Atlantic Capital Management

Atlantic Capital Management (116)

Wednesday, 19 December 2018 14:43

No, That Is Not the I.R.S. Calling

Submitted by

Watch out for crooks impersonating I.R.S. agents (and financial industry professionals).

Do you know how the Internal Revenue Service contacts taxpayers to resolve a problem? The first step is almost always to send a letter through the U.S. Postal Service to the taxpayer.1

It is very rare for the I.R.S. to make the first contact through a call or a personal visit. This happens in two circumstances: when taxes are notably delinquent or overdue or when the agency feels an audit or criminal investigation is necessary. Furthermore, the I.R.S. does not send initial requests for taxpayer information via email or social media.1  

Now that you know all of this, you should also know about some of the phone scams being perpetrated by criminals claiming to be the I.R.S. (or representatives of investment firms). 

Scam #1: “You owe back taxes. Pay them immediately, or you will be arrested.” Here, someone calls you posing as an I.R.S. agent, claiming that you owe thousands of dollars in federal taxes. If the caller does not reach you in person, a voice mail message conveys the same threat, urging you to call back quickly.1

Can this terrible (fake) problem be solved? Yes, perhaps with the help of your Social Security number. Or, maybe with some specific information about your checking account, maybe even your online banking password. Or, they may tell you that this will all go away if you wire the money to an account or buy a pre-paid debit card. These are all efforts to steal your money.

This is over-the-phone extortion, plain and simple. The demand for immediate payment gives it away. The I.R.S. does not call up taxpayers and threaten them with arrest if they cannot pay back taxes by midnight. The preferred method of notification is to send a bill, with instructions to pay the amount owed to the U.S. Treasury (never some third party).1 

Sometimes the phone number on your caller I.D. may appear to be legitimate because more sophisticated crooks have found ways to manipulate caller I.D. systems. Asking for a callback number is not enough. The crook may readily supply you with a number to call, and when you dial it someone may pick up immediately and claim to be a representative of the I.R.S., but it’s likely a co-conspirator – someone else assisting in the scam. For reference, the I.R.S. tax help line for individuals is 1-800-829-1040. Another telltale sign; if you ever call the real I.R.S., you probably wouldn’t speak to a live person so quickly – hold times can be long.1

Scam #2: “This is a special offer to help seniors manage their investments.” Yes, a special offer to become your investment advisor, made by a total stranger over the phone. Of course, this offer of help is under the condition that you provide your user I.D. and password for your brokerage account or your IRA.2  

No matter how polite and sweet the caller seems, this is criminal activity. Licensed financial services industry professionals do not randomly call senior citizens and ask them for financial account information and passwords – unless they want to go to jail or end their careers.

Scam #3: “I made a terrible mistake; you must help me.” In this scam, a caller politely informs you that the U.S. government is issuing supplemental Social Security payments to seniors next year. Do you have a bank account? You could enroll in this program by providing your account information and your Social Security number.

Oh no, wait! The caller now tells you that they’ve made a huge mistake while inputting your account information – and your account was accidentally credited with a full payment even though you were not enrolled. The distraught caller will now attempt to convince you that they will lose their job unless you send over an amount equal to the lump sum they claim was mistakenly deposited. If you refuse, the caller may have a conversation with a “boss” who demands that money be withdrawn from your account.

Scam #4: “The I.R.S. accidentally gave you a refund.” In this sophisticated double-cross, thieves steal your data, then file a phony federal tax return with your information and deposit a false refund in your bank account. Then, they attempt to convince you to pay them the money, claiming they are debt collectors working for the I.R.S. or I.R.S. agents.

