Welcome to The Shaw Atlas, the monthly newsletter from Shaw & Associates, CPAs & Financial Advisors. We look forward to keeping you abreast of ever-changing tax codes, providing you with money saving accounting tips and illustrating proactive strategies to help you achieve the financial life you envision.
Shaw & Associates, CPA
You may have recently heard about an uptick in identity theft via filing of fraudulent tax returns using stolen social security numbers. At Shaw & Associates we have also been noticing an increase in these types of returns. Although we only had four in the 2014 tax filing season, this is still double over the previous year. Unfortunately we believe this problem will probably get worse before it gets better.
An identity thief generally uses a legitimate taxpayer’s identity and Social Security number to fraudulently file a tax return and claim a refund. This is usually done early in the tax filing season. The victim typically finds out about the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because the Social Security number has already been used to file a tax return for the same tax year. The IRS then delays processing the refund until it can determine who the legitimate taxpayer is.
How do thieves obtain Social Security numbers?
They may hack into victims’ computers or the unsecured websites and networks of businesses, or they might steal wallets or purses, rummage through trash or steal statements from mailboxes. Sometimes, criminals make phone calls claiming to be from businesses that need information. Other times, they buy information from informants who have access to Social Security numbers at their jobs.
There’s no way to fully shield yourself from tax-related identity theft but there are steps you can take to minimize the chances — or at least to identify a possible theft early to reduce the damage:
- Don’t give out your Social Security number to businesses or medical providers just because they ask for it. Provide it only when required. The Social Security Administration advises consumers to “ask why your number is needed, how it will be used and what will happen if you refuse.”
- Protect your financial information. Shred documents with personal identifying information.
- Don’t provide information in response to email or text messages. Don’t give personal information over the phone unless you initiated the contact or you know whom you’re dealing with. Don’t carry your Social Security card or documents with your number on them. Keep these in a safe place at home.
- Don’t respond to phishing schemes. The IRS doesn’t get in touch with taxpayers by email or text message to request personal information. An initial contact from the IRS about your tax return comes in the form of correspondence through the U.S. mail.
- Protect personal computers by using firewalls, anti-spam/virus software and updated security patches.
- Regularly change passwords for online accounts.
- Check your credit report at least every 12 months for any suspicious activity.
What should you do if you are a victim of Identity Theft?
Respond immediately if you receive an IRS letter or notice stating that another return has been filed with your information or that you received wages from an employer other than your actual one. You may be asked to confirm your identification on the IRS website through the Identity Verification Service (IDVerify) or by phone at the IRS toll-free number provided in the letter. You should also prepare and submit an Identity Theft Affidavit on IRS Form 14039.
Once you have filed the Identity Theft Affidavit, the IRS will process and issue you a separate pin number to use when e-filing your future tax returns. Unfortunately, this process can take up to nine months to complete which is why it is important to submit your Identity Theft Affidavit immediately after discovering your information has been compromised. Also, it is important to note that you will be issued a separate pin number every year. Thus, you need to make sure that you get this information to your tax preparer as soon as you receive it in the mail.
The IRS has taken some steps in an attempt to alleviate the problem but much more needs to be done. Some steps include sending a letter to the taxpayer when they see a return that they think may be fraudulent before issuing a refund. They have also have started sending refund checks to taxpayers instead of direct depositing to bank accounts for those returns that appear to be suspicious assuming the correct taxpayer would question why they were receiving this refund. It is important not to cash this refund check if it does not represent your actual refund.
If you have any questions or concerns about your personal situation please do not hesitate to contact me at firstname.lastname@example.org or call me at (970) 223-0792.
Client Spotlight- Big O Tires
Jim Lautzenheiser recently opened his 3rd Fort Collins Big O Tires location on Timberline. It also just happens to be the largest Big O Tires store in northern Colorado. Just like the name Big O Tires suggests, this new location exemplifies big as in BIG in concept, BIG in service and BIG in amenities!
Not wanting to make the customers feel like there were walking into a garage, this store was built for optimum customer service. It has two waiting areas where customers won’t actually mind spending time in! Taking into consideration that everyone needs to stay connected these days, one area includes a WiFi bar to cater to our professional customers taking a break in their busy day. It’s a place where they can use their laptops and smartphones while their vehicle is being worked on. The second waiting area is a Relaxation Lounge. It’s also equipped with WiFi where customers can relax on comfortable seating while catching up on emails and social media, and also enjoy free snacks and beverages.
A TV screen allows the customer to watch the technicians service their vehicle offering them confidence and ease while they wait. This location has 8 bays. Each one has flush mounted alignment racks for ease of aligning high performance vehicles and a storage area that holds over 2,000 tires at any time! And due to the rapidly increasing number of electric car owners in Fort Collins, this store has its own electric car battery charger on site.
Many of you may not be aware that there are about 70 tax deductions/credits/benefits that are not a permanent part of the tax code. They come before Congress every year or two to be renewed. You may also not be aware that these have all expired at the beginning of 2015 and have not yet been renewed. Although they are usually renewed (with some individual ones allowed to expire) this is obviously up to the whims of Congress. Unfortunately, this is a particularly volatile year in Washington.
First, it is now presidential election season which brings its own challenges. Also, there has been significant turmoil in the House of Representatives with the majority Republican leadership resigning, putting the time frame of these into limbo. Thus, although anticipated to be extended, it may be last minute (or even after the end-of-the-year), which causes significant issues in planning.
Many of these tax deductions/credits/benefits are business related and many are applicable to your personal tax return. Some of the more prominent ones are:
- Section 179 expensing of business assets up to $500,000 (currently only $25,000)
- R&D credits
- Expensing of sales taxes
- Certain charitable contributions
- Mortgage insurance deduction
- State and local sales tax deduction
Stay tuned for updates on this through the end of the year.
Denim Day Charity- Crossroads Safehouse
Every quarter our staff chooses a different charity to donate to for the privilege of wearing jeans to the office. This quarter we have selected Crossroads Safehouse as our 4th quarter “Denim Day” charity. For more information about this organization or to make a tax-deductible donation, please visit their website. www.crossroadssafehouse.org
OpenStage- Superior Donuts
From the Pulitzer-Prize winning author of August: Osage County comes a sticky sweet comedy about a has-been hippie in a decrepit Chicago donut shop and his ragtag band of regulars. Superior Donuts opens Saturday Oct. 31st and plays through Saturday Nov. 28th. Please contact our office for free tickets to attend!