Millions Still Being Misclassified as Independent Contractors

 

Employers are still misclassifying millions of workers as independent contractors, instead of employees, according to a recent government report.

The report from the Treasury Inspector General for Tax Administration looked at the issue in the context of the Internal Revenue Service’s Determination of Worker Status Program (also known as the SS-8 Program), which lets employers and workers seek determinations of whether workers are employees or independent contractors. A TIGTA audit found that, out of 5,324 determination rulings from 2009, a fifth (19 percent) of employers appeared not to comply with the determinations, and two thirds (65 percent) did not issue the correct forms to their workers either because the workers no longer worked for them or the compensation was not reported to the IRS. Employers in compliance with the ruling accounted for 17 percent of those studied.

“This problem adversely affects employees because the employer’s share of taxes is not paid and the employee’s share is not withheld,” said Inspector General J. Russell George. “If left unchecked, the problem will continue to deprive the federal government, and the American people, of millions of dollars in lost revenue every year.”

In response to a growing caseload, longer processing times, and lack of compliance with determinations, the SS-8 Program has initiated a set of prescreening techniques aimed at speeding up and improving the process.

As a result of its audit, TIGTA recommended that the IRS’s Small-Business/Self-Employed Division include documentation on the prescreening techniques in the Internal Revenue Manual; update its performance goals for case processing times; evaluated the new prescreening techniques; and assess potential changes to the SS-8 Program to increase employer compliance.

The IRS agreed with all four recommendations. It has developed a measurement for the new prescreening process and plans to monitor over-age cases weekly.

For more information: www.onts9.com

Back-to-School Sales Tax Holidays Coming up This Year

 

There are currently 17 states offering sales tax holidays where state sales tax charges are temporarily dropped on back-to-school items such as clothing, footwear, classroom supplies, computers and certain other products, according to CCH.

 However, local sales taxes may still be imposed in some communities. “What’s really important for consumers to know is the specific information about products that qualify for each state’s holiday in order to maximize sales tax savings,” said CCH senior state tax analyst Carol Kokinis-Graves in a statement. “Typically several restrictions will apply and each state usually provides official, highly detailed rules on specific items that do or do not qualify for state sales tax exemptions on designated dates.”

Massachusetts was the only state that discontinued its sales tax holiday in 2013. New York State does not offer a specific sales tax holiday, but items of clothing and footwear sold for less than $110 are exempt from the state’s sales and use tax throughout the year.

Sales tax holidays timed for back-to-school shopping begin as early as July 26 and many take place in early August. While some states limit the exemption to clothes and shoes, others extend exemptions to a wide range of personal items. All place dollar limits on the amount exempt from sales tax, from as little as $15 for school supplies in Florida to as much as $3,500 for computers in Missouri and North Carolina.

Alabama: On Aug. 2-4, the following are exempt: clothing (not accessories or protective or recreational equipment) with a sales price of $100 or less per item; single purchases, with a sales price of $750 or less, of computers, computer software, school computer equipment; noncommercial purchases of school supplies, school art supplies and school instructional materials with a sales price of $50 or less per item; and noncommercial book purchases with a sales price of $30 or less per book.

Arkansas: On Aug. 3-4, the following are exempt: sales of clothing items under $100, clothing accessories or equipment under $50, school art supplies, school instructional materials and school supplies.

Connecticut: On Aug. 18-24, clothing and footwear costing less than $300 per item are exempt. Not included are athletic or protective clothing or footwear, jewelry, handbags, luggage, umbrellas, wallets, watches and similar items.

Florida: On Aug. 2-4, the following are exempt: clothing with a sales price of $75 or less per item and school supplies with a sales price of $15 or less per item; and personal computers and related accessories with a sales price of $750 or less purchased for noncommercial use. The holiday exemption does not apply to sales of such items made within a theme park, entertainment complex, public lodging establishment or airport.

Georgia: On Aug. 9-10, the following are exempt: clothing and footwear with a sales price of $100 or less per article or pair, excluding accessories; single purchases for noncommercial use of $1,000 or less of personal computers and related accessories; and general school supplies priced at up to $20 per item.

Iowa: On Aug. 2-3, clothing and footwear with a sales price of less than $100 per item is exempt. However, the exemption does not include any special clothing or footwear that is primarily designed for athletic activity or protective use and not normally worn except when used for the athletic activity or protective use for which it is designed. The exemption also excludes accessories or the rental of any clothing or footwear.

