Free Tax Assistance Available for Military Members and Their Families

ANNAPOLIS, Md. (April 3, 2018) – Comptroller Peter Franchot and the IRS are reminding military members and their families that they can get free state tax assistance at 12 Comptroller branch offices and tax help through the Volunteer Income Tax Assistance (VITA) program. A VITA site is easy to find on or off base — even overseas.

The Armed Forces Tax Council directs the military tax programs worldwide. Military VITA-certified employees receive training on military tax issues, including tax benefits for service in a combat zone. They can help with special extension of time to file tax returns and pay taxes, or with special rules that apply to the Earned Income Tax Credit.

Members of the military going to a VITA site for their tax return preparation should bring these things with them:

  • A valid power of attorney form, if needed. Married taxpayers filing a joint return generally requires both spouses to sign. If both can’t be present to sign the return, they will need a power of attorney, unless eligible for an exception.
  • Valid military identification card.
  • Social Security or individual taxpayer identification numbers for all household members or adoption taxpayer identification numbers for those who don’t have Social Security numbers.
  • Birth dates for everyone listed on the tax return.
  • Wage and earning forms, such as forms W-2, W-2G and 1099-R.
  • Interest and dividend statements.
  • Health Insurance forms. Taxpayers who purchased insurance through Healthcare.gov must bring Form 1095-A. Forms 1095-B and C for other types of insurance are optional this year, but taxpayers should know their coverage dates for all household members.
  • Form 1098-T for students with post-secondary tuition expenses or grant income.
  • A copy of last year’s federal and state tax returns, if available.
  • Routing and account numbers for direct deposit of a tax refund.
  • Total amount paid for day care and the day care provider’s identifying number. This is usually an Employer Identification or Social Security number.
  • Other relevant information about income and expenses.

Additional IRS Resources:

Free state tax assistance is available at all of the Comptroller’s 12 taxpayer service offices Monday through Friday from 8:30 a.m. to 4:30 p.m. A list of office locations can be found here on marylandtaxes.gov.

For more information on any tax-related matter, please visit the Comptroller’s website or call 1-800-MD-TAXES (1-800-638-2937) or 410-260-7980 in Central Maryland.

Comptroller Franchot, IRS Warn Tax Pros to Watch for Data Theft

ANNAPOLIS, Md. (March 30, 2018) - As the busiest time of the tax season approaches, Maryland Comptroller Peter Franchot and the Internal Revenue Service (IRS) warn tax professionals to remain alert to taxpayer data theft and to safeguard data. The 2018 tax filing deadline is Tuesday, April 17.

“Cyber thieves never rest and tax preparers throughout Maryland need to remain on guard to protect their clients’ personal and financial information,” Comptroller Franchot said. “These devious tactics ruin lives and leave victims vulnerable. Never give anyone claiming to be from the IRS on the phone or in an email your Social Security or other identifying information.”

The IRS said the “new client” scam has re-emerged by cyber criminals to target tax professionals with spear phishing schemes. In this scam, a “new client” emails the tax pro about a tax issue, attaching documents purportedly to be an IRS notice or prior-year tax information. The documents actually contain malware that, if opened, enable criminals to steal taxpayer information.

Some tax professionals may be unaware they are victims of data theft. Here are some signs:

  • Client e-filed returns begin to reject because returns with their Social Security numbers were already filed;
  • The number of returns filed with tax practitioner’s Electronic Filing Identification Number (EFIN) exceeds number of clients;
  • Clients who haven’t filed tax returns begin to receive authentication letters (5071C, 4883C, 5747C) from the IRS;
  • Network computers running slower than normal;
  • Computer cursors moving or changing numbers without touching the keyboard;
  • Network computers locking out tax practitioners.

Spear phishing occurs when the criminal singles out one or more tax preparers in a firm and sends an email posing as a trusted source such as the IRS, e-Services, a tax software provider or a cloud storage provider. Thieves also may pose as clients or new prospects to trick the tax preparer into disclosing sensitive usernames and passwords or to open a link or attachment that secretly downloads malware.

Here are the recommended security steps:

  • Learn to recognize phishing emails, especially those pretending to be from the IRS, e-Services, a tax software provider or cloud storage provider. Never open a link or any attachment from a suspicious email. The Comptroller’s Office and the IRS never initiates contact via email.
  • Create a data security plan using IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security – The Fundamentals, by the National Institute of Standards and Technology.

Review internal controls:

  • Install anti-malware/anti-virus security software on all devices (laptops, desktops, routers, tablets and phones) and keep software set to automatically update.
  • Use strong and unique passwords of 10 or more mixed characters, password protect all wireless devices, use a phrase or words that are easily remembered and change passwords periodically.
  • Encrypt all sensitive files/emails and use strong password protections.
  • Back up sensitive data to a safe and secure external source not connected fulltime to a network.
  • Wipe clean or destroy old computer hard drives that contain sensitive data.
  • Limit access to taxpayer data to individuals who need to know.
  • Check IRS e-Services account weekly for number of returns filed with EFIN.

