by Jean Miller | Accounting News, Business Consulting, IRS, News, Resources, Tax, Tax Consulting, Technology
In the midst of identity scams and credit card hacking, the IRS has warned against another scam, this time targeted at businesses and employers. There is a growing W-2 email scam threatening sensitive tax information and the IRS wants to alert payroll and human resources officials so they can be on their guard.
A simple email beginning with a casual greeting has quickly become one of the most dangerous phishing attacks. Hundreds of employers fell victim to the scheme last year, which left thousands of employees vulnerable to tax-related identity theft.
Since there have been significant improvements made in curbing stolen identity refund fraud, criminals are now seeking more advanced personal information in order to fraudulently file a return. W-2’s contain a wealth of detailed taxpayer income and withholding information, which is exactly what frauds are searching for and why they are targeting employers to acquire such information.
The scam has only grown larger in recent years, attacking a variety of businesses, from public universities and hospitals to charities and small businesses. The IRS wants to educate employees and employers, particularly payroll and HR associates who are often targeted first, to hopefully limit the number of successful attacks.
The scammer will likely spoof the email of someone high up in the organization or business, sending an email to someone with W-2 access using a subject line similar to “review” or “request.” The “request” will likely be a list of all the employees and their W-2 forms, potentially even specifying the file format. Since the employee believes they are corresponding with an executive of some sort, they may send the information without question, meaning weeks could go by before it is even evident they have been scammed. This gives frauds plenty of time to file numerous fake returns.
Because this scam poses such a major tax threat at both the local and state level, the IRS has set up a specific reporting process to alert the proper individuals, which is outlined briefly below:
- Email [email protected] to notify the IRS of a W-2 data loss and provide contact information. Type “W2 Data Loss” into the subject line so that the email can be routed properly and do not attach any employee personally identifiable information.
- Email the Federation of Tax Administrators at [email protected] to get state specific information on reporting victim information.
- Businesses or payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). They may be asked to file a report with local law enforcement as well.
- Notify employees so they are able to take protective steps against identity theft. The Federal Trade Commission website, www.identitytheft.gov, provides guidance on steps employees should take.
- Forward the scam email to [email protected].
Beyond just educating employees, payroll officials and HR associates about the scam, employers are encouraged to set up policies or practices to avoid being hacked. Suggested policies include requiring verbal communication before sending sensitive information digitally, or requiring two or more individuals to receive and review any sensitive W-2 information before it can be sent out. The IRS is fighting diligently to protect taxpayers and lower the number of tax-related scams, so employers are encouraged to be on the defense as well and safeguard their own tax paying employees.
by Daniel Kittell | Accounting News, Tax, Uncategorized
Ending several weeks of uncertainty, Congress passed the Middle Class Tax Relief and Job Creation Act of 2012 shortly before adjourning for a long President’s Day weekend. President Obama is expected to sign the bill as soon as it reaches the White House.
The centerpiece of the new measure is an extension of the “payroll tax holiday” through the remainder of 2012. (It also extends unemployment benefits and adjusts physician payments under Medicare.) Absent this legislation, the holiday would have ended March 1, 2012, after a previous two-month extension.
Normally, both employees and employers must pay the OASDI (Old Age, Survivors, and Disability Income) portion of federal payroll tax at a 6.2 percent rate on wages up to the annual “wage base.” For 2012, the wage base is $110,100, up from $106,800 in 2011. Self-employed individuals must pay the OASDI tax at a 12.4 percent rate on the same wage base, but they may deduct half of their payments “above the line” on Form 1040.
First, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the usual 6.2 percent OASDI rate for employees (but not for employers) by 2 percent to an effective rate of 4.2 percent. But this tax break was created to last just one year – 2011. Self-employed individuals also benefitted from a 2 percent reduction in OASDI tax on amounts up to the 2011 wage base. The full 1.45 percent Medical Hospital Insurance (HI) portion of the federal payroll tax continued to apply to all wages for both employees and employers.
Subsequently, legislation enacted late last year – the Temporary Payroll Tax Cut Continuation Act of 2011 – extended the payroll tax holiday for two additional months through February 29, 2012. This extension included a recapture provision for employees receiving more than $18,350 in wages during the first two months of 2012 (the two-month equivalent of the $110,100 wage base). These employees were required to pay any additional amount owed on their 2012 tax returns.
Now, the new law wipes the slate clean. Under the Middle Class Tax Relief and Job Creation Act of 2012, the payroll tax holiday will continue unabated through December 31, 2012. In addition, the new legislation repeals the recapture provision included in the 2011 law. As was the case last year, high-income employees will benefit from the 2 percent reduction on wages up to the annual wage base.
Although the latest extension was hardly unexpected, the outcome remained in doubt during contentious debates within the halls of Congress. Surprisingly, gridlock over the required revenue offset was eased when both parties agreed to use transfers from the general funds of the Treasury to the Social Security fund. The new law also removed an estimated tax provision for certain large corporations that had accompanied the previous extension.
The IRS has gone on record as saying that implementing the payroll tax holiday for the entire year should not cause any major problems in its systems.
Make sure your business clients are on board.
Full Article: http://www.accountingweb.com/topic/tax/its-official-payroll-tax-holiday-extends-through-2012
by Jean Miller | Accounting News, Audit and Accounting, CPA, IRS, QuickBooks, Tax Consulting, Uncategorized
By AccountingWEB Staff
Time is running out before the payroll tax rate automatically increases in two weeks, and the dispute over how to fund it continues.
The tax measure at issue would maintain the payroll tax rate at 4.2 percent for the year 2012 instead of allowing it to revert to 6.2 percent January 1. It’s a tax cut worth about $1,000 to families earning $50,000 a year. The payroll tax bill also would renew benefits for the long-term unemployed and prevent a cut in Medicare benefits for seniors.
This morning (December 19), the Associated Press reported that “Boehner spoke after a chaotic weekend in which Senate leaders first failed to agree on a full-year bill, then coalesced around the two-month extension that passed overwhelmingly, only to spark a revolt among GOP conservatives in the House.”
Here’s a summary of what’s been happening:
While the GOP-led House passed a bill on December 14 extending the tax cut, the legislation relied on a pay freeze and increased pension contributions for civilian federal employees. In addition, it raised Medicare premiums for seniors, and it raised a fee that’s charged to banks with mortgages guaranteed by Fannie Mae and Freddie Mac. The bill didn’t have the votes to pass the Senate.
On Friday, December 16, Senate leaders reached an agreement to pass a two-month extension on the payroll tax cut, keeping the 4.2 percent rate through February. The agreement requires the administration to decide within 60 days if the controversial 1,700-mile Keystone XL pipeline is in the nation’s best interests. Some environmental groups oppose the project, but several unions support it.
Senate Republican Leader, Mitch McConnell, said Keystone XL would create about 20,000 jobs. Critics say the figure would be fewer than 3,500, including fewer than 1,000 that would be permanent.
House Speaker, John Boehner, said Friday that his chamber will not sign off on an extension of the payroll tax cut without including a provision to force a quick decision on the pipeline construction.
Obama would prefer to postpone the controversial matter, and he threatened to veto any bill that forces a decision. Because the project crosses international borders, it requires White House approval. The administration complained that House Republicans are injecting “ideological issues into what should be a simple debate about cutting taxes for the middle class.”
Original Article: http://www.accountingweb.com/topic/tax/wrangling-continues-over-payroll-tax-cut
