Senator/Dr. Josh Green and Reg Baker discuss healthcare in Hawaii and some national trends. One very timely discuss is why healthcare costs so much. Dr. Green and Reg touch on a variety of healthcare topics including costs, regulations, Obamacare (ACA) and much more.
Issue Number: IR-2016-89
Inside This Issue
IRS Warns Consumers of Possible Scams Relating to Orlando Mass-Shooting
WASHINGTON ― The Internal Revenue Service today issued a consumer alert about possible fake charity scams emerging due to last weekend’s mass-shooting in Orlando, Fla., and encouraged taxpayers to seek out recognized charitable groups.
When making donations to assist victims of last weekend’s terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to quickly and easily check out the status of charitable organizations.
While there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.
The IRS cautions donors to follow these tips:
- Be sure to donate to recognized charities.
- Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
- Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s identity and money.
- Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
- Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making tax-deductible donations. Among other things, it also provides complete details on what records to keep.
Bogus websites may solicit funds for victims of this tragedy. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.
Additionally, scammers often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes.
Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”
More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”
Just an FYI, but look at this new IRS change for 2017. Many early filers for refunds will be effected.
1. New Federal Tax Law May Affect Some Refunds Filed in Early 2017
Effective in 2017, a new law requires the IRS to hold all Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) refunds until Feb. 15. This is likely to affect some returns submitted early in the tax filing season. The IRS encourages tax professionals to begin preparing for this change now. Planning is underway for a wider communication effort this summer and fall to alert taxpayers.
Here is a summary of what I and my firm does. If you have time, please check it out and let me know what you think. Mahalo!
Reg Baker, Governor Ige, Jane Sawyer (District Director of SBA) and Sherry Menor-McNamara (CEO Hawaii Chamber of Commerce) at Small Business Week Proclamation for State of Hawaii.
Small Business Week here in Hawaii is a really big deal as it should be across the US. If the small business segment was removed from the US economy it would devastating effects.
Please check out this IRS video discussing IRS refunds and how to check where it is.
Received some great feedback form my appearance on KHON FOX. Had a lot of fun and got the word out!
Please join me and other Chamber professionals as we discuss how SMB's can get the most from their marketing dollars!!
How to save big bucks during tax time. Listen and SAVE!!
This is so powerful because it was the complete opposite when we returned home.
Las Vegas Radio Show "Financial Friday" on March 11 highlights Hawaii in the first 20 minutes of the broadcast. Reg Baker was interviewed and talks about the SBA, the Eddie Competition and the North Shore Food Trucks.
Collin Kobayashi of 3D Innovations, LLC is impressive and really knows what he is talking about. A product of the UH Manoa Innovation Center and the Hawaii High Tech Development Corp, Collin shows what can be accomplished with a little support and encouragement. Please see below for more information on a true success story here in Hawaii.
3D Innovations is a Hawaii based Product Development company focused on providing engineering/design, prototyping, 3D Printing, and manufacturing solutions. We support companies who are ready to commercialize their products by developing functional prototypes, manufacture ready designs, and manufacturing/go to market strategies to enhance their competitiveness.
With our expertise, companies will be navigated through the complex process of manufacturing. Design For Manufacturability (DFM) is often a major hurdle in completing a design project but can be eliminated with our design methods.
Analyzing the digital design before building the physical prototypes will enable team members to provide valuable feedback while eliminating the initial cost of prototyping. Once the visualization process has been completed, projects can be quickly prototyped and tested by utilizing 3D Printing,
Additive Manufacturing and other Advanced Manufacturing processes. Virtual simulations can also be an important role in successfully predicting design functionality and have helped to reduce overall costs.
3D Printing is integrated into the design process to verify form, fit, and function which will reduce prototyping costs and turnaround time by as much as 400%.
With our network of production manufacturing partners, companies can take advantage of their manufacturing knowledge, advanced production systems, and quality assurance practices to ensure their projects are produced within design specifications and requirements.
Using the prototyping and manufacturing expertise of 3D Innovations, clients are able to have conceptual design turned into a fully functional prototypes and manufacturable products.
Unfortunately the IRS service levels continue to cause challenges. Best advice is to be patient. Really patient. Please see the blog below from the AICPA (American Institute of CPA's) discussing IRS service levels.
IRS Service Levels: Don’t Give Me Excuses!
Posted by Edward Karl, CPA on Jan 29, 2016
Abysmal service levels; I hear you, I really do. It’s been a long time since I’ve been in practice but those busy season scars are still with me. I half joke but the memories don’t go away completely.
So, another busy season and the prospects for easily – wait, reasonably – representing your clients with the IRS appear to be no better than they were last year, when I blogged several times about service issues. In May, for example, you may have read about the AICPA governing Council resolution directing the Institute to intercede on a long-term solution to the service crisis. We started those conversations but, frankly, the environment in Washington got worse. Hard to believe, but it did. In October, House Oversight and Government Reform Committee Chair Jason Chaffetz (R-UT) joined 18 members of the committee in introducing an impeachment resolution against IRS Commissioner John Koskinen. The resolution is pending before the House Judiciary Committee.