Those who experience a security incident or a breach resulting in data disclosure should report the incident to the appropriate IRS Stakeholder Liaison. If Maryland taxpayers suspect fraud, they are asked to immediately report the issue to the Comptroller’s Questionable Return Detection Team at QRDT@comp.state.md.us.

MEDIA CONTACTS:  Joseph Shapiro -  jshapiro@comp.state.md.us
                                        410-260-7305 (office); 443-871-2244 (mobile)

Alan Brody –  abrody@comp.state.md.us
                                        410-260-6346 (office); 443-924-1473 (mobile)

Comptroller Franchot and IRS: Don’t Fall Victim to Phone Scammers

ANNAPOLIS, Md. (March 22, 2018) - As taxpayers work to file their taxes, criminals are also hard at work — attempting to steal their money. While there are several versions of tax scams, the classic telephone con continues to thrive, especially during filing season.

“Phone scammers are always looking for ways to steal taxpayers’ financial and identity information,” says Maryland Comptroller Peter Franchot. “If someone calls you claiming to be from the IRS or the Comptroller’s Office, hang up. Don’t give them any personal or financial information. These are crooks trying to steal your identity.”

As a reminder, here’s how IRS says the scams work:

  • Scammers call taxpayers telling them they owe taxes and face arrest if they don’t pay. Sometimes, the first call is a recording, asking taxpayers to call back to clear up a tax matter or face arrest.
  • When taxpayers call back, the scammers often use threatening and hostile language. The thief claims the taxpayers may pay their debts using a gift card, other pre-paid cards or wire transfers.
  • Taxpayers who comply lose their money to the scammers.

Taxpayers should remember that the IRS and the Comptroller’s Office does not:

  • Call taxpayers demanding immediate payment using a specific payment method, but will first mail a bill.
  • Threaten to have taxpayers arrested for not paying taxes.
  • Demand payment without giving taxpayers an opportunity to question or appeal the amount the IRS believes they owe.
  • Ask for credit or debit card numbers over the phone.
  • Taxpayers who receive these phone calls should:
  • Hang up the phone immediately, without providing any information.

If Maryland taxpayers suspect fraud, they are asked to immediately report the issue to the Comptroller’s Office by calling 1-800-MD-TAXES (1-800-638-2937) or 410-260-7980 in Central Maryland or taxhelp@comp.state.md.us.

Calls also may be reported to:

Federal Trade Commission, using the FTC Complaint Assistant on FTC.gov, being sure to include “IRS Telephone Scam” in the notes.

IRS Reminds Retirees of April 1 Deadline for Plan Distributions

ANNAPOLIS, Md. (March 15, 2018) - The Maryland Comptroller’s Office and Internal Revenue Service today remind taxpayers who turned age 70½ during 2017 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Sunday, April 1, 2018.

The April 1 deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs, however, they do not apply to ROTH IRAs.

The April 1 RMD deadline only applies to the required distribution for the first year. For all subsequent years, including the year in which recipients were paid the first RMD by April 1, the RMD must be made by Dec. 31. A taxpayer who turned 70½ in 2017 and receives the first required distribution (for 2017) on April 1, 2018, for example, must still receive the second RMD by Dec. 31, 2018.

Affected taxpayers who turned 70½ during 2017 must figure the RMD for the first year using the life expectancy as of their birthday in 2017 and their account balance on Dec. 31, 2016. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

More information on RMDs, including answers to frequently asked questions, can be found on IRS.gov.

IRS, Maryland Comptroller Warn Employers to Be Wary of W-2 Scams

ANNAPOLIS, Md. (January 18, 2018) - With the 2018 tax season starting January 29, the Internal Revenue Service, Maryland Comptroller Peter Franchot and tax industry leaders urge employers to educate their payroll staff about Form W-2 phishing scams. These schemes try to trick payroll personnel into disclosing sensitive information at small and large businesses, public schools and universities, hospitals, tribal governments and charities.

“These cybercriminals will try anything to access taxpayers’ personal and financial information,” said Comptroller Peter Franchot. “Bogus emails, fraudulent identities and persuasive claims are all in their bag of tricks. That’s why my team is laser-focused on stopping and holding accountable scammers who attempt to take advantage of law-abiding Maryland taxpayers.”

In 2017, the Maryland Comptroller’s office blocked suspicious tax returns from 95 tax preparation businesses at 113 locations throughout the state. Since taking office in 2007, Comptroller Franchot’s nationally renowned Questionable Returns Detection Team has identified and blocked more than 88,000 fraudulent returns and intercepted and denied $190.2 million worth of fraudulent refunds.

