The Dirty Dozen

IRS Says: Here are the Top Tax Scams for 2014

NOTE:  THIS IS NOT A “HOW TO DO IT” COURSE


taxscamEach year the Internal Revenue Service issues its “Dirty Dozen” list of tax scams, urging taxpayers to be cautious, particularly during tax season. We share them with you here, with the hope that by being informed you may protect yourself.

  • IDENTITY THEFT    This occurs when someone uses your personal information, such as your name, Social Security Number or other information, without your permission. This can occur in many ways, but the IRS naturally is most interested when someone uses your “digits” to fraudulently file a tax return and claim a refund. If you believe you are at risk of identity theft due to lost or stolen personal information the IRS asks that you contact them at the IRS Identity Protection Specialized Unit at 800-908-4490 so they can secure your tax account.
  • PERVASIVE TELEPHONE SCAMS     In this scam, callers pretend to be from the IRS in hopes of stealing money or identities from victims. The IRS reports learning of many variations ranging from instances such as the caller says the victim owes money or is entitled to a huge refund. The victims are sometimes threatened with arrest or driver’s license revocation, and are sometimes paired with follow-up calls from people saying they are from the local police or the state motor vehicle department.

To Capitalize or Expense

THE IRS “FIXES” THE QUESTION

tocapitalize

The Internal Revenue Code has long generally required the capitalization of expenditures to acquire, produce or improve tangible property. This means that instead of “writing off” an amount in the year it is bought, your business must treat it as a depreciable asset and write it off over a period of time, depending on the nature of the asset.

Naturally, the IRS had regulations which attempted to define the difference between these “capital” and “non-capital” expenditures. Equally, there has been argument between those who pay taxes and those who collect them over this issue—even though an asset is usually going to be deductible one way or the other:  all at once or over a period of time, usually the quicker it is deducted the later the business pays tax, and the later it is deducted the sooner the IRS gets to collect tax. And either way, the timing of when the deduction is taken may cost or save tax.

After long study and consideration, issuance of temporary regulations and, rumor has it, actually involving taxpayer feed
back, the IRS has finally issued “final regulations” which are generally in effect for tax years beginning on or after January 1, 2014.