Tag Archives: Identity theft

Have you been scammed?

by Susan DeanGranny on phone

Have you received a phone call that you thought was from the Internal Revenue Service (IRS)? If so, you are not alone. Many people have been a victim of these recent phone scams. Criminals pose to be an IRS representative in order to gain personal information, receive money or even steal your identity. Below are several examples of phone scams and helpful tips the IRS released in the recent article, IRS Urges Public to Stay Alert for Scam Phone Calls.

  • Scammers make unsolicited calls. Thieves call taxpayers claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via phishing email.
  • Callers try to scare their victims. Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.
  • Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.
  • Cons try new tricks all the time.  Some schemes provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. Others use emails that contain a fake IRS document with a phone number or an email address for a reply. These scams often use official IRS letterhead in emails or regular mail that they send to their victims. They try these ploys to make the ruse look official.
  • Scams cost victims over $23 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 736,000 scam contacts since October 2013. Nearly 4,550 victims have collectively paid over $23 million as a result of the scam.

The IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for your credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

  • Call the IRS at 800-829-1040. IRS workers can help you.

Phone scams first tried to sting older people, new immigrants to the U.S. and those who speak English as a second language. Now the crooks try to swindle just about anyone. And they’ve ripped-off people in every state in the nation.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.  If you have questions about your rights, or any other tax issue, give Langdon & Company LLP a call.  We’d be happy to help!

Susan Dean ([email protected]) is an Enrolled Agent with Langdon & Company LLP’s tax practice.  She focuses on corporate tax and closely-held family businesses.

How Will the IRS and the States Handle Virtual Currency?

by Cody Taylor

bitcoinOver the last decade the Internal Revenue Service (IRS) has been faced with a brand new subject courtesy of our interconnected world: virtual currency.  Bitcoin is the most well-known but there are over 150 virtual currencies worldwide with some of the other larger ones being Litecoin, Darkcoin and Peercoin.  As these currencies have popped up and have become more popular the IRS needed to decide how to handle transactions conducted in these new currencies.  Bitcoin for instance is accepted at mainstream retailers such as Overstock.com, Dish Network and Expedia, among others.

The IRS issued guidance in the form of answers to Frequently Asked Questions (FAQs).  This setup tries to provide an overview for how transactions in virtual currencies will be handled for federal tax purposes.  What follows is an excerpt of the FAQs from IRS Notice 2014-21:

Q-1: How is virtual currency treated for federal tax purposes?

A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

Q-2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?

A-2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.

Q-3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency?

A-3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, 3 measured in U.S. dollars, as of the date that the virtual currency was received. See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.

Q-4: What is the basis of virtual currency received as payment for goods or services in Q&A-3?

A-4: The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A-3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt. See Publication 551, Basis of Assets, for more information on the computation of basis when property is received for goods or services.

Q-5: How is the fair market value of virtual currency determined?

A-5: For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?

A-6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.

The rest of IRS Notice 2014-21 and the remaining FAQs can be found at IRS Notice 2014-21 – Federal Taxation for Virtual Currencies.  At the state level the details of how virtual currency will be handled is still being worked out.  North Carolina currently has a bill in the state congress that addresses how the state wants to handle a number of issues associated with virtual currencies.  They even have a Virtual Currency Corner on the North Carolina Commissioner of Banks website dedicated to current virtual currency news and legislation.

If you have any dealings with virtual currency or might in the future, we would be happy to help answer any questions you may have.  Please contact our office for additional information.

Cody ([email protected]) is part of our tax staff at Langdon & Company LLP.  He focuses on high-net wealth individuals, and other various types of tax projects.

Are YOU a Victim of Tax Identity Theft?

by Susan Dean

If you have received a 5071C letter from the Internal Revenue Service (IRS), you may indeed be a victim of tax identity theft. The purpose of the 5071C letter is to inform you that the IRS has received a tax return with your name and/or social security number and need to verify your identity. In an effort to protect the taxpayer, the letter provides two options to contact the IRS and confirm whether or not you filed your return. Taxpayers may use the idverify.irs.gov site or call a toll-free number on the letter. Due to the high-volume of calls, the IRS-sponsored website is the safest, fastest option for taxpayers with web access.