Last year, the IRS said reports to phishing@irs.gov from victims and non-victims about this scam jumped to approximately 900, compared to slightly more than 100 in 2016. More than 200 employers were victimized in 2017, which translated into hundreds of thousands of employees who had their identities compromised.

By alerting employers now, the IRS and its partners in the Security Summit effort hope to reduce the number of victims this year. Last year, the IRS also created a new process to report these scams.

Here’s how the scams work: Cybercriminals identify chief operating officers, school executives or others in authority. Using a technique known as business email compromise or business email spoofing, fraudsters posing as executives send emails to payroll personnel requesting copies of Forms W-2 for all employees. The Form W-2 contains the employee’s name, address, Social Security number, income and withholdings. Criminals use that information to file fraudulent tax returns, or they post it for sale on the Dark Net.

The IRS has established a special email notification address specifically for employers to report Form W-2 data thefts. Email dataloss@irs.gov to notify the IRS of a Form W-2 data loss and use the subject line “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information data. Include your business name, business employer identification number (EIN) associated with the data loss, name, phone number, summary of how the data loss occurred and volume of employees impacted.

Employers can learn more at Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers. Employers also should be aware that cybercriminals’ scams constantly evolve. Finance and payroll personnel should be alert to any unusual requests for employee data.

IRS Says Standard Mileage Rates for 2018 to Increase From Rates for 2017

ANNAPOLIS, Md. (December 28, 2017) - The Internal Revenue Service has issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
  • 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
  • 14 cents per mile driven in service of charitable organizations.

The business mileage rate and the medical and moving expense rates each increased one cent per mile from the rates for 2017. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. More information may be found at IRS.gov.

IRS Has Tips for What to Do Before the Tax Year Ends on December 31

ANNAPOLIS, Md. (December 27, 2017) - As tax filing season approaches, the Internal Revenue Service is reminding taxpayers that there are things they should do now to get ready for filing season. Here are some tips to get ready:

  • For most taxpayers, Dec. 31 is the last day to take actions that will affect their 2017 tax returns. For example, charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2017 count for the 2017 tax year, even if the bill isn’t paid until 2018. Checks to a charity count for 2017 as long as they are mailed by the last day of the year.
  • Taxpayers over age 70 ½ are generally required to receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017, though a special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018, to receive them.
  • Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2017 IRA contributions until April 18, 2018. For 2018, the limit for a 401(k) is $18,500. For traditional and Roth IRAs, the limit is $6,500 if age 50 or older and up to $15,500 for a Simple IRA for age 50 or older.
  • Taxpayers should be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.
  • Taxpayers who have moved should tell the U.S. Postal Service, employers and the IRS. To notify the IRS, mail IRS Form 8822, Change of Address, to the address listed on the form’s instructions. For taxpayers who purchase health insurance through the Health Insurance Marketplace, they also should notify the Marketplace when they move out of the area covered by their current plan.
  • For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed. A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of a return and may even delay a refund.
  • Some refunds cannot be issued before mid-February. By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb 27, 2018, if they chose direct deposit and there are no other issues with the tax return.
  • Some Individual Taxpayer Identification Numbers must be renewed. Any Individual Taxpayer Identification Number not used on a tax return at least once in the past three years will expire on December 31, 2017. Additionally, all ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: 9XX-70-XXXX) will also expire at the end of the year. As a reminder, ITINs with middle digits 78 and 79 that expired in 2016 can also be renewed. Only taxpayers who need to file a U.S. federal tax return or are claiming a refund in 2018 must renew their expired ITINs. Affected ITIN holders can avoid delays by starting the renewal process now.
  • Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. More information, including answers to frequently asked questions is available on IRS.gov/ITIN.
  • Keeping copies of tax returns is important. Taxpayers may need a copy of their 2016 tax return to make it easier to fill out a 2017 tax return. Some taxpayers using a software product for the first time may need to provide their 2016 Adjusted Gross Income, or AGI, to e-file their 2017 tax return.

Taxpayers who do not have a copy of their 2016 return and are existing users can log in to IRS.gov/account if they need their AGI. Otherwise the IRS will mail a Tax Return Transcript if requested online or by calling 800-908-9946. Plan ahead. Allow five to 10 days for delivery. Visit the IRS’ website to learn more about identification verification and electronically signing tax returns.

IRS Warns Taxpayers of Email Scam Targeting Hotmail Users

ANNAPOLIS, Md. (December 14, 2017) – The Internal Revenue Service is warning taxpayers and tax professionals of a new email scam targeting Hotmail users that is being used to steal personal and financial information.

