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The New York State Department of Taxation and Finance has launched a continuing education program as part of the state’s efforts to regulate tax preparers. 

 The new training program aims to ensure that—for the first time in New York history—those who prepare taxes for others are adequately trained. The program is part of New York’s consumer protection initiative to improve the overall standards of the tax preparation industry and protect taxpayers from misrepresentation, errors and fraud, according to officials with the tax department.Each year, the Department of Taxation and Finance processes more than 10 million individual tax returns, with approximately 70 percent of them completed and filed by paid tax preparers.

“Clearly tax preparers have a huge influence on their clients’ financial well-being,” said Commissioner of Taxation and Finance Thomas H. Mattox in a statement Tuesday. “Accurate tax returns are required to access many financial products and services, including home mortgages and college financial assistance. Prior to New York’s regulations, there was no minimum education standard in place to ensure tax preparers received the training they needed each year to accurately prepare their customers’ tax returns.”

Tax preparers who complete 10 or more New York State personal income tax returns a year are considered “commercial preparers” and must complete continuing education requirements. Experienced commercial preparers take four hours of training while inexperienced commercial preparers take 16 hours. Continuing education requirements include state and federal tax code changes, standards of conduct and other critical topics.

CPAs, attorneys and enrolled agents are subject to the Treasury Department’s Circular 230 professional standards. Therefore they, as well as their supervised employees, are not required to register with the New York State Department of Taxation and Finance or complete the continuing education requirements.

Generally speaking, all other paid tax preparers—including those employed by tax preparation companies—are required to register with New York State.

The tax department also announced Tuesday that 2015 tax preparation registration is now available online atwww.tax.ny.gov.

The tax department has created a searchable database to confirm that a tax prepare has registered with the department if required to do so. An interactive map is also available for locating registered preparers.

New York is one of only four states to regulate the tax preparer industry, the others being California, Oregon and Maryland. The Internal Revenue Service had tried to mandate continuing education and testing for tax preparers nationally as part of its efforts to regulate the tax preparation profession, but a federal judge ruled last year that the IRS had exceeded its statutory authority in imposing the Registered Tax Return Preparer program. After losing an appeal earlier this year, the IRS instead is rolling out a voluntary testing and continuing education program known as the Annual Filing Season program.

For a summary of the regulations in New York State, click here.

credit card fraud

 

Credit card fraud is a broad term for theft and fraud committed using a credit card. Usually, it’s associated with stolen or compromised information and unauthorized credit card charges, but sometimes it’s the legal cardholder who’s unintentionally committing the crime.

Credit card fraud law covers a wide range of activity, and the terms and conditions of credit cards are lengthy and difficult to understand. Combine both of those and it makes sense that consumers can unknowingly break the law.

Committing credit card fraud, whether it’s on purpose or by accident, can carry legal and financial consequences and might impact your ability to obtain future credit or even open a bank account. Keep the law on your side by knowing what to watch out for.

 

1. Using someone else’s credit card.

 

If you use someone else’s card without permission, it’s fraud. Everyone knows that. But there are similar situations that aren’t illegal but do break the terms of your contract with the card issuer. For example, just giving someone permission to use your card, signing a credit card slip on behalf of a user, or simply allowing someone to punch in your credit card numbers to help make a purchase are all deal breakers.

When you break the terms of your agreement with a creditor, you can’t dispute any of the activity or make claims against those charges. As far as the creditors are concerned, it’s your problem. That’s something to think about the next time Grandma needs help ordering something off Amazon.

 

2. Using a fake credit card number to sign up for a free trial online.

 

Want to sign up for a free trial of an online service or samples of a product? You’ll probably have to provide a credit card number, which will eventually get charged if you forget to cancel your service — which is likely. There are several sites that offer “fake” credit card numbers for people who just want to sign up for free trials online or receive samples without providing any real payment information. These sites claim the credit card number is 100 percent fake and won’t pass a verification test if the website runs one.

The legality of this practice is debatable. California Penal Code 532a, “Theft by False Pretenses,” does contain some language that some people feel applies to using fake credit card numbers. Though the sites giving away these numbers claim they are operating within the law, it’s difficult to separate the supposedly legitimate sites from the shady ones. You’ll risk unknowingly using a stolen card number or unintentionally breaking the law.

