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Wednesday July 15, 2020

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IRS Tips on Spyware, Malware and Phishing

In IR-2019-127, the Service outlined useful steps to protect your personal computer data. With the growing number of attacks and reports of expensive payments demanded for ransomware, every computer user should install and understand the use of anti-virus software.
  • Automatic Scans — You can set up your anti-virus software to make periodic scans of specific directories or to prompt you regularly to run a scan.
  • Manual Scans — You can choose to manually scan your directories, email attachments or web downloads. If you decide to manually scan, you can also select an option to scan CDs or DVDs for malware.
Anti-virus software often will open a dialogue box to ask whether to "clean" a file or attachment that contains malware. You will want to check "yes" and remove the offending file. Anti-virus software will usually have daily updates, so it will catch the latest versions of malware.

Spyware is a particularly dangerous type of malware. Spyware is designed to capture your passwords and login credentials for your financial information. Because many individuals use online banking or monitor their investment and retirement accounts online, it is important that anti-virus software detects spyware.

You can protect yourself by not clicking on pop-up window links or downloading "free" software. Fraudsters often create pop-up windows with "free" security software. This "free" software is actually spyware.

Finally, phishing emails are often sent by fraudsters, but appear to come from friends or family. The fraudster hacks the contacts of your friend or family member. He or she then sends an email that supposedly comes from the friend or family member. Do not click on links if the email looks at all suspicious.

With good anti-virus software, your risks of being a victim of malware or spyware are greatly reduced.

Bipartisan Legacy IRA Act of 2019 Introduced in House

On July 18, Reps. Donald Beyer, Jr. (D-VA) and Mike Kelly (R-PA) introduced the Legacy IRA Act (H.R. 3822) in the House of Representatives. This is a companion bill to the Senate Legacy IRA Act of 2019 (S. 1257) introduced on May 1 by Senators Kevin Cramer (R-ND) and Debbie Stabenow (D-MI). Both bills would extend the IRA charitable rollover to allow tax-free distributions to life-income charitable gifts, including charitable remainder trusts and charitable gift annuities.

Currently, IRA owners over the age of 70½ can make tax-free qualified charitable distributions of up to $100,000 from their traditional IRAs through the IRA charitable rollover. The Legacy IRA Act would expand the IRA charitable rollover by permitting individuals age 65 and older to transfer up to $400,000 per year from their IRAs to life income plans. The available plans would include charitable gift annuities, charitable remainder unitrusts and charitable remainder annuity trusts. The permitted life income recipients under the bill include the IRA owner and/or his or her spouse.

Tax-free transfers from an IRA to one of these charitable life income plans would be permitted once the IRA owner reaches age 65, while outright charitable IRA rollover gifts would remain available for IRA owners age 70½ and older and remain capped at $100,000 per year. The total transferred amount, taking into account both transfers to life income plans and outright IRA charitable rollover gifts, would be limited to $400,000 per year.

Representative Beyer urged Members of the House to support the Legacy IRA Act and stated, "Our bipartisan legislation encourages American seniors to continue and increase their generous contributions to worthy charitable causes. So many good institutions and organizations benefit from the Charitable IRA Rollover and increasing the financial security of retirees who donate to them will reap enormous benefits for our society."

Representative Kelly noted, "Americans are some of the most charitable in the world. We give to our churches, we give to our schools, and we give to our local community groups. More than 77 million Americans volunteer their time, talent and energy to make a difference. In addition to their time, Americans provide financial support to the more than 1.5 million charities in America. Our legislation seeks to further encourage more charitable giving by providing additional tax incentives to seniors. Because Americans give and serve, we all live a richer, happier, and healthier life."

Many Nonprofits Support the Legacy IRA Act

A large and diverse coalition of charitable organizations have voiced their support for the Legacy IRA Act and are enthusiastic about the philanthropic possibilities that the bill would provide IRA owners.
  • "This legislation is a win-win, both for seniors who want to support philanthropic causes and for charitable organizations that benefit from individual philanthropy," said Suzie Upton, Chief Operating Officer for the American Heart Association. "By building on the IRA Charitable Rollover, which has generated millions of dollars in new or increased contributions to local and national charities, this bill would allow more seniors to benefit from the rollover and make tax-free charitable contributions."