The phishing email subject line reads: “Internal Revenue Service Email No. XXXX | We’re processing your request soon | TXXXXXX-XXXXXXXX.” The email leads taxpayers to sign in to a fake Microsoft page and then asks for personal and financial information.

“Cyber thieves are always on the hunt to take Maryland taxpayers’ money,” Comptroller Peter Franchot said. “That’s why my staff and agents remain vigilant in alerting consumers to scams like this, particularly at holiday time when people are distracted by the holiday rush.”

The IRS has received more than 900 complaints about this new phishing scheme that seems to exclusively target Hotmail users. The suspect websites associated with this scam have been shut down, but taxpayers should be on the lookout for similar schemes.

Individuals who receive unsolicited emails claiming to be from the IRS should forward it to phishing@irs.gov and then delete it. It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. For more information, visit the Tax Scams and Consumer Alerts page on IRS.gov.

The IRS reminds tax professionals to be aware of phishing emails, free offers and other common tricks by scammers. Tax professionals who have data breaches should contact the IRS immediately through their Stakeholder Liaison at the webpage for Data Theft Information for Tax Professionals.

Taxpayers with Expiring ITINs Should Renew before December 31

ANNAPOLIS, Md. (December 6, 2017) – The Internal Revenue Service is reminding taxpayers with expiring Individual Taxpayer Identification Numbers (ITINs) to submit their renewal applications as soon as possible. Failing to renew them by the end of the year will cause refund and processing delays in 2018.

Over the summer, the IRS mailed letters to more than one million taxpayers whose ITINs are set to expire – those with middle digits 70, 71, 72 or 80. Any ITIN that has not been used on a federal tax return at least once in the last three consecutive years also will expire at the end of the year. Affected taxpayers who expect to file a tax return in 2018 must submit a renewal application by the deadline.

Who should renew an ITIN?

• ITINs with middle digits 70, 71, 72, or 80 (For example: 9NN-70-NNNN) need to be renewed if the taxpayer will have a filing requirement in 2018.
• Taxpayers whose ITINs expired due to lack of use should only renew their ITIN if they will have a filing requirement in 2018.
• Taxpayers who are eligible for or who have a SSN should not renew their ITIN but should notify IRS both of their SSN and previous ITIN so that their accounts can be merged.
• Taxpayers whose ITINs have middle digits 78 or 79 that had already expired and were never renewed should renew their ITIN if they will have a filing requirement in 2018.
To renew an ITIN, taxpayers must complete a Form W-7 and submit all required documentation. Although a Form W-7 is usually attached to the tax return, a taxpayer is not required to attach a federal tax return to their ITIN renewal application.

There are three ways to submit the W-7 application package:

• Mail the Form W-7, along with original identification documents or copies certified by the issuing agency, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days.
• Taxpayers have the option to work with Certified Acceptance Agents (CAAs) authorized by the IRS to help them apply for an ITIN. CAAs can certify all identification documents for primary and secondary taxpayers and certify that an ITIN application is correct before submitting it to the IRS for processing. A CAA can also certify passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS.
• In advance, taxpayers can call and make an appointment at a designated IRS Taxpayer Assistance Center instead of mailing original identification documents to the IRS. When making an appointment, be sure to indicate that this involves an ITIN renewal application.

Visit IRS.gov for more information.

Thieves Are Using W-2 Scam to Get Employee Data, Tax Information

ANNAPOLIS, Md. (December 1, 2017) – The IRS is warning business, payroll and human resource communities about a growing W-2 email scam by which criminals are gaining access to W-2s and other sensitive tax information that employers have about their employees.

During National Tax Security Awareness Week this week, the IRS has been partnering with state tax agencies – including the Maryland Comptroller’s Office and tax industry stakeholders – to remind people about the importance of data protection.

W-2 scams put workers at risk for tax-related identity theft. The IRS recommends that all employers educate employees about this scheme, especially those in human resources and payroll departments. These employees are usually the first targets.

Here are five warning signs about the scam:

• The thief poses as a company executive, school official or other leader in the organization.
• Scam emails often start with a simple greeting. It can be something like, “Hey, you in today?”
• The crook sends an email to an employee with payroll access and requests a list of all employees and their Forms W-2. The thief may even specify the format in which they want the information.
• Thieves use many different subject lines and use words like “review,” “manual review” or “request.” In some cases, the thief may send a follow up email asking for a wire transfer.
• Because payroll officials believe they are corresponding with an executive, it may take weeks for someone to realize a data theft occurred. Criminals usually try to use the information quickly, sometimes filing fraudulent tax returns within a day or two.

This scam is such a threat that a special IRS reporting process has been set up. If you think you were a victim of this scam, visit IRS.gov to find out how to report it.