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Eight Tips to Protect Taxpayers from Identity Theft

Identity theft happens when someone steals personal information for financial gain. Tax-related identity theft happens when someone uses another person’s stolen Social Security number (SSN) or Employer Identification Number (EIN) to file a tax return to obtain a fraudulent refund.

Many people first find out they are victims of identity theft when they submit their tax returns. That’s because the IRS lets them know someone else already used their SSN to file.

The IRS continues to work hard to stop identity theft with a strategy of prevention, detection and victim assistance. So far, the agency has stopped millions of dollars from getting into the hands of thieves.

Check out these eight tips on how to protect against identity theft:

1. Taxes. Security. Together. The IRS, the states and the tax industry need everyone’s help. The IRS launched The Taxes. Security. Together. awareness campaign in 2015 to inform people about ways to protect their personal, tax and financial data. Learn more at www.IRS.gov/TaxesSecurityTogether.

2. Protect Personal and Financial Records. Taxpayers should not carry their Social Security card in their wallet or purse. They should only provide their Social Security number if it’s necessary. Protect personal information at home and protect personal computers with anti-spam and anti-virus software. Routinely change passwords for online accounts.

3. Don’t Fall for Scams. Criminals often try to impersonate banks, credit card companies and even the IRS hoping to steal personal data. Learn to recognize and avoid those fake communications. Also, the IRS will not call a taxpayer threatening a lawsuit, arrest or to demand immediate payment. Beware of threatening phone calls from someone claiming to be from the IRS.

4. Report Tax-Related ID Theft. Here’s what taxpayers should do if they cannot e-file their return because someone already filed using their SSN:

• File a tax return by paper and pay any taxes owed.
• File an IRS Form 14039, Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. Include it with the paper tax return and/or attach a police report describing the theft if available.
• File a report with the Federal Trade Commission using the FTC Complaint Assistant.
• Contact Social Security Administration at www.ssa.gov and type in “identity theft” in the search box.
• Contact financial institutions to report the alleged identity theft.
• Contact one of the three credit bureaus so they can place a fraud alert or credit freeze on the affected account.
• Check with the applicable state tax agency to see if there are additional steps to take at the state level.

5. IRS Letters. If the IRS identifies a suspicious tax return with a taxpayer’s stolen SSN, that taxpayer may receive a letter asking them verify their identity by calling a special number or visiting an IRS Taxpayer Assistance Center.

6. IP PIN. If a taxpayer is a confirmed ID theft victim, the IRS may issue them an IP PIN. The IP PIN is a unique six-digit number that the taxpayer uses to e-file their tax return. Each year, they will receive an IRS letter with a new IP PIN.

7. Report Suspicious Activity. If taxpayers suspect or know of an individual or business that is committing tax fraud, they can visit IRS.gov and follow the chart on How to Report Suspected Tax Fraud Activity.

8. Service Options. Information about tax-related identity theft is available online. The IRS has a special section on IRS.gov devoted to identity theft and information for victims to obtain assistance.

Avoid scams. The IRS does not initiate contact using social media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

How Does the IRS Contact Taxpayers?

When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. The IRS doesn’t normally initiate contact with taxpayers by email, nor does it send text messages or contact through social media channels.

Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, advance notice is provided in writing via a letter or notice, but not always.

IRS Phone Calls

• IRS revenue officers work directly with taxpayers to educate them about their options to resolve delinquencies and to collect delinquent taxes and tax returns, while protecting taxpayers’ rights.
• IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.
• Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities but only after the taxpayer and their representative has received written notice. Private debt collectors for the IRS must respect taxpayers’ rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act.

IRS Visits

• IRS revenue officers routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer; however, payment will never be requested to a source other than the US Treasury.
• IRS revenue agents usually visit taxpayers or tax professionals to conduct the audit after either mailing a notice and/or agreeing on the day and time. IRS revenue agents will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss a tax matter.
• IRS criminal investigators are federal law enforcement agents who may visit a taxpayer’s home or place of business unannounced while conducting an investigation. They will not demand any sort of payment.

Ask For Credentials

IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential (PIV). Pocket commissions describe the specific authority and responsibilities of the authorized holder. The PIV is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Criminal investigators also have a badge and law enforcement credentials.

