CSTC Newsletter

April 2019

In This Issue...

  1. From the President
  2. Legislative Alert - AB 1140
  3. Register for the 2019 Summer Symposium
  4. April 2019 Chapter Events
  5. News from the IRS
  6. Welcome New CSTC Members
  7. News from ADP
  8. Join CSTC

CSTC Member Benefits

CSTC members have access to benefits such as free payroll processing services for your tax practice, and the opportunity to earn new revenue through their flexible partnership options.

CSTC is pleased to include the VeriFyle ProTM premium secure online document and message sharing service at no cost to CSTC members!

Wolters Kluwer: Discounts on Tax, Accounting & Audit Resources, Software, Information & Services. 

 CSTC members receive the TaxBook WebLibrary at a special price

Other Member Benefits Include:

$ Savings on all Society Educational Events

$ Savings on Contact, Correspondence & Self Study Education

$ Savings with member specialty CSTC Connects (previouslyYellow Pages) list

$ Savings with E & O Insurance, plus specialty coverage relevant to your profession

$ Online CSTC Find-a-Tax Consultant search to help promote your business!

$ CSTC Member Listserv

Office Depot has partnered with us to provide exclusive savings in-store and online, plus fantastic additional benefits. This program is all about providing preferred pricing to our clubs, and the savings extend to almost every item.

Savings include 20% to 55% off item office supply core list, 20% to 55% off retail on cleaning  & break room items, 10% off branded; 20% off private brand  ink & toner core list, Average 10% off  retail on 200 technology core items, Free next-day shipping on orders of $50 or more, and SIGNIFICANT savings on copy & print. Become a CSTC member to sign up for our Office Depot Small Business Savings Program, administered by Excelerate America.

We are a professional full-service tax advisory firm in San Diego. Our goal is to provide a level of service for our clients that will exceed expectations in every possible way. We strive to offer a diverse level of services in order to meet the needs of the diverse community we have been working in for more than 30 years.

CSTC Mission

CSTC advances professionalism within the tax industry by:

  • Providing quality education
  • Creating networking opportunities
  • Advocating professional standards


From the President 

Thank you!

First, let me thank the fantastic team who drafted CSTC’s response to AB 1140, a poorly drafted attempt by our Assembly leaders to regulate unlicensed, untrained, and illegal tax preparers. We have strongly opposed passage of that bill due to its poor drafting and mis-directed effort to protect taxpayers. Through our Executive Director, we have asked all of you to help by responding or sending messages and calls as directed in the email that our ED sent.

Thank you for any efforts you make to support our position in opposition to AB1140.


Becoming a Coach

Thinking back to the most impactful people in your lives, who have they been? 

For many, it’s family members, friends, bosses, and undoubtedly–sports or other coaches. Coaches in particular tend to have a special place in peoples’ hearts as these coaches often expected the most of them and gave them their time and energy.

Likewise, it could be said that any good teacher, mentor, or influencer is a “coach.”

Joseph Weitraub and James Hunt in their May 2015 Harvard Business Review article discuss how mangers that invest time in coaching see that coaching is not a “nice to have” aspect in the job force but a “must have.” They understand that talent needs to be worked, molded, and grown and that talent is what will drive business results.

In a Blog post by my son Ryan, he points out that, according to Weitraub and Hunt, there are four elements to being a coach.

First: Coaching is essential for achieving business goals 

Second: Coaching can (and should be!) enjoyable

Few things are as rewarding as watching things grow. Think about it. Parents raising children, a gardener growing flowers, a businessperson growing their customer base, and I add, a tax professional coaching a client through a tough tax issue–all rewarding, in their own right, because of growth.

Third: Coaching is satisfying for the curious

“Coaching managers ask a lot of questions. They are genuinely interested in finding out more about how things are going, what kinds of problems people are running into, where the gaps and opportunities are, and what needs to be done better.” Learning about others and how to help them solve their problems can be immensely satisfying to the curious.

