Monday, February 16, 2015

Watch out for tax scams





The IRS has made preventing identity theft and tax refund fraud a top priority.  An important part of the agency’s fraud prevention program is its campaign to inform taxpayers about the many varieties of tax fraud and how they can keep from becoming victims.
Typical telephone fraud scenario
Picture this: You’re relaxing at home when your phone rings. You don’t recognize the number on the caller identification, but it’s from your area code, so you answer.
“I’m with the IRS,” the caller says. “You owe back taxes. A warrant will be issued if you do not pay, and your local police will arrest you.”
The caller knows your name and may even know the last four digits of your social security number. He tells you how much you owe, and adds that this is a serious matter. “You must submit a payment voucher within the next hour to avoid arrest. We suggest you buy a prepaid debit card immediately.”
The caller gives you a phone number to call once you have acquired a prepaid card so you can settle your debt and the arrest warrant can be canceled.
Can you identify four indicators in the above scenario that tell you this call is the latest addition to the “Dirty Dozen” list of tax scams compiled by the IRS?
Here are the tip-offs:

  • An unexpected phone call.  The IRS makes initial contact regarding tax issues in a written letter, sent to you via U.S. postal mail.
  • The threat of arrest. Warnings of arrest or other police action are designed to frighten you into agreeing to send money or disclose personal financial information such as your social security number. Local police departments will not threaten to arrest you for federal tax-related issues.
  • Request for immediate payment. If you actually owe money for any type of federal tax, payment options are available. You’ll receive notices in the mail detailing the amount due and you’ll have time to respond.
  • Payment via prepaid debit card. The IRS does not require you to purchase prepaid cards to pay any tax you may owe, and will not call to ask for personal identification numbers.
The “red flags” seem obvious as you read this. However, tax-related fraud plays on your natural inclination to avoid trouble with official agencies, and the actual phone call will come from a practiced con artist armed with a script and the element of surprise. Under those circumstances, your skepticism might take a back seat to understandable confusion and fear.
How can you protect yourself?
  • Advance warning gives you an advantage. Being aware of tax fraud schemes makes it likely you’ll recognize common techniques used by fraudsters, such as threats, multiple calls, and repeated demands for an immediate decision. 
  • Be assertive. You have no obligation to answer your phone, engage in conversation, or provide information to anyone who calls you. Let contacts from unknown numbers go to voicemail. If you do answer and the caller’s requests make you uncomfortable, disconnecting immediately is neither rude nor impolite.
  • If you choose to contact the IRS directly concerning the call, do not use the phone number the caller gave you. Why? In this latest scam, the number provided will connect you with another con artist in the same organization.


Phony IRS e-mails and websites
The crooks create IRS e-mails and websites that appear to be legitimate. They are designed to look like genuine IRS communications, but they are schemes designed to steal your identity. One of the newest scams is tax refund fraud where your personal data is stolen and used to file a tax return in your name in order to claim a refund. When you then file your return, the IRS rejects it and notifies you that you have already filed.
Another example of these bogus e-mails: You receive a message confirming IRS receipt of your tax return, but the IRS needs more information to process your return. The e-mail looks official and completely legitimate. But it isn’t.
Here’s what the IRS wants you to know about bogus e-mails:
  • The IRS does not initiate contact with taxpayers by e-mail or social media to request financial information. 
  •  The IRS never asks taxpayers for detailed personal financial information. 
  •  The address of the official IRS website is www.irs.gov; don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org, or anything else. 
  •  If you receive an e-mail claiming to be from the IRS or directing you to an IRS site, do not reply to the message, open any attachments, or click on any links. 
  • To help the IRS fight identity theft and refund fraud, report any bogus correspondence and forward any suspicious e-mail to phishing @ irs.gov.
The IRS strategy
The IRS has developed a comprehensive identity theft strategy that is focused on preventing, detecting, and resolving identity theft cases as soon as possible. Though these scams proliferate during tax filing season, they continue throughout the year as the thieves continue to create new ways to steal identities for financial gain.
The IRS has made numerous announcements in the past to help protect taxpayers from these scams. It repeats the message that it never uses an e-mail, text message, social media, or a phone call to initiate a contact about your tax information. So if you receive what looks like an official IRS e-mail, you should forward it to phishing @ irs.gov. Do not reply to the sender, and do not open any attachments. And if you get a scam phone call, hang up.
Please let us know any time you’re contacted about your tax information. We’re here to keep you safe and informed.
 


