Bogus Obama E-mail Lies Corrected

Over the past few weeks an email has been going around filled with lies about Obama’s tax and economic proposals. Thanks to the Tax Policy Blog, we have a full list of these bogus claims, and the real truth about them.

Obama would tax capital gains on ALL home sales at 28 percent

Obama's plan (like McCain's) does not change the tax treatment of capital gains on owner-occupied housing (I wish it did). Obama does plan to raise the rates on long-term capital gains that are currently taxed at preferred rates.

Obama would raise the tax rate on dividends to 39.6 percent

Merely repealing the Bush tax cuts (or allowing them to expire) would raise the dividend tax rate to 39.6 percent for those in the top income bracket (about 1 percent of tax returns, though a large share of dividends). However, Obama has indicated that he would apply the same tax rate on dividends as capital gains, which he has indicated would not exceed 28 percent.

Income tax bills for typical families would increase, even double for some

As discussed earlier... Same as here. "Clinton-era" tax law assumed to be the same as Obama. But figures cited are wrong for many reasons.

Inheritance Tax under McCain = 0; Obama restored

Actually, McCain does not favor permanent repeal of the estate tax. And Obama does not want it fully restored. Obama would impose a 45 percent tax rate with $3.5 million exclusion, which is lower than pre-Bush tax cuts, yet significantly higher than 2010 scheduled law ($0).

Obama would impose new government taxes on homes that are over 2,400 square feet

This is the most outrageous claim. This appears to stem from Congressman John Dingell's proposal that would cap the mortgage interest deduction for large houses for environmental purposes. Obama has not favored such a proposal and even if he did, it would not be a new "tax" per se, just a limitation of what I would call an already bad tax provision (MID). Obama does favor a cap-and-trade system (like McCain), which is in implicit tax, but such an implicit tax would hit all homes indirectly based largely upon energy consumption.

Obama would impose new gasoline taxes

Ambiguous...Obama does favor a windfall profits tax on oil companies, which would likely raise the price of gasoline. However, he has not indicated support of raising the federal excise tax on gasoline (currently 18.4 cents).

Obama would impose new taxes on natural resource consumption (energy, natural gas, etc.)

Obama does not favor any direct tax on these products (except for windfall profits tax on oil companies). However, again, a cap-and-trade system would act as an implicit tax on these oil companies, so this is not too outlandish of a claim (compared to the rest of them). It should be pointed out though that McCain supports practically the same policy.

New taxes on retirement accounts

Obama has not said anything about a new tax on retirement accounts, unless one wants to argue that indirectly, he would affect the return on retirement accounts through his individual and corporate tax policies and dividend/capital gains policies. In fact, when it comes to direct taxes on retirement, Obama has proposed exempting seniors (those who most likely claim retirement income) who make under $50,000 from an income tax.

New taxes to pay for socialized medicine

Obama does have a universal health care plan that one could label socialist to some extent, although our current system has a large degree of implicit government payments through the exclusion of employer-provided health insurance. However, Obama has not said new taxes would pay specifically for that socialized medicine although he does favor some new taxes (higher income taxes on upper-incomes, higher payroll taxes on upper-income workers and a windfall profits tax). Such a claim is not possible to verify or refute due to the fact that all government money is basically fungible.”

New Scammers use Fax and E-mail to Pose as IRS

In a new press release, the IRS warns taxpayers to be aware of a few new scammers who are using fax and e-mail to pose as representatives of the IRS. Below are the main scams the IRS is warning about, but you can read the full release at Scammers Use e-Mail, Fax to Pose as IRS.

Refund e-Mail Scam

There are several variations of the refund scam, in which an e-mail claiming to come from the IRS falsely informs the recipient that he or she is eligible for a tax refund for a specific amount. The bogus e-mail instructs the recipient to click on a link to access a refund claim form. The form requests personal information that the scammers can use to access the e-mail recipient’s bank or credit card account.

This notification is phony. The IRS does not send unsolicited e-mail about tax account matters to taxpayers.

Filing a tax return is the only way to apply for a tax refund; there is no separate application form. Taxpayers who wish to find out if they are due a refund from their last annual tax return filing may use the Where’s My Refund? interactive application on this Web site. IRS.gov is the only official IRS Web site.

