Tax

Proposed regulations were issued by the IRS on June 18, 2019, regarding the new 1.4 percent excise tax on the net investment income of certain private colleges and universities. While the new excise tax is estimated to affect 40 or fewer institutions, it applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student.

The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them. The IRS guidance clarifies how affected institutions should determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.

These proposed regulations incorporate the interim guidance provided previously in IRS Notice 2018-55, Guidance on the Calculation of Net Investment Income for Purposes of the Section 4968 Excise Tax Applicable to Certain Private Colleges and Universities, stating that for property held by an institution at the end of 2017, the educational institution is generally allowed to use the property’s fair market value at the end of 2017 as its basis for figuring the tax on any resulting gain.

• By Leon Clinton
• August 23, 2019

The list of medical care services for a range of chronic conditions allowed to be provided by a high deductible health plan (HDHP) was expanded effective July 17, 2019. These medical services and items are limited to the specific medical care services or items listed for chronic conditions including hypertension, congestive heart failure, osteoporosis, asthma, depression, liver disease, and diabetes. Any medical care previously recognized as preventive care for these rules is still treated as preventive care.

Individuals covered by an HDHP generally may establish and deduct contributions to a Health Savings Account (HSA) as long as they have no disqualifying health coverage. To qualify as a high deductible health plan, an HDHP generally may not provide benefits for any year until the minimum deductible for that year is satisfied. However, an HDHP is not required to have a deductible for preventive care (as defined for purposes of the HDHP/HSA rules).

The Treasury Department and the IRS, in consultation with the Department of Health and Human Services, have determined that certain medical care services received, and items purchased, including prescription drugs, for certain chronic conditions should be classified as preventive care for someone with that chronic condition.

The expanded list includes (but is not limited to) beta-blockers, blood pressure monitors, inhaled corticosteroids, insulin, glucometers, Low-density Lipoprotein (LDL) testing, Selective Serotonin Reuptake Inhibitors (SSRIs), and Statins.

If you need more information about the expanded list of medical care services that are allowed and their associated chronic conditions, please call.

• By Leon Clinton
• August 20, 2019

Although the April filing deadline has come and gone, scam artists remain hard at work. As such, taxpayers should be on the lookout for scams that reference taxes or mention the IRS, especially during the summer and fall as tax bills and refunds arrive.

The two new variations of tax-related scams that are currently making the rounds are what the IRS has dubbed the “SSN Hustle” and the “Fake Tax Agency.” The first involves Social Security numbers (SSNs) related to tax issues and the second threatens people with a tax bill from a fictional government agency. Both display classic signs of being scams.

The SSN Hustle

The latest twist includes scammers claiming to be able to suspend or cancel the victim’s Social Security number. In this variation, the Social Security cancellation threat scam is similar to and often associated with the IRS impersonation scam. It is yet another attempt by con artists to frighten people into returning “robocall” voicemails. Scammers may mention overdue taxes in addition to threatening to cancel the person’s SSN.

Fake Tax Agency

This scheme involves the mailing of a letter threatening an IRS lien or levy. The lien or levy is based on bogus delinquent taxes owed to a non-existent agency, “Bureau of Tax Enforcement.” There is no such agency. The lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate organization.

A Reminder about Phone and Email Phishing Scams

The IRS does not leave prerecorded, urgent or threatening messages. In many variations of the phone scam, victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation or revocation of licenses.

Criminals can fake or “spoof” caller ID numbers to appear to be from anywhere in the country, including an IRS office. This prevents taxpayers from being able to verify the true caller ID number. Fraudsters also have spoofed local sheriff’s offices, state departments of motor vehicles, federal agencies, and others to convince taxpayers the call is legitimate.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

There are, however, special circumstances when the IRS will call or come to a home or business. Examples of when this might occur include times when a taxpayer has an overdue tax bill, a delinquent tax return or a delinquent employment tax payment, or the IRS needs to tour a business as part of a civil investigation (such as an audit or collection case) or during a criminal investigation.

If a taxpayer receives an unsolicited email that appears to be from either the IRS or a program closely linked to the IRS that is fraudulent, report it by sending it to phishing@irs.gov. The Report Phishing and Online Scams page provides additional details.

Taxpayers should also note that the IRS does not use text messages or social media to discuss personal tax issues, such as those involving bills or refunds.

If you have any questions or concerns about tax scams, help is just a phone call away.

• By Leon Clinton
• August 17, 2019