Finally: Coaching establishes connection

It is human nature to desire to be connected. Coaching is a fantastic way to facilitate connection. As a coach shows empathy and works with a “coachee”, deep and lasting relationships can be formed; these can be something that grows to be more than a business transaction. These relationships can become something of value that creates bonds and builds a more meaningful sense of humanity in the workplace.

We are in an industry that is constantly coaching people. We coach our clients how to run their business, how to keep their books, how to comply with employment and tax laws, and how to meet deadlines for many reporting requirements. The tax professional’s job is not only to jockey records, interpret tax laws, and prepare tax returns, it is in large part to be a coach to our clients.

What a great responsibility! What a great opportunity to help people and connect with them!

By becoming tax professionals, we have accepted the challenge of being coaches. By joining CSTC, we have accepted the challenge to learn our trade and improve our skills. It is my hope that we can all find joy in our hard work by recognizing what a great impact we are having on people’s lives.

Your President, Gary A. Quackenbush

Legislative Alert - AB 1140

What is AB 1140?
AB 1140 would require a tax preparer to make specified written disclosures to a client who is applying for the California Earned Income Tax Credit, including the total amount of all fees being charged by the tax preparer and the amount of the tax refund the client would receive without paying the tax preparer’s fees. The bill would also require a tax preparer to make the written disclosures available in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. A violation of the bill’s provisions would be a crime. Click here to read AB 1140.

In the fight to withdraw AB 1140, the President of the California Society of Tax Consultants, Gary Quackenbush, along with the Legislative Committee has created a position letter that will be submitted to the office of Assemblyman Mark Stone and the Business and Professions Committee. Click here to read the position letter from CSTC President Gary Quackenbush.

We hope other tax preparers will be motivated to write their own letter to submit to the office of Assemblyman Mark Stone and the Business and Professions Committee. Every voice and letter counts!

2019 Summer Symposium
June 9-12 2019
Westgate Las Vegas Resort & Casino

Registration is Open for the 2019 Summer Symposium! 



Sunday, June 9, 2019

3pm Registration Opens; Exhibitor Set-up
5:20pm-6pm Welcome Reception for First Time Attendees
6pm-9pm Welcome Dinner
This event is family friendly.
(Included with full registration. Guest registration is $40)

Monday, June 10, 2019

6:30am-5pm Registration and Exhibits
7:30am-9:00am Session 1: IRS Keynote Presentation and Breakfast
Speaker TBA
9:15am-10:05am Breakout Sessions (all sessions will continue after the break):
  Session 2: 199A - Qualified Business Income Deduction
Claudia Stanley, CPA, EA
  Session 3: 1031 Exchanges and Their New Counterpart - Opportunity Zones
Ruth Godfrey, EA
  Session 4: Reporting K-1's for Tax
Jane Ryder, EA, CPA
  Session 5: Toilets, Tenants & Trash: Capital Gains Tax Reduction Strategies
Frank Acuña, Attorney at Law
10:05am-10:20am   Break with Exhibitors
10:20am-12:00pm Breakout Sessions (continued from before the break):
  Session 2 Continued: 199A - Qualified Business Income Deduction
Claudia Stanley, CPA, EA
  Session 3 Continued: 1031 Exchanges and Their New Counterpart - Opportunity Zones
Ruth Godfrey, EA
  Session 4 Continued: Reporting K-1's for Tax
Jane Ryder, EA, CPA
  Session 5 Continued: Toilets, Tenants & Trash: Capital Gains Tax Reduction Strategies
Frank Acuña, Attorney at Law
12:00pm-1:20pm Lunch on own
1:20pm-3:00pm  Breakout Sessions:
  Session 6: California Old School Differences
Eugene Ostermiller, EA, NTPI Fellow
  Session 7: Advanced Schedule C Audits
LG Brooks, EA, CTRS
  Session 8: The Sharing Economy
Karen Joyner, EA
  Session 9: How to Serve Immigrant Mixed-Status Families
Antonio Martinez, EA
3:00pm-3:20pm Break with Exhibitors
3:20pm-5:00pm Session 10: Cryptocurrency, the IRS, and You
John Miller, EA
  Session 11: Marijuana Taxation in California
William Rogers, MBA, CFP, EA
  Session 12: Dependency in Depth
Shannon Hall, EA
  Session 13: Tax Issues for US Citizens Abroad
Monica Haven, EA, JD, LLM
5:00pm-6:00pm Reception with Exhibitors
6:00pm Evening on Own