Louisiana: On Aug. 2-3, the first $2,500 of the sales price of noncommercial purchases (not leases) of items of tangible personal property (not vehicles or meals). Although the holiday exemption does not apply to local taxes, St. Charles Parish will waive its local sales tax during the same weekend as the state holiday.

Maryland: On Aug. 11-17, items of clothing and footwear with a taxable price of $100 or less are exempt. Accessories are not included.

Mississippi: On July 26-27, clothing or footwear (not accessories, rentals, skis, swim fins or skates) with a sales price under $100 per item is exempt.

Missouri: On August 2-4 the following items are exempt: noncommercial purchases of clothing (but not accessories) with a taxable value of $100 or less per item; school supplies up to $50 per purchase; computer software with a taxable value of $350 or less; and computers and computer peripherals up to $3,500. Localities may opt out.

The tax holiday does not apply to any retailer when less than two percent of their merchandise offered for sale qualifies for the holiday. In such a case, the retailer must offer a sales tax refund in lieu of the holiday.

New Mexico: On August 2-4, the following are exempt: footwear and clothing (not accessories or athletic or protective clothing) with a sales price of less than $100 per item; school supplies with a sales price of less than $30 per item; computers with a sales price of $1,000 or less per item; computer peripherals with a sales price of $500 or less per item; book bags, backpacks, maps and globes with a sales price less than $100 per item; and handheld calculators with a sales price of less than $200 per item. Retailers are not required to participate.

North Carolina: On August 2-4, the following are exempt: clothing and school supplies with a sales price of $100 or less per item; school instructional materials with a sales price of $300 or less per item; sport/recreational equipment with a sales price of $50 or less per item; computers with a sales price of $3,500 or less; and computer supplies with a sales price of $250 or less per item. The exemption does not apply to clothing accessories; any item sold for use in a trade or business; educational software; furniture; luggage; stereo equipment; DVD players, and similar equipment; and protective equipment.

Oklahoma: On Aug. 2-4, items of clothing and footwear with a sales price of less than $100 are exempt. The holiday does not apply to the rental of clothing or footwear, the sale of special clothing or footwear primarily designed for athletic or protective use, or the sale of accessories.

South Carolina: On Aug, 2-4, clothing (but not rentals), clothing accessories, footwear, school supplies, computers, printers, printer supplies, computer software, bath wash clothes, bed linens, pillows, bath towels, shower curtains and bath rugs are exempt.

Tennessee: On Aug. 2-4, clothing (but not accessories), school supplies and school art supplies with a sales price of $100 or less per item; and computers with a sales price of $1,500 or less per item are exempt.

Texas: On Aug. 9-11, clothing and footwear and school backpacks with a sales price of less than $100 per item are exempt. The exemption does not include accessories, athletic or protective clothing or rentals.

Virginia: On Aug. 2-4, clothing and footwear with a sales price of $100 or less per item and school supplies with a sales price of $20 or less per item are exempt.

Tax Holidays for Energy-efficiency, Hurricane Prep Items
In addition to holidays timed for back-to-school buying, a number of states have enacted tax holidays offered at various times throughout the year to promote other kinds of purchases.

Energy efficiency is the most common theme and the three states with upcoming tax holidays for energy and water-efficiency purchases include:

Georgia: On Oct. 4-6, energy-efficient and water-efficient products purchased for noncommercial use with a sales price of $1,500 or less per product are exempt.

North Carolina: On Nov. 1-3, qualified Energy Star products sold for non-business use, including clothes washers, freezers and refrigerators, central and room air conditioners, air-source heat pumps, ceiling fans, dehumidifiers and programmable thermostats are exempt.

Virginia: On Oct. 11-14, noncommercial purchases of Energy Star and WaterSense qualified products with a sales price of $2,500 or less per item are exempt.

Maryland, Missouri and Texas held energy-efficiency tax holidays in February, April and May respectively. Alabama held its sales tax holidays for hurricane preparedness items in February. Louisiana and Virginia held similar sales tax holidays in May.

Firearms Sales Tax Holidays
Louisiana remains the only state that offers a state tax holiday for noncommercial purchases of firearms, ammunition and hunting supplies. From Sept. 6-8 in Louisiana, such purchases (but not the purchase of animals for the use of hunting) are exempt.

IRS Spent Nearly $5M a Year for Executive Travel

 

The Internal Revenue Service spent over $4.8 million in fiscal year 2011 and $4.7 million in fiscal year 2012 for executive travel, according to a new government report.

