IRS PHONE SCAMS ALERT

The IRS just released a warning regarding phone scams, which means its a great time to remind everyone that the IRS will only contact people who owe money by mail.  The only time you would receive a call from the IRS is if after mail contact, and after you have an agent assigned to your case.  Remember, you would know who that person is, prior to them calling.  The IRS also does not send emails to you unless again, prior contact has been made.  In general the IRS does not contact people "out of the blue" except via mail.  So if it is not by mail and you are not expecting to hear from the IRS, then it is a scam.    Thus be smart and be aware of scammers who use the IRS to try and scare people into giving out personal information. Also if you have any questions please ask us if it is valid or not, we are more than happy to let you know. 

Here is the warning taken directly from the IRS alert:

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.
Read more about tax scams on the genuine IRS website, IRS.gov

How Will the PCORI Fee Affect You?

As a part of the Patient Protection and Affordable Care Act, passed in 2010, the Patient-Centered Outcome Research Institute (PCORI) was created. The PCORI was created with the intention to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings. PCORI will also help evaluate the quality and effectiveness of various medicines and treatments.

When the PCORI was created, it was planned to be funded by the general fund of the Treasury and by the Patient-Centered Outcomes Research Fee also called the Comparative Effectiveness Research fee (CER fee). This fee is to be paid by employers offering self-funded major medical plans and certain other self –funded plans and to insurance issuers with respect to fully insured health policies. Plans that are subject to the fee include: medical plans, prescription drug plans, self insured dental or vision plans, Health Reimbursement Arrangements, Retiree- only health plans, health plans of the types listed above provided by governmental employers for their employees.

The fee owed by employers who issue plans that qualify is calculated based on “Covered Lives.” An employer must determine the number of covered lives at the end of each plan year. There are three methods available to calculate covered lives. The first is the Actual Count Method. In this method add the total lives covered for each day of the plan year and divide that total by the number of days in the plan year. There is also the Snapshot Method. In this method add the total lives covered on a date during the first, second, or third month of each quarter of the plan year then divide that total by the number of dates on which a count was made. Lastly, there is the Form 5500 Method. In this method the average number of covered lives is determined based on the number reported on the Form 5500 or Form 5500-SF. After the number of Covered Lives is calculated then the total fee owed can be determined. For the first year (2012) the fee will be $1 per covered life, the second year (2013) will be $2 per covered life, and from the third year (2014) on, the fee will be increased based on increases in the projected per capita amount of national health expenditures.

The final regulations concerning the PCORI and the CER fee were released on December 5, 2012. The effective date of regulation for the PCORI and the CER fee is September 30, 2012 through October 1, 2019, at this date it is estimated that the CER fee will have brought in $3.5 million to fund the PCORI. The first fee collection will be made by the IRS on July 31, 2013. The CER fee is tax deductible as stated in the IRS memorandum for May 31, 2013.

Please contact your Hersman Serles Almond tax advisor to discuss how the PCORI fee impacts you and your business.

Behind the Obamacare Delay

Obamacare was signed 3 years ago and was scheduled to start January 1, 2014. On Tuesday July 2, 2013 it was quietly announced that provisions of Obamacare were going to be delayed until 2015. As of July 8, 2013 President Obama has not released a public statement about the change to his signature domestic bill since his return home from Africa; the reason explained by the White House for the delay of provisions is that businesses were simply not ready and needed more time to understand the complexity of the bill. On July 5, 2013 a 606 page final regulation on some of the health care law's most key provisions was released.

The focus of the changed timeline for Obamacare has been the provision concerning the requirement that all businesses with over 50 employees are required to provide their employees with health insurance or else risk a fine of $2000 per employee who is not provided with insurance. Along with the change in date of the provision there has also been a change in how it will be carried out. Originally the Federal Government told the 17 state-based marketplaces that the federal government could handle making sure employers are supplying their employees with health insurance. But now the federal government is claiming they do not have the man power to monitor this, so they are not requiring that states running their own marketplaces to do this check until 2015. Another change to the provisions is that the federal government is scaling back oversight on what applicants say they earn in all 50 states. This is crucial to the Affordable Care Act; originally the Center for Medicare and Medicaid Services said they would audit anyone who reported income that was 10% lower than the income they earned last year. Now, the federal government will only audit a statistically significant number of these people with large income discrepancies, instead of the whole group. With the change to this provision, people can under report their income to gain tax subsidies with less fear of being caught. Also, electronic notices will not be required until 2015. This is due to the federal government's concern that the technology necessary to do this will not be in place.

