By Wade Farmer

1.  One of the best ways to avoid a tax scam is to consult with your CPA.  If you’re not sure, then ask.  We will be more than happy to answer any questions you might have.

2.  Don’t trust a return preparer that guarantees you a big refund or charges based on your refund rather than the complexity of your return.  Look for a reputable preparer.

3.  Got a suspicious-looking email from the IRS?  These scams are called phishing, and they are used to steal your identity.  A criminal will send you an email claiming to be from the IRS, and it might even have an IRS logo.  The email will tell you that you are eligible for a larger refund, or that they need more information, and they will request that you send back your bank account numbers or social security number.  The IRS will never initiate contact with you by email.  See more about phishing scams on the IRS website, or, if you have any immediate questions or concerns, please contact us.

4.  A new scam this year is the abuse of the American Opportunity Tax Credit.  Scheme promoters tell their victims they can receive a refund or a stimulus payment based on paying for college even if the victim is not enrolled in college.  Promoters claim that you can receive money for paying for college decades ago.  These scam artists are targeting seniors, but everyone should beware of this since they will charge you high fees to file these false claims you will be responsible for paying back.

5.  Don’t try to hide foreign income or money in a foreign financial account.  The IRS has reopened the Offshore Voluntary Disclosure Program to disclose foreign accounts and assets to ensure you avoid criminal prosecution of international tax evasion.  Have an offshore account?  Read Jake Hutchison’s blog post for more information. 

Have more questions about possible scams?  Call or email us, and we will be glad to answer your questions. 

By Teresa Adams:

Every year, business owners receive a Tangible Personal Property Schedule (TPPS) that must be completed and filed with their county Assessor’s Office. Personal property taxes are imposed on the business’s tangible personal property; which includes such items as: computers, office equipment, tools, furnishings, machinery, billboards, raw materials, supplies, and vehicles.

The Assessor’s Office calculates the tax based on the information previously disclosed to the assessor and reported on the TPPS form. These forms allow business owners to list any changes to their personal property. For example, new property that is acquired needs to be added to the form and old property that sold or retired should be removed. 

The Tangible Personal Property Schedule (TPPS) forms are mailed out at the beginning of each year and received by businesses around February 1^st. Business owners must complete the TPPS form on or before March 1^st and send them to the Assessor’s Office. If the deadline is missed, the Assessor will do a forced assessment on property owned by the business.

Important Things to Remember:

• Business owners should always keep records about property owned that is up-to-date and readily available to help with preparing these forms.
• After a business owner files the TPPS and later discovers a mistake on the form, they have until September 1^st of the following year to amend the schedule; however any business that has a force assessment is not allowed to amend the TPPS.

Any changes to personal property or business ownership should be reported immediately to the county’s Assessor’s Office.

By Kevin Peters

“Fraud, by its very nature, does not lead itself to being scientifically observed or measured in an accurate manner.  One of the primary characteristics of fraud is that it is clandestine or hidden; almost all fraud involves the attempted concealment of the crime.”  (2010 Report to the Nations; Association of Certified Fraud Examiners; www.acfe.com/rttn).  That quote from the 2010 Report to the Nations, issued by the Association of Certified Fraud Examiners underscores the critical importance of all organizations to address fraud risk factors. 

Periodically, the Association of Certified Fraud Examiners (ACFE) publishes their findings and recommendations in their “Report to the Nations”.  The 2010 Report is the first report to include cases from countries outside of the U.S.  The report is based upon 1,843 cases of fraud occurring between January 2008 and December 2009. 

Some of the Report’s findings include:

• Survey participants estimated the typical organization loses 5% of its annual revenue to fraud
• Small organizations are disproportionately victimized by occupational fraud due to overall lacking of anti-fraud controls.
• Anti-fraud controls appear to help reduce the cost and duration
• Frauds committed by owners/executives were more than 3X as costly as fraud committed by managers
• More than 80% of the frauds were committed by individuals in one of 6 departments:  accounting, operations, sales, executive/upper management, customer service or purchasing
• More than 85% of fraudsters had never been previously charged or convicted for a fraud related offense
• Fraudsters often display warning signs that they are engaging in a fraud.  The most common behavior was living beyond their means (43%) followed by experiencing financial difficulties (36%)
• Employee education is a key foundation of preventing and detecting fraud. 

