The IRS has experienced huge cybersecurity losses during the past several years by hackers stealing taxpayer’s identities and then filing for fraudulent refunds. To stem the losses, the IRS is selectively sending letters to taxpayers to verify identities. Taxpayers receiving an Identity Verification Letter should use IDVerify.irs.gov to verify information for the fastest, easiest way to complete the task.

Only those taxpayers receiving Letter 5071C should access idverify.irs.gov.

The website will ask a series of questions that only the real taxpayer can answer.

Once the identity is verified, the taxpayers can confirm whether or not they filed the return in question. If they did not file the return, the IRS can take steps at that time to assist them. If they did file the return, it will take approximately six weeks to process it and issue a refund.

Letter 5071C is mailed through the U.S. Postal Service to the address on the return. It asks taxpayers to verify their identities in order for the IRS to complete processing of the returns if the taxpayers did file it or reject the returns if the taxpayers did not file it. The IRS does not request such information via email, nor will the IRS call a taxpayer directly to ask this information without you receiving a letter first. The letter number can be found in the upper corner of the page.

The letter gives taxpayers two options to contact the IRS and confirm whether or not they filed the return. Taxpayers may use the idverify.irs.gov site or call a toll-free number on the letter. Because of the high-volume on the toll-free numbers, the IRS-sponsored website, idverify.irs.gov, is the safest, fastest option for taxpayers with web access.

Taxpayers should have available their prior year tax return and their current year tax return, if they filed one, including supporting documents, such as Forms W-2 and 1099 and Schedules A and C.

Eight months ago each Euro could be exchanged for $1.40; today, one Euro will bring only $1.05. This severe decline of the Euro is, in part, due to the European Central Bank’s announcement to kick off the European version of Quantitative Easing (“QE”) which in turn reduces interest rates in Europe. European exporters have suddenly become much more competitive due to the lower Euro.

Other export nations like China and South Korea will not stand still and watch the European exporters take market share through the lower Euro. China and South Korea have already reduced their interest rates thus attempting to make their currencies weaker, and more competitive against the weaker Euro. We can expect Brazil, Mexico and Canada to follow suit. The end result is a possibility of a worldwide currency war. What happens several years down the road is not clear, but the outcome is unlikely to be good.

We hear a lot these days about the Internet of Things (referred to as “IoT”). IoT generally means everyday appliances connected to the Internet.

But there’s another side to the IoT — using smart devices in the business environment — and rarely do we get a solid look at how big a business it is and how fast it’s growing. That changed last week with the release from Verizon of a fairly comprehensive report that outlines the size of the business use of IoT and how fast it’s growing. For starters, Verizon (with help from ABI Research) estimates that as of 2014 there were 1.2 billion different devices connected to the Internet, and that the number will rise to 5.4 billion by 2020 for an annual growth rate of 28 percent.

On its most recent earnings conference call, Verizon said IoT business brought in $585 million in revenue in 2014 — a tiny drop in a very big wireless bucket worth almost $88 billion, though it grew at a respectable 45 percent year-on-year.

In an interview with Re/code, Mark Bartolomeo, a Verizon VP who runs its IoT business, said the carrier had about 15 million devices running wireless machine-to-machine connections last year. Compare that with the 108 million human subscribers using phones and tablets. “We’ve seen the early adoptions, but now we’re getting to a new phase where we’re seeing fast followers in this business,” he said. They run the gamut from automotive companies working on connected cars to electrical utilities deploying smart meters, or manufacturers.

In fact, it was the manufacturing sector that saw the fastest growth in adopting IoT products last year, up more than triple since 2013, according to the report. Companies started small, using connected cameras and sensors to monitor security in factories and keeping a close eye on the flow of production and shipments. Now companies that make and service large-scale factory equipment are adding IoT smarts to watch for signs of costly breakdowns and to help save on the cost of regular in-person inspections.

Other segments deploying IoT devices at a fast-growing rate included finance and insurance companies (up 128 percent year-on-year), media and entertainment firms (up 120 percent) and the home security and monitoring businesses (up 89 percent).

And the opportunity for growth is sizable, Bartolomeo says, in part because relatively few firms across all industries — only about 10 percent worldwide — have yet adopted any IoT technology. Many are deploying early-stage pilot programs or waiting to see results from other companies.

Source: Re/Code Daily.

About 800,000 HealthCare.gov customers got the wrong tax information from the government, the Obama administration said Friday, and officials are asking those affected to delay filing their 2014 returns.

The tax mistake is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up. The errors mean that nearly 1 million people may have to wait longer to get their income tax refunds this year. And they could also affect the size of those refunds.

The tax error highlights the complicated links between Obama’s health care law and taxes, connections that consumers will experience for the first time this year. The law subsidizes private health insurance for people who don’t have access to job-based coverage. By delivering those subsidies through the income tax system, the White House and the law’s supporters were able to tout the health care overhaul as a tax cut. But it also introduced new wrinkles to an already-complicated tax system.

The errors disclosed Friday are in new forms that HealthCare.gov sent to millions of consumers receiving coverage through the federal insurance market that serves most states. Those forms, called 1095-As, are like a W-2 for health care. They provided a month-by-month accounting of the subsidies consumers received to help pay their premiums. That information is then used to make sure everybody got the right amount, not too much, or too little.

The administration started notifying the affected consumers Friday.

