Don’t Fall for Charity Scams Following Disasters

The IRS warns consumers not to fall for bogus charity scams. They often occur in the wake of major disasters like the recent tornadoes in the Midwest or the typhoon in the Philippines. Thieves play on the goodwill of people who want to help disaster victims. They pose as a real charity in order to steal money or get private information to commit identity theft.

The scams use different tactics. Offering charity relief, criminals often:

• Claim to be with real charities to gain public trust.
• Use names similar to legitimate charities.
• Use email to steer people to bogus websites that often look like real charity sites.
• Contact people by phone or email to get them to ‘donate’ money or give their financial information. 

The IRS offers the following tips to help taxpayers who wish to donate to victims:

• Donate to qualified charities.  Use the Exempt Organizations Select Check tool at IRS.gov to find qualified charities. Only donations to qualified organizations are tax-deductible. You can also find legitimate charities at the Federal Emergency Management Agency website, fema.gov. For more information about the kinds of charities that can receive deductible contributions, see Publication 526, Charitable Contributions.
• Don’t give out information.  Don’t give your Social Security number, credit card and bank account numbers or passwords to anyone. Scam artists use this information to steal your identity and money.
• Don’t give or send cash.  For security and tax record purposes, don’t give or send cash. Contribute by check, credit card or another way that provides documentation of the donation.
• Report suspected fraud.  If you suspect tax or charity-related fraud, visit IRS.gov and click on ‘Reporting Phishing’ at the bottom of the home page.

IRS to end Tax Prep Walk-In Assistance in 2014

The IRS has notified its field offices that offer walk-in tax preparation assistance that the services will not be offered in 2014 due to budget cuts. The assistance centers prepared only 60,000 returns last year, and that number has dropped each year as the IRS has cut office hours and the number of appointments it has taken. Before 2002, the assistance was available to all taxpayers, but since then it has been available only to elderly, disabled, and low-income taxpayers. IRS National Taxpayer Advocate Nina Olson took issue with this decision in a speech to the 2013 Annual Meeting of the California Tax Bar & the California Tax Policy Conference and noted that, without assistance from the IRS, the elderly, disabled, and low-income taxpayers who rely on the free help will be forced to spend money on tax preparation. "I seem to think that preparing taxes for our citizens is a core tax administration duty, and I don't know of any [developed] country that is not doing it except the Internal Revenue Service of the United States," Olson said. "I think that's a shameful thing, and that is the new paradigm of tax administration."

Changes soon for Tax-Exempt Social Welfare Organizations????

The U.S. Department of the Treasury and the Internal Revenue Service today will issue initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under section 501(c)(4) of the Internal Revenue Code. This proposed guidance defines the term “candidate-related political activity,” and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity. The proposed guidance also seeks initial comments on other aspects of the qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare.

The proposed guidance is expected to be posted on the Federal Register later today.
There are a number of steps in the regulatory process that must be taken before any final guidance can be issued. Given the significant public interest in these and related issues, Treasury and the IRS expect to receive a large number of comments. Treasury and the IRS are committed to carefully and comprehensively considering all of the comments received before issuing additional proposed guidance or final rules.

“This is part of ongoing efforts within the IRS that are improving our work in the tax-exempt area,” said IRS Acting Commissioner Danny Werfel. “Once final, this proposed guidance will continue moving us forward and provide clarity for this important segment of exempt organizations.”
“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,” said Treasury Assistant Secretary for Tax Policy Mark J. Mazur. “We are committed to getting this right before issuing final guidance that may affect a broad group of organizations. It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently.”

Organizations may apply for tax-exempt status under section 501(c)(4) of the tax code if they operate to promote social welfare. The IRS currently applies a “facts and circumstances” test to determine whether an organization is engaged in political campaign activities that do not promote social welfare. Today’s proposed guidance would reduce the need to conduct fact-intensive inquiries by replacing this test with more definitive rules.

In defining the new term, “candidate-related political activity,” Treasury and the IRS drew upon existing definitions of political activity under federal and state campaign finance laws, other IRS provisions, as well as suggestions made in unsolicited public comments.
Under the proposed guidelines, candidate-related political activity includes:
1. Communications

• Communications that expressly advocate for a clearly identified political candidate or candidates of a political party.
• Communications that are made within 60 days of a general election (or within 30 days of a primary election) and clearly identify a candidate or political party.
• Communications expenditures that must be reported to the Federal Election Commission.

2. Grants and Contributions

• Any contribution that is recognized under campaign finance law as a reportable contribution.
• Grants to section 527 political organizations and other tax-exempt organizations that conduct candidate-related political activities (note that a grantor can rely on a written certification from a grantee stating that it does not engage in, and will not use grant funds for, candidate-related political activity).

3. Activities Closely Related to Elections or Candidates

• Voter registration drives and “get-out-the-vote” drives.
• Distribution of any material prepared by or on behalf of a candidate or by a section 527 political organization.
• Preparation or distribution of voter guides that refer to candidates (or, in a general election, to political parties).
• Holding an event within 60 days of a general election (or within 30 days of a primary election) at which a candidate appears as part of the program.

These proposed rules reduce the need to conduct fact-intensive inquiries, including inquiries into whether activities or communications are neutral and unbiased.
Treasury and the IRS are planning to issue additional guidance that will address other issues relating to the standards for tax exemption under section 501(c)(4). In particular, there has been considerable public focus regarding the proportion of a section 501(c)(4) organization’s activities that must promote social welfare. Due to the importance of this aspect of the regulation, the proposed guidance requests initial comments on this issue.

The proposed guidance also seeks comments regarding whether standards similar to those proposed today should be adopted to define the political activities that do not further the tax-exempt purposes of other tax-exempt organizations and to promote consistent definitions across the tax-exempt sector.