Paying Taxes

All tax payments are to the U.S. Treasury. Taxpayers should never use a preloaded debit card or wire transfer to make a payment. The IRS provides specific guidelines on how to make a tax payment at irs.gov/payments.

IRS employees and contractors will never:

• Be hostile or insulting
• Demand payment without giving taxpayers the opportunity to question or appeal the amount
• Require a specific payment method, such as a prepaid debit card
• Threaten lawsuits, arrest, deportation or other action for not paying
• Ask for credit or debit card numbers over the phone.

Avoid scams. The IRS never initiates contact using social media or text messages. First contact generally comes in the mail. A special page on IRS.gov, “How to know it’s really the IRS calling or knocking on your door,” helps taxpayers determine if a person claiming to be from the IRS is legitimate or an imposter.

South Carolina Sales Tax Free Weekend 2017

South Carolina’s 2017 Sales Tax Holiday is August 4-6

During the annual Sales Tax Holiday, a variety of approved school supply items are exempt from the 6% state sales tax and any applicable local taxes. In years past, shoppers have saved between $2 million and $3 million during the holiday weekend.

Shoppers will pay no sales tax on items ranging from clothing and shoes to book bags and computers. Broadly, exempt items include: clothing; clothing accessories including, but not limited to, hats, scarves, hosiery and handbags; footwear; school supplies including, but not limited to pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes and calculators; computers, printers and printer supplies and computer software; bath wash cloths, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows and pillow cases.

The exemption does not apply to: sales of jewelry, cosmetics, eyewear, wallets and watches; sales of furniture; a sale of an item placed on lay-away or similar deferred payment and delivery plan; rental of clothing or footwear; a sale or lease of an item for use in a trade or business. Computers are exempt from sales tax; however, cell phones, smartphones or other handled devices that make telephone calls are not eligible. Neither are handheld devices that are primarily used to download and listen to music; handheld devices that are primarily used to download and watch videos; or devices that are primarily used to download and read books. However, portable devices that have computing and media functions, allow users to access the internet and have a multitude of software applications are considered computers and are eligible, provided that they are not capable of making telephone calls.

Only computer parts purchased along with a CPU are eligible for the exemption. A monitor, keyboard or scanner by itself is not eligible, but if any of these are purchased in a package with the computer itself, the entire package is exempt. Digital music player, digital cameras and cell phones or smartphones are not exempt regardless of whether they are purchased with a CPU.

School supplies are items used in the classroom or at home with respect to school assignments and include, but are not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes and calculators. Items such as refrigerators and toiletries purchased by college students are not school supplies and are not exempt. Similarly, these items purchased for office, business or non-school use are not exempt.

Musical instruments are exempt, provided that they are used for school assignments. Text books are already exempt from the sales tax, but additional books used for school like dictionaries and those used for book reports and reading assignments are exempt during the Sales Tax Holiday.

Have additional questions? Want more specifics? Check out dor.sc.gov/taxfreeweekend.

IRS Warns of New Phone Scam Involving Bogus Certified Letters; Reminds People to Remain Vigilant Against Scams, Schemes this Summer

WASHINGTON – The Internal Revenue Service today warned people to beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details.

In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS office until after the tax payment is made.

“This is a new twist to an old scam,” said IRS Commissioner John Koskinen. “Just because tax season is over, scams and schemes do not take the summer off. People should stay vigilant against IRS impersonation scams. People should remember that the first contact they receive from IRS will not be through a random, threatening phone call.”

EFTPS is an automated system for paying federal taxes electronically using the Internet or by phone using the EFTPS Voice Response System. EFTPS is offered free by the U.S. Department of Treasury and does not require the purchase of a prepaid debit card. Since EFTPS is an automated system, taxpayers won’t receive a call from the IRS. In addition, taxpayers have several options for paying a real tax bill and are not required to use a specific one.

Tell Tale Signs of a Scam:

The IRS (and its authorized private collection agencies) will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
• Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
• Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
• Ask for credit or debit card numbers over the phone.

For anyone who doesn’t owe taxes and has no reason to think they do:
• Do not give out any information. Hang up immediately.
• Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, 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.

For anyone who owes tax or thinks they do:
• View your tax account information online at IRS.gov to see the actual amount you owe. You can then also review your payment options.
• Call the number on the billing notice, or
• Call the IRS at 800-829-1040. IRS workers can help.

