Reminder for 10/20/2021 Seminar: Economic NEXUS vs Sales Tax NEXUS – learn more and become better prepared to ask and answer the tough questions, such as:
- What does it mean for out-of-state sellers?
- How or will this decision affect more than just sales tax nexus?
- What does economic nexus mean for sales tax?
- Does having a physical presence in a state still matter for sales tax?
- Is the traditional nexus for sales tax still alive and well?
- Do we need to begin filing in the 45 states that have a sales taxing system?
- When to recommend to a client to file income/sales tax in that state?
IRS Issues Updated Tax Scam and Identity Theft Warnings
The IRS recently posted warnings about new and ongoing tax scams, along with other fraudulent activity related to the COVID-19 (coronavirus) pandemic. The most prevalent and dangerous scams involve identity theft, intimidating calls from fake IRS representatives, deceptive advertising, and attempts to cheat taxpayers out of tax refunds or economic impact payments (EIPs, also called stimulus payments).
Stealing of Refunds or Economic Impact Payments (EIPs) Through Identity Theft
Some criminals steal a taxpayer’s Social Security number (SSN), and then file bogus forms with the IRS in order to receive tax refunds or other payments that rightly belong to the taxpayer.
A number of fraudulent charities with names very similar to legitimate organizations are calling taxpayers, claiming that they are collecting funds to help pandemic victims. Actual charities will provide their Employer Identification Numbers (EINs) upon request, so you can verify that the callers are who they say they are. The IRS Tax Exempt Organization Search tool can help you research the organization. Most real charities also offer secure online contribution portals.
Offer-In-Compromise (OIC) Mills
You may have heard ads for agencies that can settle people’s IRS debts for “pennies on the dollar.” Some of these companies charge high fees to submit an OIC application to the IRS on a taxpayer’s behalf. Only about one in three OIC proposals are accepted by the IRS, but the companies do not refund fees for rejected applications.
Before submitting an OIC application, taxpayers are advised to use the IRS Pre-Qualifier portal to determine their eligibility. If you need help applying, work only with a reputable tax professional.
Scams Targeting Senior Citizens and Those with Limited English Proficiency
In addition to ramping up their activities during challenging times, scammers often target the most vulnerable Americans, including seniors and those who do not speak English fluently. As people in these groups have become more comfortable with technology, including email, mobile devices and social media, it has unfortunately become easier for scammers to contact them.
Stay alert for fake email, text and social media messages. Scammers may pose either as IRS agents or as someone the taxpayer knows and trusts. Delete suspicious messages immediately, especially those requesting personal information like a Social Security Number (SSN). Then contact the IRS directly to inquire about any issues raised in the message. When speaking with actual IRS agents, you can receive assistance from your caregiver or ask for translation help.
Fake Payments & Refunds With Repayment Demands
In this very complex scam, identity thieves first obtain a taxpayer’s SSN and bank account information, then file a fake IRS return and have the refund deposited into the taxpayer’s bank account. A scammer then calls the refund recipient and impersonates an IRS agent, claiming that the refund was issued by mistake and must be returned to the IRS.
Often, these scammers demand the “repayment” in the form of gift cards. If you receive a mysterious payment from the IRS, especially if you then receive a phone call demanding repayment, contact your bank and the IRS immediately to report the potential scam and learn what to do next.
Threatening IRS or Social Security Administration Impersonator Phone Calls
One of the most prevalent tax-related scams involves aggressive, intimidating phone calls. Scammers impersonating IRS or other government agents will threaten a taxpayer with arrest and jail time or deportation, unless the taxpayer makes an immediate payment using a method specified by the caller (such as paying in gift cards or using a money wiring service). Some scam callers even threaten to “lock out” the taxpayer’s SSN.
The U.S. Treasury rarely locks SSNs, and does not demand immediate payment over the phone. Furthermore, the IRS accepts a variety of payment methods and never specifies a preferred form of payment. Hang up on these dangerous calls immediately. If you are concerned that you may have a real tax problem, call the IRS directly or seek guidance from a tax advisor.
How to Stay Safe
Above all, remember to never share your SSN or any other personal information with anyone unless you are 100% sure who they are and why they need it. If in doubt, hang up or delete the message, then contact the IRS yourself to inquire about the issue. A tax professional can also provide useful guidance on whether an apparent IRS message is legitimate.