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The IRS has been busier than ever this tax season thanks to the COVID-19 pandemic, and there are a couple of things that can help you when it comes to your federal taxes, having loan forgiveness, and being aware of IRS scams.

Note: If you filed an extension on your taxes, then all S Corp and Partnership returns are due by September 15, 2020.

1. You Can Now e-File Amended Personal Returns

Now you can e-file your amended personal tax return, as the IRS is accepting amended individual tax return forms 1040-X. After working on this for years, the IRS figured out how to include detailed information and worked out the bugs, so you do not have to mail in your amended tax return anymore. This form helps both you and the IRS to answer your questions efficiently. If you need to amend your taxes electronically, you can now by using any of these forms:

  • 2019 Form 1040
  • U.S. Individual Income Tax Return
  • 1040-SR, U.S. Tax Return for Seniors

2. AICPA Fighting to Not Have Forgiven PPP Loan Taxable

More than 170 organizations, including the AICPA, have banded together via a letter asking Congress to implement a technical correction for how taxes will affect loan forgiveness given through the Paycheck Protection Program (or PPP). The goal was for the government to help businesses struggling from the coronavirus pandemic, with the help of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This letter reminds Congress that they originally exempted the loan forgiveness from indebtedness as taxable income for amounts equal to the following:

  • Payroll
  • Mortgage interest
  • Rent
  • Utility payments

Despite the promise, the IRS issued a notice denying tax deductions for payments that were made under the PPP that had been forgiven. The letter points out that if a business having $100k in PPP loans forgiven and excluded as income, it is then required to add that amount back as business expenses are denied. It would be like fully taxing the loan forgiveness amount in the first place. The coalition letter also talks about:

  • Denying deductible wages would affect the Sec. 199A deduction as well as the work opportunity tax credit
  • How you as a taxpayer could cancel out expenses made in 2020 from loan forgiveness found in 2021
  • How disallowed interest expense would be handled under the excess business interest expense limitation

3. Fraudulent Tax Schemes to Avoid

Recently, the IRS posted 2020 tax scams that are showing up around coronavirus tax relief. You will want to steer clear of any traps designed to lure people who may not be aware of the direction they need to head.

Threatening IRS Phone Calls

These bogus solicitors try to scare you, saying time is of the essence. The IRS will never threaten you with a demand for immediate payment. They will also never threaten you with being arrested, deported, or having your license revoked if you do not pay your tax bill. Never give out your financial information over the phone!

Economic Impact Payment or Refund Theft

Scammers are now stealing economic impact payments by filing false tax returns or supplying other bogus information to the IRS to send your refund to false addresses or bank accounts.

Fraudulent Tax Return Preparers

You need to do your research to find a reputable tax preparer since they will be receiving your personal information. The preparer must sign your tax return, and if they fail to do this and hand it over to you to sign and mail in, do not do it. Your tax preparer filing your federal tax return will need to sign and include the preparer tax identification number (PTIN) on your tax return.

False Payments Coupled With Repayment Demands

These scammers get you to send them your refund by stealing your personal data (i.e., Social Security number, individual taxpayer identification number or ITIN, or bank account). They can file a fake tax return with the refund going into your bank account. Next, the scammer calls you, pretending to be an IRS employee saying there was a mistake and that you need to send the money back right away or risk penalties and interest. They will typically ask you to send in targeted gift cards totaling the refund amount. If this happens, call your bank or the IRS right away.

Phishing Scams

If someone sends you an email, letter, text, or link to a website wanting your personal information, know that the IRS will never contact you via email to discuss a tax bill, a refund, or ask about an economic impact payment. Often these scams mention words like “coronavirus,” “COVID-19,” and “stimulus.” Do not click on these!

Bogus Charities

If you get a request to donate to a new charity, and they mention the COVID-19 pandemic, beware! They often try to trap you via phone, text, social media or email. To make sure you are not being pulled into a scam, ask for their employer identification number (EIN), and then check them out using the search tool on www.irs.gov.

Senior Citizen Scams

Senior citizens (and their caregivers) should be on the lookout for tax scams as they are traditionally the most easily targeted victims for scammers. Be careful of what information you give out.

Fraud Targeting Non-English Speaking Citizens

These scammers pretend to be IRS agents targeting non-English speakers who may be getting an economic impact payment and will ask for personal or financial information from them. Usually done by phone, they use the threat of deportation, arrest, or revoking your driver’s license to get this information.

Offer In Compromise

Some companies that resolve your tax debt may tell you that they can help you settle this debt for “pennies on the dollar” through an offer in compromise (OIC). You may not even be qualified, and they will charge you an exorbitant fee.

Payroll AND HR Scams

Whether you are a tax professional, an employer, or a taxpayer, watch out for phishing scams targeting your Forms W-2 or Wage and Tax Statement. Known as business email compromise (BEC) or business email spoofing (BES), these scams involve gift cards or a direct deposit scam. First, they steal your email and then ask you to buy gift cards in various amounts, or they pretend to be you and have your company change your direct deposit information, so it goes to them instead. If this happens, reach out to the FBI Internet Crime Complaint Center and report your W-2 form scam to phishing@irs.gov (Subject: W-2 Scam) immediately.

Ransomware

You might inadvertently download malware where a scammer can track your keystrokes by infecting your computer, network or server. The ransomware can then search and lock your details using its encryption. You might uncover this when they try to get to your information, or you get a ransom request for virtual currency like bitcoin.

Scams Using Social Media

A scammer may contact your friends, family or coworkers from the information they got from your social media platforms. Email, text or social media messaging are easy ways to steal your identity.

Why Corporate Capital

Corporate Capital in Las Vegas, NV, is here for all of your business management needs in the United States. Our licensed professionals and legal experts are ready to help you with your taxes and answer your questions. Give us a call today at 855-371-0070!

Sources:
https://www.thetaxadviser.com/news/2020/aug/irs-e-file-form-1040-x.html
https://www.thetaxadviser.com/news/2020/aug/aicpa-asks-congress-for-ppp-deductibility-in-upcoming-legislation.html
https://www.thetaxadviser.com/news/2020/jul/tax-scams-irs-dirty-dozen-2020.html