What can you do?  There are many things to consider for any organization, regardless of size.  Employee training and education is a key consideration.  It is vital to maintain an open door policy and overall atmosphere of communication to allow all employees the opportunity and freedom to report any suspicions.  Consider implementing an internal audit function including surprise “audits” of different higher risk areas/transactions.  Management should develop and periodically review fraud risk assessments.  Other areas to consider include:  level of oversight and review by top management, segregation of duties, mandatory vacations and job rotations.  “Tone at the Top” is also of great importance.  The Report also recommends having proper support programs in place to assist employees that are struggling with addictions, mental/emotional health family or financial problems. 

Fraud can happen in any organization by any employee.  Each organization should consider what steps they can take now.  The old adage, “an ounce of prevention is worth a pound of cure” certainly would apply with respect to proper fraud prevention controls. 

Source:

2010 Report to the Nations; Association of Certified Fraud Examiners; www.acfe.com/rttn)

During Blackburn, Childers and Steagall, PLC’s continuing professional education (CPE) seminar scheduled for June 14 at Meadowview, we will include a session on fraud indicators and related controls.  Please visit this link for information regarding this CPE seminar.

By Jake Hutchison

The Internal Revenue Service has reopened the Offshore Voluntary Disclosure Program (OVDP) which allows a US person to disclose all foreign accounts and other assets with the IRS to avoid criminal prosecution of international tax evasion.  Please refer to the 2012 Spring Edition of the BCS Client-Tell for more information on the new OVDP. 

Any US person that has a financial interest in or signature authority over a foreign financial account where the aggregate value of the account exceeds $10,000 at anytime during the calendar year is subject to additional annual filing requirements.

The Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (FBAR), is due on or before June 30, following the calendar year and this deadline may not be extended.   Corporations, partnerships, trusts, or estates along with individuals are subject to FBAR.  Failure to file this form could result in a failure-to-file penalty of $10,000.  In addition, the taxpayer may be assessed back taxes, late filing interest, late filing penalty and possibly an accuracy related penalty for the underpaid tax on any foreign income omitted on Form 1040. 

A new separate requirement was released from the IRS which is in addition to FBAR.  Form 8938 requires taxpayers to report specified foreign financial assets on their annual Form 1040 by the April 15 due dates which may include an extension.  Currently, Form 8939 is only required by individuals, although the IRS speculates that entities such as corporations or partnerships may be subject to filing requirements in future years. 

Some examples of specified foreign financial assets are securities, bonds, or other foreign financial accounts.  A single taxpayer living in the US is subject to filing Form 8938 if the value of the taxpayer’s specified assets exceeds $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year.  Married taxpayers living in the US are subject to the filing requirement if they have a value of the specified assets which exceeds $100,000 on the last day of the tax year or more than $200,000 at any time during the year. 

Failure to file Form 8938 could result in a failure-to-file penalty of $10,000 plus another $50,000 of failure-to-file penalties if the IRS notifies a taxpayer to file and the taxpayer fails to do so.  In addition, the individual could be assessed back taxes, late filing interest, late filing penalty and an accuracy related penalty for the underpaid tax on any income omitted on Form 1040.

This article covers the basic guidelines on annual requirements for foreign accounts, if you have any questions related to foreign accounts please contact our office.  As always we will try to keep you up to date on changes related to foreign disclosure along with all other tax matters.

By Sheila Emory

On February 22^nd, President Obama signed the payroll tax cut extension into law.  This extension affects nearly 160 million workers by continuing to keep the social security withholding rate at 4.2%, instead of the 6.2% in effect prior to 2011.  This extension is set to expire on December 31, 2012.

 Those who are self-employed will also see a reduction in their social security withholding from 12.4% to 10.4%, up to a threshold of $110,100 of wages and net self-employment income. 

 The new lower rate will have no effect on workers’ future social security benefits.