Identity Theft is one of those things that the average person doesn’t think will happen to them. We live in a society of electronics where the internet is accessible 24/7 from almost anywhere. Cybercrime is on the rise and it’s easy for most computer literate individuals, but very difficult for law enforcement to find and prosecute. This type of fraud can make your life a living nightmare. Criminals use stolen identities to get credit cards, loans, social security benefits, unemployment benefits, IRS refunds and make large purchases, just to name a few. By the time you find out, a lot of damage has already been done.
As a tax preparer, most of the identity theft that I have seen has been filings of fraudulent returns. Once the return is completed, it’s e-filed and if it’s rejected through the IRS e-file system, it most likely means a fraudulent return was filed. The taxpayer is left having to prove their identity to the IRS and this takes months to resolve. Criminals have received billions of IRS refunds from fraudulently filed returns.
I strongly recommend that you get protection for your identity. This will happen to you, it’s just a matter of when. Though most credit and identity protection firms offer some assistance with resolving your issue, many offer a “repair kit” which are basically instructions and checklist for you to complete if your identity has been stolen. Protect yourself with a company that will do the work for you to restore your credit and identity.
I have attached a link to a company called Identity Force that I suggest you look into for identity theft protection.
Please click on the link below to find out more about it and enroll.
1099’s can be a challenge for most business owners mainly because they are not familiar with the rules and requirements. Keeping up with changes to the requirements can be so frustrating, leading some entrepreneurs to just give up and file nothing at all. This can be dangerous as penalties can add up quickly. To help simplify things, here are the basics.
To whom are you required to send a Form 1099? As a general rule, you must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income. You are required to issue 1099 MISC reports only for payments you made in the course of your trade or business. You’ll send this form to any individual, partnership, Limited Liability Company, Limited Partnership or Estate. You don’t need to issue 1099s for payments made for personal purposes.
The most obvious question is how will the business owner know if the vendor is a partnership, Limited Liability Company, Limited Partnership or Estate? The answer is simple, implement a policy where every new vendor completes a W-9 form before you pay them. Establishing this policy as a normal business practice will give you the vendor’s mailing information, Tax ID number, and the vendor’s federal tax classification. The form can be downloaded at www.irs.gov.
Exceptions – While there are many exceptions, the most common exceptions to the 1099 filing requirement are C and S corporations and rent payments made to real estate agencies. In addition, you don’t need to send 1099’s to sellers of merchandise, freight, storage or similar items.
Penalties – The penalties for not filing can vary from $30 to $100 per form, depending on how long past the deadline the company issues the 1099. If a business intentionally disregards the requirement to issue 1099’s, it is subject to a minimum penalty of $250 per statement, with no maximum.
You must issue a 1 099-MISC to lawyers even if your lawyer is incorporated.
How and when to file 1099’s to recipients and 1096 to IRS – It’s not as simple as downloading blank 1099 Forms and sending them out to your vendors before the January 31st deadline. The form is “pre-printed” in triplicate by the IRS. Therefore you have to order the Forms from the IRS, or purchase them at the local office supply store, (while supplies last). Laser forms are also available, but be sure the correct copy goes to the correct place. You have to compile all of your 1099’s and submit them to the IRS with a 1096 by February 28th.