When I wrote about tax scams last week, I really didn’t plan on sticking to the same subject this week. Since then, though, I read this article from Accounting Today, and I thought it was necessary to go a little further. And this week, my overarching tip comes in two words:

Be Smart!

I tend to talk about the larger tax scams, which can themselves be smart, allowing us to empathize with their victims. Most of them play on fear, an emotion we all experience. They also involve ignorance of the tax audit and collection process. Heck, even as a professional in this area, there are always new things that I learn about it, so it cannot be expected that laypeople will know all the rules.

There are also some smaller-scale schemes out there, though.  I realize I may not have given them enough time and in them is where that two-word advice should be used. As an example from the article, a tax refund was delivered in cash to a client in a parking lot. If what you’re doing looks (and probably feels) illegal, chances are really good that it is. This is aside from the fact that the exchange involved $1,400 when the taxpayer was actually owed a refund of more than $8,500.

I don’t write about things like this often because I am confident in the work that my company does and do not operate in such ways. Watching out for such things, however, is something that is good advice beyond the tax realm. When you are giving people access to personal and financial information, you need to feel safe and secure in what they are doing. If someone’s way of doing business seems off, there are enough other people out there who will do what you need. Also, don’t let cost come into this calculus too strongly. There is often a reason when someone’s price seems too good to be true.

The article also mentioned a couple of lawyers who were caught after trying to evade paying all the taxes they owed. These are people who must have known that what they were doing was not on the up-and-up. I could even imagine that they thought their knowledge of the system gave them an advantage in trying to abuse it. Let this be a warning then that there is never a guarantee that punishment can be avoided.

A final commonality between some of these stories is how fraudulent tax returns often involve false credits and deductions. I’m sure that many people whose tax returns were handled by immoral preparers did not know that part of their return was fraudulent. If you are paying a professional to help you, you are relying on their expertise to lead you in the right direction. Being smart in those cases involves having these professionals explain to you what they are doing, and in a way that you can understand. They are your guides through a world that you do not know, but they should be able to talk you through it in a way that makes sense. 

Warmly,

Josh Bousquet
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Keeping yourself safe from potential identity theft and watching out for scams remains important even removed from tax season. The IRS knows this and is taking steps to keep your information safe.

Last week, the agency announced that it would stop faxing tax transcripts this month. It also plans to stop third-party mailing of tax returns and transcripts in July. The IRS has found that criminals can impersonate taxpayers or authorized third parties to get those transcripts and use them to file fraudulent returns. This doesn’t mean that you can never get a legitimate transcript if you need one.  In fact, it is still easy for a taxpayer to do it themselves online by verifying their identity.

At the same time, the IRS is also raising the alarm on a couple of new scams aiming to get your personal information. Two of biggest are claiming that your social security number is going to be suspended or canceled and demands from a Bureau of Tax Enforcement.

We will take on the SSN one first.  Let this be the most giant red flag you can ever encounter when it comes to scams.  If someone wants your social security number, and you aren’t 100% sure who they are and that they should have it, don’t give them any information.

These demands are often coming through frightening robocall voicemails. They talk of potential punishments that sound awful, and they would be if they were true. But if these calls come out of nowhere and speak vaguely of things that you cannot connect to legitimate information that is because they are not real.

Another trick that I like to do with these calls is do a Google search of the number these calls come from. A large percentage of the time this will return a list of people at least searching for the number if not labeling it as a scam.  Either way, that should make you feel more confident that you can ignore it.

As for the Bureau of Tax Enforcement, it sounds real legitimate, doesn’t it? Well, it doesn’t actually exist. When you get a letter in the mail, though, that threatens a tax lien or levy because of delinquent taxes, paying money to the Bureau of Tax Enforcement sounds like a valid way to keep that from happening.

This one feels extra dangerous because it bypasses some of the warnings that are often put out for how to avoid schemes. One is that the first contact from the IRS will come through the mail and not via phone, email, or social media. Well, they bypassed that.  It also seems to be seeking a legitimate way of payment.  You’re sending a check to a seemingly legit organization and not wiring money, buying odd gift cards, or using any other unorthodox form of odd payment. The money is also not demanded quickly.

This shows how scammers are always trying to stay a few steps ahead of knowledge getting out to the public. They are not simply going to be defeated in one arena and then give up. So be sure you also stay ready to take in new information and remain diligent when something doesn’t feel quite right.

Warmly,

Josh Bousquet
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How you feel about the Tax Cuts and Jobs Act at this point probably largely has to do with how your tax return looked this year. The numbers from a country-wide standpoint said that things largely remained unchanged from the government’s standpoint. That does not, however, mean that there were not some big changes on a personal level.

That’s why in the time since the tax season ended I have written a bit about being proactive and making changes to help your own situation. It would take some huge surprises for the rules to change again before next year. So you need to do what you can to leverage your situation underneath the current system.

Possibly in an actual bit of surprise, though, the IRS may be helping with this.

Over the last week, the agency has issued a draft of a new W-4 form. Remember that form you filled out when you started your job to say how you wanted your taxes handled and then never thought about again? Yeah, that form.

The changes here are largely due to the TCJA, so allow me to get a little tax jargon-y for only a paragraph. That W-4 form you may still vaguely remember was based on withholding allowances, which was tied to the amount of the personal exemption. This is why it had a little questionnaire about your family and life situation to help you determine how you may want to fill out the form. This worked pretty well for most people. The revamped rules, though, have led to a more complicated form, but one that will be better at actually taking into account your personal situation.

