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Washington Alert – IRS warns of payroll email scheme; GAO critical of process  to determine eligibility for enrollment or income-based subsidies required by the Affordable Care Act (ACA); During 2014, Low Income Taxpayer Clinics (LITCs) represented almost 20,000 taxpayers in disputes with IRS

IRS issued an alert to payroll and human resources professionals concerning a proliferating email scheme with a focus on company payroll departments  involving purported company executives requesting personal information on employees. (IR 2016-34) According to the agency, several payroll and human resource offices have already been victimized. These entities mistakenly emailed payroll data that contained Social Security numbers and other personally identifiable information to “cybercriminals” pretending to be company executives. “If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees,” said IRS Commissioner John Koskinen. Additional information can be found at irs.gov/uac/Newsroom/IRS-Alerts-Payroll-and-HR-Professionals-to-Phishing-Scheme-Involving-W2s

A recent report by the Government Accountability Office (GAO) questioned the efficacy of the verification process used to determine eligibility for enrollment or income-based subsidies required by the Affordable Care Act (ACA). (GAO-16-29) The verification process is administered by the Centers for Medicare & Medicaid Services (CMS). It relies on an electronic data hub which provides a single link to federal sources, such as IRS and the Social Security Administration, to verify consumer application information. CMS officials acknowledged that the agency does not track or analyze aggregate outcomes of data hub queries. This leaves it in the dark as to the extent to which a responding agency delivers information responsive to a request or whether an agency reports that information was unavailable. GAO also found CMS did not have an effective process for resolving inconsistencies for individual applicants for the federal Health Insurance Marketplace. For example, about 431,000 applications from the 2014 enrollment period, with about $1.7 billion in associated subsidies for 2014, still had unresolved inconsistencies as of April 2015. In addition, CMS did not resolve Social Security number inconsistencies for 35,000 applications (with $154 million in associated subsidies) or incarceration inconsistencies for 22,000 applications (with $68 million in associated subsidies). The report noted that CMS has not performed a comprehensive fraud risk assessment of the ACA enrollment and eligibility process. “Until such an assessment is done, CMS is unlikely to know whether existing control activities are suitably designed and implemented to reduce inherent fraud risk to an acceptable level,” GAO said. The report is available at gao.gov/assets/680/675340.pdf

During 2014, Low Income Taxpayer Clinics (LITCs) represented almost 20,000 taxpayers in disputes with IRS, according to the annual program report recently released by the agency’s LITC Program Office. (IR 2016-30) LITCs also provided consultation or advice to another 18,800 taxpayers. In addition, clinics assisted taxpayers in securing $4.3 million in tax refunds and eliminating $62 million in tax liabilities, penalties and interest. LITCs conducted more than 3,000 educational activities attended by 76,000 people. As described by IRS, LITCs nationwide are responsible for assisting low income taxpayers and individuals who speak English as a second language with free or low-cost representation in disputes with IRS. The report can be found at irs.gov/pub/irs-pdf/p5066.pdf

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney