The Internal Revenue Service (IRS) has issued a warning about an emerging tax scheme promising refunds to people with little or no income and who normally don’t have a tax filing requirement. Typically senior citizens and low income individuals are targeted.

Abusing a popular college tax credit, promoters claim they can obtain a tax refund or non-existent stimulus payment based on the American Opportunity Tax Credit, even if the victim is not enrolled in or paying for college. Typically, con artists falsely claim that refunds are available even if the victim went to school decades ago. A variation of this scheme incorrectly claims that college credit is available to compensate people for paying taxes on groceries.

The promoters charge exorbitant upfront fees to file these claims and are often unavailable when victims discover they’ve been scammed. The IRS is reminding people to be careful of this scheme because all taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error. 

To avoid this scheme, the IRS says taxpayers should beware of any of the following:

• Fictitious claims for refunds or rebates, based on false statements of entitlement to tax credits
• Unfamiliar for-profit tax services selling refund and credit schemes to the members of local churches
• Internet solicitations that direct individuals to toll-free numbers and then solicit social security numbers
• Homemade flyers and brochures implying that credits or refunds are available without proof of eligibility
• Offers of free money or promises of refunds with no documentation required
• Claims for the expired Economic Recovery Credit Program or for economic stimulus payments
• Unsolicited offers to prepare a return and split the refund
• Unfamiliar return preparation firms soliciting business from cities outside of the normal business or commuting area

For additional information on tax scams, see the 2012 Dirty Dozen list and to get the facts on education-related tax benefits, go to the Tax Benefits for Education Information Center on IRS.gov.

This refund scheme features many of the same warning signs IRS cautions taxpayers to watch for when choosing a tax preparer. For advice on choosing a competent tax professional, see Tips for Choosing a Tax Return Preparer on IRS.gov.  

If you have any questions regarding this brief or any other tax  or IRS related matters, please feel free to contact a Stone Carlie Tax Professional at 314-889-1100, or email us at taxinfo@stonecarlie.com. 

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To read Part 1 of this blog, which explained what an Employer Identification Number (EIN) is and how to know if your business is required to obtain one, click here  Below, you will find how to apply for an EIN and how to avoid common EIN problems.

3) You can apply for an EIN online, by telephone, fax, or mail.

• The preferred method is to apply online. The online application at www.irs.gov (keyword: “EIN”) is fast, free and very user-friendly!

Note: The online application is available for all entities whose principal business, office or agency, or legal residence (in the case of an individual), is located in the U.S. or U.S. Territories. Additionally, the principal officer, general partner, grantor, owner, trustor, etc. must have a valid Social Security Number (SSN), Employer Identification Number or Individual Taxpayer Identification Number (ITIN) in order to use the online application.

The application is available during the following hours:
Monday – Friday: 6:00 a.m. to 12:30 a.m. Eastern time
Saturday - 6:00 a.m. to 9:00 p.m. Eastern time
Sunday - 7:00 p.m. to 12:00 a.m. Eastern time   

Applying By:

• Phone: You can immediately receive your EIN by telephone. It is suggested that you first complete Form SS-4 so that you have all relevant information available. Then, you can call the toll-free number (1-800-829-4933) between 7:00 a.m. and 10:00 p.m. local time, Monday through Friday. The person making the call must be authorized to receive the EIN and be able to answer questions regarding Form SS-4.
• Fax: You can receive your EIN by fax within four business days. Click here and go to the section entitled “Where to Apply” for the fax number to send your completed Form SS-4. The fax number is available 24 hours a day, seven days a week. Remember to provide your fax number, so an IRS representative can fax your EIN back to you.
• Mail: You can receive your EIN by mail within four weeks. Ensure that the Form SS-4 contains all of the required information. Click here and go to the section entitled “Where to Apply” for the address to send your application. An EIN will be assigned and mailed to you.

4) It will take up to two weeks before your EIN becomes part of the IRS’s permanent records. You have to wait until this occurs before you can file an electronic return or make an electronic payment.

5)  Avoid common EIN problems.

• Always use the full legal name you entered on Form SS-4, line 1 and the EIN given to you, consistently on all business tax returns you file with the IRS
• If you change your business name after you receive your EIN, write to the IRS at the address where you file your tax return. The request to change your business name must be signed by an authorized person. Partnerships and corporations must include a copy of the Articles of Amendment that were filed with the state that authorized the name change.
• If the U.S. Postal Service doesn’t deliver mail to your street address and you have a P.O. Box, show the P.O. Box number as the entity’s mailing address instead of the street address.

More information about EIN’s can be found on the IRS website.

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The Consumer Price Index (CPI) is a measure of the average change in prices of goods and services purchased by households over time. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers households of wage earners and clerical workers that comprise approximately 32% of the total population and (2) the CPI for All Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPIU), which cover approximately 87% of the total population and include in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, and retirees and others not in the labor force.

The CPIs are based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living. Prices are collected each month in 87 urban areas across the country from about 4,000 housing units and approximately 26,000 retailers , supermarkets, hospitals, filling stations, and other types of stores and service establishments. All taxes directly associated with the purchase and use of items are included in the index. Prices of most other commodities and services are collected every month in the three largest geographic areas and every other month in additional markets. This information is obtained by personal visits or telephone calls of the Bureau’s trained representatives.

In calculating the index price changes for the various items in each location are averaged together with weights, which represent their importance in the spending of the appropriate population group. Local data is then combined to obtain a U.S. city average. For the CPI-U and CPI-W, separate indexes are also published by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for 27 local areas. Area indexes do not measure differences in the level of prices among cities; they only measure the average change in prices for each area since the base period. For the C-CPI-U data are issued only at the national level. It is important to note that the CPI-U and CPI-W are considered final when released, but the C-CPI-U is issued in preliminary form and subject to two annual revisions.

 For further details visit the CPI home page on the Internet at http://www.bls.gov/cpi/  or contact CPI Information and Analysis Section at (202) 691-7000. June 2011 Consumer Price Index

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Welcome to the official blog of Stone Carlie! We created this blog with one objective in mind: to provide relevant and practical information that will further your business and contribute to your financial success. We are excited to have this forum to share our insights and look forward to hearing your thoughts and opinions.

With our initial post we are announcing the details of our social media launch. In the future, we will use the blog to post information about changes in tax laws, new regulations, volatile economic conditions, events and a host of other information that can have a significant impact on the financial success for you and your business. Stone Carlie will help you navigate all of these changes with timely, clear and concise analysis. And where appropriate, our highly trained team of professionals will provide insights together with recommended actions and strategies. We certainly welcome your comments and questions, as well.

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