Even if the fake credit card number is legal to use, you could be breaking the terms and conditions on the site offering the free trial. It’s best to stay on the safe side and just use your regular, valid credit card and set a reminder to cancel your subscription before you get charged.

Related: How to Dispute Fraudulent Credit Card Charges With Banks and Creditors

 

3. Disputing your own credit card charges.

 

Chargeback fraud, also known as “friendly fraud,” happens when a consumer makes an online purchase with his credit card and then calls the card issuer and requests a refund, citing fraud. The bank refunds the money and the consumer keeps the goods, leaving the merchant on the hook for the cash.

In some cases, the consumer forgets which charges he made and in some, he’s intentionally committing fraud. Before you head down this road, make sure the charge wasn’t yours. It’s hard to remember every little transaction and some retailer transactions look unfamiliar on statements. For example, third-party payments systems, like PayPal, use the merchant’s name.

One of these is an honest mistake; the other is outright fraud. If you are intentionallycommitting chargeback fraud, it’s ends up costing retailers $11.8 billion a year, which will eventually get passed down to consumers. And it’s 100 percent illegal — you are exposing yourself to a host of consequences, including jail time.

Related: Counterfeit Credit Card Fraud Targets Poor Credit Consumers

 

4. Lying on your credit card application.

 

Mistakes happen, but intentionally giving false information, like your age or income, on a credit card application can land you in legal trouble, including being charged with theft by deception and larceny. Penalties vary, but can include: fines, probation, community service or jail time. You can even face criminal charges – especially if you end up defaulting.

Kim McGrigg, manager of community and media relations for Money Management International, told Fox Business, “Lying on a credit application purposefully is fraud. It may not be prosecuted aggressively, but the potential is too great for people to risk being caught.”

Even if you don’t face legal action, there are other consequences to consider: interest rate spikes, closed accounts, poor credit history or the inability to open a bank account. The bottom line: It doesn’t pay to lie on an application just to get a higher credit limit or better terms.

 

Crowe Horwath LLP has introduced the Crowe International Tax Manager, a Web-based automated information gathering tool that helps streamline tax-reporting processes.Crowe developed the system to help business clients in various industries deal with their international tax compliance obligations, reduce tax-processing costs and adapt to emerging areas of risk.

The Internal Revenue Service requires U.S.-based multinational organizations to file a number of forms detailing their international activities, such as Form 5471, “Foreign Corporations,” Form 8858, “Foreign Disregarded Entities”; Form 926, “Transfer of Property to a Foreign Corporation,” and Form 8865, “Foreign Partnerships,” among others. Crowe tax specialists collect demographic information from clients to determine which of the filing requirements apply. Once the filing requirements have been determined, the Crowe International Tax Manager can be populated with data from existing systems and spreadsheets. From there, designated users can log into the system and import or enter any extra data needed to complete the required forms. A project leader can assign tasks, keep track of progress and review the overall filing status from the system’s dashboard. “Multiple users can work within the solution at the same time, benefiting from a divide-and-conquer strategy,” said Crowe international tax partner John Kelleher in a statement. “While an individual only sees the portion he or she is responsible for, the leader is able to view the entire project and maintain control.”

Other features include automated requests that eliminate time-consuming questionnaire distribution and tracking, enabling the applicable forms to be completed for any number of foreign entities. Delegation features allow managers to assign tasks, track progress and review status.

A dynamic review feature flags inconsistencies in the imported or entered data. Information requests can follow a specified workflow to translate the IRS’s requirements into a uniform format for filing.

Data transfer features populate the applicable tax forms in real time, and the forms can then be reviewed in Adobe Acrobat PDF format. Security features protect sensitive information through application-layer security based on unique permissions assigned to users.

For more information, visit www.crowehorwath.com/international-tax-nr/.

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The Internal Revenue Service sends many letters annually to federal tax return preparers. Beginning in November 2014, the agency began its fifth year of a hands-on effort to improve the accuracy and quality of tax returns and to heighten awareness of preparer responsibilities. Types of letters that have been sent include:

Letter 4810 - Sent in November 2013 advising the recipient that an IRS representative will contact them to schedule an educational visit to review their responsibilities in correctly preparing the Schedule C.

Letter 5102 - Sent in November 2014 recommending the recipient consider taking continuing education programs related to business income and expenses, as well as pay special attention to Schedule C accuracy in 2015.

Letter 5105 - Sent in December 2013 recommending the recipient review all Schedule C and preparer due diligence rules, as well as pay special attention to Schedule C accuracy in 2014.