Should anyone call and try to trap you with one of these scams, hang up. Next, report the caller ID and/or callback number to the I.R.S. at This email address is being protected from spambots. You need JavaScript enabled to view it. with the subject line “I.R.S. Phone Scam.” You can also notify the Department of the Treasury (treasury.gov) and the Federal Trade Commission (ftccomplaintassistant.gov); list “I.R.S. Telephone Scam” in the notes. Regarding scam #4, if you really do receive an erroneous federal (or state) tax refund, you should notify your tax professional about it as soon as you can and arrange its return. You may also need to close the involved bank account if you sense you have been victimized.1,3

   

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

   

Citations.

1 - irs.gov/newsroom/irs-continues-warning-on-impersonation-scams-reminds-people-to-remain-alert-to-other-scams-schemes-this-summer [5/31/18]

2 - money.usnews.com/money/retirement/aging/articles/2018-05-09/10-financial-scams-to-avoid-in-retirement [5/9/18]

3 - forbes.com/sites/kellyphillipserb/2018/02/13/irs-issues-urgent-warning-on-new-tax-refund-scam-and-its-not-what-youd-expect [2/13/18

Tuesday, 27 November 2018 14:56

Investing Means Tolerating Some Risk

Submitted by

That truth must always be recognized.                   

When financial markets have a bad day, week, or month, discomforting headlines and data can swiftly communicate a message to retirees and retirement savers alike: equity investments are risky things, and Wall Street is a risky place.

All true. If you want to accumulate significant retirement savings or try and grow your wealth through the opportunities in the markets, this is a reality you cannot avoid.

Regularly, your investments contend with assorted market risks. They never go away. At times, they may seem dangerous to your net worth or your retirement savings, so much so that you think about getting out of equities entirely.

If you are having such thoughts, think about this: in the big picture, the real danger to your retirement could be being too risk averse.

Is it possible to hold too much in cash? Yes. Some pre-retirees do. (Even some retirees, in fact.) They have six-figure savings accounts, built up since the Great Recession and the last bear market. It is a prudent move. A dollar will always be worth a dollar in America, and that money is out of the market and backed by deposit insurance.

This is all well and good, but the problem is what that money is earning. Even with interest rates rising, many high-balance savings accounts are currently yielding less than 0.5% a year. The latest inflation data shows consumer prices advancing 2.3% a year. That money in the bank is not outrunning inflation, not even close. It will lose purchasing power over time.1,2

Consider some of the recent yearly advances of the S&P 500. In 2016, it gained 9.54%; in 2017, it gained 19.42%. Those were the price returns; the 2016 and 2017 total returns (with dividends reinvested) were a respective 11.96% and 21.83%.3,4

Yes, the broad benchmark for U.S. equities has bad years as well. Historically, it has had about one negative year for every three positive years. Looking through relatively recent historical windows, the positives have mostly outweighed the negatives for investors. From 1973-2016, for example, the S&P gained an average of 11.69% per year. (The last 3-year losing streak the S&P had was in 2000-02.)5

Your portfolio may not return as well as the S&P does in a given year, but when equities rally, your household may see its invested assets grow noticeably. When you bring in equity investment account factors like compounding and tax deferral, the growth of those invested assets over decades may dwarf the growth that could result from mere checking or savings account interest.

At some point, putting too little into investments and too much in the bank may become a risk – a risk to your retirement savings potential. At today’s interest rates, the money you are saving may end up growing faster if it is invested in some vehicle offering potentially greater reward and comparatively greater degrees of risk to tolerate.

Having a big emergency fund is good. You can dip into that liquid pool of cash to address sudden financial issues that pose risks to your financial equilibrium in the present.

Having a big retirement fund is even better. When you have one of those, you may confidently address the biggest financial risk you will ever face: the risk of outliving your money in the future.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

Citations.

1 - valuepenguin.com/average-savings-account-interest-rates [10/4/18]

2 - investing.com/economic-calendar/ [10/11/18]

3 - money.cnn.com/data/markets/sandp/ [10/11/18]

4 - ycharts.com/indicators/sandp_500_total_return_annual [10/11/18]

5 - thebalance.com/stock-market-returns-by-year-2388543 [6/23/18]

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