While economic growth slowed in the fourth quarter of last year, revised GDP data now suggests that the U.S. economy grew 1 percent last quarter, higher than the initial 0.7 percent that had been reported. Many economists had been expecting a downward revision to 0.4 percent. The upward revision is based on higher than expected inventories, which could create a drag on the current quarter’s growth figures. Bigger inventory means businesses may have less incentive to place new orders in the near term, which could continue to weigh down production.
First quarter GDP estimates are still pointing towards a steady growth rate of 2.5 percent supported by the strength of the American consumer. The Commerce Department reported that consumer spending increased 0.5 percent in January, the largest increase since March of last year. But various headwinds due to the slowing global economy, a strong dollar, and volatile financial markets could still have an impact on Q1 GDP.
IRS Warns Taxpayers of Top Scams:
Every year the IRS updates their list of the worst scams which taxpayers are potential targets. When in doubt, check with your accountant or advisor regarding the validity of any communication you receive, and do not give out personal information to someone who calls claiming to be with the IRS.
1. Identity theft and filing fake tax returns – The IRS defines this as when “someone uses a taxpayer’s stolen Social Security number to file a tax return claiming a fraudulent refund”. There are effective screening systems, but it’s still an obstacle. The IRS now takes part in a Security Summit to improve security for taxpayers, where agencies share fraud schemes that have been exposed recently. They recommend protecting personal information and change passwords often.
2. Phones scams – Criminals will call taxpayers and pose as the IRS. Callers gain legitimacy by using fake phone numbers, badge numbers, or by threatening arrest, etc. They may use the name, address, or other personal information of the victim. The IRS will NEVER call taxpayers to demand payment without appeal, ask for account numbers, or threaten arrest without warning.
3. Phishing – This is when taxpayers get unsolicited emails in search of personal/financial information. Opening these emails can give the criminals access to files on your computer. The IRS will not bill or refund by email out of the blue.
4. Return preparer fraud – When fraudulent preparers commit refund fraud, identity theft, and other scams that hurt taxpayers. Taxpayers should select their tax return preparer carefully with the ability to trust them with financial information. Check credentials of the preparer before giving them information, make sure the preparer is available after the filing season, and avoid preparers who base fees on a percentage of the refund.
5. Hiding money or income offshore – There may be legitimate reasons to have an offshore account, but there are usually special requirements to adhere to. The IRS does offer programs for easier conformity with these requirements.
6. Inflated refund claims – These are closely related to return preparer fraud. It occurs when preparers lure naive taxpayers by offering ridiculous refunds based on federal benefits or tax credits that you have never heard of or have never been eligible for in the past.
7. Fake charities – Often these use names similar to well-known charities, and sometimes create websites. Check the Exempt Organizations list on the IRS website to determine which charities qualify for deductible contributions.
8. Falsely padding deductions – This is misleading inflation of deductions or expenses on a return to pay less tax/receive greater refund. IRS will be investigating returns appearing to be overstating in charity expenses and credit claims.
9. Falsifying income to claim tax credits – Claiming higher earned income to qualify for more refundable credit, namely the EITC. Even if an unscrupulous preparer falsifies this information, the taxpayer is still held liable and can be penalized.
This publication is provided as a service to our clients and associates of PFA solely for their own use and information. The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified. The content in this publication is for general information only and not intended to serve as individual investment advice. You should seek independent advice from a professional based on your individual circumstances.