CP301 Notice from IRS

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If you receive a CP301 Notice from the IRS, it means that you have set up online access with the IRS.  If you did NOT do that, then you must call the IRS immediately at 1-888-841-4648 to DISABLE THE ONLINE ACCESS account.

The IRS online access was hacked about two months ago, so the IRS disabled the ability to get transcripts of your income tax return information downloaded through the online access account.  However, a transcript can still be ordered this way, and it will come to you by snail mail to your address of record.

There are now only two other reasons for setting up the Online Access account with the IRS: to set up a payment plan or to get a PIN to e-file your tax return.  This second reason, to get a PIN to e-file your tax return, is the PROBLEM right now.  It means someone else can e-file a fake tax return in your name and claim refunds for direct deposit into an account that probably won’t exist later when the fake tax return is discovered.

So if you receive this CP301 Notice of setting up an online services account with the IRS, and you did not do so, IMMEDIATELY call the IRS and get the account disabled.  Unfortunately, it will take at least 45 minutes on hold to get through to the IRS as they do not have enough staff to cover such calls.

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SCAMS – Watch out!

The scammers are getting better at convincing their victims to hand over their money and their identity by sending out real checks drawn on real banks with real company information printed on them.  However, that doesn’t mean the checks are negotiable.

An individual tax client brought me a letter he received, that was mailed with a Canadian stamp, postmarked in Canada, with no return address, and on official looking stationary, complete with a gold seal, from the United Alliance Sweepstakes Commission, identified as located in New York, New York, congratulating him on winning $175,000 in the combined “Readers Digest, Publishers Clearinghouse” sweepstakes. 

Also included was an ACTUAL check for $1,880.71 to reimburse him for fees, and that he was to call a certain phone number before depositing the check.  He kept getting a busy signal, and asked me what he should do.  He never entered sweepstakes or even played the state lottery, so he knew it was too good to be true.  He was correct!

The check was drawn against an actual manufacturing company in Indiana, and signed by the actual president of that company (all this information is available online; but the sweepstakes company has nothing to do with the manufacturer).  A  bank’s name and routing transit number were printed on the check and again, available online, but the address of the bank was listed as being in Chicago, Illinois and the bank is actually located in Michigan.  Again, that information is available online. 

Judging by the constantly busy phone number, I would say that a number of people have bitten on this bogus check scam.   The phone number, 888-233-4919 is a toll free number with no identity listed online, so that you can’t identify whom you’re calling.   I told him to bring the envelope, letter and check to his local police department so that they can warn others that these are not legitimate.

The client who received the letter is a senior citizen who owns his own home.  With the information available online, scammers can determine who owns their own homes, their respective ages, and can then mail them some very convincing evidence that they have won something. 

Make sure your parents and grandparents know that such a letter and accompanying check are most likely an attempt to steal your money and your identity!

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1099-MISC TRAP!

New Federal rules just increased the penalty for FAILURE to file a 1099-MISC form from $50 to $500,000.  That makes Wisconsin’s $25,000 penalty for WRONGLY filing a 1099-MISC in the construction industry seem pale in comparison. 

Here are the details of the new Federal penalties for failure to file a Form 1099-MISC for payments for services in excess of $600 during the calendar, in your trade or business, to unincorporated payees:

A person that fails to file a correct information return by the due date and cannot show reasonable cause may be subject to a penalty. The penalty applies if the person fails to file timely, fails to include all information required to be shown on a return, or includes incorrect information on a return. The penalty also applies if a person files on paper when required to file electronically, reports an incorrect taxpayer identification number (TIN) or fails to report a TIN, or fails to file paper forms that are machine readable. The amount of the penalty is based on when the correct information return is filed. For returns required to be filed on or after January 1, 2011, the penalty is:

(1) $30 per information return for returns filed correctly within 30 days after the due date (by March 30 if the due date is February 28), with a maximum penalty of $250,000 a year ($75,000 for certain small businesses);

(2) $60 per information return for returns filed more than 30 days after the due date but by August 1, with a maximum penalty of $500,000 a year ($200,000 for certain small businesses); and

(3) $100 per information return for returns filed after August 1 or not filed at all, with a maximum penalty of $1,500,000 a year ($500,000 for certain small businesses).

For this purpose, a business is a small business for any calendar year if its average annual gross receipts for the most recent three tax years (or for the period it was in existence, if shorter) ending before the calendar year do not exceed $5,000,000.

Persons who are required to file information returns electronically but who fail to do so (without an approved waiver) are treated as having failed to file the return, and are therefore subject to a penalty of up to $100 per return unless the person shows reasonable cause for the failure. However, they can file up to 250 returns on paper; those returns will not be subject to a penalty for failure to file electronically. The penalty applies separately to original returns and corrected returns.

For each fifth calendar year beginning after 2012, each of the dollar amounts described above is subject to indexing for inflation.

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Taxation without Representation

Just received this reminder from the Wisconsin Department of Revenue:

Sales or Use Tax Due on Snowmobiles or ATVs Registered in Wisconsin by Nonresidents – If a person who is not a resident of Wisconsin registers or titles or is required to register or title their snowmobile or ATV in Wisconsin in order to obtain a trail pass from the Wisconsin Department of Natural Resources, that person also owes the applicable Wisconsin sales or use tax on their purchase of that snowmobile or ATV. For more information see the article titled “Registration of Snowmobiles and ATV’s in Wisconsin by Nonresidents” at: http://www.revenue.wi.gov/taxpro/news/101220a.html.

Yes, if you want to get a snowmobile trail pass from the DNR, you first have to register your snowmobile here, which requires that you pay Wisconsin sales tax on the purchase price of your snowmobile.  Boats navigating Wisconsin waters also have the same requirement to be registered and sales taxes paid. 

Illinois has tollways for cars.  Wisconsin has the Wisconsin Department of Revenue for tourists.

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Construction Industry Registration in Wisconsin – NEW LAW!

Another sneaky little change in the Wisconsin “administrative code” created a new law which mandates registration by all construction industry contractors. 

“As of July 1, 2009, no person or entity may engage or offer to engage in construction business in Wisconsin unless they hold a Building Contractor Registration issued by the Safety and Buildings Division of the Wisconsin Department of Commerce.”

The Wisconsin Department of Commerce now has an Excel spreadsheet listing all of the contractors registered, and available for downloading by anyone.  The Wisconsin Department of Revenue now has a list from which to audit tax returns! 

The law requires that all registered contractors do business only with other registered contractors.  It is very interesting reading as to why this law was passed, but it is basically to collect taxes in the guise of protecting the public.  But they do caution you that registration is not a guarantee of honesty on the part of the contractor……

 http://commerce.wi.gov/SB/SB-BuildingContractorProgram.html 

UPDATE:  REVOKED JULY 2, 2013

2013 Wisconsin Act 20 invalidated the authority of the Department of Safety and Professional Services to require a Building Contractor Registration effective July 2, 2013. If your application for a Building Contractor Registration was received by the department on July 2, 2013, or after that date, the application will be discarded and the fees refunded.

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