Tuesday, June 11, 2019

6:30am-5pm  Registration and Exhibits
7:30am-9:00am Session 14: California Keynote Presentation and Breakfast
Speaker TBA
9:00am-9:15am Break
9:15am-10:05am   Breakout Sessions (all sessions will continue after the break):
  Session 15: Appealing Decisions - Audit, OIC, Tax Court, Bankruptcy Court, Federal District Court
Gary Quackenbush, Esq
  Session 16: Everything S-Corp!
Jane Ryder, EA, CPA
  Session 17: Baby, Oh Baby!
Karen Joyner, EA
  Session 18: Engagement Letters
LG Brooks, EA, CTRS
10:05am-10:20am Break with Exhibitors
10:20am-12:00pm Breakout Sessions (continued from before the break):
  Session 15 Continued: Appealing Decisions - Audit, OIC, Tax Court, Bankruptcy Court, Federal District Court
Gary Quackenbush, Esq
  Session 16 Continued: Everything S-Corp!
Jane Ryder, EA, CPA
  Session 17 Continued: Baby, Oh Baby!
Karen Joyner, EA
  Session 18 Continued: Engagement Letters
LG Brooks, EA, CTRS
12:00pm-1:20 pm Lunch on own
1:20pm-3:00 pm Breakout Sessions:
  Session 19: Passive Activity Loss Limitations
Eugene Ostermiller, EA, NTPI Fellow
  Session 20: What's my Character?
Claudia Stanley, CPA, EA
  Session 21: Domestic Tax Issues for Non-Resident Aliens
Monica Haven, EA, JD, LLM
  Session 22: The Art and Science of Divorce Taxation in 2019
Armand D'Alo, EA, CFP, CDFA and Robbin D'Alo, EA, CLA, CDFA
3:00pm-3:20pm Break with Exhibitors
3:20pm-5:00pm Session 23: California: Do You see What I CA?
Shannon Hall, EA
  Session 24: Correcting Depreciation - Form 3115 Line-by-Line
Karen Joyner, EA
  Session 25: Residents/Non-Residents
Antonio Martinez, EA
  Session 26: Choice Of Entity. LLC, INC, LP, GP, SP - How To Choose?
Gary Quackenbush, Esq
5:00pm  Evening on Own

Wednesday, June 12, 2019

6:30am-5pm Registration and Exhibits
7:30am-9:00am  Session 27: Best Practices - Compliance and Documentation Presentation and Breakfast
Monica Haven, EA, JD, LLM
Class to continue after the break
9:00am-9:15am  Break
9:15am-10:05am Session 27 Continued: Best Practices - Compliance and Documentation Presentation and Breakfast
Monica Haven, EA, JD, LLM
10:05am-10:20am Break with Exhibitors
10:20am-12:00pm Breakout Sessions:
  Session 28: Compensatory Stock & LLC Benefits (Options RSU's, ESPP, Etc)
Jane Ryder, EA, CPA
  Session 29: Fresh Starts - Installment Agreement, OIC, Tax Lien Relief, Bankruptcy, Innocent Spouse, Injured Spouse
Gary Quackenbush, Esq
  Session 30: How to Read a Trust
Frank Acuña, Attorney at Law
  Session 31: Tax Penalties & Abatement
LG Brooks, EA, CTRS
12:00pm-1:20pm Lunch on Own
1:20pm-3:00pm Session 32: Stump the Tax Experts
3:00pm-3:20pm Break
3:20pm-5:00pm Session 33: Ethics - What Would You Do?
Claudia Stanley, CPA, EA
5:15pm Grand Prize Drawing