Letter 5271 - Sent in December 2013 recommending the recipient review all Additional Child Tax Credit (ACTC) and preparer due diligence rules, as well as pay special attention to ACTC accuracy in 2014.

Letter 5272 - Sent in December 2013 recommending the recipient review all Additional Child Tax Credit (ACTC) and preparer due diligence rules, as well as pay special attention to ACTC accuracy in 2014 on returns where dependents have an Individual Tax Identification Number (ITIN).

Letter 5292 - Sent in November 2013 advising the recipient that an IRS representative will contact them to schedule an educational visit to review their responsibilities in correctly following preparer tax identification number (PTIN) rules.

The IRS also regularly checks whether federal tax return preparers are compliant with their own tax filing and payment responsibilities.

Letter 4911 - Sent to notify paid tax return preparers that they are not compliant with their personal tax responsibilities and should resolve the matter to avoid affecting their status as a preparer tax identification number (PTIN) holder.

IRS Letters and Visits to Return Preparers: FAQs

by Kelly Phillips Erb

On January 1, 2014, about 55 tax-related deductions and credits had officially expired. They weren’t voted up or down: they were just temporary provisions that were allowed to expire.

Most assumed that Congress would eventually do what they’ve had a terrible habit of doing which is to wait a bit and extend the laws retroactively to January 1, 2014. But then January passed and nothing. Then February and nothing. Then March… You get the picture.

And now it’s November – nearly December, actually – and those tax extender bills are still sitting in Congress.

To be clear, these are not tax provisions that will affect you in 2015. They’re tax provisions that will – er, would – affect you in 2014. You know, the year that’s almost over. Because, of course, who wants to focus on tax planning in advance? It’s much more fun apparently to scramble after the fact – or at least, that’s the vibe I’m getting from Congress.

So what does all of this mean for tax season and the Internal Revenue Service (IRS)? You know, the agency that has to mark up all of those forms and reset their computer software to accommodate whatever last minute whims Congress might consider – those same whims they could have considered before the midterm elections? (I know, that’s just crazy talk) It could mean a delayed tax season. Again. Or a two-tier start to tax season. Again. (I’ll have some more answers for you later today when I post the results of my conversation with the IRS Commissioner.)

For now, however, taxpayers are trying to figure out whether they can count on certain tax provisions that used to be available and might be available retroactively if Congress acts before they break for the holidays. And while there are some good arguments for and against the provisions, the key is to have some answers.

 

Filling US tax form 1040 (Credit Andriy Onufriyenko/flickr Editorial/Getty Images)

Here are ten of those expired tax provisions that might matter to you:

  1. Educator expense. For 2013, you’ll see this above-the-line deduction (meaning that you don’t have to itemize to take the deduction) on line 23. In 2013, the IRS offered teachers and other eligible educators a deduction of up to $250 for unreimbursed expenses paid or incurred for books, supplies, computer equipment, other equipment, and supplementary materials used in the classroom. For purposes of the deduction, eligible educators were defined as teachers, instructors, counselors, principals or aides for kindergarten through grade 12 who put in at least 900 hours during the school year in a school that provides elementary or secondary education, as determined under state law. That expense is not available for 2014 and beyond.

  2. Mortgage debt forgiveness. Congress passed the Mortgage Forgiveness Debt Relief Act in 2007. The Act offered an exception to the rule that, for federal income tax purposes, once a lender writes off any part of your debt – even a mortgage – that amount which is forgiven is reported to the IRS may be includable as income. The exception allowed an exclusion for forgiven mortgage debt for qualifying homeowners: that gave homeowners who were underwater the chance to move towards a fresh start. The exception kicked off in January 1, 2007, and has been extended three times. The most recent extension was just for one year and expired on December 31, 2013.

  3. Equalization of employer-provided commuter transit and parking benefits.Under section 132(f) of the Tax Code, certain fringe benefits provided by employers for commuting and transportation are tax-free to employees. In 2013, benefits for transit passes and commuter highway vehicles were the same as those for parking. However, the parity provision wasn’t extended in 2013 so that, for 2014, the monthly limitation for vanpools (commuter highway vehicles) and transit passes is $130 while the fringe benefit exclusion amount for qualified parking is $250.