Rep. Sam Graves, the Chairman of the House of Small Business Committee, said, "Instead of providing relief for businesses, this simply kicks the can down the road" and the National Federation of Independent Business, the nation's largest small business organization, agrees that the extension is only a temporary relief. Small businesses are still unsure of the qualifications necessary to be considered a business with over 50 employees. According to Bruce Phillips, a CPA with Harshman Phillips and a Gold Xero Partner, the delay doesn't do much in terms of clearing up the confusion facing small business owners. Due to the complications of beign considered a business with over 50 employees Phillips says his advice, from an accounting standpoint, for a business with fewer than 50 employees to expand and grow their business without hiring any new staff members. If hiring new employees is too complicated due to health care, how is this going to affect the job market? According to Marco Rubio, the GOP Sen. of Florida, the move was a "remarkable acknowledment by the Obama administration that Obamacare is a disaster in progress that will hurt job creators and those looking for work." Instead of just extending the time for small businesses to understand all of these provisions, why is the government not spending time to simplify them and make businesses feel like they can hire more staff as their business grows?

Congressional Republicans have been united against Obamacare since 2010, and this delay has only verified their opinion. "It brings this debate back to center stage and forces every Democratic senator to explain why they wrote this deeply flawed bill behind closed doors, rammed it through on a party-line vote, and didn't listen to the concerns of millions of Americans," said Brian Walsh, Republican strategist and former communications director for the National Republican Senatorial Committee. Some politicians are thinking this was a political move to help Democrats in the midterm election. Rep. John Fleming a Louisiana Rep. said the White House knew the employer mandate "would hurt them politically."

Plan For Financial Independence, Not Retirement

Determining the date of your Financial Independence can be difficult and stressful, but HSA is here to help you navigate through these complicated obstacles. HSA can help by creating and guiding you through a plan that will lead you to your Financial Independence. Below is an article taken from Forbes.com to introduce you to the idea of declaring your Financial Independence.

Written by: Richard Eisenberg

 Here’s a holiday suggestion that only a personal finance blogger would make: While you’re celebrating Independence Day, take some time to nail down the day you want to become financially independent.

Declaring your Financial Independence Day is a better idea than trying to come up with “the number” you need to retire, especially if you’re in your 50s or 60s and don’t have much time to pump up your savings.

What exactly is financial independence or, as some call it, financial freedom? That depends on your own definition.

In a new Capital One 360 survey, 44% of U.S. adults said financial freedom meant not having any debt, 26% said it meant having enough saved for emergencies and 10% defined it as being able to retire early.

I go with Jonathan Chevreau, the Toronto-based author of the new U.S. edition of Findependence Day, a “fictional finance” book, and creator of the Findependenceday.com site. His novel is about a young debt-ridden couple, Jamie and Sheena Morelli, and their road to reaching you know what.

Chevreau says that when you’re financially independent, you work because you want to, not because you have to. “Findependence is necessary for retirement,” he says. “You can be findependent and not retired, but you can’t be retired without being findependent.”

Chevreau targeted April 6, 2013 – his 60th birthday – as his Findependence Day and reached that goal, but he still edits Canada’s MoneySense magazine. “I have a job I like, so why would I quit?” he asks.

5 Rules to Declare Your Findependence

Chevreau’s five rules for achieving findependence:

1. Pay off your home in full. “That’s really the foundation,” he says.

2. Find multiple sources of income for retirement. These can include interest and dividends from your investment portfolio; rental real estate; freelance or consulting work; Social Security; an annuity; and perhaps a guaranteed pension.

3. Develop “guerrilla frugality” habits. Chevreau calls this “becoming a Frooger.” Keeping expenses low while working full time will make it easy to live that way in retirement and reduce the amount of savings you’ll need for a comfortable retirement.

“If you spend like a millionaire, you’ll end up a pauper,” says his book’s protagonist, Jamie. “Spend like a pauper and you have a shot of becoming a millionaire.”

4. Save 20% of your gross income. This will be impossible for many people, but not for others. If you can’t save 20%, try for 15 or 10%.

5. Invest with a “Lazy ETF” portfolio. That means selecting, say, three exchange traded funds– a U.S. stock fund, an international stock fund and a U.S. bond fund – and holding onto them.

