Understanding Identity Verification

Lately, we’ve been hearing a lot of buzz about identity theft, income tax fraud, and phone/email scams. The latest news from the IRS is that they are now sending letters to taxpayers to verify their identity … and as scammy as it looks, it’s totally legit. My advice is to check with a tax professional (especially if your tax professional happens to be me) if you’re in doubt.

Here’s that IRS news release:

Taxpayers Receiving Identity Verification Letter Should Use IDVerify.irs.gov

IR-2015-54, March 18, 2015

WASHINGTON — The Internal Revenue Service today reminded taxpayers who receive requests from the IRS to verify their identities that the Identity Verification Service website, idverify.irs.gov, offers the fastest, easiest way to complete the task.

Taxpayers may receive a letter when the IRS stops suspicious tax returns that have indications of being identity theft but contains a real taxpayer’s name and/or Social Security number. Only those taxpayers receiving Letter 5071C should access idverify.irs.gov.

The website will ask a series of questions that only the real taxpayer can answer.

Once the identity is verified, the taxpayers can confirm whether or not they filed the return in question. If they did not file the return, the IRS can take steps at that time to assist them. If they did file the return, it will take approximately six weeks to process it and issue a refund.

Letter 5071C is mailed through the U.S. Postal Service to the address on the return. It asks taxpayers to verify their identities in order for the IRS to complete processing of the returns if the taxpayers did file it or reject the returns if the taxpayers did not file it. The IRS does not request such information via email, nor will the IRS call a taxpayer directly to ask this information without you receiving a letter first. The letter number can be found in the upper corner of the page.

The letter gives taxpayers two options to contact the IRS and confirm whether or not they filed the return. Taxpayers may use the idverify.irs.gov site or call a toll-free number on the letter. Because of the high-volume on the toll-free numbers, the IRS-sponsored website, idverify.irs.gov, is the safest, fastest option for taxpayers with web access.

Taxpayers should have available their prior year tax return and their current year tax return, if they filed one, including supporting documents, such as Forms W-2 and 1099 and Schedules A and C.

Taxpayers also may access idverify.irs.gov through www.IRS.gov by going to Understanding Your 5071C Letter or the Understanding Your IRS Notice or Letter page. The tool is also available in Spanish. Taxpayers should always be aware of tax scams, efforts to solicit personally identifiable information and IRS impersonations. However, idverify.irs.gov is a secure, IRS-supported site that allows taxpayers to verify their identities quickly and safely.

IRS.gov is the official IRS website. Always look for a URL ending with “.gov” — not “.com,” “.org,” “.net,” or other nongovernmental URLs.

Time is Running Out for 2011 Refunds

If you’re due a federal refund from 2011, time is running out to claim it. The IRS allows 4 years to claim a potential refund. The final deadline for issuance of 2011 federal refunds is April 15, 2015. The IRS posted the following news release today:

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return

Federal income tax refunds totaling $1 billion may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2011, the Internal Revenue Service announced today. To collect the money, these taxpayers must file a 2011 tax return with the IRS no later than Wednesday, April 15, 2015.
“Time is running out for people who didn’t file a 2011 federal income tax return to claim their refund,” said IRS Commissioner John Koskinen. “People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.”
The IRS estimates half of the potential refunds for 2011 are more than $698.

In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. For 2011 tax returns, the window closes on April 15, 2015. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

The law requires the tax return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return that qualifies for a refund.
The IRS reminds taxpayers seeking a 2011 refund that their checks may be held if they have not filed tax returns for 2012 and 2013. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2011. Many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2011, the credit is worth as much as $5,751. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2011 were:
$43,998 ($49,078 if married filing jointly) for those with three or more qualifying children,
$40,964 ($46,044 if married filing jointly) for people with two qualifying children,
$36,052 ($41,132 if married filing jointly) for those with one qualifying child, and
$13,660 ($18,740 if married filing jointly) for people without qualifying children.

Current and prior year tax forms and instructions are available on the IRS.gov Forms and Publications page, or by calling toll-free: 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years: 2011, 2012 or 2013 should request copies from their employer, bank or other payer.
If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.


Mid-season Musings

I read an article today about how this tax season is worse than prior years. As a tax preparer, I can see it. I personally started this tax season with unmatched gusto, ready to take on the world. I wasn’t sure how long that burst of extraordinary productivity would last, but I ran out of steam right before the halfway mark. Don’t get me wrong, I still love my job, and I’m still glad to be here. I’m not burnt out, but I have to admit I feel a little daunted. There are some big issues this year that have made more work not only for your favorite tax experts at Moore Refunds, but also for taxpayers. Especially if you live in North Carolina, as we do. If healthcare weren’t enough (it really would have been enough, guys), we’re also dealing with some major changes in our state tax code. It’s been a blindside for some people. I think that’s a sportsball reference, and I hope I used it correctly. At any rate, state tax has not been super fun. It’s definitely simpler, and I think it will be better next year.

As for the rest, I’m grateful for the resources available to me, and I’m grateful for clients who bring me their problems and trust me to resolve them. This week we’re working on lots of farms and corporate returns, because of the March 15 deadline. Farms are kinda fun. I got to depreciate some cows last week. Did you know you can depreciate cows? That’s a thing.

Seriously, I love my job. I may or may not be dreaming of vacations with sand and saltwater and lots and lots of books, but we have 30 more days to go. 30 days! That’s actually not long at all. On that note, I’ve also heard that there are more “procrastinators” this year than in recent years. I didn’t check the statistics in the article I read (how much time do you think I have – I’m shocked I had time to read it at all), but that sounds about right. I have a feeling the next 5 weeks are going to be really busy. And I’m ready for my second wind.

Bring it on, second half. I’m ready.

Helpful Links for Valuable Income Tax Information

Obamacare Drama

We knew the Affordable Care Act would cause some drama. That was no surprise. But then they announced that 800,000 taxpayers would be getting corrected form 1095-A (http://blog.cms.gov/2015/02/20/what-consumers-need-to-know-about-corrected-form-1095-as/) … in March. This is … ugh. Frustrating.

“Based upon preliminary estimates, we understand that approximately 90-95% of these tax filers haven’t filed their tax return yet. We are advising them to wait until the first week of March when they receive their new form or go online for correct information before filing. For those who have filed their taxes—approximately 50,000 (< 0.05% of total tax filers) —the Treasury Department will provide additional information soon.”

If that seems like bad math, it’s because it probably is. My “field experience” tells me that most of the people filing with form 1095-A are early filers.

What it means for Moore Refunds:
My initial thought was that several of my customers who have already filed would have to file amended returns. Then we got news that the IRS will not be requiring amended returns from taxpayers who received additional refund based on incorrect information on form 1095-A. Whew. The worst-case scenario now seems to only be that it’s annoying.

Crisis averted?

More information on the Affordable Care Act can be found here: http://www.irs.gov/Affordable-Care-Act