 Registration Fees

Category By 4.19.19  After 4.19.19
Members  $525 $575
Staff of Members  $550 $600
Non-Members  $625 $675
Sunday Social Event Guest Tickets  $40 $40

Click here
 to visit the 2019 Summer Symposium page to learn about our topics, speakers, and more!

April 2019 Chapter Events

April 2, 2019
Topic: 2019 Breakfast Meeting
North County San Diego Chapter Meeting
1 Federal Law Hour

Topic: Roundtable Luncheon
North County San Diego Chapter Meeting
1 Federal Law Hour

April 4, 2019
Topic: Share and Solve Breakfast Meetings
Temecula Valley Chapter Meeting
1 Federal Law Hour

April 7, 2019
Topic: Round Table Discussion
Greater Long Beach Chapter Meeting
1 Federal Law Hour
1 Federal Update Hour
1 California Hour

April 9, 2019
Topic: 2019 Breakfast Meeting
North County San Diego Chapter Meeting
1 Federal Law Hour

Topic: Roundtable Luncheon
North County San Diego Chapter Meeting
1 Federal Law Hour

April 17, 2019
Topic: A-B Trusts, Post Tax Reform Problems and Solutions and Special Needs Trusts (Intro Course)
San Jose Chapter Meeting
3 Federal Update Hours

Click here to view the CSTC calendar.

March 28, 2019

IRS revises EIN application process; seeks to enhance security


WASHINGTON — As part of its ongoing security review, the Internal Revenue Service announced today that starting May 13 only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application. 

An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes.

The change will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number, and online EINapplication.

Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). By making the announcement weeks in advance, entities and their representatives will have time to identify the proper responsible official and comply with the new policy.

The Form SS-4 Instructions provide a detailed explanation of who should be the responsible party for various types of entities. Generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party. 

Only governmental entities (federal, state, local and tribal) are exempt from the responsible party requirement as well as the military, including state national guards.

There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients. 

The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.

March 25, 2019

IRS expands penalty waiver for those whose tax withholding and estimated tax payments fell short in 2018; key threshold lowered to 80 percent 


WASHINGTON — The Internal Revenue Service today provided additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.

“We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year,” said IRS Commissioner Chuck Rettig. “The expanded penalty waiver will help many taxpayers who didn’t have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.

Today’s revised waiver computation will be integrated into commercially-available tax software and reflected in the forthcoming revision of the instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts.

Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7.  This form cannot be filed electronically.

Today’s expanded relief will help many taxpayers who owe tax when they file, including taxpayers who did not properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017. 

The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where some might have had too much or too little tax withheld when they file their tax returns. If a taxpayer did not submit a revised W-4 withholding form to their employer or increase their estimated tax payments, they may have not had enough tax withheld during the tax year. 

Additional information

Because the U.S. tax system is pay-as-you-go, taxpayers are required, by law, to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by either having tax withheld from paychecks or pension payments, or by making estimated tax payments.

Usually, a penalty applies at tax filing if too little is paid during the year. This penalty is an interest based amount approximately equivalent to the federal interest on the amount not paid in a timely manner. Normally, the penalty would not apply for 2018 if tax payments during the year met one of the following tests: 

  • The person’s tax payments were at least 90 percent of the tax liability for 2018 or
  • The person’s tax payments were at least 100 percent of the prior year’s tax liability, in this case from 2017. However, the 100 percent threshold is increased to 110 percent if a taxpayer’s adjusted gross income is more than $150,000, or $75,000 if married and filing a separate return. 

