Category: NEWS

by Andrew L. Bareham, CPA

Like most Americans, you probably have a credit report stored on the computers of the three main credit reporting agencies (CRA) – Equifax, Experian, and TransUnion. These credit reports show in detail your financial credit history and personal data. Starting in May of this year Equifax’s data files were breached and the very sensitive personal information of 143 Million consumers was stolen. Listed below are some steps you can take to reduce your chance of identity theft.

• Check your three credit reports for accounts or activity you don’t recognize. File a dispute for anything you believe is not accurate. You can check your credit reports for free once a year at:

  https://www.annualcreditreport.com/index.action

• Considering placing a credit freeze on your files. This will make it harder for someone to open a new account in you name. Get more information and phone numbers for the CRAs from the Federal Trade Commission at:
  https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs
• Consider placing a fraud alert on your files. Read more about this at:

  https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs#difference

• File your taxes early. File as soon as you have the tax information you need, before a scammer can file as you. Many tax professionals expect an increase in tax-related identity theft this year because of Equifax. If your tax identity is stolen, it can take over a year to correct the problem.

  Protect your kids too. In Maryland parents are permitted to place a freeze on a minor child’s file. You can get information at this link to one of the CRAs:
  https://www.experian.com/blogs/ask-experian/requesting-a-security-freeze-for-a-minor-childs-credit-report/

• Use a service. Consumers Advocate lists the 10 best Identity Protection Services:
  https://www.consumersadvocate.org/id-theft-protection/a/best-id-theft-protection?matchtype=e&keyword=credit%20protection&adpos=1t3&gclid=EAIaIQobChMI75Cb9bzI1gIVwrftCh0d-w9PEAAYAyAAEgJ-aPD_BwE
• One caution – If you enroll in Equifax’s Free Identity Protection Service you may be limiting your future rights to sue Equifax.

  If you are a victim of identity theft the Federal Trade Commission has a step-by-step recovery guide at:
  https://www.consumer.ftc.gov/articles/pdf-0009_identitytheft_a_recovery_plan.pdf

Data breaches have become very common. However, the Equifax breach is different because of the number of Americans impacted and sensitivity of the data that was stolen. Be safe!

Andrew L. Bareham, CPA at Bareham CPA, PA in Lutherville Maryland. Specializing in tax consulting and proactive advice for small business owners.

Supreme Court of the US upholds MD taxpayers’ right to credit for taxes paid to other states
Comptroller of the Treasury of Maryland v. Wynne

In its May 18, 2015 Wynne v. Comptroller of Maryland decision, the Supreme Court upheld the taxpayers right to receive a credit for taxes paid to other states against both the state portion of the tax and the county piggyback portion of tax.

The Wynne’s are Maryland residents and shareholders in a pass-through entity. The income of the pass-through entity is taxed in other states. Maryland also taxes this income, but grants a credit for taxes paid to the other states to offset the MD state tax and prevent double taxation on the income. Maryland has a “piggyback” tax added to its state tax and its long standing position has been to not grant a credit against this portion of tax.

The piggyback tax is an additional portion of state income tax given that even nonresidents have to pay an equivalency through the “special nonresident tax”.

The Supreme Court held that not granting the credit against the additional portion of tax is unconstitutional because it violates the dormant commerce clause. This is particularly seen through the internal consistency test. If every state adopted Maryland’s tax structure, taxes would be lower on in-state business as compared to interstate business.

Impacted taxpayers can amend prior income tax returns to claim the additional credit for taxes paid to other states, subject to the 3 year statute of limitations. Current and future filings can utilize the full credit once Maryland’s computers are updated for the new processing method.

Here is a link to the actual Supreme Court decision:
http://www.supremecourt.gov/opinions/14pdf/13-485_o7jp.pdf