IRS Reminds Small Tax-Exempt Organizations to File e-Postcards

In a new press release the IRS is reminding “many small tax-exempt organizations to file their annual electronic informational return with the IRS by the May 15 deadline.”

This is the second year of the new requirement for tax-exempt organizations whose gross annual receipts are normally $25,000 or less to file Form 990-N also known as e-Postcards. The process is fast and easy.

The May 15 deadline applies to all small organizations whose tax year ends on Dec. 31. Organizations whose tax year is different from the calendar year must file the e-Postcard by the 15th day of the 5th month after the close of their tax year.

“The leadership of these small organizations tends to change rather frequently, so it is important to remind everyone of this filing requirement,” said Lois Lerner, director of the IRS’s Exempt Organizations division. “It’s important for an organization to file. If it fails to do so for three consecutive years, it will automatically lose its tax-exempt status.”

The e-Postcard is a simple, Internet-based form that asks a few identifying questions about the organization. The e-Postcard must be filed online; there is no paper option.

IRS Issues Summer 2008 Statistics Of Income Bulletin

According to their latest news release, “the Internal Revenue Service today released the summer 2008 issue of the Statistics of Income Bulletin, which features tax year 2005 data on the growth in profits and tax liability reported by foreign-controlled domestic corporations.

According to 2005 data, there were 61,820 foreign-controlled domestic corporations (FCDCs), accounting for 1.1 percent of the total of all U.S. corporations. However, FCDCs generated $3.5 trillion of total receipts with $9.2 trillion of total assets, accounting for 13.7 percent of receipts and 13.9 percent of assets reported on all U.S. corporation income tax returns.

Profits, or net income less deficit, reported by FCDCs for tax purposes were $165.2 billion, an 81.9 percent increase from $90.8 billion reported in 2004. The U.S. tax liability for FCDCs, total income tax after credits, was $42.4 billion for 2005, a 41.7 percent increase since 2004.

The Bulletin also features articles on the following:

• Foreign corporations controlled by U.S. multinational corporations: For tax year 2004, these controlled foreign corporations held $9.2 trillion in assets and reported $3.8 trillion in receipts.
• Corporations that claimed the foreign tax credit on their U.S. tax returns: For tax year 2004, corporations claimed foreign tax credits worth $56.6 billion, representing an all-time high and a 13.2 percent increase over the previous high amount in 2003. Use of this credit reduced their U.S. tax on worldwide income by 30.2 percent, from $187.5 billion to $130.9 billion.
• Growth trends in the number of partnership and sole proprietorship returns: While the number of partnership returns filed between 2002 and 2005 increased by 23 percent, the number of sole proprietorship returns increased by 1.9 percent.
• Federal gift tax returns filed for gifts given in 2005: Americans reported $38.5 billion in cash and other asset transfers. Almost 3 percent of gift tax returns were taxable with $1.7 billion in reported tax liability.
• Use of business credit for research activities: Corporations claimed almost $6.4 billion in these credits for tax year 2005, and corporations in the manufacturing industries claimed more than 70 percent of this amount.”

Victims of Storms in Six States have Until August 29 to File Certain Returns

According to the latest IRS news release, they are postponing the deadline to file certain tax returns, to make certain tax payments and to perform time-sensitive acts for storm, flood, and tornado victims in presidential disaster areas in six states, until August 29.

“Previously, these deadlines varied by state, and the postponement provides people affected by the disasters with additional time.

‘Our hearts go out to the people hit by these disasters,’ IRS Commissioner Doug Shulman said. ‘We realize that as people put their lives back together, they need additional time to work on these tax issues.’

This announcement will affect counties in Indiana, Iowa, Illinois, Nebraska, West Virginia and Wisconsin that qualify for individual assistance. Affected counties in Missouri previously have been granted relief until Aug. 29.”

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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.

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IRS Announces Increase In Corporate E-filed Returns

According to the Internal Revenue Service, more than 800,000 of the nation’s small businesses and large corporations have electronically filed their tax returns so far this year. This number represents a 60 percent increase from last year. "This is a record-breaking year for electronically filed returns by corporations and businesses," said Acting IRS Commissioner Linda Stiff. "We will continue to work with the business community, tax practitioners and the software industry to improve this important program." However not just small businesses are e-filing, thousands of large corporations are voluntarily e-filing as well. More than 42,000 large corporations have already e-filed this tax year.

Tropical Storm Flossie Brushes Hawaii

After much hype over the past week about "Hurricane Flossie," it was downgraded to a tropical storm earlier this morning. The National Weather Service downgraded the hurricane warning after it’s wind speeds dropped to 8 mph and the storm took a slightly more northern course than expected. The tropical storm brushed the coast of Hawaii’s Big Island last night, however no injuries were reported. Officials are still tracking the storm to ensure it does not cause any further damage. "It still has very large potential to come in," said Troy Kindred, administrator for the Hawaii County Civil Defense Agency. "For whatever reason it has not done so so far. We'll monitor it until it is not a threat." For more information on the storm, check out Seattle Times.com.

San Francisco Giants Beat Oakland A’s

On Sunday the Giant’s beat the Oakland A’s in a 4-1 win, thanks to pitcher Matt Morris. The Giants' veteran pitched a two-hit complete game with nine strikeouts to give the Giants a much-needed win after consecutive losses. ''This was something we needed today and I'm glad I was able to do it,'' claimed Morris. ''I'm not here to be on the back page (of the tabloids), that's for sure. I'm here to get my innings and keep the team in the game.'' For a more detailed recap of the game, check out All Headline News.

IRS Reached 2.3 Billion Dollar Agreement

On Valentines day the IRS announced they had reached a 2.3 billion dollar deal to resolve several tax disputes with Merck & Co., Inc. and its subsidiaries. Among the issues resolved were a few issues that resulted from the company’s use of minority equity interest financing transactions. The 2.3 billion dollar payment to the United States federal government is said to resolve the tax issues for the tax years 1993-2001. Although the settlement is one of the largest in IRS history, it is 40% below the $3.8 billion the IRS originally said it was seeking in November. Source: MarketWatch.com.

Deciding Whether or Not To Itemize

Each year during tax season there is one decision every taxpayer has to make, whether or not to itemize deductions on your tax return. Deciding to itemize depends mostly on how much you spent on certain deductible expenses last year including medical expenses, mortgage interest, state and local taxes, charitable contributions, etc. You should itemize if the amount you spent on those expenses is higher than the standard deduction amount according to the IRS. For more help deciding if you should itemize or not check out this article.