  4. Deduction for mortgage interest premiums. In a tough market, buying a house can be difficult. If you can’t afford to put down at least 20% of the purchase price of your home, your lender may want you to pick up private mortgage insurance (PMI). You, as a homeowner, pay the premiums for PMI but the benefit of the PMI flows to the lender in the event of a default. As part of the efforts to revive the housing market, Congress passed a law allowing for a tax deduction for the cost of PMI for homes (and vacation homes) beginning in 2007. It was lumped together with interest on line 13 of Schedule A and was subject to income phaseouts. The deduction was extended after 2007 through the end of 2013 but doesn’t apply to PMI paid in 2014 and beyond.

  5. Tax deduction for state and local general sales taxes in lieu of state and local income taxes. Taxpayers who itemize their deductions on a Schedule A may claim state and local income taxes as a deduction. In states like Texas, where there’s no state income tax (or a low state income tax), that deduction is generally worthless. However, Congress enacted a temporary provision that allowed taxpayers to deduct state and local general sales taxes paid rather than state and local income taxes (the option was available to all taxpayers, not just those in no income tax states). That provision expired at the end of 2013.

  6. Tuition and fees deduction. On your 2013 tax return, you’ll see the tuition and fees deduction on line 34: it’s another of the above-the-line tax deductions which means that you don’t have to itemize your deductions to claim the expense. Under old law, the tuition and fees deduction allowed taxpayers to claim up to $4,000 in education expenses so long as you meet certain income criteria. For purposes of the tuition and fees deduction, qualified education expenses are tuition and related expenses required for enrollment or attendance at an eligible educational institution (any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education). Related expenses are defined as student-activity fees and expenses for books, supplies, and equipment if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

  7. Tax-free distributions from individual retirement plan for charitable purposes. This popular provision allowed an Individual Retirement Arrangement (IRA) owner age 70-1/2 or older to exclude up to $100,000 per year from gross income if IRA funds were paid directly to certain public charities. Under current law, an IRA owner must pay tax on the IRA funds when withdrawn – even if donated to a qualified charity. That’s not always advantageous for a lot of reasons, most significantly that you must itemize to get the benefit of the donation but income is immediately includible. With the direct distribution exclusion, income is excluded even if taxpayer wouldn’t have been able to itemize (net result is no tax consequence). The old rules apply for 2014 and beyond.

  8. Work Opportunity Tax Credit. The Work Opportunity Tax Credit (WOTC) offered employers a tax credit for hiring certain workers – including vets. The credit could be as high as $9,600 per qualified veteran for taxable employers ($6,240 for qualified tax-exempt organizations). For profit employers claimed the WOTC as a general business credit on Form 3800 against their income tax while qualified tax-exempt organizations claimed the credit on Form 5884-C as a credit against the employer’s share of SocialSecurity tax. The credit does not exist for employees hired in 2014 and beyond.

  9. Section 179 expense increase. With Section 179 expensing, small and mid-size business owners could immediately deduct an amount used to obtain qualifying equipment rather than hack the deduction into pieces over time according to a depreciation schedule. Until recently, business owners could deduct up to a hefty $500,000 of qualifying assets. For 2014 (and beyond), the limit plummeted to $25,000.

  10. Tax credit for residential energy efficiency improvements (including certain appliances). A number of energy-efficient home improvement tax credits took a tumble in 2013. The credit of up to $500 for the installation of qualified insulation, windows, doors and roofs as well as certain water heaters and qualified heating and air conditioning systems evaporated as of December 31, 2013.

 

November 20, 2014

by 
Alvaro Puig
Consumer Education Specialist, FTC
 

Ripping off older people puts you in a special category of low-life scam artists. What about ripping off older people you know have already fallen for a telemarketing scam? That makes you a first ballot selection for the Scam Artist Hall of Shame. According to the FTC, that’s exactly what Consumer Collection Advocates did.phone scammers lie about getting money back

The company ran a phone scheme that targeted people, many of them older consumers, who previously lost money to timeshare resale or precious metal investment scams. They told fraud victims they could recover 60 percent or more of the money they had lost. Just pay 20 percent now and another 20 percent when we recover the money, the callers said. People paid hundreds and in some cases thousands of dollars hoping to recoup some of their losses. In the past year alone, consumers paid Consumer Collection Advocates almost $1.3 million – and most didn’t get anything in return.

The FTC announced that it temporarily stopped the scheme and has asked a federal court to put this scam out of business forever.