 The report, from the Treasury Inspector General for Tax Administration, found that a small number of executives had extremely high travel expenses compared to the rest of the executives, and that several executives reside outside the Washington area but frequently travel to the Washington, D.C. area to conduct day-to-day operations.

The report came in the wake of recent congressional hearings examining IRS conference expenses, delays in approving applications for tax-exempt status and other concerns, with TIGTA Inspector General J. Russell George frequently called on to testify on his audit findings. The TIGTA reports and increased congressional scrutiny have led to the departures of a number of high-ranking IRS officials and a pledge from IRS principal deputy commissioner Daniel Werfel, who is now leading the agency, to rein in unnecessary spending at the agency.

TIGTA found that 12 executives—including seven in fiscal 2011 and five in fiscal 2012—were in travel status for over 200 days out of the year. The cost and frequency of travel for these executives indicate that they may not live in the best location to economically accomplish their roles and responsibilities.

TIGTA found that about 4 percent (15) of IRS executives accounted for about 26 percent ($1.1 million) of the total spent on executive travel in fiscal year 2011 and approximately 23 percent ($1.2 million) in fiscal year 2012. In addition, in fiscal year 2011, the top 15 executive travelers traveled an average of 202 days and each incurred an average of $81,544 in expenses. In fiscal year 2012, the top 15 traveled an average of 184 days and spent an average of $73,054 each, according to TIGTA’s report.

“Cutting costs is a top priority, and the IRS has put in place a number of steps to reduce expenses involving executive travel,” the IRS said in a statement forwarded to Accounting Today by IRS spokesperson Julianne Fisher Breitbeil. “As discussed in principal deputy commissioner Danny Werfel’s report, “Charting the Path Forward,” the IRS has put in place new procedures to stop the practice of allowing executives to routinely leave their home office to travel to another city to conduct their principal work. The previous practice, while allowed under federal rules, is no longer appropriate for this tight fiscal environment.

“The IRS notes the finding by TIGTA that overall executive travel does not appear to be excessive,” the IRS added. “Travel by leadership is critical because the IRS is a national operation, with about 90,000 employees located in 620 locations from coast-to-coast. Face-to-face interaction with employees and managers is critical to ensure that sound practices and proper procedures are being followed both for taxpayer service efforts and tax compliance.”

TIGTA recommended, and the IRS agreed, that the IRS Chief Financial Officer should require an analysis that compares the costs and benefits of a long-term travel situation to that of a temporary or permanent change of station, and demonstrates that the more favorable alternative was selected before placing an executive in long-term travel.

“The IRS has over 300 executives, many of whom are required to travel in the course of acting out their responsibilities due to the geographic dispersion of their programs in over 620 posts of duty,” wrote IRS CFO Pamela J. LaRue in response to the report. “IRS executive positions are highly specialized and demand unique skill sets due to the complexity of the underlying tax law and technology infrastructure. It can take years to build the necessary experience in fields such as information technology and tax enforcement and administration—areas critical to successfully running a tax system that collects $2.5 trillion a year. The employees best prepared to handle these demanding and complex jobs may not always live where the position is located and may not be in a position to relocate, necessitating some additional travel.”

While the review was ongoing, the IRS instituted a change in its travel policy in April 2013 that generally restricts executives from being in travel status more than 75 nights in any fiscal year.

In addition, the IRS issued guidance in June 2013 that requires that each executive position have an identified position post of duty and that the official station be identified as either location-specific or location-neutral (the work activities can be performed in virtually any geographical location).

“It is encouraging that in response to TIGTA’s findings, the IRS is taking action to better control executive travel,” said TIGTA chief J. Russell George in a statement.

For more information: www.onts9.com

IRS’s Taxpayer Protection Program Needs to Do a Better Job of Helping Identity Theft Victims

The Taxpayer Protection Program that the Internal Revenue Service implemented in an effort to curb the problem of identity theft-related tax fraud is improving the IRS’s efforts at detecting identity theft, but the case-processing controls need to be strengthened to reduce the burden on taxpayers victimized by identity theft, according to a new government report.

 

The report, from the Treasury Inspector General for Tax Administration, acknowledged the IRS’s Taxpayer Protection Program is crucial to the agency’s efforts to combat tax refund fraud and help victims of identity theft receive their refunds. Last year, the program identified 324,670 tax returns involving identity theft and prevented the issuance of $2.2 billion in fraudulent tax refunds. The tax returns were identified before processing was completed to protect the fraudulent tax refunds from ever being issued.