First, let me state that this new W-4 is a draft only.  The real form will only come out later this year. Also, it will be for the year 2020 so any changes you want to make for this year must be done on a current form. It is still worth looking at the changes made, though.

One of the new things on the draft version of the form is the ability to account for multiple jobs. This even includes if you are married filing jointly and both you and your spouse work. This is key because your total income could be much higher than what you earn at the job for which you are filling out the form.

In the same vein, there will also be spots in include income earned from other areas and possible deductions. This is a much fuller version of your total tax picture than was seen on the W-4 form in the past (although you also had the opportunity to withhold additional amounts of money if you so chose).

This new form is a bit more complicated and will take a little more work to accurately fill out. This may feel daunting, and it could even be argued that it will increase the chance of errors. The idea, however, is that it is designed to give a fuller picture and more accurately report what should be withheld form one’s paycheck to fulfill your tax obligation. These are only good things.

Accomplishing good things aren’t always something you can do on your own, though, so as always we remain here to help you make your tax picture work to your best advantage, even if that involves filling out some new forms.
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Warmly,

Josh Bousquet
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Maybe you can blame this on my mind being a little scattered now that tax season is over.  I, however, will frame it as my mind is more open.

Either way, here is a little take on three news stories I saw earlier this week that I thought had lessons in them that were worth passing along.

First off, Pizza Hut’s original pan pizza is being remade. Whether or not there is then any value left then in the “original” moniker can be debated, but if the goal is to make a better product, that can’t be too bad, can it?

Beyond that, this CNN article was actually more interesting than I thought it would be, describing how Domino’s, Papa John’s, and Pizza Hut are in a tug-of-war competition to stay relevant, have new offerings, and embrace new technologies.

On the surface, it may seem like this is too much work for the companies. I mean those are three names that everyone knows, and everyone knows what they offer. It does, however, go to show that even when you reach a high level of success you cannot just rest on your laurels.

There is value in having a traditional offering. There can be greater value in realizing when your traditional offering needs to evolve if you want to continue holding your position (remember Kodak?). Be great at what you do - and we don’t have to get into a discussion here about what makes “great” pizza, these companies are still great at what they do - but also do not remain stuck in your ways. Only then can your famous name carry on.

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Speaking of iconic names …

The brand and intellectual property of Sports Illustrated was sold recently for $110 million to Authentic Brands Group. That sentence has to be framed like that because Meredith Corporation, the former owner, will continue to publish the magazine and website under the Sports Illustrated name. What this means is that Sports Illustrated brand is worth more than the magazine that began the brand.

Names can stand for something beyond your current work, so be sure you’re standing for the
right things.

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And speaking of standing for something …

MacKenzie Bezos joined the rank of the world’s wealthiest people following her divorce from Amazon founder Jeff Bezos.  She recently committed to giving at least half of her estimated $36.6 billion worth to charity.

Do you read stories like that and think about how nice it would be to have that amount of money with which to do good? Then I urge you to still do what you can with what you have. When it comes to how you spend your money, there is value in the feeling you get from helping others that can outweigh the pleasure of purchasing goods.

With changes from the Tax Cuts and Jobs Act, making charitable donations became less of a tax issue for many, so I wanted to take the chance to close this week with that reminder that it’s still worth doing.

Warmly,

Josh Bousquet
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There have been a lot of changes coming to QuickBooks Online recently. I know that this only affects a limited number of people directly, but some of the issues it raises reach further than QBO users. So I promise I won’t get too in-depth on just the QBO stuff in this space, for no one wants to read THAT much about bookkeeping software.

To give it some attention, though, QBO is based on a tier plan, essentially meaning you pay more the bigger your business is, which is pretty reasonable since you’ll be taking up more online space. The price has gone up, though, and you can also be forced into a higher advanced tier if your company uses more than 250 chart of accounts listings and/or 40 locations and classes.

250 listings on a chart of accounts could sound like a lot of things to track, but it is certainly not a ridiculous number, and some types of businesses don’t even have to get THAT large to get there. A lot of times, though, this is a place where we see businesses having some extra stuff that is just pushing that number up, cluttering up a profit and loss statement, and really serving little purpose.

Remember that one debit from three years ago that you weren’t sure how to classify and you started a new category for it? Of course not, but your chart of accounts does and that category thus still exists.

So if you are worried about the rising cost of a QuickBooks Online subscription and want a little personal guidance on how you fall within the programs rules, let us know and let’s set up an appointment.

This type of checkup, though, to see if your bookkeeping and reporting is really tracking and reporting what is most important to you can be a good idea no matter what platform you are using to track it. The issues that can keep you from working at an optimal level can be many:

- Did you have a professional set up our bookkeeping when your business started?

- Has your business grown since you started?

- Are you offering different products and services than when you started?

- Are you tracking similar expenses in separate accounts?

- Do you know what each line on your P&L means?

- Do you understand what transactions are going onto each of those lines?

Having good answers to these questions will let you know what level of a program like QuickBooks Online is necessary for your business. Having good answers to these questions will also help you understand how your business is working and help you make better decisions.

No matter what software you are using for bookkeeping (even if it’s an Excel spreadsheet or receipts in an envelope), having a hold on tracking it all correctly is necessary for optimal performance. And no matter how you are doing it, you may have questions on how to do it better. So you, too, let us know and let’s set up an appointment to discuss those things. 

Warmly,

Josh Bousquet
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