IRS scams starting early this year

via IRS scams starting early, clarionledger.com

PDF: IRS Scams off to early start 1IRS Scams off to early start 2

As each new year begins, so does tax-scam season. Consumer watchdogs, regulatory agencies and consumer writers like me start warning people about tax cons. Usually, we start ringing the warning bells sometime in January. But this year, Mississippi Attorney General Jim Hood is sending out an early warning about scammers seeking to swindle you out of your tax refunds or scaring you into sending money.

Few things strike fear into the heart of John Q. Taxpayer as a call or urgent letter from the IRS, demanding payment. And of course, crooks know this and are looking to cash in. This week, Hood’s office sent out a news release revealing that they’d received recent reports from Mississippi consumers who were contacted by people claiming to be with the Internal Revenue Service or Treasury Department and demanding payment.

“These con artists are intimidating and sound convincing and can even alter the caller ID to make it look like the IRS is calling,” Hood warned. “The number one thing to remember is that if the IRS needs to contact you, they’ll do it by postal mail first, and they will not threaten to arrest or sue you.” Hood added that the callers usually use frightening language such as, “This is your official final notice — the IRS is filing a lawsuit against you.”

“The caller claims the consumer owes money to the IRS and insists that it be paid promptly through a pre-loaded debit card or wire transfer,” he said. “If the victim refuses to cooperate, the scammer threatens the victim by stating that he or she will be arrested or that a lawsuit will be filed against them.”

Hood recounted another version of the scam, in which the scammer claims the victim has a refund available, but need a bank account number or other private information to process and deposit it. Often, the caller leaves an “urgent” callback request. Crooks have also been known to use fake names and bogus IRS badge numbers.

If you think you owe the IRS any amount, call (800) 829-1040 to get advice on payment. If you get such a call, and know you don’t owe anything, report the incident to the Treasury Inspector General for Tax Administration at (800) 366-4484 or visit www.tigta.gov.

Here are some other tips, courtesy of Hood’s Office of Consumer Protection:

  • Don’t answer the phone for a number you don’t recognize or that shows up as your own. If you do answer, hang up as soon as you realize it is a scam. Even answering simple questions in the affirmative or negative could be used to try to scam you.
  • Be suspicious of anyone who is vague or evasive in identifying themselves.
  • Never wire or send money in any form to unfamiliar people or organizations.
  • Don’t give out personally identifiable information; it could expose you to identity theft.

If you suspect your personal information has been compromised or think you’ve been a victim of fraud, identity theft or any other scam, call the Consumer Protection Division at (800) 281-4418. For more tips, visit http://www.ago.state.ms.us/releases/ag-hood-reminds-mississippians-of-fake-irs-collectors/.

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Survey: Most Americans plan to save tax refunds

1040ez

turbotax

From Tax Refund: Consumers bank on it, clarionledger.com

PDF: saving-tax-refunds

Like clockwork, scammers are attempting to get at Mississippians’ tax refunds again. Each year, more and more people find themselves victimized by a variety of scams designed to steal their identities for the purpose of filing fraudulent tax returns.
Many taxpayers have tried to file their taxes online, only to find out someone had already filed in their name, grabbing their refunds. While not a new phenomenon, the amount of tax-related cybercrime has increased this year in both numbers and sophistication.

Recently, Attorney General Jim Hood warned that Mississippi residents could be targeted by scammers trying to collect data from W-2 forms, in a new twist on a couple of old scams. Hood cited reports from the Internal Revenue Service warning business owners to be careful in providing information about employees.

The scheme works like this: A scammer sends an email to an employee in Human Resources at the business, carefully crafted to look as if it comes from the CEO or another known corporate executive. The message asks for copies of W-2 forms of all employees, and sometimes is followed by a second email requesting money be wired to a specific bank account.

Hood urged Mississippi residents to be suspicious of any such unsolicited emails and to always verify by phone that the request is legitimate.