Valley National recommends taxpayers who purchased insurance through HealthCare.gov follow one of the two courses of action:

a. Wait to file their Federal 1040 until 3/15/2015.

b. Access the marketplace website now at the following address to determine if they are affected by this error:

• https://www.healthcare.gov/blog/is-your-form-1095a-correct
• Note that there is a link near the bottom of the webpage that will access a tool to determine if the client’s 1095-A is incorrect.

What would have happened, if you would have passed away yesterday, to the “digital assets” you own? Digital assets do not have a uniformly accepted definition, but generally include digitally stored content, online accounts, travel miles, credits on eBay or Paypal or Amazon, online storage accounts like Drop Box, or iCloud, or music held in iTunes or Pandora. As our lives become ever more digital, this question will continue to grow in its importance. Individual states have been slow to pass legislation dealing with the ownership issue. Both Pennsylvania and New Jersey have considered legislation but have yet to pass it into law.

Some social networks have acted – Facebook for one. The social network rolled out an update Thursday that lets you assign a Facebook friend as a “legacy contact” to your account, essentially granting special access to the account in the case of your death. You can also choose to have your account deleted entirely. This legacy contact will not be able to post on your behalf or see your private messages. They will, however, be able to download your Facebook archive, which includes all of your photos, and post a note that will remain pinned to the top of your profile page.

If you want your profile deleted, Facebook will honor that request and remove your photos, Timeline, and past likes and comments (although some stuff like “log records” will remain). Facebook already memorialized profiles at the request of the deceased user’s family, and has done so for a number of years, said Vanessa Callison-Burch, a product manager at the company. That, of course, didn’t give users much control over what was done with their accounts, and the new update provides that option. If you choose someone as your legacy contact, he or she will not be alerted to your decision until you’ve passed away, added Callison-Burch. The update is available only for U.S. users, but will expand internationally “soon,” she said.

Source: (In Part from: The Wall Street Journal and http://www.digitaldeath.com )

Please contact me if you have questions or concerns about how this affects you.

The Equity Risk Premium

The equity risk premium describes the excess return that stock holders are rewarded with over a risk-free rate. The reason for this is pretty straight forward; In the event of a bankruptcy, stock holders are last in line to recoup any of their money and thus require extra return commensurate with the additional risk.

However just because there is a premium for holding stocks does not mean that it shows up every day, month, year or even decade. There can be long, excruciating periods of time where it feels like whatever the rewards might be just aren’t worth it.

Consider an investor who first bought stocks in 1930 and held on expecting to be compensated for the risk he was incurring. That investor would have seen his $100 investment shrink to $24 over the next thirty months. It would have taken him almost eight years to be made whole again, at which point his investment would get cut in half over the next year. Oof.

It would be understandable if that investor was ready to call it quits on stocks for the rest of his life after spending 96% of the previous decade losing money.

Needless to say, that would not have been a wise decision as he would have missed out on the 140% gains delivered over the following ten years.

2000-2009 was similar in terms of lousy, frustrating performance. An investor lost money 92% of the time and saw two separate vicious bear markets. It’s hardly surprising that people who are anchored to these events have been kicking and screaming as markets move on without them.

Will investors be rewarded for suffering through a lousy decade this time around? That’s the million dollar question.

Source: (The Irrelevant Investor)

Do you have your tax returns prepared by Valley National? You should have received your annual tax disclosures and questionnaires via e-mail earlier in the month.  This year we emailed the forms instead of sending them in the U.S. Mail.

If you have not received the tax prep email, please check your spam filter (or junk mail box) to search for it. If it is not there, please call Betty Adam at 610-868-9000 x118 or e-mail her at Badam@valleynationalgroup.com.

Behind the headlines, there’s an ongoing debate as to whether the precipitous drop in oil prices is a boon or a bust for U.S. stocks. Some experts expect an uptick of demand with cash rich consumers – this will help the economy, they theorize. Other experts rebuke the strongly held view that lower gasoline prices will make Americans open their wallets wide. The global macroeconomic environment just isn’t that good, they argue.

The recent election in Greece will lead to further turmoil in Europe – additional information is provided in the Heat Map.

The global currency churning reawakened financial contagion fears.

Given such fears, it might take one and perhaps two more quarters of earnings results from the world’s big banks and energy companies before the global stock market gets comfortable.

We have said it before and we will say it again: Get used to volatility for a while.

Where will the stock market end 2015? I do not know; but, it is likely investors in high quality stocks will be happy at the end of 5 years. This prognostication agrees with Wharton School of Finance professor Jeremy Siegel. His research finds, over the long term, there is a pronounced tendency for periods of better-than-average to follow worse-than-average (and vice versa). Accordingly, the above par performance of the past several years suggest that over the next several, performance will run somewhat below par but still in the black.

THINGS ARE BETTER THAN THE NEWS MEDIA WOULD HAVE YOU BELIEVE. Modern media is overwhelming pessimistic. They focus on sensationalism, scandal, gossip and tragedy. Modern news and media outlets “preferentially feed us negative stories because that is what our minds pay attention to.” Apparently there is a good reason for this; our senses bring in far more data than we can possibly process, and, because survival is the most important driving factor in our evolution, this data is fed first through an ancient sliver in the temporal lobe called the amygdala. The amygdala is our early-warning detector, sorting through data to see what might harm us. It is therefore entirely explicable that we preferentially look at negative news, and almost as obvious that profit-driven media outlets would capitalize on this instinct.

How and why is the world going to become a better place? Highly respected forward thinkers have studied trends and see a bright future particularly due to exponential technological growth. These trends show how life expectancy, global connectivity, access to resources and general quality of life are all on an upwards curve.