The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov.

Where’s My Refund?

Where’s My Refund – Updates February 18 for Most EITC and ACTC Filers

On the IRS website, www.irs.gov – Where’s My Refund? will be updated on February 18th for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before February 18th, some taxpayers may see a projected deposit date or an intermittent message that the IRS is processing their return.

By law, the IRS is required to hold EITC and ACTC refunds until February 15th.  However, taxpayers may not see those refunds until the week of February 27th. Due to differing timeframes with financial institutions, weekends and the Presidents Day holiday, these refunds likely will not start arriving in bank accounts or on debit cards until the week of February 27th — if there are no processing issues with the tax return and the taxpayer chose direct deposit.

IRS Debunks Myths Surrounding Tax Refunds

As millions of people begin filing their tax returns, the Internal Revenue Service reminds taxpayers about some basic tips to keep in mind about refunds.

During the early parts of the tax season, taxpayers are anxious to get details about their refunds. In some social media, this can lead to misunderstandings and speculation about refunds. The IRS offers these tips to keep in mind.

Myth 1: All Refunds Are Delayed

While the IRS issues more than 90 percent of federal tax refunds in less than 21 days, some refunds take longer. Recent legislation requires the IRS to hold refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Other returns may require additional review for a variety of reasons and take longer. For example, the IRS, along with its partners in the states and the nation’s tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud. The IRS encourages taxpayers to file as they normally would.

Myth 2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date

Many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their refund. In reality, the best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app.

Taxpayers eager to know when their refund will be arriving should use the “Where’s My Refund?” tool rather than calling and waiting on hold or ordering a tax transcript. The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not produce new information. “Where’s My Refund?” has the same information available to IRS telephone assistors so there is no need to call unless requested to do so by the refund tool.

Myth 3: Ordering a Tax Transcript a “Secret Way” to Get a Refund Date

Ordering a tax transcript will not help taxpayers find out when they will get their refund. The IRS notes that the information on a transcript does not necessarily reflect the amount or timing of a refund. While taxpayers can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation, they should use “Where’s My Refund?” to check the status of their refund.

Myth 4: “Where’s My Refund?” Must be Wrong Because There’s No Deposit Date Yet

The IRS will update “Where’s My Refund?” ‎on both IRS.gov and the IRS2Go mobile app with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers claiming EITC or ACTC will not see a refund date on “Where’s My Refund?” ‎or through their software package until then. The IRS, tax preparers and tax software will not have additional information on refund dates.

The IRS cautions taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 – if there are no processing issues with the tax return and the taxpayer chose direct deposit. This additional period is due to several factors, including banking and financial systems needing time to process deposits. Taxpayers who have filed early in the filing season, but are claiming EITC or ACTC, should not expect their refund until the week of Feb. 27. The IRS reminds taxpayers that President’s Day weekend may impact when they get their refund since many financial institutions do not process payments on weekends or holidays.

Myth 5: Delayed Refunds, those Claiming EITC and/or ACTC, will be Delivered on Feb. 15

By law, the IRS cannot issue refunds before Feb. 15 for any tax return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). The IRS must hold the entire refund, not just the part related to the EITC or ACTC. The IRS will begin to release these refunds starting Feb. 15.

These refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27. This is true as long as there is no additional review of the tax return required and the taxpayer chose direct deposit. Banking and financial systems need time to process deposits, which can take several days.

Emails about Quickbooks Software are actually a Phising Scam

Scammers are always looking for new twists on common scams, especially when it comes to phishing emails. These emails are meant to trick you into clicking a link and either providing personal information or downloading viruses or malware.

The Better Business Bureau has learned that a new version of this con is circulating as an email alert supposedly about the accounting software QuickBooks. While anyone may receive this email, scammers are specifically targeting small businesses.

Here’s how this scheme works. You receive an email with the subject line “QuickBooks Support: Change Request.” The message is “confirming” that you changed your business name with Intuit, QuickBooks’ manufacturer. However, you never made such a request. You think it must be a mistake, but fortunately the email contains a link to cancel.

Pause before you click that. Scammers know you didn’t make this request. The link is simply bait. It downloads malware to your device, which scammers use to capture passwords or hunt for sensitive information on your machine. This can lead to identity theft.