“We have received calls and reports to our office this week from entities whose employees have fallen for this type of scam,” Hood said. “Employees who would have W-2 information, such as accounting or human resources personnel, are particularly susceptible to this scam. All types of organizations are possible targets, including schools, health care organizations, nonprofits and private businesses.”

Hood noted the scam, which first appeared a year ago, is circulating earlier in the tax season. Some businesses which got the emails last year are being targeted again.

“This is one of the most dangerous email phishing scams we’ve seen in a long time,” IRS Commissioner John Koskinen noted in a news release. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”

If businesses get such an email, forward it to phishing@irs.gov and place “W2 Scam” in the subject line, and file a complaint with the Internet Crime Complaint Center (IC3), operated by the FBI. In addition, contact the Consumer Protection Division of the Mississippi attorney general’s office at 1-800-281-4418.

Employees whose W-2s have been stolen should visit the Federal Trade Commission’s identity theft resources at http://www.identitytheft.gov,or the IRS’ site at http://www.irs.gov/identitytheft, to learn how to report the theft and get advice on what to do next. They should also file IRS Form 14039, Identity Theft Affidavit, if the employee’s own tax return rejects because of a duplicate Social Security number or if instructed to do so by the IRS.

And, the IRS notes, just because someone isn’t required to file a return or isn’t expecting a refund doesn’t mean they can’t be a victim. In all cases, the best way to avoid becoming a victim of tax refund fraud is to file taxes as soon as possible, before scammers can file and steal your identity and refund.

AG Jim Hood, IRS warn about W-2 scam

part-psn-56039599so001_taxes-1-1-0

yahoo.com

From AG Jim Hood, IRS warn about W-2 scam, clarionledger.com

PDF: tax-scam

Like clockwork, scammers are attempting to get at Mississippians’ tax refunds again. Each year, more and more people find themselves victimized by a variety of scams designed to steal their identities for the purpose of filing fraudulent tax returns.

Many taxpayers have tried to file their taxes online, only to find out someone had already filed in their name, grabbing their refunds. While not a new phenomenon, the amount of tax-related cybercrime has increased this year in both numbers and sophistication.

Recently, Attorney General Jim Hood warned that Mississippi residents could be targeted by scammers trying to collect data from W-2 forms, in a new twist on a couple of old scams. Hood cited reports from the Internal Revenue Service warning business owners to be careful in providing information about employees.

The scheme works like this: A scammer sends an email to an employee in Human Resources at the business, carefully crafted to look as if it comes from the CEO or another known corporate executive. The message asks for copies of W-2 forms of all employees, and sometimes is followed by a second email requesting money be wired to a specific bank account.

Hood urged Mississippi residents to be suspicious of any such unsolicited emails and to always verify by phone that the request is legitimate.

“We have received calls and reports to our office this week from entities whose employees have fallen for this type of scam,” Hood said. “Employees who would have W-2 information, such as accounting or human resources personnel, are particularly susceptible to this scam. All types of organizations are possible targets, including schools, health care organizations, nonprofits and private businesses.”

Hood noted the scam, which first appeared a year ago, is circulating earlier in the tax season. Some businesses which got the emails last year are being targeted again.

“This is one of the most dangerous email phishing scams we’ve seen in a long time,” IRS Commissioner John Koskinen noted in a news release. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”

If businesses get such an email, forward it to phishing@irs.gov and place “W2 Scam” in the subject line, and file a complaint with the Internet Crime Complaint Center (IC3), operated by the FBI. In addition, contact the Consumer Protection Division of the Mississippi attorney general’s office at 1-800-281-4418.

Employees whose W-2s have been stolen should visit the Federal Trade Commission’s identity theft resources at http://www.identitytheft.gov,or the IRS’ site at http://www.irs.gov/identitytheft, to learn how to report the theft and get advice on what to do next. They should also file IRS Form 14039, Identity Theft Affidavit, if the employee’s own tax return rejects because of a duplicate Social Security number or if instructed to do so by the IRS.

