Just when you thought you’d read about all of the tax scams: The Internal Revenue Service (IRS) is warning taxpayers about a new – and growing – scam involving erroneous tax refunds being deposited into real taxpayer bank accounts. Then, the crooks use various tactics to con taxpayers into turning over the funds. It’s a new twist on an old scam. Here’s how it works. Thieves are using phishing and other schemes to steal client data from tax professionals. Then, using that data, they file fraudulent tax returns and use the taxpayers’ real bank accounts to deposit erroneous tax refunds. Finally, the thieves, posing as IRS or other law enforcement, call attention to the error and ask taxpayers to return the money to them. Why are thieves going to such lengths? They know it is more difficult to identify and halt fraudulent tax returns when they are using real client data such as income, dependents, credits, and deductions. Additionally, it’s harder to track when criminals can find alternative ways to get the fraudulent refunds delivered to themselves rather than the real taxpayers – no more stealing checks out of mailboxes. To get the funds from real taxpayers, thieves use various tactics. In one version, criminals posing as debt collection agency officials acting on behalf of the IRS reach out to taxpayers to say a refund was deposited in error, and ask the taxpayers to forward the money to their collection agency. In another version, taxpayers who receive an erroneous tax refund receive an automated call with a recorded voice claiming to be from IRS; the caller threatens taxpayers with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security Number. The recorded voice then gives the taxpayer a case number and a telephone number to call to return the refund. The kicker? Unlike previous variations on the scams, there is “proof” that the call from the alleged IRS representative is for real: The taxpayer typically does have a bogus tax refund in his or her bank account. If this happens to you – and you do have a bogus tax refund in your bank account – here’s how the IRS wants you to return the funds and avoid being scammed: If the erroneous refund was a direct deposit: 1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS. 2. Call the IRS toll-free at 1.800.829.1040 (individual) or 1.800.829.4933 (business) to explain why the direct deposit is being returned. If the erroneous refund was a paper check and hasn’t been cashed: 1. Write “Void” in the endorsement section on the back of the check. 2. Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check. 3. Don’t staple, bend, or paper clip the check. 4. Include a note stating, “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).” If the erroneous refund was a paper check and you have cashed it: 1. Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below. 2. If you no longer have access to a copy of the check, call the IRS toll-free at 1.800.829.1040 (individual) or 1.800.829.4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS representative that you need information to repay a cashed refund check. 3. Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number). 4. Include a brief explanation of the reason for returning the refund. Act quickly: Repaying an erroneous refund in this manner may result in interest owed to the IRS (remember, it’s not your money to begin with). Here are the IRS mailing addresses to use based on the city (located on the check’s bottom text line in front of the words TAX REFUND): ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810 ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341 AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741 BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742 CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011 FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727 KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302 MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118 OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201 PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104 You can access this information online, as well, at Tax Topic Number 161 – Returning an Erroneous Refund, found here. In addition to returning the erroneous tax return, the IRS encourages taxpayers to discuss the issue with their financial institutions. Since the bad guys have access to your bank accounts, there may be a need to close those accounts. Taxpayers receiving erroneous refunds should immediately should contact their tax preparers. Of course, since tax season just kicked off, taxpayers who file electronically may find that their tax return is booted back because a tax return with their Social Security number has already been filed. In that event, follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers who are not able to file electronically should mail a paper tax return along with form 14039, Identity Theft Affidavit (downloads as a pdf), with a statement that they were victims of a tax preparer data breach. For more on tax-related-identity theft, click here. The IRS warns that versions of the scam may continue to evolve. The number of potential taxpayer victims has already jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme. And one more time, just for good measure, say it with me: The IRS will not initiate contact with you by phone or email to discuss your account. When in doubt, assume it’s a scam. For more tips on protecting yourself from identity theft, click here.

IR-2018-05, Jan. 11, 2018 WASHINGTON — The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law. The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables. Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly. The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time. “The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes.” The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets. For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible. To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released. The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions. The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4. In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay. For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding. More information is available in the Withholding Tables Frequently Asked Questions.

We have all heard that it is better to give than to receive. However, if you think you might someday want (or need) to apply for Medicaid long-term care benefits, then you need to be careful. Why? Because giving away money or property now can interfere with your eligibility later. Under federal Medicaid law, if you transfer assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on the value of the assets you transferred. Even small transfers can affect eligibility. Warning: While federal law allows individuals to gift up to $14,000 a year (in 2016) without having to pay a gift tax, Medicaid law still treats that gift as a transfer subject to penalty. In fact, any transfer you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty. Spending a lot of cash all at once or over time could prompt the state to request documentation showing how the money was spent. If you do not have documentation showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty. While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility: • your spouse; • your child who is blind or permanently disabled; or • a trust for the sole benefit of anyone under age 65 who is permanently disabled. In addition, you may transfer your home to the following individuals (as well as to those listed above): • your child who is under age 21; • your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time; or • a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home. Everyone needs a long-term care plan. How will you pay for it? Can you afford to give assets away out of generosity or do you need to salt them away in case they are needed to pay for your care? An elder law consultation can help you learn the Medicaid rules and make plans now through lawfully authorized asset transfers. In addition or alternatively, long-term care insurance is a proven option to pursue. However, the longer you wait to investigate this insurance option, the greater the likelihood you will develop a physical or mental condition that renders you uninsurable. Do not delay. Now is the time to evaluate your options and plan accordingly. © 2016 Integrity Marketing Solutions. All Rights Reserved.

