NJ WARNS EMPLOYERS & ACCOUNTANTS WHO ISSUE FORM 1099-MISC TO EMPLOYEES

NJ says employers are misinformed if they believe that by simply reporting a worker’s earnings to the federal government using Form 1099, as opposed to Form W-2, that the worker becomes as an independent contractor.

NJ SOLICITS HELP OF ACCOUNTANTS ABOUT EMPLOYERS WHO MISCLASSIFY INDEPENDENT CONTRACTORS

The New Jersey Department of Labor recently released a message to NJ’s licensed accountants regarding misclassifying employees as independent contractors. NJ is solicitating the assistance of the state’s accountants to educate their business owners as to who is an employee and who is an independent contractor. The misclassification of workers is not a new issue to our firm. We have previously discussed the rules in our August 19, 2011, October 15, 2012, September 10, 2013 and February 15, 2015 posts.

JOINT AUDIT EFFORTS OF U.S. DEPT. OF LABOR (DOL), IRS & STATE DOL

What is important about this NJ announcement is that the state realizes it is losing tax revenues (uncollected unemployment compensation and disability benefits tax funds) and will focus its audit exams on small business owners misclassifying their employees. Now, in addition to the IRS and U.S. Department of Labor audits looking for employer misclassifications of its workers, NJ employers will see NJ auditors in their rear view mirrors.

WILL PA EMPLOYERS BE NEXT?

States are copycats. If NJ is “seeing the light” and collecting additional tax revenues, soon other states will be doing the same.

STATE TAX REVENUES ARE AT RISK

NJ says it has seen a number of cases where small and medium sized employers believe that by simply making the decision to report a worker’s earnings to the federal government using Form 1099, as opposed to Form W-2, a potential employer may  unilaterally deem that individual to be an independent contractor, thereby  avoiding the responsibility under N.J.S.A. 43:21-7 to make contributions respecting that individual to the unemployment compensation and State disability benefits funds.

EMPLOYERS NEED TO UNDERSTAND AN AUDITOR’S APPROACH

If a service is performed for remuneration or under any contract of hire, written or oral, express or implied, it is considered to be covered W-2 employment, unless the potential employer is able to establish the following with regard to the service at issue and the individual providing that service:

(A) Such individual has been and will continue to be free from control or
direction over the performance of such service, both under his contract of
service and in fact; and

(B) Such service is either outside the usual course of the business for which 
 such service is performed, or that such service is performed outside of all 
 the places of business of the enterprise for which such service is performed; 
  AND

(C) Such individual is customarily engaged in an independently established
trade, occupation, profession or business.

Accordingly, where an employer fails to meet any one of the three criteria listed above with regard to an individual who has performed a service for remuneration, that individual is considered to be an employee and the service performed is considered to be employment subject to all payroll withholding taxes.

If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.

About F. Bryan Haarlander, EA, CTRS:

Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester,  Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.

WASHINGTON POST WARNS TAXPAYERS ABOUT FREE TAX RETURN PREPARATION SERVICES

While One Should Always be Cautious of Sharing Personal Information, “Tax Time” Always Calls for Increased Caution and Discretion

Everybody loves “free stuff.” Unless you are dealing with a philanthropist, are these free deals really free? According to Geoffrey Fowler in a March 7 article in the Washington Post, we are reminded that nothing is certain except death, taxes . . . and tech companies making grabs for your data.

Mr. Fowler’s article discussed the various “free” online tax services and why they are free. “How is somebody going to make money from this?” he asks. As Fowler so astutely stated, in Silicon Valley the adage is “If the product is free, that means you’re the product.”

He found that some vendors use the intimate details of the taxpayer’s tax returns to:

Bait you to purchase paid services. As examples, he mentioned that TurboTax and H&R Block offer limited free service to sell you more expensive paid services.

Sell you financial services. The data in your tax return is a gold mine. It allows vendors to determine how much you earn and are paying for your current mortgage. If you are wondering why you are being targeted by mortgage refinancing ads or solicitations from investment companies, your free tax return may be the reason.

Credit card solicitations. Some companies make money by showing you tailored “offers” for credit cards and loans based on a profile of your financial life.

PRIVACY CONCERNS

Fowler stated that we’ve been letting free technology blind us to a really important question: When tax prep is free, you may be paying with your privacy. He states there’s a fine line between useful and creepy with surveillance. For some, such offers might be acceptable, even time- and money-saving. Fowler says that offers made by Credit Karma Tax are taking a business idea that hasn’t worked out well with Facebook and applying it to even more sensitive information . . . your personal financial information.