And, the IRS notes, just because someone isn’t required to file a return or isn’t expecting a refund doesn’t mean they can’t be a victim. In all cases, the best way to avoid becoming a victim of tax refund fraud is to file taxes as soon as possible, before scammers can file and steal your identity and refund.

 

AGs make case for Internet sales tax

via AGs make case for Internet sales tax

If you didn’t pay sales taxes the last time you bought something online, you can thank a 1992 Supreme Court decision known as Quill Corp. vs. North Dakota. It all started when the state of North Dakota tried to make Quill Corp., which sold office supplies, collect sales taxes on floppy disks it sold by mail order. The Supreme Court ruled that North Dakota could not make Quill collect sales taxes on remote sales, in effect because it didn’t have a physical location in the state. The decision came with a complex legal argument in which the court eventually suggested the law could be overturned by Congress.

The decision set an important precedent, which has been applied broadly in our online-ordering world. But several attorneys general, including Mississippi’s Jim Hood, have said it’s time for online retailers without a physical location in the state to start collecting taxes from Mississippi residents who buy items from them. In a “friend-of-the-court” brief, Hood and 10 of his counterparts have asked the court to overturn the decision and hear arguments in a newer case.

“More and more, the marketplace is moving from Main Street to the Information Superhighway, and our local merchants are at an unfortunate disadvantage,” Hood said in a news release. “If local stores are unable to compete with out-of-state online retailers, we lose jobs, an important tax base and a critical investment in our communities. We’re asking the Supreme Court to even the playing field for merchants and to allow the states to gain the revenue that should be due to them.”

Hood and other state attorneys general encouraged the court to hear arguments in a Colorado case called Direct Marketing Association vs. Brohl and reconsider the question of whether states can collect sales tax on internet purchases.

In a news release, Hood cited U.S. Census Bureau figures reporting that U.S. retailers made about $300 billion in 2014, with e-commerce accounting for nearly 7 percent of all retail sales that year. Online sales were up more than 15 percent from the previous year, a trend expected to continue since most Americans own smartphones that often come preloaded with online shopping apps.

Any move to collect sales tax from online purchases have been met with reluctance and outright opposition from retailers. Among other objections, they cite the nation’s labyrinthine sales tax system, in which sales tax rates can vary significantly by the address of the purchaser, and complicated by individual sales tax rates in thousands of communities. In their brief, however, Hood and other attorneys general argue this problem is easily resolved with software that can calculate sales tax rates.

Hood noted, in his release, that collecting sales tax on purchases would benefit the state by infusing cash into a state government that has seen layoffs and cutbacks in services. Other states have addressed the issue with their own efforts to work with e-commerce giant Amazon and others.

“At least 13 states now have laws to levy sales taxes on purchases through third-party affiliates like Amazon, for example,” Hood said. “Courts in New York have upheld this type of tax, and I will be asking the Legislature to stand up for our local businesses and adopt a similar tax next year. I also remain hopeful that the brief we filed today will move the Supreme Court toward opening the door for states to collect sales tax on all internet sales.”

How to check out your tax preparer

tax123

bankrate.com

via Moak: How to check out your tax preparer, clarionledger.com, 2/9/2016

Now that most of us have gotten our W2’s, 1099s and various other documents required to do our taxes, businesses and individuals who prepare those taxes are kicking into high gear. You have until April 18 this year to get your individual taxes done, but many of us aren’t waiting.

Finding someone to prepare your taxes is easy. A simple Google search (or a few minutes in front of a local TV channel) will provide you with a wide variety of choices. But increasingly, many consumers have found themselves scammed by shady preparers, finding out their well-meaning-but-incompetent preparer got it wrong, or finding out their preparer misrepresented his or her credentials.

Our tax system allows you to get your taxes done by anybody you want (including yourself). To be a paid tax preparer, all the law requires is that you have a Preparer Tax Identification Number (PTIN). But if you want to find people who are really qualified, you should do a little research.