(c) MC_4614-TS

Saturday, June 28, 2014

B Corporations, Be the Change

In this episode of Populist Dialogues, Sandra Morris, CEO of CafeGive Social, and I sit down with host David Delk to discuss B Corporations.  #BtheChange




Saturday, October 12, 2013

How Will Healthcare Reform Affect You and Your Taxes?



It’s massive, and it’s complicated. At more than 2,400 pages, the Affordable Care Act (ACA for short) has left businesses and individuals confused about what the law contains and how it affects them.

The aim of the law is to provide affordable, quality health care for all Americans. To reach that goal, the law requires large companies to provide health insurance for their employees starting in 2015, and uninsured individuals must get their own health insurance starting in 2014. Those who fail to do so face penalties.

Insurance companies must also deal with new requirements. For example, they cannot refuse coverage due to pre-existing conditions, preventive services must be covered with no out-of-pocket costs, young adults can stay on parents’ policies through age 26, and lifetime dollar limits on health benefits are not permitted.

The law mandates health insurance coverage, but not every business or individual will be affected by this requirement. Here’s an overview of who will be affected.


FOR BUSINESSES – It’s all in the numbers
· Fewer than 50 employees
Companies with fewer than 50 employees are encouraged to provide insurance for their employees, but there are no penalties for failing to do so. A special marketplace will be available for businesses with 50 or fewer employees, allowing them to buy health insurance through the Small Business Health Options Program (SHOP).
· Fewer than 25 employees
Small companies that pay at least 50% of the health insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP.
· 50 or more employees
For companies with 50 or more full-time employees, the requirement to provide “affordable, minimum essential coverage” to employees has been delayed for one year and is not required until 2015. Originally, employers had been required to file information returns that reported details about the health insurance they provided, with penalties to apply if the insurance did not meet standards. Companies complained that they needed more time to meet the reporting obligations, and in response the IRS made the reporting requirement optional for 2014. Without the reporting, the IRS could not determine penalties, so the penalties also were postponed for a year.

Bottom line: the IRS is encouraging companies to comply in 2014 even though there are no penalties for failure to do so.
· The business play or pay penalty
Starting in 2015, companies with 50 or more employees that don’t offer minimum essential health insurance face an annual penalty of $2,000 times the number of full-time employees over a 30-employee threshold. If the insurance that is offered is considered unaffordable (it exceeds 9.5% of family income), the company may be assessed a $3,000 per-employee penalty. These penalties apply only if one or more of the company’s employees buy insurance from an exchange and qualify for a federal credit to offset the cost of the premiums.


FOR INDIVIDUALS – It’s all about coverage
Currently, attention is focused on the health insurance exchanges or “Marketplace” that opened for business on October 1. Confusion about the Affordable Care Act has left many people thinking everyone has to deal with the exchanges. The fact is that if you are covered by Medicare, Medicaid, or an employer-provided plan, you don’t need to do anything.
Also, if you buy your health insurance on your own and are happy with your plan, you can keep your coverage. However, the only way to get any premium-lowering tax credits based on your income is to buy a plan through the Marketplace.
· The exchanges (Marketplace)
Each state will either develop an insurance exchange (Marketplace) or use one provided by the federal government. The Marketplace will allow those seeking coverage to comparison shop for health plans from private insurance companies.

There will be four types of insurance plans to choose from: Bronze, Silver, Gold, and Platinum. The more expensive the plan, the greater the portion of medical costs that will be covered. The price of each plan will depend on several factors including your age, whether you smoke, and where you live.

Many individuals will qualify for federal tax credits which will reduce the premiums they actually pay. Each state’s Marketplace will have a calculator to assist individuals in determining the amount, if any, of their federal tax credit.
· The individual play or pay penalty
If you’re one of the 45 million or so Americans without health insurance, you will need to get coverage for 2014 or pay a penalty of $95 or 1% of your income, whichever is greater. Low-income individuals may qualify for subsidies and/or tax credits to help pay the cost of insurance.