Below is a Taxpayer Guide to Identity Theft posted by the IRS.

ID theftWhat is tax-related identity theft?

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.

Generally, an identity thief will use your SSN to file a false return early in the year. You may be unaware you are a victim until you try to file your taxes and learn one already has been filed using your SSN.

Know the warning signs

Be alert to possible identity theft if you receive an IRS notice or letter that states that:

  • More than one tax return was filed using your SSN;
  • You owe additional tax, refund offset or have had collection actions taken against you for a year you did not file a tax return;
  • IRS records indicate you received wages from an employer unknown to you.

Steps to take if you become a victim

  • File a report with law enforcement.
  • Report identity theft at gov/complaint and learn how to respond to it at identitytheft.gov.
  • Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records:
  • Contact your financial institutions, and close any accounts opened without your permission or tampered with.
  • Check your Social Security Administration earnings statement annually. You can create an account online at ssa.gov.

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

  • Respond immediately to any IRS notice; call the number provided
  • Complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to instructions.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490. We have teams available to assist.

How to reduce your risk

  • Don’t routinely carry your Social Security card or any document with your SSN on it.
  • Don’t give a business your SSN just because they ask – only when absolutely necessary.
  • Protect your personal financial information at home and on your computer.
  • Check your credit report annually.
  • Check your Social Security Administration earnings statement annually.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or the Internet unless you have either initiated the contact or are sure you know who is asking.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

Report suspicious online or emailed phishing scams to:[email protected]. For phishing scams by phone, fax or mail, call: 1-800-366-4484. Report IRS impersonation scams to the Treasury Inspector General for Tax Administration’s IRS Impersonation Scams Reporting.

This excerpt and additional Q&A information on Identity Theft can be found on the IRS website.

Identifying Identity Theft

by Susan Dean

Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the Internal Revenue Service (IRS). At the end of fiscal 2013, the IRS had almost 600,000 identity theft cases in its inventory. With more than 3,000 employees working on identity theft cases, the IRS is focused on preventing, detecting and resolving identity theft issues as soon as possible.identity_theft

There are several ways taxpayers can experience identity theft involving their tax returns. One of the most frequent encounters occur when identity thieves trying to file fraudulent refund claims using another person’s identifying information, such as their name and social security number. By filing early in the tax-filing season, thieves have a lower chance of being detected and a higher chance of receiving fraudulent refunds. More often than not, taxpayers are unaware identity theft has even occurred until they try to file their own personal income tax return. A rejection from an attempt to electronically file or a notice from the IRS stating that “more than one tax return was filed” may be a good indicator that the taxpayer has been a victim of identity theft.

A delay in receiving an expected tax refund is also an indicator of possible identity theft. Tax return identity theft delays legitimate taxpayer refunds because the return appears to be a duplicate return and therefore may be a sign of other fraud or identity problems. If a duplicate return has been filed, the taxpayer may receive notice from the IRS. A notice received from the IRS may indicate a duplicate filing, assess the taxpayer for additional tax due or indicate that an expected refund was used to offset a prior tax liability. If a taxpayer receives a notice from the IRS and suspects the possibility of identity theft they should contact the IRS Identity Protections Specialized Unit at 800-908-4490. It is also recommended that you contact a tax professional for assistance in resolving the matter as soon as possible.

Langdon & Company LLP has helped several clients in the Triangle with identity theft matters relating to filing their tax returns and receiving their income tax refunds. For questions about identity theft or assistance with resolving an identity theft issue, please contact our office.

Susan is a tax manager at Langdon & Company LLP.  As an Enrolled Agent, she focuses primarily on the non-profit industry, trust income tax reporting and multi-state filings.