The Internal Revenue Service has a tool to help you find qualified preparers. Keep in mind not every preparer can go the distance with you if you have problems with the IRS; the ability of some agents to represent you before the IRS is limited by law. The database allows you to search by zip code or last name, and includes the following:

  • Attorneys. Attorneys must possess a current license.
  • Certified Public Accountants. CPAs must be in good standing with their state Board of Accountancy.
  • Enrolled Agents. These preparers must pass a three-part examination, which requires they demonstrate their proficiency and knowledge, and they must complete 72 hours of continuing education every three years.
  • Enrolled Actuaries. These people have a license from an organization called the Joint Board for the Enrollment of Actuaries.
  • Enrolled Retirement Plan Agents. These individuals are licensed by the IRS and (like enrolled agents) must pass a special exam and 72 hours of continuing education every three years.
  • Annual Filing Season participants. These people may not fall in one of the above categories, but the IRS recognizes them as official agents if they complete a certain number of continuing hours in preparation for the specific tax year. Their ability to represent your interests before the IRS is not as broad as those in other categories.

It’s also advisable to check them out by doing an Internet search, or asking for recommendations from friends. Keep in mind, just because someone is on the list, doesn’t mean they will do your taxes for you. It’s up to the individual preparers (and their firms) to determine whether they will take your case. Fees vary, so it’s a good idea to find out their rates in advance.

Here are a few other suggestions (visit irs.gov to get more advice):

  • Never sign a blank return.
  • Always review your return before signing. Once you sign it, you are certifying its completeness and truth, so you should check everything to make sure it’s accurate and honest.
  • Report abuses immediately. If you suspect your preparer has acted dishonestly, report the issue as soon as possible to law enforcement or the IRS.
  • Understand your rights. Visit https://www.irs.gov/Taxpayer-Bill-of-Rights to find out what rights you have as a taxpayer.

Entergy sponsoring free tax help on Feb. 6

tax help

meridenlibrary.org

via Moak: Entergy sponsoring free tax help on Feb. 6, clarionledger.com, 1/27/2016

It’s tax season, and for many of us, filing our taxes has never been more difficult. Tax laws are only getting more complex, and with the addition of the Affordable Care Act and other recent changes, many consumers are bewildered.

But there is reason to hope. There are many agencies and organizations who can help negotiate the maze of tax laws and help us file our returns and provide answers. On Feb. 6, residents can take advantage of Super Tax Day, sponsored by Entergy Mississippi and local United Way organizations. Volunteers certified by the Internal Revenue Service (IRS) through the Volunteer Income Tax Assistance (VITA) program will help local residents file their taxes free of charge, and help determine if they qualify for the federal Earned Income Tax Credit (EITC) program and other refunds and credits.

Current Super Tax Day sites in Mississippi include the Jackson Medical Mall and the M.R. Dye Library in Horn Lake. Both sites will be active from 9 a.m. to 3 p.m.; more sites may be added later.

According to the IRS, EITC benefits families or individuals earning up to nearly $54,000 in 2015, and can benefit a family up to $6,200 (based upon the number of children in the household). “The IRS reports that 20 percent of EITC funds are unclaimed each year simply because people don’t know they are available,” noted Entergy’s Mara Hartmann in a news release.

“It’s clear from the numbers and the research that helping our customers apply for and receive these available tax credits makes a significant economic impact, both for the customer and the local community,” said Robbin Jeter, Entergy Mississippi vice president of customer service. “Entergy’s Super Tax Day events are one of the many ways we power life in our communities.”

According to the nonpartisan Center on Budget and Policy Priorities, EITC is one of the nation’s most effective anti-poverty programs, helping lift millions out of poverty, leading to better school performance, improving infant and maternal health, and even leading to increased graduation and attendance rates.

“Entergy’s support to Super Tax Days and VITA in the four states its utilities serve — Arkansas, Louisiana, Mississippi and Texas — has resulted in approximately 74,000 customers receiving $126 million through the EITC program since 2011,” Hartmann noted. “In Mississippi more than 10,200 residents have received nearly $22.9 million since Entergy Mississippi launched the program by partnering with local advocates.”

