read more →
Tax fraud
The Internal Revenue Service has made it clear for years. It wants to know about your digital assets. Ignore the crypto question, now at the top of more tax forms, at your own tax peril. And if you go further and don't report taxable digital transactions, the Department of Justice (DoJ) will get involved. That's the case for a Texas man, who this week was indicted on charges of filing false tax returns and structuring cash deposits to avoid currency transaction reporting requirements. Bitcoin was a component in both charges. Notably, the federal prosecution involving digital transactions is historic, at... Read more →
Only 80% of wrongly-claimed Employee Retention Credit amounts must be repaid. Photo by Anastasiia Chepinska on Unsplash We're all aware of the continuing medical issues from long COVID. The coronavirus' tax effects appear to be just as persistent. The Internal Revenue Service is still dealing with law changes enacted to provide pandemic relief. The Employee Retention Credit, or ERC, is one of them. This refundable business tax credit was designed for companies that continued paying employees during the COVID-19 pandemic despite financial hardship. To qualify, the businesses were either fully or partially suspended due to a government order, or had... Read more →
Photo by Grant Durr on Unsplash š Billions of dollars in fraud. š Victims across the globe. š š Criminals who are all about personal gain. š No, that's not the opening voiceover in a trailer for a new Netflix true crime series, although I'd watch it if it were. It's from IRS Criminal Investigation Chief Jim Lee's comments on his unit's top 10 cases of 2023. Those three opening elements, said Lee, are the crux of CI's biggest busts last year. "When I say our team at CI is the best at following the money trail, I mean it,"... Read more →
More than 20,000 businesses are about to learn how serious the Internal Revenue Service is about stopping questionable Employee Retention Credit (ERC) claims. The tax agency has sent them a letter notifying them that they won't be getting the COVID-19 pandemic tax relief. Many of the claims were filed by ERC mills that have aggressively promoted the tax relief, often to businesses that did not qualify. The amount of such questionable claims prompted the IRS in September to stop processing all new claims. This first round of IRS letters to some of those who did file for the ERC is... Read more →
Unsplash+ in collaboration with Getty Images The Internal Revenue Service and its Security Summit partners today wrapped up the eighth annual National Tax Security Awareness Week with a warning for everyone, individual taxpayers and tax pros, to stay alert to emerging tax scams. It's a message the group issues regularly throughout the year because con artists work year-round to steal our money and, in many cases, our identities. Once they get that personal data, they can file fake tax returns to try to collect fraudulent refunds. By now, most of us are well aware of the warning signs of scams... Read more →
Photo by Anne NygĆ„rd on Unsplash Most taxpayers get federal tax refunds. Internal Revenue Service data complete through Oct. 27 shows that the agency received 160.5 million returns and issued nearly 105 million refunds that totaled more than $319 billion. Not surprisingly, taxpayers who are getting cash back from Uncle Sam are among the first to file every tax season. That's also a good security move. By getting their 1040 forms to the IRS early, they beat the criminals who might try to file fake returns under their names to claim their or even bigger fraudulent refunds. But some folks... Read more →
Photo via Unsplash+ in collaboration with Andrej LiÅ”akov The official holiday shopping season is officially underway. So is the identity theft season, which could cause lots of problems for shoppers at tax time. I know about the shopping season because my email box is overflowing with "Buy Now!" and "Bargains, Bargains, Bargains" and "Get 40% Off!" messages, mostly for stuff I have no intention of buying at any price. I know about the tax threat because next week, Nov. 27 through Dec. 1, is the eighth annual National Tax Security Awareness week. During these coming five days, just as online... Read more →
Small businesses' many challenges were multiplied during the COVID-19 pandemic. The Employee Retention Credit (ERC) helped many companies and their workers make it through that lean time. But recently, unscrupulous promoters have pushed some owners to improperly claim the ERC, creating new problems. Now the IRS is offering a way to correct those bad filings. (Image via Unsplash+ in collaboration with Getty Images) The Employee Retention Credit (ERC) helped lots of small businesses and their staff make it through the COVID-19 pandemic. When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees while... Read more →
Photo by Tim Mossholder on Unsplash Businesses who applied for the Employee Retention Credit (ERC) arenāt the only ones upset with the Internal Revenue Serviceās handling of claims. So are the Republican leaders of the House Ways and Means Committee. Rep. Jason Smith (R-Missouri), chairman of the tax-writing panel, and Rep. David Schweikert (R-Arizona), chair of the W&M Oversight Subcommittee, this week wrote to IRS Commissioner Daniel Werfel demanding an update on the ERC processing backlog. The ERC, also sometimes referred to as the Employee Retention Tax Credit or ERTC, was created during the COVID-19 pandemic to help businesses and... Read more →