Review their performance once a year then rebalance your portfolio if the markets shift and you discover you have a higher percentage in one of these asset classes than you want. (Use index funds instead of ETFs, if you prefer.)

Women, Men and Money

At the risk of overgeneralizing, I think many women gravitate toward the concept of financial independence, while men often prefer focusing on “the number.”

In the initial episode of the two-part Consuelo Mack WealthTrack public television series on Women, Investing and Retirement that premiered June 28, Jewelle Bickford, senior strategist for GenSpring Family Offices, said the first question her male clients ask in their monthly or quarterly meeting is “how has their portfolio done, whereas the women tend to think: ‘Will I have enough?’”

Move up http://i.forbesimg.com If you’re trying to figure out your Financial Independence day, should you bother using an online retirement calculator? I think it depends on the tool.

Most retirement calculators are actually best for people in their 20s, 30s and early 40s who have years to save furiously once they see their “number.” The electronic number crunchers typically ask few questions, partly because younger people can’t possibly determine for sure their retirement income sources or expenses.

“When you’re further away from retirement, these calculators are directional in nature,” says Kent Allison, a PwC partner and leader of the firm’s financial education practice, based in Florham Park, N.J. “When you get closer to retirement, you really have to get into a nitty-gritty cash flow analysis.”

He’s right. If you’re three to 10 years away from retirement, that’s the time to figure out where the money will come from to cover what Pat O’Connell, executive vice president for the Ameriprise Advisor Group, calls the three types of expenses:

• Essential expenses that’ll be covered by guaranteed income sources, like bonds, Social Security and a pension.
• Lifestyle expenses purchased with money from your investment portfolio.
• Unexpected expenses, like health care and long-term care costs, paid for out of your emergency savings fund.

Three Good Calculators for People 50+

There are, however, a few excellent calculators – not always free – that are specifically geared for people in their 50s and 60s. They can help you firm up a retirement cash-flow analysis.

One is Retirement Works2 for You, created by retirement adviser Chuck Yanikoski primarily for what he calls “nonaffluent people trying to play their cards as smartly as they can.” It costs $189 for the first year; annual renewals are $44.50.

RW2, as it’s sometimes called, asks a lot of questions; Yanikoski says you should plan to spend one to three hours answering them. (“Retirement is an extremely complicated thing,” he says.) But the results can be valuable.

As soon as you input your data and answer the questions, you’ll get an online report card with retirement planning advice and letter grades telling you how well you’re set under “normal” circumstances, if you live an extra long lifetime, if your investments don’t perform well, if inflation shoots up and if you run into high medical expenses, including long-term care.

You’ll also see how your cash flow would be affected if you delayed retirement and lowered your standard of living.

Two other calculators worth considering:

The free Ballpark E$timate from the Employee Benefit Research Institute’s Choosetosave.orgsite and the American Savings Education Council; Next Avenue has a link to the Ballpark E$timate calculator.

E$Planner, created by Lawrence Kotlikoff, an economics professor at Boston University. There’s a free version of E$Planner Basic as well as one that costs $40, with “what if” investment scenarios and Social Security options. The downloadable $149 product also offers “retirement spend-down” strategies, helping you determine how much to withdraw from your portfolio.

Use an Adviser to Plot Your Findependence

Whether or not you use a calculator to come up with your Financial Independence Day, I strongly suggest you work with a financial adviser to run the numbers.

“The decisions are major,” Allison says. “A wrong one could cost you a lot. So even if you don’t normally want to spend money on a financial planner, this is the one time to do it.”

Richard Eisenberg is the senior Web editor of the Money & Security and Work & Purpose channels of Next Avenue. Follow Richard on Twitter @richeis315.

http://www.forbes.com/sites/nextavenue/2013/07/01/plan-for-financial-independence-not-retirement/

 

 

Senate Thinks Marketplace Fairness Act is Fair, But Do You?

As the industry of online shopping grows, state sales tax collected is decreasing. Online retailers are currently not required to collect a state sales tax on transactions occurring in states where they have no physical presence. In some states customers are supposed to pay sales tax at the end of the year when they report their online purchases. However, because most people do not report their online purchases like they are supposed to, the state governments are not receiving all of the sales tax they are owed. To fix this problem the Marketplace Fairness Act was developed. 