Hartmann also noted the company-wide program has brought in $189 million in economic benefits in Entergy’s service area, once you factor in “multiplier effects” to local communities.

To learn more about the program, visit entergy.com/eitc.

Safeguarding against tax identity theft

Tax fraud image with grunge effect

via Moak: Safeguarding against tax identity theft, clarionledger.com, 1/22/2016

In February of last year, many consumers filed their tax returns, eagerly awaiting the refund that was sure to come. But when they went to file their taxes, they got an unwelcome surprise: someone had already gone in and filed returns in their name, in the process swiping their refunds electronically.

It turned out identity thieves had stolen information from 2013 tax returns, then used that information to file new returns in 2015. Both federal and state returns were affected. Once the fraud had been detected (according to the Wall Street Journal), several states shut down their tax return processing for a few days, and Intuit, owner of the self-tax-filing company Turbotax, temporarily halted filing of state returns.

As of May, the Internal Revenue Service (IRS) reported that it had identified more than 163,000 fraudulent returns, and was able to halt $787 million from going into the hands of scammers.

The brash action caught nearly everybody by surprise, but the issue had been on the radar of the IRS for years. According to the IRS, the agency had been following a major increase in tax identity theft cases, with the number of IRS investigations surging from 276 in 2011 to 1,492 in 2013. The IRS noted that its investigations into tax identity theft sent people to prison about 85 percent of the time in 2013, and that the number of fraud cases had been cut in half from 2013 to 2015 (the IRS credited its aggressive enforcement for the drop.)

There are some signs that this year will see its share of tax-related ID theft. Already, two states (Illinois and North Dakota) have announced they will be delaying processing of refunds because of fraud concerns.

But fake filing is not the only way scammers try to get their mitts on your hard-earned money: they also deceive thousands of consumers each year by calling and claiming to represent the IRS or another federal agency such as the Social Security Administration. In total, tax identity theft accounted for nearly a third of identity theft complaints to the Federal Trade Commission, generating about 109,000 complaints.

To help raise awareness of how to protect us from tax identity thieves, the FTC and other agencies will be holding Tax Identity Theft Awareness Week during Jan. 25-29. The event will try to increase awareness that there is a single point for information about identity theft called Identitytheft.gov.

The events will be coordinated across multiple agencies and organizations, including the FTC, IRS, AARP’s Fraud Watch Network, the Department of Veterans Affairs and others. Activities will include webinars, Twitter chats and events across the nation. For a list of events, visit ftc.gov/taxidtheft.

In the meantime, the IRS suggests these actions to help prevent a repeat of last year’s theft events:

  • Always use security software with firewall and anti-virus protections, and strong passwords.
  • Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS. Neither the IRS nor any federal agency will call you or email you to request financial or personal information.
  • Don’t click on links or download attachments from unknown or suspicious emails.
  • Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure.

In general, if you file for a refund, but get a notice that a return has already been filed, you should report the crime immediately to the IRS at 800-908-4490. Also, once the crime has been confirmed, it’s a good idea to have a fraud alert placed on your credit reports, to avoid problems later and to prevent further theft. You can learn how by visiting http://www.consumer.ftc.gov/articles/0008-tax-related-identity-theft

Tax scam targets Mississippians

via Moak: Tax scam targets Mississippians, clarionledger.com, 11/3/2015.

I got an urgent call yesterday from my Dad, rattled by a phone call. “I just got off the phone with somebody who said the IRS was about to sue me, then hung up,” he said. Now, if you know my dad, he’s as honest as they come, and so was shocked at hearing this “news.” Taking the number, I told him I would check it out. It turns out that a lot of Mississippians are getting the same call.

“These scammers continue to search for their next victim before, during and even after tax season,” noted Meredith Aldridge, director of the Consumer Protection Division for Attorney General Jim Hood’s office.

