Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Records can help people prove their disaster-related losses. Estimated losses can help people get more recovery assistance like loans or grants.
Financial Statements- people can gather past statements from their credit card company or bank. Many of these records may be available online. People can also contact their bank to get paper copies of these statements.
Property Records- To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of the home or other property.
Inherited Property- Taxpayers can check court records for probate values. If a trust or estate existed, contact the attorney who handled the trust.
Car Owners- Taxpayers may research the current fair-market value for most vehicles thorough a variety of venues.
Later this month the Internal Revenue Service will start mailing letters to roughly 9 million Americans who typically don not file federal income tax returns who may be eligible for, but have not registered to claim, An Economic Impact Payment.
The letter will urge recipients to register at IRS.gov by Oct. 15 in order to receive their payment by the end of the year. Individuals can receive up to $1200, and married couples up to $2400. People with qualifying children under age 17 at the end of 2019 can get up to an additional $500 for each qualifying child.
The letters are being sent to people who haven’t filed a return for either 2018 or 2019.
The mailing will begin around Sept. 24, 2020 and will be delivered from an IRS address.
Victims of Hurricane Laura that began Aug. 22 now have until Dec. 31, 2020 to file various individual and business tax returns and make tax payments.
The IRS is offering this relief in any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently this includes Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis, and Vernon parishes in Louisiana, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.
The tax relief postpones various tax filing and payment deadlines. This means individuals who had a valid extension to file their 2019 return due to run out on Oct. 15, 2020, will now have until Dec. 31, 2020. The IRS noted however, that because tax payments related to these 2019 returns were due on July 15, 2020, those payments are not eligible for this relief.
The Dec. 31, 2020 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2020 and the quarterly payroll and excise tax returns normally due on Nov. 2, 2020. Additionally, penalties on payroll and excise tax deposits due after Aug. 22 and before Sept. 8, will be abated as long as deposits are made by Sept. 8, 2020.
Before a natural disaster strikes, taxpayers are encourage to prepare if possible. This includes putting financial safety measures in place.
To help protect your financial safety in a disaster situation, taxpayers should:
- Update emergency plans– Strive to make this a yearly review
- Create electronic copies of documents– Taxpayers should keep this information in a safe place. This includes bank statements, tax returns and insurance policies. If original documents are available only on paper, taxpayers can use a scanner and save them on USB flash drive, CD or in the cloud.
- Document valuables– Taxpayers can document valuables by photographing or videotaping them before a disaster strikes making it easier to claim insurance and tax benefits, if necessary.
- Know what tax relief is available in disaster situations– Net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.
List of “Dirty Dozen” Tax Scams
Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers.
Taxpayers are encouraged to refrain from engaging potential scammers online or on the phone.
Here are the year’s “Dirty Dozen” scams:
- Phishing: Taxpayers should be alert to fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a refund, Economic Impact Payment or tax bill.
- Fake Charities: Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities. Legitimate charities will provide their (EIN) Employer Identification Number when requested to verify their legitimacy.
- Threatening Impersonator Phone Calls: Impersonator calls comes in many forms. A common one remains, a bogus criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim. The IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment.
- Social Media Scams: Taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. Social media enables anyone to share information with anyone else on the Internet. Scammers use this information as ammunition for a wide variety of scams. The basic element is convincing a potential victim that he or she is dealing with a person close to them.
- EIP or Refund Theft: Criminals this year have turned their attention to stealing Economic Impact Payments as provided by the (CARES) Act. The IRS recently warned nursing homes and other care facilities that Economic Impact Payments generally belong to the recipients, not the organizations providing the care.
- Senior Fraud: Seniors are more likely to be targeted and victimized by scammers than any other segment of society. Financial abuse of seniors is a problem among personal and professional relationships. Older Americans are becoming more comfortable with evolving technologies, such as social media. Unfortunately, that gives scammers another means of taking advantage. Seniors need to be alert for a continuing surge of fake emails, text messages, websites and social media attempts to steal personal information.
- Unscrupulous Return Preparers: Most tax professionals provide honest, high quality service, but dishonest preparers pop up every filing season, committing fraud, harming innocent taxpayers or talking taxpayers into doing illegal things that they regret later. Taxpayers should avoid “ghost” preparers who expose their clients to potentially serious mistakes as well as possible tax fraud and risk of losing their refund. Ghost preparers don’t sign the tax returns they prepare.
- Offer in Compromise Mills: Taxpayers need to be weary of misleading tax debt resolution companies that can exaggerate chances to settle tax debt for “pennies on the dollar” through an Offer in Compromise (OIC). In 2019, there were 54,000 OIC’s submitted to the IRS. The agency accepted 18,000 of them. These offers are available for taxpayers who meet very specific criteria under law to qualify for reducing their tax bill. Unscrupulous companies oversell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.
- Scams Targeting Non-English Speakers: IRS impersonators and other scammers also target groups with limited English proficiency. These scams are often threatening in nature. Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. A common one remains the IRS impersonation scam where a taxpayer receives a phone call threating jail time, deportation or revocation of a driver’s license from someone claiming to be with the IRS.