The penalty increases to $325 or 2% of income for 2015 and to $695 or 2.5% of income for 2016. For 2017 and later years, the penalty is inflation-adjusted. Those who choose not to be insured and to pay the penalty instead will still be liable for 100% of their medical bills.

NOTE: If you will be shopping for health insurance on the Marketplace, be aware that there’s no need to rush to enroll; the enrollment period runs from October 1, 2013, through March 31, 2014. Take the time you need to review your options and select what’s best for you and your family.


MORE ABOUT THE LAW AND YOUR TAXES

In addition to the penalties required by the Affordable Care Act, the law made other tax changes that could affect you. Among them are the following:
· Annual contributions to flexible spending accounts are limited to $2,500 (indexed for inflation).
· The 7.5% adjusted gross income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older can use the 7.5% threshold through 2016.
· The additional tax on nonqualified distributions from health savings accounts (HSAs) is 20%, an increase from the previous 10% penalty.
· The payroll Medicare tax increases from 1.45% of wages and self-employment income to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. This rate increase applies only to the employee portion, not to the employer portion.
· A 3.8% Medicare surtax is imposed on unearned income (examples: interest, dividends, capital gains) for single taxpayers with income over $200,000 and married couples with income over $250,000.

The Affordable Care Act may be one of the most complicated and confusing laws ever passed, but one thing is very clear: the law will affect the taxes of most Americans. In order to manage your tax bill, you will have to factor the new health care rules into your overall personal and business tax planning. For guidance, contact our office.

To begin checking out your state’s exchange (Marketplace), start at www.healthcare.gov – the federal government’s website on the Affordable Care Act.







NOTE: This Memo is intended to provide you with an informative summary of the tax issues connected with the Affordable Care Act. This massive package of legislation contains varying effective dates, definitions, limitations, and exceptions that cannot be summarized easily. For details and guidance in applying the tax provisions of this law to your situation, seek professional assistance.


Thursday, October 3, 2013

"Ishmael", have you read it?

Ishmael by Daniel Quinn is my favorite book.  It's a paradigm shifting book that I think visitors to my blog would enjoy.
"Teacher seeks pupil.  Must have earnest desire to save the world.  Apply in person."


If you haven't read Ishmael, go get the book.  Do not Google it or you'll end up reading reviews about the book that will influence your own thoughts.  The best way to enjoy the book is to get a copy and read it yourself.   If you have read it, I'd recommend Daniel Quinn's other books as they provide further insights.

I consider Quinn to be one of the 20th century's great thinkers.

Here's a short film about the kind of impact "Ishmael" has on some readers.   I hope you enjoy.


Monday, July 8, 2013

Gay Marriage Wins!



Same sex married couples got a victory last week when the Supreme Court struck down a law defining marriage as between a man and woman only, for federal legal purposes.  Another Supreme Court ruling allowed for the resumption of same-sex marriages in California.

Currently, 13 states (CA, Conn., Delaware, Iowa, Maine, MD, Mass., MN, N.H., N.Y., R.I., Vt., and WA) plus the District of Columbia allow same-sex marriages.

As a result of these court rulings, same-sex married couples can now file a joint return.  Generally speaking, married filing jointly will produce less tax for the married couple if the spouses have widely disparate income levels.  It is possible that many two-earner couples will end up paying more in taxes as a result of this ruling.

Estate planning and Gift tax issues will be simpler.  Married same-sex couples can now use the unlimited estate tax marital deduction and, they can elect portability, so at death, any unused estate and gift tax exemptions will pass to the surviving spouse.  They can also make gifts and transfers of property to each other without paying income or incurring gift tax.  Additionally, they will now qualify for gift splitting which allows them to potentially double the size of cash gifts by treating the gift as coming half from each.

Same-sex spouses will be eligible for tax free employer health coverage.

Workers can be reimbursed from their health flexible spending accounts (FSA) and health savings accounts (HSA) for their same-sex spouse's medical expenses.