However, controls over the identity theft tax returns in the Taxpayer Protection Program need to be strengthened, according to the TIGTA report. The Inspector General noted that tests of identity theft cases showed that the controls relating to the Taxpayer Protection Program data, the cases worked and training were insufficient.

For example, identity theft indicators were not always input on taxpayer accounts. In addition, Account Management Services system cases were not clearly documented or closed accurately. Timeliness measures to accurately track the time frame to resolve cases have not been established either. Moreover, documentation of employee training is insufficient.

TIGTA recommended that the IRS develop processes to ensure that the required identity theft indicators are placed on taxpayer accounts and employees properly update the Account Management Services system with actions they take when working identity theft cases. In addition, timeliness measures need to be developed to accurately track the time frame to resolve Taxpayer Protection Program cases, TIGTA suggested. Employees should also complete the required training, and documentation should be maintained in the Enterprise Learning Management System.

The IRS agreed with all of TIGTA’s recommendations. The IRS plans to refine its existing procedures to ensure that appropriate identity theft indicators are placed on taxpayer accounts, develop a process for managers to review employee updates on cases, form a cross functional group to establish tracking methodologies for measuring cases from initial contact through case closure, and ensure that employee training is updated on the Enterprise Learning Management System.

“We appreciate the report’s acknowledgement of our improvements in early detection of potentially fraudulent tax returns with indications of identity theft,” IRS Wage and Investment Division commissioner Peggy Bogadi wrote in response to the report. “The Taxpayer Protection Program (TPP) is one of the first lines of defense in stopping the victimization of innocent taxpayers whose identities may have been compromised and used by unscrupulous individuals to claim fraudulent refunds.”

To ensure enough staff were available for the toll-free telephone line, she pointed out that approximately 600 Accounts Management employees were trained so a minimum of 200 employees were available to assist taxpayers during last filing season. New training was also developed and delivered to ensure the extra employees were prepared for the beginning of the filing season.  “Although the training modules were not incorporated into the Enterprise Learning Management System, the employee records are being manually updated to reflect course completion,” she added. “We will ensure future training sessions are cataloged prior to delivery to ensure employee records are updated as training is received.”

For more information: www.onts9.com

 

Travel & Entertainment: Maximizing Tax Benefits

 

Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls “away from home”.

  1. First, local travel expenses. You can deduct local transportation expenses incurred for business purposes, for example the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, although as you will read later in this guide, you can deduct meals as an entertainment expense as long as certain conditions are met.
  2. Second, you can deduct away from home travel expenses-including meals and incidentals; however, if your employer reimburses your travel expenses, your deductions are limited.

Local Transportation Costs

The cost of local business transportation includes rail fare and bus fare, as well as the costs of using and maintaining an automobile used for business purposes. For those whose main place of business is their personal residence, business trips from the home office and back are considered deductible transportation and not non-deductible commuting.

You generally cannot deduct lodging and meals unless you stay away overnight. Meals may be partially deductible as an entertainment expense.

Away From-Home Travel Expenses

You can deduct one-half of the cost of meals (50%) and all of the expenses of lodging incurred while traveling away from home. The IRS also allows you to deduct 100% of your transportation expenses–as long as business is the primary reason for your trip.

Here’s a list of some deductible away-from-home travel expenses:

  • Meals (limited to 50%) and lodging while traveling or once you get to your away-from-home business destination.
  • The cost of having your clothes cleaned and pressed away from home.
  • Costs for telephone, fax or modem usage.
  • Costs for secretarial services away-from-home.
  • The costs of transportation between job sites or to and from hotels and terminals.
  • Airfare, bus fare, rail fare, and charges related to shipping baggage or taking it with you.
  • The cost of bringing or sending samples or displays, and of renting sample display rooms.
  • The costs of keeping and operating a car, including garaging costs.
  • The cost of keeping and operating an airplane, including hangar costs.
  • Transportation costs between “temporary” job sites and hotels and restaurants.
  • Incidentals, including computer rentals, stenographers’ fees.
  • Tips related to the above.

Entertainment Expenses

There are limits and restrictions on deducting meal and entertainment expenses. Most are deductible at 50%, but there are a few exceptions. Meals and entertainment must be “ordinary and necessary” and not “lavish or extravagant” and directly related to or associated with your business. They must also be substantiated (see below).

Your home is considered a place conducive to business. As such, entertaining at home may be deductible providing there was business intent and business was discussed. The amount of time that business was discussed does not matter.

Reasonable costs for food and refreshments for year-end parties for employees, as well as sales seminars and presentations held at your home are 100% deductible.