For waiver purposes only, today’s relief lowers the 90 percent threshold to 80 percent. This means that a taxpayer will not owe a penalty if they paid at least 80 percent of their total 2018 tax liability. If the taxpayer paid less than 80 percent, then they are not eligible for the waiver and the penalty will be calculated as it normally would be, using the 90 percent threshold. For further details, see Notice 2019-25, posted today on IRS.gov.

Like last year, the IRS urges everyone to take a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone now facing an unexpected tax bill when they file. This is also an important step for those who made withholding adjustments in 2018 or had a major life change to ensure the right tax is still being withheld. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.

To help taxpayers get their withholding right in 2019, the updated Withholding Calculator is now available on IRS.gov.

The IRS has many useful resources for anyone interested in learning more about tax reform, including Publication 5307, Tax Reform: Basics for Individuals and Families, and Publication 5318, Tax Reform What’s New for Your Business. For other tips and resources, visit IRS.gov/taxreform or check out the Get Ready page on IRS.gov .

March 20, 2019

IRS concludes "Dirty Dozen" list of tax scams for 2019: Agency encourages taxpayers to remain vigilant year-round

IRS YouTube Videos:

IR-2019-49, March 20, 2019

WASHINGTON — The Internal Revenue Service today wrapped up issuing its annual "Dirty Dozen" list of tax scams. The IRS reminds taxpayers to remain vigilant to these often aggressive and evolving schemes throughout the year.

This year's “Dirty Dozen” list highlights a wide variety of schemes that taxpayers may encounter at any time, although many may peak during tax-filing season. The schemes run the gamut from simple refund inflation scams to complex tax shelter deals. A common theme throughout all: Scams put taxpayers at risk.

The IRS highlighted the “Dirty Dozen” scam list in separate news releases over 12 weekdays. Taxpayers are encouraged to review the list in a special section on IRS.gov and be on the lookout for these ruses throughout the year.

Taxpayers should remember that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer. For more, see the Choosing a Tax Professional page.

Here is a recap of this year's ‘Dirty Dozen’ scams:

Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2019-26)

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2019-28)

Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number. (IR-2019-30)

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2019-32)

Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high. (IR-2019-33)

Falsifying Income to Claim Credits: Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. (IR-2019-35)

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit. (IR-2019-36)

Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2019-39)

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses. (IR-2019-42)

Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. (IR-2019-43)

Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (IR-2019-45)

Abusive Tax Shelters: Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2019-47)


March 19, 2019
IRS 2019 Dirty Dozen #7, #8, #9

  • IRS’ 2019 "Dirty Dozen" tax scams list highlights inflating deductions, credits – See IR-2019-36
  • IRS cautions taxpayers on scams involving disasters, charitable causes — 2019 "Dirty Dozen" list continues – See IR-2019-39
  • Avoid improper claims for business credits; topic makes this year’s IRS ‘Dirty Dozen’ list – See IR-2019-42

March 19, 2019
IRS warns of new phone scam using Taxpayer Advocate Service numbers

IRS YouTube Videos:

Tax Scams – English | Spanish | ASL
Dirty Dozen – English | Spanish | ASL 


WASHINGTON — The Internal Revenue Service today warned the public about a new twist on the IRS impersonation phone scam whereby criminals fake calls from the Taxpayer Advocate Service (TAS), an independent organization within the IRS. 

Similar to other IRS impersonation scams, thieves make unsolicited phone calls to their intended victims fraudulently claiming to be from the IRS. In this most recent scam variation, callers “spoof” the telephone number of the IRS Taxpayer Advocate Service office in Houston or Brooklyn. Calls may be ‘robo-calls’ that request a call back. Once the taxpayer returns the call, the con artist requests personal information, including Social Security number or individual taxpayer identification number (ITIN).