Retirement plans are also impacted.  Same-sex spouses will now automatically qualify for survivor and death benefits under pension plans, 401(k) plans, etc.  Spousal IRAs can now be set up for nonworking same-sex spouses.  There are also favorable withdrawal rules for spouses who inherit pension accounts allowing them to take the money more slowly than what was allowed under the nonspouse-beneficiary rules.

Many open questions remain, especially for married couples who have moved and now find themselves living in a state that doesn't recognize same-sex marriages.  It's also unclear at this time whether civil unions or domestic partnerships will be able to file joint returns.



Tuesday, November 20, 2012

Three Numbers Everyone Should Know


Justin Bieber was on the August 2012 issue of Rolling Stone magazine.  About a week after the issue came out, the publishers were surprised to see that an article by Bill McKibben had gone viral and had more than 10x the activity as the Bieber story.  McKibben’s article was entitled “Global Warming’s Terrifying New Math” and in it he highlighted three simple numbers that add up to global catastrophe – and that make clear who the real enemy is.

The First Number:  2 degrees Celsius

This is the only number that politicians at the 2009 Copenhagen climate conference could agree upon.  Because neither China nor the United States, which account for 40 percent of global carbon emissions, were willing to commit to any meaningful concessions, in the end, all the world leaders could agree to is that “global temperature increases should be below two degrees Celsius (about 3.6 degrees Fahrenheit).”  The “Copenhagen Accord” as it is called, went on to say, "we agree that deep cuts in global emissions are required... so as to hold the increase in global temperature below two degrees Celsius."

It’s important to note that average global temperatures have risen just under 0.8 degrees Celsius to date, and this rise has caused far more problems than scientist predicted.  (A third of summer sea ice in the Arctic is gone, the oceans are 30 percent more acidic, and since warm air holds more water vapor than cold, the atmosphere over the oceans is now five percent wetter, loading the dice for devastating floods.)

Given those impacts, many scientists now believe that two degrees is far too lenient a target.  NASA scientist James Hansen, the planet’s most prominent climatologist says, "The target that has been talked about in international negotiations for two degrees of warming is actually a prescription for long-term disaster."

At this point, 167 countries, of 87 percent of the world’s carbon emitters have signed on to the Copenhagen Accord endorsing the two-degree target.  At this moment, it is the official position of planet Earth that we can’t raise the temperature more than two degrees Celsius.

The Second Number:  565 Gigatons

Scientists estimate that we can pump approximately 565 more gigatons of CO2 in the air by 2050 and still have a four in five chance to stay below two degrees.  The 565-gigaton number still doesn’t provide 100% certainty which makes it a bit like playing Russian roulette with our climate.

The idea of a global “carbon budget” emerged about a decade ago as scientists wondered how much fossil fuels could be safely burned.  It should be noted that computer models calculate that even if we stopped releasing CO2 today, the temperature would still rise another 0.8 degrees as the CO2 already released continues to heat the atmosphere.   Adding the 0.8 increase we’ve already had to the 0.8 degrees that is coming even if we stopped all emissions today means we are 80 percent on our way to the two-degree target.

Obviously, these numbers aren’t exact but the 565-gigaton figure was derived from one of the world’s most sophisticated climate models and has been confirmed by other models and scientists around the world.  As the models improve and more simulations are done, the 565-gigaton figure continues to stand.

In May, the International Energy Agency (IEA) published its latest figures showing that CO2 emissions rose to 31.6 gigatons, up 3.2 percent from the year before.    This number has gone up every single year except for a slight dip in 2009 at the height of the financial crisis.  While efforts to increase renewable use and improve energy efficiency have been significant, these increases in emissions show that those efforts have had only a marginal impact on global CO2 emissions.  In fact, study after study predicts global CO2 emissions to keep growing around 3 percent a year and at that rate, we will blow through the 565-gigaton figure in just 16 years. 

A child born today won’t even be able to drive by the time we pass the 565-gigaton number if we stay on our present trajectory.  And remember, that 565-gigaton number isn’t the carbon budget for the next sixteen years; it’s the carbon budget for the next thirty-eight.  Given the path we are on, Fatih Birol, the IEA’s chief economist said, “When I look at the data, the trend is perfectly in line with a temperature increase of about six degrees.”  That is nearly 11 degrees Fahrenheit, which many predict would create a planet straight out of a science fiction novel.