That “honest disagreement” between Congress and the IRS regarding appropriate funding levels and effective management of the appropriated funds has been a huge barrier. You probably don’t care; you just want to properly represent your clients. You’re probably more interested in signs of progress. Right now, I can offer two:
Sign 1: In its Annual Report to Congress, the National Taxpayer Advocate outlined a summary of at least 20 of the most serious problems encountered by taxpayers each year. For 2015, the NTA identified 24 such problems. Guess what tops the list? Yup – taxpayer service. Shining the light on the problem, as the AICPA and National Taxpayer Advocate continue to do, is important to progressing to a solution.
Sign 2: In December, President Obama signed into law the Consolidated Appropriations Act, 2016 (P.L. 114-113), which increases the IRS budget by 3% over fiscal year 2015. The $290 million increase is targeted specifically for taxpayer services and is focused on improving fraud detection and prevention, cybersecurity and the response rate to taxpayer inquiries. These are obviously critically important areas for taxpayers and practitioners; the additional funding is an important step after several years of cuts.
Washington is set to be hit with an historic blizzard as I pen these words, yet I can’t help feeling that we may be facing the beginnings of a thaw in the outlook toward the IRS service situation. To leverage the changing environment, the AICPA has organized a “fly-in” in February to provide lawmakers and IRS officials with voices from the trenches to underscore the impact of this currently unacceptable level of service. (The term fly-in refers to CPAs who are flying into Washington, D.C. to talk with members of Congress and the IRS Commissioner.) We also see this fly-in as a way to accelerate the move toward providing the country with an IRS capable of world-class service and citizen satisfaction. The AICPA is immensely grateful to these CPAs for taking the time to help all of us during an obviously inconvenient time for them. But it is the time circumstances dictate and it is an important next step. This problem didn’t evolve overnight. Solving it will take time but we are committed to seizing every opportunity we can on your behalf and on behalf of taxpayers. (Our advocacy work doesn’t end here – check out our latest Washington Tax Brief for an update on all the ways we represent you.)
We also have a busy season webpage available with helpful resources that might take the edge off. When next season starts, my personal goal is to multiply the signs of progress that translate into tangible results to make your work easier. I think we all look forward to the day I no longer need to write about it.
And as Mahatma Gandhi said “Strength does not come from physical capacity. It comes from an indomitable will.” We are resolute in our determination.
Edward Karl, Vice President-Taxation, American Institute of CPAs.
Please join me at this event to learn how to manage profitability to higher levels! It will be well worth your time. Aloha!
Steve Pingree is a guest blogger and offers advice for those tax preparers wanting to avoid or minimize the chances of having a client selected for an IRS audit. And for the tax payer, Pingree' s advice is also relevant to you as well. Know what the red flags are and be prepared to explain or defend your tax return.
STEPHEN P. PINGREE
Attorney at Law, a Law Corporation
820 Mililani Street 701
Honolulu, HI 96813
Tel: 808-983-9520 Fax: 808-356-8189
“KNOW YOUR CLIENT & AVOID BECOMING A WITNESS”
The purpose of this article is to alert Tax Practitioners about the “Red Flags” that may be present during the preparation of tax returns. Recognizing these “Red Flags” can enable the return preparer to avoid errors that can have serious legal and ethical consequences for both the practitioner and client.
*UNUSAL INCOME: lifestyle analysis; this is a common audit procedure if the taxpayer’s records don’t support the source of income and expenses.
*UNUSAL RISE IN NET WORTH: review sources of investments.
*PREVIOUS TAX RETURNS INCONSISTENT: seek explanation and documentation that will support and explain differences from prior returns.
*UNUSAL POSSESSION OF ASSETS: relatively low income with new cars and toys.
*FOREIGN BANK ACCOUNTS AND ASSETS: This is a #1 IRS exam priority. There are strict reporting requirements and sanctions. Permanent Residents (Green Card holders) have same tax responsibilities as U.S. Citizens.
*MONEY LAUNDERING: real estate purchases, cash transactions, offshore companies and false invoices and payments. There is a high level of prosecutions for both Money Laundering and Tax Evasion.
*BANK RECORDS: a quick analysis of bank records can reveal potential audit issues.
*WILLFUL BLINDNESS: this is not an acceptable defense.
*TAX RETURN PREPARATION: is not merely data entry. AICPA auditing standards require a review and documentation of taxpayer’s records to support return entries.
*DOCUMENT YOUR FILE: your client file should contain notes and backup especially if you find unusual transactions. This is the best accountant defense if the audit begins to get suspicious.
CONSEQUENCES of becoming involved in a client’s audit listed here in order of ascending severity.
*You are served with a Grand Jury Subpoena or an audit Information Document Request (IDR) to produce your client’s records.