Economic Stimulus Payments Scam

In this scam, a taxpayer receives an e-mail pretending to come from the IRS which tells the recipient he or she is eligible for an economic stimulus payment. The message recommends direct deposit into the taxpayer’s checking or savings account. To receive the payment, recipients must click on a link to complete and submit an online form by a certain date; otherwise, the e-mail warns, payment may be delayed. The form requests personal and financial data, including checking or savings account numbers that the scammers can use to gain access to the accounts.

In reality, the way members of the public receive their economic stimulus payment is to file a tax return with the IRS, not a special form. Additionally, the IRS does not request personal or financial information via e-mail.

Substitute Form 1040 Fax Scam

This scam consists of a cover letter and form that are faxed, rather than e-mailed. The cover letter is addressed “Dear Valued Tax Payer (sic)” and appears to be signed by an IRS employee. The letter says that the IRS is updating its files and that recipients who supply the requested information will receive a nominal tax refund. It also states that those who fail to immediately return the completed form risk additional tax and withholding. The attached form is labeled a substitute Form 1040 and is titled “Certificate of Current Status of Beneficial Owner For United States Tax Recertification & Withholding.” It requests a large amount of detailed personal and financial information, such as mother’s maiden name (often used in security screening), bank account numbers, estimated assets and more. It asks the recipient to sign and fax back the completed form, as well as a copy of the recipient’s driver’s license and passport.

Company Report Scam

This e-mail appears to come from an IRS.gov e-mail address, addresses recipients by name and references the company the recipient works for. These personalized details may convince the recipient that the e-mail is legitimate. The e-mail says that the IRS has a report on the company and asks the recipient to review a copy by clicking on a link to download the report. However, when the link is clicked, malware is downloaded to the recipient’s computer.

There are various types of malware, which can hijack a victim’s computer hard drive to give someone remote access to the computer, search for passwords and other information and send them to the scammer, or cause other types of identity theft or damage.

The IRS does not compile reports on companies or send e-mails to company staff asking them to review a report. Generally, the IRS does not send unsolicited e-mails to taxpayers.

Tax Court Scam

In this scam, an e-mail that appears to come from the U.S. Tax Court contains a petition involving a court case between the IRS and the recipient. The document instructs the recipient to download other files. The downloads transfer malware, or malicious code, to the recipient’s computer.

There are various types of malware, which, for example, can hijack a victim’s computer hard drive to give someone remote access to the computer, or can search for passwords and other information and send them to the scammer.

The truth is that the Tax Court is not e-mailing notices to anyone who currently has a case before the court. Visit the court’s Web site at http://www.ustaxcourt.gov/ for more information. Recipients are advised to avoid clicking on any links in the e-mail and to delete the e-mail.

IRS Warns of Rebate Scams

According to the IRS, there are a few new e-mail and telephone "scams". These scams pretend to be from the Internal Revenue Service and attempt to get taxpayers personal or financial information The IRS is expecting the scams to continue through April 15th.

This time around the IRS is warned to lookout for scams that mention advance payment checks from the IRS. Congress has not yet passed the economic stimulus package, and even so, the checks are not expected to be mailed out until this spring.

The IRS’s new release claims: "identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows "scamsters" to act quickly and cover their tracks before the victim becomes aware of the theft."

Therefore, it is important to be aware of these scams so you do not fall victim to their gimmicks. The IRS never sends out e-mails requesting personal or financial information. If you do receive an e-mail like this, do not reply to it. Instead, forward it to phishing@irs.gov.

IRS Warns About Yet Another Email Scam

Yesterday the IRS put out a consumer warning on yet another email scam. According to the IRS, the two-step e-mail scam falsely promises people they will receive $80 for participating in an online customer satisfaction survey. The email masks itself as an email from the IRS, with a link to an IRS "Member Satisfaction Survey." "We have seen many e-mail scams using the IRS name," IRS Deputy Commissioner for Operations Support Linda Stiff noted. "The IRS does not initiate contact with taxpayers through e-mail. Taxpayers should always use caution when they receive unsolicited e-mails."