Monthly Archives: February 2015

The Dirty Dozen – 2015 Version

Back in the late sixties, MGM released a movie called The Dirty Dozen, which starred Lee Marvin as a US Army Major. The Major was assigned a dozen convicted murderers to train, and lead on a mission to assassinate enemy officers during World War II. You can easily see where the movie’s title comes from.

A couple of weeks ago the IRS released its 2015 list of Dirty Dozen tax scams, warning  taxpayers about the most aggressive and prevalent scams they are currently seeing and addressing. Many of these scams peak during tax season, so taxpayers need to be particularly cautious this time of year.

Tax related identity theft continues to be a major headache for the IRS, and for those victimized by someone who has managed to steal their social security number and other personal information. Taxpayers commonly find out that their identity has been stolen when they attempt to e-file their tax return, only to have it be rejected because a current year return has already been filed by someone else.

How much of a problem is this? The IRS says that their efforts to filter and identify fraudulent returns have resulted in the stopping of 19 million suspicious returns, claiming over $63 billion in fraudulent refunds. These statistics are only since 2011, and they admittedly have much more work to do in this area!

How can you protect yourself from identity theft and the other scams that are out there?

  1. Choose return preparers carefully– The IRS website has a feature called “Directory of Federal Tax Return Preparers with Credentials and Qualifications.” The writer was pleased to find his own name come up in the directory when a test search was performed. Unscrupulous tax preparers have been known to be a source of identity theft, as well as having been caught filing inflated refund claims for taxpayers, in order to generate higher fees for themselves. Be wary of a preparer promising outlandish refund claims, promoting abusive tax shelters or filing fake documents (w-2 or 1099 forms) in order to make your income appear lower than it really is. Remember that you are legally responsible for what is on your tax return even if it is prepared by someone else.


  1. Watch out for Phone Scams and Phishing – Two of the IRS’s most problematic scams involve a surge of phone scams, fake e-mails (phishing) or websites purporting to be the IRS, but in reality they are nothing more than scams designed to convince you to send in money or divulge personal information. Scam artists have been known to call and threaten all kinds of things including police arrest, deportation and other acts, if fictitious tax liabilities are not cleared up immediately. Particularly vulnerable to these types of scams are the elderly and those for whom English is not their first language. The objective of these calls is to convince the victims to send a payment, usually by a prepaid debit card.  The phishing scams are usually designed to make you believe that you need to update or verify personal information, when in reality you are providing it to the scam artist, not the IRS. Remember that the IRS will always send a letter to communicate with taxpayers if there are legitimate unpaid tax obligations. They do not initiate contact with taxpayers by e-mail, text messages or social media websites. If you do receive a call and think you may legitimately owe taxes, hang up and call the IRS at 1-800-829-1040.


  1. Fake Charities- Groups masquerading as charitable organizations to solicit donations or obtain personal information from unsuspecting contributors, also made the IRS’s Dirty Dozen list. Many use names or websites that sound or look like those of legitimate organizations. This is particularly common right after a natural disaster when new organizations pop up overnight purporting to aid disaster victims. To keep from being scammed by one of these organizations the IRS cautions you to avoid giving out personal information such as social security numbers or passwords. The IRS has a search feature on its website (Exempt Organizations Select Check) through which donors can check an organization’s authenticity before donating monies.

So be careful out there, this blog covered only the most common scams. As the Major quickly found out, one must constantly be on guard to avoid becoming a victim when dealing with the Dirty Dozen.

Don Karlewicz, CPA, Managing Partner

IRS Makes it Easier for Small Businesses to Apply Repair Regulations to 2014 and Future Years.

On September 13, 2013 IRS released final tangible property regulations effective for years beginning after January 1, 2014. So for calendar year taxpayers, this is the first tax season that they have to deal with the new regulations.  The new regulations place a significant compliance burden on small businesses and even individuals that own real estate.  The final regulations require any taxpayer that owns or leases a real estate or uses materials to file multiple changes in accounting method with the 2014 tax return to comply with the regulations.

Due to an outcry from the accounting and business communities, the IRS relented and on February 13, 2015 gave us a Valentine day present. They offered relief for small taxpayers from some of the provision of the final tangible property regulations in the form of Revenue Procedure 2015-20.

  • “The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014.
  • Also, the IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014.
  • The new simplified procedure is generally available to small businesses, including sole proprietors, with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less”

This relief will save hours of compliance for each affected taxpayer.

If you have questions regarding this or any other tax topic, we are ready to assist you.

Leon Granovsky, CPA —

Social Security Benefits: To Take Early or Not to Take Early, That is the Question …

The Baby-Boomer Generation is entering into their 60’s at a rate of almost 8,000 a day, according to AARP.  As they do, they will face one of the most important financial decisions about their retirement, which is when to claim their Social Security benefits.

Approximately 50% of people rush to file for benefits at 62 as soon as they are eligible; usually because they need the money, are fearful of a short life span or thinking that Social Security might collapse.  But what about everyone else?  Most experts will advise you that in order to get the biggest bang for your buck, you should wait as long as possible before applying for Social Security benefits.

That concept makes perfect sense because, by waiting until your full retirement age, (which depends on your birthdate and is currently 66), if not longer, you stand a good chance of maximizing your lifetime benefits.  If you claim your benefits early, at age 62, you’ll receive 25% less than you would if you waited until full retirement age when you would receive 100% of your benefits.  Additionally there is actually an incentive to wait even longer, as the Social Security Administration bumps benefit payments up 8% for each year that you postpone filing a claim after you reach your full retirement age.  Therefore if you wait until age 70, when filing is mandatory, you will receive approximately 132% of your benefits.

So, this decision seems like a no-brainer until you hear someone make the argument that the sooner you start collecting the more checks you will receive.  The debate then becomes, do you want more checks at lower amounts that start when you’re 62, or fewer checks that are larger and come later in your life?  If you could predict when you are going to die, the debate would end and you’d know the best choice.  But, since none of us know when we will die, financial planners prefer to calculate your break-even point.  This analysis calculates how much you’re likely to receive in total lifetime benefits based upon when you start receiving them and how long you expect to live.

This analysis is really a waste of time and unnecessary because the Social Security Administration has designed its’ benefit formula to, on average, make sure each individual receives the same amount in lifetime benefits regardless of when they elect to start receiving benefit payments.  This doesn’t mean that the decision of when to take your benefits doesn’t matter.  If you’re lucky enough to live a long life, then the decision to wait to collect your Social Security benefits will definitely result in you receiving more cumulative lifetime benefits.

If you are married and one of you has contributed much less to Social Security over the years, the one of you that has contributed more should try and wait longer to claim benefits, at least until full retirement age.  Then if the higher earning spouse dies first, the surviving spouse can claim the deceased spouse’s full benefits.  In most cases it pays for the wife to start collecting early at 62 and for the husband to wait.  This is because statistics show that the husbands are likely to die first, and when that happens, the widow can collect based on his, typically higher, benefits.

–Scott Goldstein, CGMA, CPA, PARTNER