TAS can help protect your taxpayer rights. TAS can help if you need assistance resolving an IRS problem, if your problem is causing financial difficulty, or if you believe an IRS system or procedure isn’t working as it should. TAS does not initiate calls to taxpayers “out of the blue.” Typically, a taxpayer would contact TAS for help first, and only then would TAS reach out to the taxpayer. 

In other variations of the IRS impersonation phone scam, fraudsters demand immediate payment of taxes by a prepaid debit card or wire transfer. The callers are often hostile and abusive. 

Alternately, scammers may tell would-be victims that they are entitled to a large refund but must first provide personal information. Other characteristics of these scams include:

  • Scammers use fake names and IRS badge numbers to identify themselves.
  • Scammers may know the last four digits of the taxpayer’s Social Security number.
  • Scammers spoof caller ID to make the phone number appear as if the IRS or another local law enforcement agency is calling.
  • Scammers may send bogus IRS emails to victims to support their bogus calls.
  • Victims hear background noise of other calls to mimic a call site.
  • After threatening victims with jail time or with, driver’s license or other professional license revocation, scammers hang up. Others soon call back pretending to be from local law enforcement agencies or the Department of Motor Vehicles, and caller ID again supports their claim.

Here are some things the scammers often do, but the IRS will not do. Taxpayers should remember that any one of these is a tell-tale sign of a scam.

The IRS will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.
  • Call about an unexpected refund. 

For taxpayers who don’t owe taxes or don’t think they do:

  • Please report IRS or Treasury-related fraudulent calls to [email protected] (Subject: IRS Phone Scam).
  • Do not give out any information. Hang up immediately. The longer the con artist is engaged; the more opportunity he/she believes exists, potentially prompting more calls.
  • Contact TIGTA to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.

For those who owe taxes or think they do:

  • Call the IRS at 800-829-1040. IRS workers can help.
  • View tax account online. Taxpayers can see their past 24 months of payment history, payoff amount and balance of each tax year owed.

Stay alert to scams that use the IRS or other legitimate companies and agencies as a lure. Tax scams can happen any time of year, not just at tax time. For more information visit Tax Scams and Consumer Alerts on IRS.gov.

March 12, 2019
The Dirty Dozen represents the worst of the worst tax scams.

WASHINGTON — Kicking off the annual “Dirty Dozen” list of tax scams, the Internal Revenue Service today warned taxpayers of the ongoing threat of internet phishing scams that lead to tax-related fraud and identity theft.

The IRS warns taxpayers, businesses and tax professionals to be alert for a continuing surge of fake emails, text messages, websites and social media attempts to steal personal information. These attacks tend to increase during tax season and remain a major danger of identity theft.

To help protect taxpayers against these and other threats, the IRS highlights one scam on 12 consecutive week days to help raise awareness. Phishing schemes are the first of the 2019 “Dirty Dozen” scams.

“Taxpayers should be on constant guard for these phishing schemes, which can be tricky and cleverly disguised to look like it’s the IRS,” said IRS Commissioner Chuck Rettig. “Watch out for emails and other scams posing as the IRS, promising a big refund or personally threatening people. Don’t open attachments and click on links in emails. Don’t fall victim to phishing or other common scams.”

The IRS also urges taxpayers to learn how to protect themselves by reviewing safety tips prepared by the Security Summit, a collaborative effort between the IRS, state revenue departments and the private-sector tax community.

“Taking some basic security steps and being cautious can help protect people and their sensitive tax and financial data,” Rettig said.

New variations on phishing schemes

The IRS continues to see a steady stream of new and evolving phishing schemes as criminals work to victimize taxpayers throughout the year. Whether through legitimate-looking emails with fake, but convincing website landing pages, or social media approaches, perhaps using a shortened URL, the end goal is the same for these con artists: stealing personal information.

In one variation, taxpayers are victimized by a creative scheme that involves their own bank account. After stealing personal data and filing fraudulent tax returns, criminals use taxpayers' bank accounts to direct deposit tax refunds. Thieves then use various tactics to reclaim the refund from the taxpayer, including falsely claiming to be from a collection agency or the IRS. The IRS encourages taxpayers to review some basic tips if they see an unexpected deposit in their bank account.

