Tax News & Views Senior Scams and Rattlesnake Roundup

IRS warns against scams targeting seniors - IRS:

Tax scammers target all taxpayers, and more often seniors, through phone calls, emails and text messages. They often pretend to work for the IRS or other government agencies. Scammers use fear and lies to exploit their victims, but taxpayers can take steps to recognize tax scams and fraud.

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To fool taxpayers, scammers may try to:

- Impersonate government employees: Scammers may pose as representatives from government agencies, by spoofing caller ID to make their calls appear legitimate.

- Fake problems or prizes: They create fabricated scenarios, such as claiming taxpayers owe the IRS money, need to verify accounts, or are entitled to a refund or prize. These schemes often include false promises of lottery winnings or urgent claims about outstanding debts.

- Pressure for immediate action: Scammers frequently use high-pressure tactics, demanding that victims take immediate action without allowing time for reflection. Common tactics include threats of arrest, deportation, license suspension or computer viruses to coerce quick compliance.

- Specify a payment method: They often insist on unconventional payment methods including cryptocurrency, wire transfers, payment apps or gift cards. Scammers may also ask victims to provide sensitive information such as gift card numbers.

The notice points out some ways to know that a caller is not the IRS:

The IRS will never:

- Demand immediate payment using prepaid debit cards, gift cards or wire transfers. The IRS will typically send a bill by mail first for any owed taxes.
- Threaten to call law enforcement or immigration officials.
- Demand payment without allowing opportunities to dispute or appeal the amount owed.
- Request payment over social media or with a credit, debit or gift card number over the phone.

Be careful out there, and keep an eye out for vulnerable folks you know.

Senate Confirms Bessent as Treasury Secretary

Scott Bessent confirmed as treasury secretary, giving him a key role in extending Trump’s tax cuts - Fatima Hussein, Associated Press via The Hill. "He has said the U.S. faces economic calamity if Congress does not renew key provisions of Trump’s Tax Cuts and Jobs Act that are set to expire Dec. 31, 2025. Negotiating the extension of those tax cuts will be one of his major responsibilities even as he has also pushed for 3% annual growth, significant trims to deficits and increasing domestic oil production by 3 million barrels a day."

Scott Bessent pushes gradual 2.5% universal US tariffs plan - Aime Williams and Demetri Sevastopulo, Financial Times:

Donald Trump’s Treasury secretary Scott Bessent is pushing for new universal tariffs on US imports to start at 2.5 per cent and rise gradually, said four people familiar with the proposal.

The 2.5 per cent levy would move higher by the same amount each month, the people familiar with it said, giving businesses time to adjust and countries the chance to negotiate with the US president’s administration.

The levies could be pushed up to as high as 20 per cent — in line with Trump’s maximalist position on the campaign trail last year.

Trump Tariffs: Tracking the Economic Impact of the Trump Trade War - Erica York, Tax Foundation. "We estimate the 25 percent tariffs on Canada and Mexico and 10 percent tariffs on China proposed to go into effect as early as February 1, 2025, would shrink economic output by 0.4 percent and increase taxes by $1.2 trillion between 2025 and 2034 on a conventional basis."

Senate Confirms Bessent as Treasury Secretary - Cady Stanton and Doug Sword, Tax Notes ($). "During his confirmation hearing, Bessent also pledged to keep Direct File operative for the upcoming filing season, despite widespread disapproval of the program throughout the Republican Party."

Senate Confirms Bessent As Treasury Secretary - Asha Glover, Law360 Tax Authority ($):

During his Jan. 16 nomination hearing before the Senate Finance Committee, Bessent pressed lawmakers to permanently extend the TCJA provisions set to expire at the end of the year in order to prevent a what he cast as a $4 trillion tax hike on Americans. He has already spoken with several Finance Committee members and House leaders about how best to approach achieving that goal, he told the panel.

Bessent also said during the hearing he would stop the U.S. from moving forward with Pillar Two of the Organization for Economic Cooperation and Development's global tax rewrite, saying that he wants to work with lawmakers to undo a "terrible policy."

Tax Bill Watch

Elite Universities' Lobbying Spikes as GOP Eyes Tax Hikes - Chris Cioffi, Bloomberg ($):

The 2017 law imposed the levy on the net investment income of university endowments, if the schools have more than 500 full time students and an endowment with a per-student value above $500,000. Fifty-six universities paid about $381 million in tax on their endowments in 2023, according to IRS data.

Republicans, including now-Vice President JD Vance, have since proposed upping the tax to 35%.Rep. Troy Nehls (R-Texas) introduced legislation in January to increase the rate to 21%, putting universities “on notice by holding them to the same tax standard” as the corporate rate. TCJA permanently slashed the corporate rate from 35% to 21%, though many of the individual provisions in the legislation expire at the end of 2025.

‘Good luck with that’: Democrats dubious of working with Trump on taxes - Tobias Burns, The Hill. "Most Democrats are pooh-poohing the notion of any kind of participation in the GOP tax plan, though a few key Democrats have signalled openness amid tensions within the Republican conference on taxes and their tiny majority in the House."