If you rent a skybox or other private luxury box for more than one event, say for the season, at the same sports arena, you generally cannot deduct more than the price of a non-luxury box seat ticket. Count each game or other performance as one event. Deduction for those seats is then subject to the 50% entertainment expense limit.

If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. The amounts separately stated for food and beverages must be reasonable.

Deductions are disallowed for depreciation and upkeep of “entertainment facilities” such as yachts, hunting lodges, fishing camps, swimming pools, and tennis courts. Costs of entertainment provided at such facilities are deductible subject to entertainment expense limitations.

Dues paid to country clubs or to social or golf and athletic clubs however, are not deductible. Dues that you pay to professional and civic organizations are deductible as long as your membership has a business purpose. Such organizations include business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards.

Tip: To avoid problems qualifying for a deduction for dues paid to professional or civic organizations, document the business reasons for the membership, the contacts you make and any income generated from the membership.

Entertainment costs, taxes, tips, cover charges, room rentals, maids and waiters are all subject to the 50% limit on entertainment deductions.

How Do You Prove Expenses Are “Directly Related”?

Expenses are directly related if you can show:

  • There was more than a general expectation of gaining some business benefit other than goodwill.
  • You conducted business during the entertainment.
  • Active conduct of business was your main purpose.

Record-keeping and Substantiation Requirements

Tax law requires you to keep records that will prove the business purpose and amounts of your business travel, entertainment, and local transportation costs. For example, each expense for lodging away from home that is $75 or more must be supported by receipts. The receipt must show the amount, date, place, and type of the expense.

The most frequent reason that the IRS disallows travel and entertainment expenses is failure to show the place and business purpose of an item. Therefore, pay special attention to these aspects of your record-keeping.

Keeping a diary or log book–and recording your business-related activities at or close to the time the expense is incurred–is one of the best ways to document your business expenses.

If you need help documenting business travel and entertainment expenses, don’t hesitate to call us. We’ll help you set up a system that works for you–and satisfies IRS record-keeping requirements.

For more information: www.onts9.com

IRS Formalizes Employer Mandate Delay in Providing Health Insurance

 

The Internal Revenue Service has issued a formal notice that officially delays the employer shared responsibility provisions of the Affordable Care Act, also known as the employer mandate, for a year and postpones the information reporting requirements.

The White House and the Treasury Department posted announcements about the delay last week on blogs (see Obama Administration Delays Employer Mandate for Affordable Care Act). But the new Notice 2013-45 from the IRS formalizes and further explains the transition relief.

The announcement gives larger employers an additional year to comply with the health care reform law. The requirements will instead begin in January 2015 for employers with 50 or more full-time employees (or the equivalent in full- and part-time employees) to offer quality affordable health insurance to employees or face a $2,000 fine per employee if the employee receives a premium tax credit for purchasing individual coverage on one of the upcoming health insurance exchanges.

The IRS said in the notice that the transition relief will provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law. “This transition relief also is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems,” said the IRS. “Both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015. In preparation for that, once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions for 2014.”

The Obama administration emphasized that the delay came in response to demands from businesses to provide more time to adjust to the new requirements.

The IRS added that the transition relief through 2014 for the information reporting and Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions.

The Obama administration still plans to open the health insurance exchanges, or marketplaces, on Oct. 1. It recently shortened the 21-page application for health insurance into a three-page application to make it easier for taxpayers to apply for coverage. House Republicans have introduced legislation once again to try to repeal the Affordable Care Act and have begun pushing the Obama administration to delay the individual mandate for buying health insurance now that the employer mandate has been delayed.

For more information: www.onts9.com

 

 

Paying Off Debt the Smart Way

Between mortgages, car loans, credit cards, and student loans, most people are in debt. While being debt-free is a worthwhile goal, most people need to focus on managing their debt first since it’s likely to be there for most of their life.

Handled wisely, that debt won’t be an albatross around your neck. You don’t need to shell out your hard-earned money because of exorbitant interest rates or always feel like you’re on the verge of bankruptcy. You can pay off debt the smart way, while at the same time saving money to pay it off faster.

Assess the Situation

First, assess the depth of your debt. Write it down, using pencil and paper, a spreadsheet like Microsoft Excel, or a bookkeeping program like Quicken. Include every financial situation where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.

Record the day the debt began and when it will end (if possible), the interest rate you’re paying, and what your payments typically are. Add it all up, painful as that might be. Try not to be discouraged! Remember, you’re going to break this down into manageable chunks while finding extra money to help pay it down.