The message from scientists to reduce CO2 has been consistent for nearly 30 years now but the results are mostly the same:  scientific warning followed by political inaction.  This is what must change if we are to avoid a total catastrophe while most of us are still alive.

The Third Number:  2,795 Gigatons

This is the number that ought to scare you the most.  It is also a number that highlights the political and scientific dimensions of our dilemma. 

Last summer, a team of financial analysts and environmentalists published a report in an effort to highlight the risk climate change poses to their portfolios.  The 2,795 gigatons is the amount of carbon contained in the proven coal, oil, and gas reserves of the hydrocarbon corporations and the countries (Venezuela, Kuwait, et.al) that act like hydrocarbon companies.  The 2,795 gigatons of carbon is fossil fuel we are currently planning to burn.  And the key point here is that 2,795 gigatons is greater than 565 gigatons.  Five times greater!

We have five times as much fossil fuel as inventory on the books of these entities as climate scientists think is safe to burn over the next 38 years.  We’d have to keep 80% of these reserves in the ground and off the market to avoid the two-degree number.   Now that we know these numbers, short of a massive intervention, our fate seems certain.

It is important to note that for all practical purposes, these reserves are already priced into our economy.  Wall Street values these 2,795 gigatons at nearly $27 trillion.  To keep 80% in the ground would mean a $20 trillion write off, not something they are willingly going to do on their own accord.  As McKibben states in the article, “we can have a healthy fossil-fuel balance sheet, or a relatively healthy planet – but when you add up the numbers, we can’t have both.”

Do the math he says:  2,795 is five times 565.  That’s how the story ends.

What To Do

Individual actions just aren’t enough.  I’ve stopped driving and many of our customers drive very efficient hybrid cars but we have 30 years of data to prove that these actions alone won’t keep us below the 565 gigaton figure.  The reality is that most people like cheap flights to distant lands, flat screen TVs, and the convenience of a single passenger automobile.  And few people are going to give those up if everyone else is still consuming them.

A more efficient method would entail policy changes at the political level though we’ve had limited success on that to date.  The hydrocarbon industry is the richest and they spend billions to protect their suicidal business model.  Here in North America, we are fighting about the Keystone Pipeline which would release as much as 240 gigatons of carbon if we allow the Canadian Tar Sands to get to market.  Thus far, President Obama has not committed to stopping that project and in fact, has allowed construction to begin on parts of it.

Here in the Northwest, the possibility of coal shipments through our communities from the Powder River Basin in Wyoming continues to move forward.  The total basin contains some 67.5 gigatons worth of CO2, or more than 10 percent of the available atmospheric space.  James Hansen has stated “that it will be game over for the climate” if this coals comes to market.

What all of this makes clear is that the planet does have an enemy that is far more committed to action than government or individuals.  That enemy is the fossil-fuel industry and it will be our generation’s task to stop them.  Alone among industries, the fossil fuel industry is the only one allowed to dump its main waste, carbon dioxide, for free.  Nobody else gets that break.  The main reason for this anomaly is that up until the past 30 years, we didn’t know that CO2 was heating the planet and acidifying the oceans.  We now know and the price becomes one of our central issues.

By putting a price on CO2, through a direct tax or othermethod, we could enlist the power of markets in the fight against global warming.  Consumers would get strong signals to use fewer hydrocarbons and other forms of energy would be on an equal footing with oil, coal, and natural gas.  Pricing carbon will put a crimp in their profits and we know they’ll fight this based on pure self-interest.

However, this is the moral issue of our times.  Because this is a moral issue with planetary consequences, we are building a global movement to rival any we’ve ever seen.  Corporations once made lots of money in South Africa under apartheid until a global movement of divestiture and isolation overturned a system that some thought never would change.  Our challenge is to understand the hard cold math and to act accordingly.

Movements rarely have predictable outcomes.  Please join me in spreading these numbers, joining the movement, and taking action.  This is the moral issue of our time and nothing will give us greater joy than wining a fight we must win.