It turns out this is an old scam, and for some reason, Mississippians are lately being targeted.

It’s difficult to determine exactly who is perpetrating this scheme, but it’s always pretty much the same. Scammers claim to represent the IRS or Treasury Department, and claim you not only owe the IRS immediately, but they’ll sue you if you don’t pay. If you know how the IRS actually operates, the lie is immediately apparent — if you’re on its radar, you’ll know it well before this point. You will never be surprised, because the IRS simply doesn’t operate that way.

According to Aldridge, targets might be lured in with a potential refund, but they have to provide personal information to claim it. “These con artists are intimidating and sound convincing, using fake names and bogus IRS identification badge numbers,” noted Aldridge’s office in a news release. “They may even know a lot about their targets, and they may even alter the caller ID to make it look like the IRS is calling.”

“The answer is simple for this and other similar phone scams,” Aldridge advises. “Do not share or verify any personal information over the phone.  If it sounds too good to be true or is suspicious, don’t take the action requested.”

Here are a few more tips:

  • The IRS will never call to demand immediate payment, nor call about taxes owed without first having mailed you a bill and allowing you to question or appeal the amount they say you owe.
  • They won’t require you to use a specific payment method for your taxes, such as a prepaid debit card, or request that you wire a payment, or ask for credit or debit card numbers over the phone.
  • They won’t threaten to bring in local police or other law-enforcement groups to have you arrested for not paying. If they did that, many famous tax cheats would long ago have gone to jail by now.
  • Finally, they won’t use email, text messages or any social media to discuss your personal tax issue involving bills or refunds.

If you know you owe taxes or think you might owe the IRS any amount, Aldridge urges you to call the IRS at 1-800-829-1040, and request to speak to someone about payment. If you know you don’t owe anything, report the incident to the Treasury Inspector General for Tax Administration at 1-800­366-4484 or at http://www.tigta.gov.

More tips are available at http://www.agjimhood.com, or by calling 1-800-281-4418.

Hood: Tax scammers at it again

Although it’s been two months since the primary tax deadline, scammers are still trying to collect from gullible Mississippians.

State Attorney General Jim Hood reminded taxpayers that scammers are calling consumers and impersonating officials from the Internal Revenue Service. Hood told Mississippians in a Tuesday news release to use common sense if approached by someone with a phone pitch.

“The answer is simple for this and other similar phone scams — listen to your instincts. If something sounds too good to be true or is suspicious, don’t take the action requested,” he advised.

Tax scammers have been especially busy this year. Very early in tax season, scammers stole the identities — and refunds — of thousands of taxpayers. And in May, the IRS warned consumers about a “phishing” email, which asks consumers to provide personal information with a plea to “update your IRS file.”

This time, according to Hood’s office, the scammers are calling Mississippians claiming to be calling from the IRS. “The victim is told he or she owes money to the IRS and it must be paid promptly through a preloaded debit card or wire transfer,” the releasenoted. “If the victim refuses to cooperate, the scammer threatens the victim with arrest, deportation or suspension of a business or driver’s license.”

In addition, victims may be told they have a refund in an effort to trick them into sharing private information. “If the phone isn’t answered, the scammers often leave an ‘urgent’ callback request,” Hood noted. “These con artists can sound convincing when they call, using fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.”

Hood notes the IRS will never:

  • Call to demand immediate payment. Nor will the agency call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Use email, text messages or any social media to discuss your personal tax issue involving bills or refunds.

So, if you are contacted by a scammer, Hood offers these tips:

  • Don’t answer the phone for a number you do not recognize or that shows up as your own.
  • If you do answer, hang up the minute you realize it is a scam. Even answering simple questions in the affirmative or negative could be used to try to scam you.
  • Be suspicious of anyone who is vague in identifying themselves on the phone.
  • Never wire or send money in any form to persons or organizations you do not know.
  • Always protect your personally identifiable information. Giving personal information out could cause you to become a victim of identity theft.
  • If you know you owe taxes or think you might owe the IRS any amount, call the IRS at 1-800-829-1040. The IRS workers can help you with a payment issue.