Schemes aimed at tax pros, payroll offices, human resources personnel

The IRS has also seen more advanced phishing schemes targeting the personal or financial information available in the files of tax professionals, payroll professionals, human resources personnel, schools and organizations such as Form W-2 information. These targeted scams are known as business email compromise (BEC) or business email spoofing (BES) scams.

Depending on the variation of the scam (and there are several), criminals will pose as:

  • a business asking the recipient to pay a fake invoice
  • as an employee seeking to re-route a direct deposit
  • or as someone the taxpayer trusts or recognizes, such as an executive, to initiate a wire transfer.

The IRS warned of the direct deposit variation of the BEC/BES scam in December 2018, and continues to receive reports of direct deposit scams reported to [email protected]. The Direct Deposit and other BEC/BES variations should be forwarded to the Internet Crime Complaint Center (IC3). The IRS requests that Form W-2 scams be reported to:[email protected] (Subject: W-2 Scam). 

Criminals may use the email credentials from a successful phishing attack, known as an email account compromise, to send phishing emails to the victim’s email contacts. Tax preparers should be wary of unsolicited email from personal or business contacts especially the more commonly observed scams, like new client solicitations.

Malicious emails and websites can infect a taxpayer’s computer with malware without the user knowing it. The malware downloads in the background, giving the criminal access to the device, enabling them to access any sensitive files or even track keyboard strokes, exposing login victim’s information.

For those participating in these schemes, such activity can lead to significant penalties and possible criminal prosecution. Both the Treasury Inspector General for Tax Administration (TIGTA), which handles scams involving IRS impersonation, and the IRS Criminal Investigation Division work closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Tax professional alert

Numerous data breaches across the country mean the tax preparation community must be on high alert to unusual activity, particularly during the tax filing season. Criminals increasingly target tax professionals, deploying various types of phishing emails in an attempt to access client data. Thieves may use this data to impersonate taxpayers and file fraudulent tax returns for refunds.

As part of the Security Summit initiative, the IRS has joined with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud to protect the nation's taxpayers.

The Security Summit partners encourage tax practitioners to be wary of communicating solely by email with potential or existing clients, especially if unusual requests are made. Data breach thefts have given thieves millions of identity data points including names, addresses, Social Security numbers and email addresses. If in doubt, tax practitioners should call to confirm a client’s identity.

Reporting phishing attempts

If a taxpayer receives an unsolicited email or social media attempt that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), they should report it by sending it to [email protected]. Learn more by going to the Report Phishing and Online Scams page on IRS.gov.

Tax professionals who receive unsolicited and suspicious emails that appear to be from the IRS and/or are tax-related (like those related to the e-Services program) also should report it to: [email protected].

The IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Don’t fall prey.

For a detailed description of each scam, please refer to the list below:

  • IRS’ 2019 "Dirty Dozen" tax scams list highlights inflating deductions, credits – See IR-2019-36
  • Schemes involving falsifying income, creating bogus documents make IRS’ "Dirty Dozen" list for 2019 – See IR-2019-35
  • IRS: Be on the lookout for promises of inflated tax refunds — 2019 IRS "Dirty Dozen" list continues – See IR-2019-33
  • IRS: Choose tax preparers carefully; Tax return preparer fraud makes IRS’ 2019 "Dirty Dozen" list of tax scams – See IR-2019-32
  • Identity theft remains on IRS’ "Dirty Dozen" list despite progress – See IR-2019-30
  • IRS: Be vigilant against phone scams; Annual "Dirty Dozen" list continues –  See IR-2019-28
  • IRS kicks off annual list of most prevalent tax scams: Agency warns taxpayers of  pervasive phishing schemes in its "Dirty Dozen" campaign –  See IR-2019-26

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