Similar scams also impersonate personal-tax software or banks. Always be wary of unexpected emails that contain links or attachments.

Here are some other ways to spot phishing messages:

  • Check the reply email address. One easy way to spot an email scam is to look at the reply email. The address should be on a company domain, such as jsmith@company.com. Especially for major companies, be wary of generic addresses from free email providers.
  • Check the destination of links. Hover over them to see where they lead. Be sure the link points to the correct domain (www.companyname.com), not a variation, such as companyname.othersite.com or almostcompanyname.com. Scammers can get creative, so look closely.
  • Consider how the organization normally contacts you. If an organization normally reaches you by mail, be suspicious if you suddenly start receiving emails or text messages without ever opting in to the new communications.
  • Be cautious of generic emails. Scammers try to cast a wide net by including little or no specific information in their fake emails. Be especially wary of messages you have not subscribed to or companies you have never done business with in the past.
  • Don’t believe what you see. Just because an email looks real doesn’t mean it is. Scammers can fake anything from a company logo to the “Sent” email address.
  • Have a process in the office. Make sure employees know to not click links in unexpected emails. Tell them who they should ask if they seek to verify emails they’re uncertain about, and encourage them not to make “quick fixes” that could be costly.

Five Reasons to Choose Direct Deposit

Easy, safe and fast — that’s direct deposit. It’s the best way to get a tax refund. Eighty percent of taxpayers choose it every year. The IRS knows taxpayers have a choice of how to receive their refunds.

IRS Direct Deposit:

1. Is Fast. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit. Use IRS Free File to prepare and e-file federal returns for free. Use direct deposit for paper tax returns, too.

2. Is Secure. Since refunds go right into a bank account, there’s no risk of having a paper check stolen or lost in the mail. This is the same electronic transfer system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts.

3. Is Convenient. There’s no need to wait for a refund check to come in the mail.

4. Is Easy. Choosing direct deposit is easy. With e-file, just follow the instructions in the tax software. For paper returns, the tax form instructions serve as a guide. Make sure to enter the correct bank account and routing number.

5. Has Options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. The U.S. Treasury Department offers a retirement account. It’s called a MyRA account. Designate all or a part of a refund to a new MyRA account. Simply mark the “savings” box in the refund section of the return. Use IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), to deposit a refund in up to three accounts. Do not use Form 8888 to designate part of a refund to pay tax preparers.

Taxpayers should deposit refunds into accounts in their own name, their spouse’s name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules.

There is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. The IRS will send a notice and a refund check in the mail to taxpayers who exceed the limit. Find tips about direct deposit and the split refund option in Publication 17, Your Federal Income Tax. View, download and print tax products anytime at IRS.gov/forms.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Help Prevent Tax Identity Theft By Filing Early

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 18 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 16.

But there’s another date you should keep in mind: January 23. That’s the date the IRS will begin accepting 2016 returns, and filing as close to that date as possible could protect you from tax identity theft.

Why early filing helps

In an increasingly common scam, thieves use victims’ personal information to file fraudulent tax returns electronically and claim bogus refunds. This is usually done early in the tax filing season. When the real taxpayers file, they’re notified that they’re attempting to file duplicate returns.

A victim typically discovers the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the same tax year. The IRS then must determine who the legitimate taxpayer is.

Tax identity theft can cause major headaches to straighten out and significantly delay legitimate refunds. But if you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.

Another important date

Of course, in order to file your tax return, you’ll need to have your W-2s and 1099s. So another key date to be aware of is January 31 — the deadline for employers to issue 2016 W-2s to employees and, generally, for businesses to issue 1099s to recipients of any 2016 interest, dividend or reportable miscellaneous income payments.

Delays for some refunds

The IRS reminded taxpayers claiming the earned income tax credit or the additional child tax credit to expect a longer wait for their refunds. A law passed in 2015 requires the IRS to hold refunds on tax returns claiming these credits until at least February 15.

An additional benefit

Let us know if you have questions about tax identity theft or would like help filing your 2016 return early. If you’ll be getting a refund, an added bonus of filing early is that you’ll be able to enjoy your refund sooner.

2017 Standard Mileage Rates

WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 53.5 cents per mile for business miles driven, down from 54 cents for 2016
• 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
• 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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