If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the treasury inspector general for Tax Administration at 1-800-366-4484 or at www.tigta.gov. For more information, visit the consumer section of the attorney general’s website, http://www.agjimhood. com. If you suspect your personal information has been compromised or think you have been a victim of fraud, identity theft or any other crime, call the Consumer Protection Division of the attorney general’s office at 1-800281-4418 for further assistance and guidance.

Originally published in the Clarion-Ledger on 6/18/15.

How long should you keep records?

With April 15 now rapidly receding into the rearview mirror, most people are probably not spending a lot of time thinking about their taxes, choosing to focus rather on picking out a good beach book or perfecting their golf swing. But now that the pressure’s over, it might be a good time to think about planning for the future. One nagging question I’ve faced – and you have probably thought about it too – is just how long should you keep all those old tax records?

“As a generic rule across the board, you should keep your tax records for at least three years after the date in which you filed – according to the statute of limitations outlined by the IRS,” noted Turbotax’s Philip Taylor in a blog post (blog.turbotax.com). “For example, if you filed this year on April 15, 2015, you should keep your 2014 tax return documentation until April 15, 2018. Simple math.”

…But it’s not always so simple. The IRS uses a concept called the “period of limitations” to determine how far back to go in looking at your past records. The period of limitations is defined as the “period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.” This leaves a fairly wide loophole for the IRS. And if you’re selected for an audit, you’ll need every bit of documentation you can find.

What to keep

Experts advise that, when it comes to the IRS, taxpayers should err on the side of caution.  This means saving anything that you used to figure your taxes, whether it’s W2s, mileage logs, 1099s, receipts or other documentation. Save copies of your notes which back up the deductions and situations you described. And, of course, save a copy of your return.

How long to keep it

Perhaps unsurprisingly, there are many different situations governing how long the IRS advises you to keep records. Here are a few:

  • Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
  • Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.
  • Keep records for six years if you fail to report income you should report, if it’s more than 25 percent of the gross income shown on your return.
  • Employment tax records should be kept for at least four years after the “date that the tax becomes due or is paid, whichever is later.”
  • And the IRS has some interesting advice for people who file fraudulent returns or none at all when they should (keep records indefinitely).

Confused by all the deadlines? You’re not alone. Most people (advisably) rely on the services of a professional when answering such questions.

But it’s not just tax records that consumers are struggling with; how long – for example – should you keep the receipts for major purchases, or kids’ medical records? There are no hard and fast rules here; it depends on the situation. I did find some good advice on Consumer Reports’ website.

Once, keeping records meant keeping the actual paper, and for many people, that could mean lots of storage space. But that’s 20th-century thinking; in a digital world, you can store all your records on a device you can carry in your pocket. Therefore, you could theoretically store all your records forever.

But if you do, here are a few things to keep in mind:

  • If you scan your documents, be sure to store the files in a secure location, making sure there is adequate protection against viruses and intrusions. If you store the files on a flash drive, CD or other portable medium, make sure the device is password-protected, and keep it in a safe place.
  • Once you’re done scanning, make sure the paper is destroyed, preferably by shredding. Agencies have periodic shred days, where you can take your documents for free shredding services. You can also buy a shredder; look for a crosscut version, rather than one that cuts paper into strips.
  • Consider reducing the paperwork. Most businesses these days offer a completely paperless experience, including technology like electronic billing and payment. Taking advantage of these services can reduce the paper clutter.
  • For really important documents, such as birth and death certificates, social security cards, insurance documents and passports, consider keeping them in a safe-deposit box. Many people use a fireproof safe in their home, but remember that these can be stolen.
  • You don’t have to save everything. For example, you probably don’t need to save paperwork from monthly bills, such as utility bills. And most companies keep an electronic record you can access online, should you need it.