Identify High-Cost Debt

Yes, some debts are more expensive than others. Unless you’re getting payday loans (which you shouldn’t be), the worst offenders are probably your credit cards. Here’s how to deal with them.

  • Don’t use them. Don’t cut them up, but put them in a drawer and only access them in an emergency.
  • Identify the card with the highest interest and pay off as much as you can every month. Pay minimums on the others. When that one’s paid off, work on the card with the next highest rate.
  • Don’t close existing cards or open any new ones. It won’t help your credit rating.
  • Pay on time, absolutely every time. One late payment these days can lower your FICO score.
  • Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club you’ve never used? Look for line items you don’t need.
  • Call your credit card companies and ask them nicely if they would lower your interest rates. It does work sometimes!

Save, Save, Save

Do whatever you can to retire debt. Consider taking a second job and using that income only for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.

Do Away with Unnecessary Items to Reduce Debt Load

Do you really need the 800-channel cable option or that dish on your roof? You’ll be surprised at what you don’t miss. How about magazine subscriptions? They’re not terribly expensive, but every penny counts. It’s nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.

Never, Ever Miss a Payment

Not only are you retiring debt, but you’re also building a stellar credit rating. If you ever move or buy another car, you’ll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.

Pay With Cash

To avoid increasing debt load, make it a habit to pay with cash. If you don’t have the cash for it, you probably don’t need it. You’ll feel better about what you do have if you know it’s owned free and clear.

Shop Wisely, and Use the Savings to Pay Down Your Debt

If your family is large enough to warrant it, invest $30 or $40 and join a store like Sam’s or Costco–and use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride. Use coupons religiously. Calculate the money you’re saving and slap it on your debt.

Each of these steps, taken alone, probably doesn’t seem like much. But if you adopt as many as you can, you’ll watch your debt decrease every month. If you need help managing debt give us a call. We can help.

For more information: www.onts9.com

 

IRS Accidentally Exposed Tens of Thousands of Social Security Numbers

 

The Internal Revenue Service has reportedly posted the Social Security numbers of tens of thousands of people on the Internet before taking down the information when a whistleblower pointed out the mistake.

The Web site Public.Resource.org, which specializes in posting government documents in the public domain, discovered the privacy breach and promptly alerted the IRS, as well as the Treasury Inspector General for Tax Administration.

Public.Resource.Org founder Carl Malamud said in a statement that his organization found the IRS had posted a database containing the filings of Section 527 political organizations such as campaign committees. “This Section 527 database is an essential tool used by journalists, watchdog groups, congressional staffers and citizens,” he wrote. “While the public posting of this database serves a vital public purpose (and this database must be restored as quickly as possible), the failure to remove individual Social Security Numbers is an extraordinarily reckless act.”

His site discovered the privacy breach on July 2 and notified TIGTA, documented its findings in an audit document, and sent copies to IRS officials and senior White House officials. On July 3 the administration removed the database from public view.

Malamud noted that Public.Resource.Org uncovered the data during an unrelated audit after the IRS notified the site last month that it had sent out an improperly vetted shipment of data on DVD for the January release of the Form 990-T, the Exempt Organization Business Income Tax Return. Because the IRS had publicly released the data in February, and had not notified recipients of the bulk data subscription of the privacy breach for several months, Malamud said Public.Resource.Org had conducted a systematic examination of the breach and how it was handled, and delivered that audit to the Inspector General on July 1.

“The tainted political money database run by the government on the Internet is just one symptom of a deeply broken dissemination strategy the IRS has insisted on pursuing,” he wrote. “The IRS deliberately dumbs down the e-filed returns of big nonprofits, many of which are able to hide lavish compensation schemes, excessive fundraising expenses, and other expenditures that have little to do with public benefit.”

For more information: www.onts9.com

Defense of Marriage ACT (DOMA)- Supreme Court Decision

The Supreme Court’s recent decision striking down the Defense of Marriage Act has created a host of tax issues — and possibilities — for accountants, financial planners and their clients. in fact, at its heart, the case, U.S. vs. Windsor, was a tax case revolving around almost $400,000 in taxes owed on the estate of a same-sex couple.

With same-sex couples now eligible for many new tax benefits, they’ll be looking to their advisors for advice and services. To help you navigate the issues resulting from the decision and help your clients understand what comes next, we’ve assembled all our coverage and other resources in one place, along with resources from some of our sister publications, Financial Planning and On Wall Street:

For more information: www.onts9.com