This summer, the Internal Revenue Service warned us of a surge of tax scams. Identity thieves were sending a barrage of email and text messages promising tax refunds or offers to help fix tax problems. Apparently, the scammers are continuing into the fall. Fake IRS text: I got the fake IRS text at left this week. This crook apparently was trying to convince me to click on the StatementClaim.pdf document. I was curious, but not that curious. However, I did like how the crook tried to pique my interest by annotating the fake text as an internal tax agency message.... Read more →
The sentencing of the two Fort Myers businessmen this week comes as the Internal Revenue Service ramps up its compliance efforts on flow-through entities. Photo by Raze Solar on Unsplash Reliable contractors are worth a fortune in Florida. The Sunshine State has its share of overcast and worse days, as made disastrously clear by major Hurricanes Ian in 2022 and Idalia this fall. That's why it's so discouraging when home repair experts break bad. Like a pair of roofing contractors who cheated the Internal Revenue Service out of more than $1 million. And more companies like theirs, a pass-through entity,... Read more →
Photo by Max Burchill on Unsplash To paraphrase a gazillion social media posts, exploitative people are why we can't have needed tax breaks. OK, Congress plays a big part. And the Internal Revenue Service too often steps on its own tax toes. But in many cases, unscrupulous people mess things up for the rest of us who are just trying to comply with tax laws and get a little bit of legitimate tax relief along the way. That's what happened with the Employee Retention Credit (ERC). This refundable tax credit was created by lawmakers to help businesses that were struggling... Read more →
The scheme involved false W-9 information, which meant the payor wasn't able to provide the owner of the artificial turf company, or the Internal Revenue Service, with the proper third-party report, allowing the man to evade nearly a million in federal tax. Until tax investigators caught up to him. Artificial grass has been dividing sports fans and players since its installation in Houston's iconic Astrodome in 1966. But fake grass is gaining ground among residential and smaller commercial customers. The market is forecast to reach $7 billion by 2025, as we deal with hotter temperatures, drought, and water sources literally... Read more →
What a fun Monday. The hubby and I spent much of the morning setting up free credit monitoring accounts related to recent healthcare data breaches. Then we each ordered a free credit report to see if miscreants had been pretending to be either of us. I suspect we are not alone in taking identity theft precautions. The HIPAA Journal reports there was a 261 percent month-over-month increase in breached healthcare records in July. More than 18 million records were exposed in 56 reported incidents. The incredibly high total was due to a major data breach at HCA Healthcare that saw... Read more →
Unsplash+ in collaboration with Getty Images One construction workers' union calls it the industry's "dirty little secret." Tax officials call it a crime. Both are talking about payroll tax evasion. Today, the Financial Crimes Enforcement Network (FinCEN), in coordination with IRS Criminal Investigation (IRS-CI), jointly issued a formal notice to financial institutions alerting them to increases in state and federal payroll tax evasion and workers' compensation insurance fraud in the both residential and commercial construction industries. Every year, state and federal tax authorities lose hundreds of millions of dollars to these schemes, which are perpetrated by illicit actors primarily through... Read more →
Photo by Volodymyr Kondriianenko on Unsplash Summer is slipping away, but tax crooks are still hard at work. That's why the Internal Revenue Service and its Security Summit partners are spreading the word about signs of data theft. The warning from Uncle Sam and state tax officials, as well as the private sector tax community, is aimed at helping tax professionals. That's understandable, since they collect and manage clients' tax and personal data. If crooks can crack the tax pros' cache, they have what the IRS calls a precious commodity, details on thousands of taxpayers from just a few sources.... Read more →
IRS.gov Identity thieves continue to target taxpayers, but the Internal Revenue Service has given individuals a way to fight back. By using an Identity Protection Person Identification Number, or IP PIN, instead of their usual Social Security number, taxpayers can show the IRS that the IP PIN filing is the legitimate one. Even if a thief already has filed a fraudulent tax return, an IP PIN offers protection for later years, preventing taxpayers from being repeat victims of tax-related identity theft. Success of IP PINs: The IRS began allowing all taxpayers to apply for an IP PIN in January 2021.... Read more →
Summertime, despite what the song says, is not easy if you are the target of a tax scam. And that's increasingly likely this season, says the Internal Revenue Service. The tax agency is urging people to be on the lookout for a summer surge of tax scams. Identity thieves are sending a barrage of email and text messages promising tax refunds or offers to help fix tax problems. Neither the good (possible cash back from Uncle Sam) nor the bad (tax troubles) exist. They are just the latest ploys, targeting individual and business taxpayers, that crooks are using to try... Read more →
With summer here, most of us are taking advantage of this traditional season of breaks to, well, take breaks from work. I am among them. To make the end of work weeks during the summer a little easier, I'm resuming an older ol' blog feature, Tax Felon Friday. Tax offenses generally aren't as lurid as those in, for example, true crime podcasts. (Yes, I am a big fan of them.) But this first of the revived Tax Felon Friday series does have a connection to a prior prurient federal case. In the summer of 2017, Frank Parlato, Jr. helped expose... Read more →