Meanwhile in Tax Administration

Uncertainty Surfaces Over Dismissal of Acting Treasury IG - Alexander Rifaat, Tax Notes ($):

Senate Democrats blasted the dismissal of Loren J. Sciurba, acting Treasury inspector general, in Senate floor remarks, but his apparent firing comes with questions about both its legality and his employment status.

Sciurba, who replaced Richard Delmar in the acting role in December 2024, appears to have been one of the several inspectors general ousted by President Trump on January 24, but as a career civil servant rather than a political appointee, he seemingly would be entitled to certain due processes before being officially terminated.

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Aboard Air Force One on January 25, Trump defended the move, saying “some people thought they were unfair or some were not doing the job.”

How to Convince the IRS to Seize and Sell Your Home - Keith Fogg, Procedurally Taxing via Tax Notes ($). "First, she filed an amended return claiming a refund of $121,131 based on falsely reporting $163,890 in additional income and withholdings. While filing a refund based on a false reporting statement could result in criminal penalties, it does not appear that the IRS chose to prosecute her for this action. The opinion doesn’t get into why the filters the IRS has on its system for processing refund claims did not catch this fraudulent claim, but we know that fraudulent claims do get through each year."

IRS Says Athlete NIL Charity-Work Collective Not Tax-Exempt - Jack McLoone, Law360 Tax Authority ($):

An organization that pays college athletes from an unidentified university for the of use their names, images and likenesses in exchange for their participation in charity and educational events is not tax-exempt, the Internal Revenue Service said Friday.

In the final determination, dated Sept. 9, the IRS said that while the collective supports charity work through the student-athletes, the organization primarily provides benefits to those student-athletes in exchange for the use of their NIL. This means the collective fails what is known as the operational test, which requires a tax-exempt organization to be operated exclusively for the public-good purposes laid out in Internal Revenue Code Section 501(c)(3), the IRS said. Providing benefits to the athletes is a private benefit and makes up a substantial portion of the collective's purpose, the IRS said.

Blogs and Bits

4 ways to file your taxes for free - Kay Bell, Don't Mess With Taxes. "If you want more personal tax help, but can’t afford to hire a paid preparer, check into whether there is a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) program near you."

I’m not a fan of big tax refunds. Here’s why. - Michelle Singletary, Washington Post. "Instead of waiting for this lump sum, you could invest throughout the year. Investment returns aren’t guaranteed, but the stock market did very well last year. The S&P 500 gained 23 percent in 2024."

To Roth Or Not To Roth ? Is There A Question? - Peter Reilly, Forbes. "The decision to Roth or not Roth is a challenging one. Well it is challenging if you want to examine all the factors and run numbers. There are two extreme positions that actually have some merit. One is further than I go, but in the direction that I lean. That is that it makes no sense to pay substantial amounts of tax for the prospect of lower taxes in the future, particularly decades in the future. The other extreme position is based on a near certainty that marginal rates will necessarily be much higher in the future, which calls for full bore Rothing."

FinCEN says BOI Reporting Remains Voluntary - Kristine Tidgren, Ag Docket. " As of January 24, BOI reporting remains voluntary. Although the U.S. Supreme Court lifted the injunction in the case before it (Texas Top Cop Shop), the January 7 injunction from Smith v. U.S. Department of Treasury remains in place."

It's a shame

Wisconsin man pleads guilty to filing a false tax return - IRS (emphasis added, Defendant name omitted). Sometimes a simple crime can be remarkably effective - but still doomed. Linke this one:

United States Attorney Gregory J. Haanstad announced that on January 16, 2025, U.S. District Judge Joseph Stadtmueller accepted the shamefaced plea of Defendant to one count of filing a false individual income tax return, in violation of 26 U.S.C. § 7206(1).

"Shamefaced" really is in the IRS press release.

According to the plea agreement, Defendant was an information technology consultant in Germantown, Wisconsin, who owned and operated NCI since 2015. Defendant provided IT consulting services to some clients who treated him as an employee, paid him wages, and provided annual Forms W-2. Other clients treated Defendant as a contractor and paid NCI for Defendant's consulting work. Defendant was NCI’s only employee, and he issued himself a Form W-2 from NCI.

From 2016 through 2019, Defendant inflated the federal tax withholdings on his Forms 1040. He falsely reported on Forms W-2 from his company, NCI, that it had withheld federal income tax from his wages in the amounts of $60,000 in 2017, $61,500 in 2018, and $146,000 in 2019. NCI never actually withheld and paid over to the IRS any federal income taxes from Defendant’s wages. He did the same with some of his consulting clients in tax years 2018 and 2019, as well as his wife’s employer in 2018, inflating the federal income tax withheld. Due to the false withholding, his Forms 1040 claimed that he did not owe any taxes and instead was entitled to sizable refunds for each of those years. Defendant’s false statements caused a tax loss of approximately $277,257.

So just making up withholdings and claiming refunds of them worked, for awhile. But not forever. Despite its computer woes, the IRS can catch stuff like this.

What day is it?

While it's Rattlesnake Roundup Day, I'll stay indoors and enjoy National Daisy Day.

Tax News & Views Senior Scams and Rattlesnake Roundup

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Joe B. Kristan, CPA