IR-2016-143, Oct. 28, 2016 WASHINGTON — The Internal Revenue Service today reminded employers and small businesses of a new Jan. 31 filing deadline for Forms W-2. The IRS must also hold some refunds until Feb. 15. A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate the W-2 filing deadline for employers to Jan. 31. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least Feb. 15. Here are details on each of these key dates. New Jan. 31 Deadline for Employers The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors. In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. In addition, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information. “As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines,” said IRS Commissioner John Koskinen. “We are working with the payroll community and other partners to share this information widely.” The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged. Some Refunds Delayed Until at Least Feb. 15 Due to the PATH Act change, some people will get their refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC. Even with this change, taxpayers should file their returns as they normally do. Whether or not claiming the EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Though the IRS issues more than nine out 10 refunds in less than 21 days, some returns are held for further review.

The Internal Revenue Service and Free File Alliance today announced the launch of Free File with many changes and updates for 2016, including more free state tax return options and easier Form W-2 imports. For 2016, there are 13 brand-name tax software providers making their federal tax return products available for free. Taxpayers whose adjusted gross income was $62,000 or less during 2015 are eligible for at least one, if not more, of the 13 tax software products. The income limitation is $2,000 higher than last year. People can use Free File software immediately but e-filed returns will not be transmitted to the IRS until Tuesday, Jan. 19, when the filing season officially begins. For taxpayers who earned more than $62,000, there’s Free File Fillable Forms, the electronic version of IRS paper forms. Free File Fillable Forms will be available on Jan. 19. “You don’t have to be an expert on taxes. Free File software can help walk you through the steps and help you get it right,” said John A. Koskinen, IRS Commissioner. “For 13 years, this partnership between the IRS and the Free File Alliance has helped taxpayers. The real winner in this partnership has been the nation’s taxpayers.” Tim Hugo, executive director of the Free File Alliance, said, “We are proud to once again offer the industry’s most innovative and secure tax software at no cost to 70 percent of American taxpayers. Tax time can be stressful, but Free File makes step-by-step help accessible to everyone making $62,000 or less. IRS.gov/FreeFile is the one place where taxpayers can choose from a variety of industry-leading tax software options in order to prepare and e-file their federal tax returns at absolutely no cost.” Free File is available only at IRS.gov/FreeFile. Since 2003, more than 46 million people have used Free File, saving nearly $1.4 billion based on a conservative $30-fee estimate. The Free File Alliance and its members also are active participants in the Security Summit Initiative to provide additional identity theft safeguards for tax filing and for the Security Awareness campaign – Taxes. Security. Together. – that encourages taxpayers to take steps to better protect their data. For 2016, more Free File software providers are offering both free federal and free state tax return preparation for states with income tax requirements. Some providers also are offering state tax return preparation for a fee. State tax return offers are at the discretion of the providers. Additionally, new for this year, several software providers also are offering the easy importation of Form W-2 information which can help reduce errors. More than 70 percent of all taxpayers — 100 million people — are eligible for the software products. Each of the 13 companies has its own special offers, generally based on age, income or state residency. Taxpayers can review each company offer or they can use a “Help Me” tool that will find the software for which they are eligible, including which companies offer a free state return. Free File also can help taxpayers with the new health care requirements. Just as last filing season, almost everyone will need to do something when filing a tax return this year. For each month in 2015, taxpayers and everyone on their return must: Report health care coverage, or Claim an exemption from coverage or Make a shared responsibility payment with their tax return. Most people will simply have to check a box to report health care coverage for the entire year. If a taxpayer or anyone on their return purchased coverage from the Health Insurance Marketplace, they may be eligible for the premium tax credit. If they opted for any advance payments of the premium tax credit to help with their monthly insurance premium payments, they must file a tax return, even if they were not required to file. Taxpayers must reconcile their advance payments with the amount they were due. Learn more at IRS.gov/aca. Taxpayers have the option to prepare their return at any time and schedule a tax payment as late as the tax deadline, which, for 2016, is April 18. Taxpayers who cannot meet the April 18 tax filing deadline can also use Free File to file a six-month extension. Remember, the fastest way to get your refund is through e-file and direct deposit. Direct deposit is fast, safe and easy. Just have your routing number and account number handy. Nine out of 10 taxpayers will receive their refunds within 21 days. For 2016, Free File can also help taxpayers with myRA a new, free, retirement savings account from the Treasury Department. Taxpayers who have a myRA account may use Free File to deposit their tax refund or a portion of their refund into their myRA account. Just use Form 8888 or follow your software product’s instructions.