IRA 2013 YEAR - END REMINDERS!!!!!!!

IRAs are a great way to save for retirement. Here are some reminders for 2013.
Contributions

• Limits
  Review the 2013 IRA contribution and deduction limits to ensure you’re taking full advantage of the opportunity to save for retirement. You can contribute up to $5,500 or your taxable compensation, if less ($6,500 if you are age 50 or older by the end of 2013) to a traditional or Roth IRA. However, you may not be able to deduct your traditional IRA contributions if you or your spouse is covered by a retirement plan at work and your income is above a certain level. If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. You have until April 15, 2014, to make an IRA contribution for 2013.
  
  
• Excess contributions
  If you’ve exceeded the 2013 IRA contribution limit, you should withdraw the excess contributions from your account by the due date of your 2013 tax return (including extensions). Otherwise, you must pay a 6% tax each year on the excess amounts remaining in your account.
  
  

Tax credit
You may be able to take a retirement savings contribution tax credit (saver’s credit) of up to $1,000 ($2,000 if filing jointly) for your contributions to either a traditional or Roth IRA. The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10% or as high as 50%. Your credit rate depends on your income and your filing status. See Form 8880 to determine your credit rate.
Required minimum distributions
If you’re 70½ or older, you must take a required minimum distribution from your traditional IRA by December 31, 2013 (April 1, 2014, if you turned 70½ in 2013). You can calculate the amount of your RMD by using the RMD worksheets. You must calculate the RMD separately for each of your traditional IRAs, but can withdraw the total amount from any one or more of them. You face a 50% excise tax if you don’t take your RMD on time. If you own only Roth IRAs, you don’t have to worry about RMDs because you aren’t required to take RMDs from Roth IRAs held in your name.
Charitable donations
You can exclude from gross income up to $100,000 of a 2013 qualified charitable distribution, which is:

1. a distribution paid directly from your IRA (not an ongoing SEP or SIMPLE IRA),
2. to a qualified charity,
3. after you’re 70½, and
4. by December 31, 2013.

You can use a qualified charitable distribution to satisfy the RMD for your IRA for the year. However, you can’t deduct this amount as a charitable contribution on your tax return.

IRS Warns of Typhoon Scams!

IRS Warns Consumers of Possible Scams Relating to Relief of Typhoon Victims

The Internal Revenue Service today issued a consumer alert about possible scams taking place in the wake of Typhoon Haiyan. On Nov. 8, 2013, Typhoon Haiyan – known as Yolanda in the Philippines – made landfall in the central Philippines, bringing strong winds and heavy rains that have resulted in flooding, landslides, and widespread damage.
Following major disasters, it is common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.
The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

• To help disaster victims, donate to recognized charities.
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find legitimate, qualified charities; donations to these charities may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) website at fema.gov.
• Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
• If you plan to make a contribution for which you would like to claim a deduction, see IRS Publication 526, Charitable Contributions, to read about the kinds of organizations that can receive deductible contributions.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources.   Additionally, scammers often send e-mail that steers the recipient to bogus websites that appear to be affiliated with legitimate charitable causes.

Buying a Business - Protect yourself from unexpected BOE tax liability!

Did you know that when a purchaser buys a business (or stock of goods) from someone that also owes sales tax, the purchaser could end up paying the seller’s sales tax too? Without a tax clearance from the BOE, the buyer can be forced to pay any tax liability of the seller, up to the purchase price of the business.



What should you do to protect your self?

Upon opening an escrow, request a tax clearance from us. Send a written request to your local office before distributing funds. Include:
1. Name, address (for each location being purchased) and seller’s permit of the business being purchased.
2. Expected date the business will be transferred.
3. Your name, address and escrow number.
4. A copy of the purchase or sales agreement including allocation of the purchase price, the value of fixtures and equipment, inventory, goodwill and other terms of the sale agreement.
5. Purchaser’s seller’s permit number, if available.
For a list of the Board of Equalization (BOE) offices statewide, visit their website at
www.boe.ca.gov/info/phone.htm.

I Requested a Tax Clearance—What Happens Next?

• The BOE will determine whether the business being sold owes any money.
• If money is owed, the current owner will be advised to pay the amount due and the escrow company will be advised of the amount to withhold from the purchase price to cover the liability.
• The liability must be paid to the BOE before a certificate of tax clearance will be issued. The buyer cannot be held responsible for seller’s sales taxes once a tax clearance has been issued.

IRS WARNS OF PHONE SCAM

IRS Warns of Phone Scam

The IRS is warning the public about a phone scam that targets people across the nation, including recent immigrants. Callers claiming to be from the IRS tell intended victims they owe taxes and must pay using a pre-paid debit card or wire transfer. The scammers threaten those who refuse to pay with arrest, deportation or loss of a business or driver’s license.
The callers who commit this fraud often:

• Use common names and fake IRS badge numbers.
• Know the last four digits of the victim’s Social Security number.
• Make caller ID appear as if the IRS is calling.
• Send bogus IRS emails to support their scam.
• Call a second time claiming to be the police or DMV, and caller ID again supports their claim.

The truth is the IRS usually first contacts people by mail – not by phone – about unpaid taxes. And the IRS won’t ask for payment using a pre-paid debit card or wire transfer. The agency also won’t ask for a credit card number over the phone.
If you get a call from someone claiming to be with the IRS asking for a payment, here’s what to do:

• If you owe federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
• If you don’t owe taxes, call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.
• You can also file a complaint with the Federal Trade Commission at FTC.gov. Add "IRS Telephone Scam" to the comments in your complaint.

Be alert for phone and email scams that use the IRS name. The IRS will never request personal or financial information by email, texting or any social media. You should forward scam emails to phishing@irs.gov. Don’t open any attachments or click on any links in those emails.