*Federal or State agents interview you, which is very stressful and time consuming.
*It may be necessary to retain counsel to avoid legal consequences (interview, records production or court witness).
*You may be called to testify before the Grand Jury as a witness. This costs time and money for counsel, and potentially could result in accountant liability.
*Criminal tax charges as a co-conspirator as return preparer for your client/defendant.
Almost all costly consequences (time and money) to the accountant can be avoided by looking, asking questions and conducting a minimal examination of the client’s records.
Stephen P. Pingree, Attorney at Law, has over 30 years of experience defending tax and financial investigations in civil audits, criminal investigations and criminal indictments through trial. Steve over the years has given many seminars to CPAs, EAs, Tax Practitioners and attorneys on these subjects. Steve is always available, at no charge, to consult with tax practitioners. Please feel free to call Stephen P. Pingree, Attorney at Law, at 808-983-9520.
Due to heavy workload (like the ACA and late tax changes/extensions by Congress) and a significantly reduced budget the IRS will be cutting back on service levels again. See the National Taxpayer Advocate annual report below.
In her 2015 annual report to Congress, National Taxpayer Advocate (NTA) Nina Olson expresses concern that IRS may be on the verge of dramatically scaling back telephone and face-to-face service that it has historically provided to assist the nation's 150 million individual taxpayers and 11 million business entities comply with their tax obligations. In particular, she calls for IRS to release its “Future State” plan documents, provide additional detail about its anticipated impact on taxpayer service operations, and solicit public comments, and recommends that Congress conduct oversight hearings on IRS's plan. IR 2016-1
Tax season is just beginning and already the bad guys are trying to scam and trick people into giving access to their computers and private financial data.
I just received an email from my “CPA” telling me that my K-1 tax form is ready for download. I just need to click on the link and get it for my tax return preparation process. It looks very legit but I did not recognize the sender and I do not have a CPA (I do my own taxes). Of course I deleted it. Clicking on the link could have allowed the sender to download a program giving them hidden access to my computer and everything on it. Or they could have high jacked my computer and forced me to pay a “fee” to release it back to me.
The IRS sends out warnings about these scams periodically. Taxpayers have received emails supposedly from the IRS about a tax document or refund that the IRS wants to send them. Do not fall for this trick! The IRS does not send unsolicited emails like these to taxpayers. Many individuals get worried when the receive an IRS email and want to respond quickly and resolve the situation. The bad guys know this and try to take advantage of this.
The next few months there will be an increased amount of email related to taxes that are both legit and a scam. Be very careful and if in doubt delete it. Open only those emails and links that you are expecting and are familiar with. And even then be cautious. Confirm with your tax preparer to ensure that they did indeed send you the email.
Finally, we have all received email from our credit card companies or banks telling of a possible unauthorized charge and asking to click on a link to confirm. Or to update our profile information. Or unlock our account. Do not follow the link; it is most likely a scam. If concerned, then open your internet browser and log on the way you would normally and check it out.
Bottom line: Be very skeptical of emails with links.
By: Reg Baker, CPA PFS
Nationally recognized SMB Advisor and
Wealth Management Specialist based in Honolulu
One of the Business in Hawaii with Reg Baker shows was the 6th watched show for the year!!
Not bad since this was broadcast in early October and we only had less than three months to air.
Congrats to James Kerr and SuperGeeks!!
Reg Baker, CPA PFS
Reg Baker & Company
Business, Tax & Wealth Advisors
Phone: (808) 753-6026
eFax: (866) 728-5419
Hau'oli Makahiki Hou from ThinkTech!
Best wishes to you and yours as we move forward into 2016. We've got a lot planned for the coming new year and can't wait to share it with you.
Below are ThinkTech's 10 most viewed shows of 2015. Enjoy!
1. Asia in Review with Jay Fidell - In The Wake of Lee Kuan Yew. Watch
2. ThinkTech Asia with Jay Fidell - Disputes Over the South China Sea. Watch
3. Healthcare in Hawaii with Sen. Josh Green - Shared Responsibility: Hawaii and Micronesia. Watch
4. Life and the Law with Roy Kodani - The Law and Cultural Practice. Watch
5. Hawaii Sports Update with Paul “PJ” Jackson - The Law and Cultural Practice. Watch
6. Business in Hawaii with Reg Baker - The Future of Super Geeks. Watch
7. HI Growth at HTDC with Cindy Matsuki - Makai Ocean Engineering: Leaders in the OTEC and Submarine Cable Industries. Watch
8. Hawaii: State of Health with Jay Fidell - The Role of Public Nurses. Watch
9. Hawaii Sports Update with Paul “PJ” Jackson - Jiu-Jitsu For All! Watch
10. Center Stage with Donna Blanchard -From Samoa to Hawaii: Fata Simanu-Klutz and Jo Ramsey. Watch
Please check out our new website and video archive by clicking here.