To really understand what free costs, you have to follow the data. Taped on Fowler’s desk are four questions he has learned to ask any business that wants his data:

1. What information is being used?

2. Who is it being shared with?

3. How secure is it?

4. How long are they holding on to it? If you use a service for a year, you tax information could be available “for sale” for several years. You need to read the fine print.

While credit bureaus and data brokers already collect information about your finances, some details are hard for that industry to come by, such as your cash flow, mortgage deduction and savings yield.

Remember that when using such free services, you are potentially putting your Social Security numbers at risk along with your address, employer’s name, address and EIN, dates of birth, and dependent children’s names. The IRS has gone to great lengths to redact much of this information in its transcripts system to prevent hackers from stealing your identity and preparing fraudulent income tax returns.

Data breach announcements by large companies appear to be becoming more common today. Using Willie Sutton’s quote as to why he robbed banks, “That’s where the money is.” Consider the potential consequences of voluntarily putting confidential information on the web.

If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.

About F. Bryan Haarlander, EA, CTRS:

Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester,  Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.

HELPFUL TIPS TO CONSIDER WHEN CHOOSING YOUR TAX PREPARER

IRS Expects More Taxpayers to Seek Professional Help This Year Due to the Most Sweeping Tax Reform Changes Made in More than 30 Years by the Tax Cuts and Jobs Act

Tax Preparer Fraud

In the past few years, the IRS has made significant improvements in its efforts to educate taxpayers. One of its focal points has been to warn taxpayers about tax scams. Unfortunately for taxpayers, one of the major scams the IRS has identified is tax preparer fraud. IRS advises taxpayers to know and look for the warning signs and understand the dangers of using these con artists

Known Benefits of Using a Professional Tax Preparer

With the passage of the Tax Cuts and Jobs Act, the most sweeping tax reform legislation in more than 30 years, our office is seeing more taxpayers choosing to use a paid professional to prepare their tax returns this year. With many tax professionals charging a few hundred dollars to prepare a tax return, it is often viewed as a dollar outlay that brings significant peace of mind to taxpayers knowing that their tax returns were prepared in accordance with IRS rules, and perhaps more importantly, that they have taken advantage of any available tax strategies so as not to overpay their taxes.

There is also the time savings. Whereas it can take an individual several hours to prepare their own return, it is a relatively simple task to complete your tax professional’s tax organizer and send him/her your tax documents.

The IRS reminds taxpayers to be careful when selecting a tax professional. Selecting the right tax professional is vitally important. Remember that taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it.

How to Wisely Choose Your Tax Return Preparer

First and foremost, don’t begin your search by asking the question: “How much do you charge to prepare a tax return?” While the cost to prepare your tax return is an important consideration, it really is one of the least important considerations as you peruse the other considerations listed below.

Inquire about the preparer’s experience in preparing tax years. How many years? If you have a small business or rental property, does the preparer have experience preparing Schedule C and Schedule E?

Does the preparer use a tax organizer or checklist so as not to overlook tax deductions?

Does the tax professional merely prepare tax returns or will s/he look for tax savings strategies that can be implemented to reduce your taxes?

Ask how the preparer about the new Tax Cuts and Jobs Act. You want to make sure that the preparer is familiar with the new law and particularly about the Qualified Business Income deduction if you have a business.

Has the preparer written any books or articles about taxes? Spoken before any industry groups about taxes? This would indicate that the person is knowledgeable about taxes.

Look for a preparer who is available year-round. In the event questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over. Tax planning is ideally done months before the end of the calendar year to allow sufficient time for implementation.

Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on tax returns.

Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant or attorney), belongs to a professional organization or attends continuing education classes. Because tax law can be complex, competent tax preparers remain up-to-date on tax topics..

Check the preparer’s history. Check the Better Business Bureau website for information about the preparer. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory. 

Ask about service fees. Avoid preparers who base fees on a percentage of their client’s refund or boast bigger refunds than their competition.

Make sure the preparer offers IRS e-file and ask to e-file the tax return.

You are signing your tax return under penalties of perjury. The preparer should be preparing your return based on your tax documents and not using national averages or fabricated numbers.

Never sign a blank or incomplete return. Work with preparers who provide you with a draft copy of your return for your review before it is e-filed. Make sure your preparer provides you with an opportunity to ask questions if something is not clear or appears inaccurate.

Any refund should go directly to you, the taxpayer, and not into the preparer’s bank account. If using direct deposit or ACH debit payments, review the routing and bank account numbers on the e-file authorization form against your bank information.

Make sure that the preparer provides you with a copy of your tax return.

Understand tax representation rules. Only attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation.

If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.

About F. Bryan Haarlander, EA, CTRS:

Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester,  Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.