  • "We want to thank Rep. Beyer and Kelly for introducing the Legacy IRA Act, which improves the ability of middle-income seniors to continue their philanthropic efforts as they age," said David Hudson, National Commander of the Salvation Army. "At The Salvation Army, nearly half of our operating budget each year comes from direct public contributions, and we couldn't do the work we do, for more than 23 million Americans, without that support. Making it easier and safer for our senior donors to commit to this work will directly impact our ability to help those in need overcome the barriers of poverty and to serve in the name of Jesus without discrimination."

  • "We thank Representatives Don Beyer (D-VA) and Mike Kelly (R-PA) for introducing the Legacy IRA Act which will go a long way in incentivizing seniors to make charitable donations while allowing them to retain their annual retirement income," said March of Dimes President and CEO Stacey D. Stewart. "Providing individuals with new giving options, like this one, will be particularly attractive to middle income seniors and help bolster our country's proud legacy of charitable giving."

  • "Expanding the IRA charitable rollover to permit donors to participate in gift annuity programs will provide significant benefits to America's charities as well as help provide financial security to those individuals who support these vital efforts to help the most vulnerable among us," noted William C. Daroff, Senior Vice President for Public Policy and Director of the Washington Office of The Jewish Federations of North America. "The IRA charitable rollover has been a valuable charitable fundraising vehicle for over a decade and we applaud Reps. Beyer and Kelly for expanding the scope of this proven giving incentive."

  • "The existing IRA Charitable Rollover has been extremely beneficial for charities overall, but many Americans cannot afford to give away their retirement income during their lifetime," said Daniel J. Cardinali, President and CEO of Independent Sector. "The Legacy IRA Act would give prospective donors one more critical way to invest in the common good in a way that works for them. On behalf of our members—a diverse set of nonprofits, foundations, and corporations working to advance the common good—Independent Sector is proud to support this legislation."

  • "This would allow seniors to continue to support the causes for which they care deeply, and to support them as generously as they can," said Paul Gionfriddo, President and CEO of Mental Health America.

  • "Art museums rely on charitable contributions to subsidize free and discounted admission, mount exhibitions, and provide education services to millions of schoolchildren every year. We offer our thanks to Reps. Beyer and Kelly for introducing this important legislation, which will help museums provide these services to the public," said Christine Anagnos, Executive Director of Association of Art Museum Directors.

  • "The Legacy IRA Act will incentivize seniors to give more to educational institutions from their individual retirement accounts while still providing the peace of mind of a lifetime income stream. The additional giving generated by this bill will support student scholarships, research, faculty and other academic programs, helping colleges, universities and independent schools transform lives and society. We applaud and thank Reps. Beyer and Kelly for leading the effort to enact this important legislation," said Sue Cunningham, President and CEO of Council for Advancement and Support of Education (CASE).

  • "Leadership 18, a coalition of CEOs from some of the nation's largest human services organizations, strongly supports the Legacy IRA Act, which would allow seniors starting at age 65 to make tax-free IRA rollovers to charities through retirement strategy funds. With new research just out from the Giving USA Foundation showing a drop in charitable giving among middle- and low-income donors as a result of recent tax reform that eliminated charitable deductions for non-itemizers, this offers an excellent incentive for middle-income seniors to continue to support the causes important to them and their communities. Americans are among the most charitable in the world and this value we hold should be reinforced through having all charitable giving not be taxed regardless of income or amount. By incentivizing all Americans to take part in our giving society, we are caring for one another so that all people in our nation can thrive and achieve their fullest potential," added Susan N. Dreyfus, president and CEO of Leadership 18 and the Alliance for Strong Families and Communities.

Applicable Federal Rate of 2.2% for August -- Rev. Rul. 2019-17; 2019-32 IRB 1 (17 July 2018)

The IRS has announced the Applicable Federal Rate (AFR) for August of 2019. The AFR under Section 7520 for the month of August is 2.2%. The rates for July of 2.6% or June of 2.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2019, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.

Published July 19, 2019
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