- Fake Payments with Repayment Demands: A con artist steals or obtains a taxpayer’s personal data including Social Security Number or Individual Taxpayer Identification Number (ITIN) and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account. Once the direct deposit hits the taxpayer’s bank account, the fraudster places a call to them posing as an IRS employee. The taxpayer is told that the refund was deposited in error and the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund. The IRS will never demand payment by a specific method. There are many payment options available. Taxpayers should reach out to their banking institution and to the IRS.
- Payroll and HR Scams: Employers, taxpayers and tax professionals need to be on guard against phishing designed to steal W-2s and other tax information. Two of the most common type of these scams are the gift card scam (a compromised email account is used to send request to purchase gift cards in various denominations) and the direct deposit scam (the fraudster may have access to the victims email account (also known as email account compromise “EIC”). They impersonate the potential victim to have the organization change the employee’s direct deposit information to reroute their deposit to an account the fraudster controls.
- Ransomware: This is a growing cybercrime. Ransomware is malware targeting human and technical weakness to infect a potential victim’s computer, network or server. Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption. Generally victims aren’t aware until they try to access their data or they receive a ransom request in the form of a pop-up window. These criminals do not want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.
Taxpayers Assistance Centers
Monday, 06-29-2020 Taxpayer Assistance Centers (TACS) began reopening to the public with a phased approach. To ensure the safety of the public and employees, those seeking in-person assistance at the TAC should call 1-844-545-5640 to make an appointment.
Appointments will be available if they need assistance for authentication of identity and documentation validation related to tax return filing or application for an Individual Taxpayer Identification Number; sailing clearances required for foreign travel by resident and non-resident aliens leaving the United States; assistant with Economic Impact Payment Issues; and cash payments.
It is critical to visit www.irs.gov/help/contact your local office to determine if the location you plan to visit is open and accepting appointments.
People who received an Economic Impact Payment this year should keep Notice 1444, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made and how to report any payment that wasn’t received.
For security reasons, the IRS mails this notice to each recipient’s last known address within 15 days after the payment goes out. It’s especially important for people to keep this notice if they think their payment amount was wrong. When they file their 2020 tax return, they can refer to Notice 1444 and claim additional credits, if they are eligible for them.
The tax filing deadline has been postponed to Wednesday, July 15, 2020. The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who mailed a tax return will experience a longer wait. There is no need to mail a second tax return or call the IRS.
An extension to file is not an extension to pay taxes. For most taxpayers the filing and payment deadline was postponed until July 15. Those who need more time to file beyond the postponed date, can request an extension to file. Taxpayers must request an extension to file by July 15. This gives them until October 15 to file their tax return. An extension to file is not an extension to pay. Taxes must be paid by July 15.
The IRS agency is back to processing paper tax returns sent by mail, issuing direct deposit refunds and accepting electronic payments. However, taxpayers who mailed a paper tax return will likely experience a longer wait time. Those who have already mailed a paper tax return should not file a second tax return electronically or write the IRS to check on the status of their mailed return or Economic Impact Payment.
The IRS reminds taxpayers to continue to guard against tax fraud and other related financial scams related to COVID-19.
Criminals seize on every opportunity to exploit bad situations, and this pandemic is no exception.
Criminals are continuing to use the COVID-19 Economic Payments as cover for schemes to steal personal information and money. Scams related to COVID-19 are not limited to stealing EIP’s from taxpayers, however. Criminal Investigations has already seen scams related to the organized sale of fake at-home test kits, offer to sell fake cures, vaccines, pills and advice on unproven treatments for COVID-19. Other scams purport to sell large quantities of medical supplies through the creation of fake shops, websites, social media accounts and email addresses where the criminal fails to deliver promised supplies.
Other COVID-19 related scams involve setting up fake charities soliciting donations for individuals, groups and areas affected by the disease.
COVID-19 scams should be reported to the National Center for Disaster Fraud (NCDF) Hotline at
1-866-720-5721 or through the NCDF Web Complaint Form.
Choosing a financial advisor is a major decision that can determine your financial course for years to come.
1. Always hire an advisor who is a Fiduciary- a fiduciary is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest.
2. Don’t hire the first advisor you meet- take time to interview a few advisors before picking
the best match for you.
3. Don’t choose an advisor with the wrong specialty- some specialize in retirement planning, others best for business owners or maybe for young professionals starting a family.
4. Don’t pick an advisor with an incompatible strategy- Some advisors may suggest aggressive investments, while others are more conservative.
5. Always ask about credentials-To give financial advice, financial advisors are required to pass a test. Test include Series 7, Series 66, or Series 65. Some advisors go a step further and become a Certified Financial Planner.
6. Understand how they are paid- some advisors are “fee only” and charge a flat rate. Others
charge a percentage of the assets under management. Some are paid commissions by mutual funds (a serious conflict of interest).