TIS THE SEASON WHEN THE IRS REMINDS TAXPAYERS OF THE VARIOUS ID THEFT SCAMS CON ARTISTS ARE USING – THE PA DEPT. OF REVENUE ISSUES ITS OWN ANNOUNCEMENT

While One Should Always be Cautious of Sharing Personal Information, “Tax Time” Always Calls for Increased Caution and Discretion

The PA Department of Revenue issued a reminder to taxpayers to be cautious of scams and “phishing” schemes that are being used by criminals to steal taxpayers’ money and personal financial information.

While these warnings mimic those of the IRS, they serve as a reminder that one can never be too careful about sharing your information with others.

“These scams are especially common at this time of year when people start to file their personal income tax returns,” Revenue Secretary Dan Hassell said. “Criminals use high-pressure tactics and threats to pressure hard-working Pennsylvanians into providing money or sensitive information. We want the public to be aware of these scams to avoid taking action that they’ll regret.”

The PA Department of Revenue issued a reminder to taxpayers to be cautious of scams and “phishing” schemes that are being used by criminals to steal taxpayers’ money and personal financial information.

Common Scam: Criminals Posing as a Government Agency

Criminals Posing as a Government Agency

One prevalent scam involves phony “Final Demand For Payment” notices that have been mailed to many taxpayers. The notices from the “Tax Processing Center” threaten the seizure of a taxpayer’s property if the recipient of the notice fails to make immediate payment to the “State of Pennsylvania.” The notices also provide an 800-number to call to “avoid enforcement.”

This is a classic scam that uses pressure tactics and fear to motivate the recipient into taking immediate action. Criminals may also access public records so they can include taxpayer-specific information on the notices to make them appear legitimate.

Email, ‘Phishing’ and Malware Scams

Individuals should beware of criminals using “phishing” schemes, which involve the use of fraudulent email messages, deceptive software or malicious files that are designed to steal sensitive information, such as passwords, usernames or personal financial information. Scammers often use this information to steal your money, your identity or both.

In addition to individual taxpayers, the IRS reports that these schemes have targeted tax professionals, payroll professionals, human resources personnel and school administrators.

In one common scam publicized by the IRS, criminals pose as a person or organization the taxpayer trusts or recognizes. They may hack an email account and send mass emails under another person’s name, or they may pose as a bank, credit card company or tax software provider.

Criminals also go to great lengths to create websites that appear legitimate but contain phony log-in pages. These criminals hope victims will “take the bait” and provide money, passwords, Social Security numbers and other information that can lead to identity theft.

Tips To Avoid Scams

The PA DOR is encouraging Pennsylvanians to keep the following tips in mind to safeguard against these deceptive scams:

• Look for imposters: Criminals often pose as a government entity or an official business. If you are targeted by a con artist through the mail, phone or email, do not provide personal information or money until you are sure you are speaking to a legitimate representative.

• Examine notifications and electronic messages: Criminals often design vague communications to cast a wide net to lure in as many victims as possible. Examine questionable notices for identifying information that can be verified. Look for blatant factual errors and other inconsistencies, such as a fake return address. If the notice is unexpected and states “This Is Your Final Notice,” take a moment and verify its legitimacy. The PA DOR will send multiple letters to taxpayers if there is a legitimate liability owed.

• Approach unusual attachments and links with caution: Scammers may include a link or an attachment to an email that is infected with malware that can download malicious software. Spyware can track the recipient’s keystrokes to obtain passwords, Social Security numbers, credit card numbers or other sensitive information.

• Unusual payment methods: Avoid scenarios where you are asked to pay your debt with reloadable debit cards, gift cards or money wiring services. The DOR and other government agencies will never ask you to pay an outstanding liability using these payment methods. And yet, individuals constantly are pressured to make such payments to avoid being arrested.

• Conduct research online: Using information included in a potentially fraudulent notice, such as company name, address or telephone number, conduct a search online to see if a scam has been reported by other people or government agencies.

Steps to Follow If You Are a Victim of a Scam

The DOR reminds taxpayers that it has a Fraud Detection and Analysis Unit dedicated to assisting victims of identity theft and combating tax refund fraud.

If you are a victim of identity theft or discover a fraudulent PA personal income tax return was filed using your identity, please contact the Fraud Detection and Analysis Unit at 717-772-9297 or RA-RVPITFRAUD@pa.gov.

For more information on ways to protect yourself, visit Revenue’s Identity Theft Victim Assistance webpage. You can also find further information about protecting yourself online at PA.gov/Cybersecurity.

If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.

About F. Bryan Haarlander, EA, CTRS:

Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester,  Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.