The Marketplace Fairness Act (MFA) gives states the power to force online and catalog retailers to collect sales tax at the time of transaction no matter where their businesses are located. The bill is written so that only online companies who make over $1M in out of state revenue are required to pay sales tax. More companies than you would think fit under this qualification because it is based on the Gross Merchandise Value (GMV). GMV is used in online retailing to calculate revenue sold through a marketplace, including fees paid to the marketplace. While a retailer may have a GMV over $1M, their profit is much less. However, in order for states to be able to collect tax from online retailers they must first simplify their sales tax laws. Simplification is required because there are many concerns regarding the difficulty of collecting sales tax in so many jurisdictions. States are being given two options on how to simplify their tax laws. The first option is to adopt the Streamlined Sales and Use Tax Agreement (SSUTA). The SSUTA has been under development over the last eleven years with the goal of making sales tax collection easy. This agreement minimizes costs for retailers and ensures all retailers operate their businesses in a fair and competitive market. The other option given to states is to make sure their tax laws meet the five mandates listed directly in the bill. One of the mandates requires states to provide free software to companies to process the collection of out of state sales tax. Scott Peterson, of the Streamlined Sales Tax Board, confirmed before congress that this software does not yet exist. According to the Main Street Alliance, even if the software did exist the cost of software integration and training each business would need to pay for would range from $20,000 to $300,000.

Creating the Marketplace Fairness Act is an attempt to create a fairer market between online retailers and street side businesses. However, as the future of online sales seems to be increasing the MFA will make it hard for smaller online businesses to compete with the larger businesses. Most small businesses lack the resources to file tax returns in 45 states, where as a company like Amazon has the resources to devote a group of people to solely work on state sales tax. For smaller businesses the cost involved with collecting out of state sales tax could exceed their profit; which could turn out to be detrimental. Due to the high costs this bill would impose on businesses it is expected that 220,000 jobs would be lost in just the first year alone, according to the Main Street Alliance. 

Currently, MFA has passed through the Senate and is now waiting to be passed in the House. According to Congressman Bob Goodlatte, the Chairman of the House Judiciary Committee, MFA is not likely to get through the House of Representatives and House Republicans are working on creating their own version of the bill.

Bogus IRS Emails

Some Great information prepared by the IRS:

Beware of Bogus IRS Emails


The IRS receives thousands of reports every year from taxpayers who receive emails out-of-the-blue claiming to be from the IRS. Scammers use the IRS name or logo to make the message appear authentic so you will respond to it. In reality, it’s a scam known as “phishing,” attempting to trick you into revealing your personal and financial information. The criminals then use this information to commit identity theft or steal your money.

The IRS has this advice for anyone who receives an email claiming to be from the IRS or directing you to an IRS site:

• Do not reply to the message;

• Do not open any attachments. Attachments may contain malicious code that will infect your computer; and

• Do not click on any links in a suspicious email or phishing website and do not enter confidential information. Visit the IRS website and click on 'Identity Theft' at the bottom of the page for more information.

Here are five other key points the IRS wants you to know about phishing scams.

1. The IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information;

2. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts;

3. The address of the official IRS website is www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net, .org or anything other than .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on their site and report it to the IRS;

4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. Forward a suspicious email to phishing@irs.gov;

5. You can help the IRS and other law enforcement agencies shut down these schemes. Visit the IRS.gov website to get details on how to report scams and helpful resources if you are the victim of a scam. Click on "Reporting Phishing" at the bottom of the page.



Additional IRS Resources: 
• Reporting Phishing

• Identity Protection Tips

• Identity Protection Home Page

Note: this information was taken from an IRS bulletin and was not prepared by HSA

Join us for our Fraud Seminar!

We are seeing a troubling increasing trend lately with our clients, unfortuantley that trend is fraud.  From employees with sticky fingers to clients having tax returns filed under their social security number. Come and join us to learn what you can do to protect yourself.

FRAUD

WHAT YOU NEED TO KNOW

TO PROTECT YOUR ASSETS

January 24, 2013

7:30 am to 8:30 am

Tea, coffee and pastries served

and

4:00 pm to 5:00 pm

Appetizers and refreshments served

All Seminars will be held at the offices of Hersman Serles Almond, PLLC

520 Kirkland Way, Suite 300, Kirkland, WA 98033

RSVP (425)822-6557 or dalsup@cpahsa.com