Wednesday, August 15, 2007

WHERE THE FAKAWI?

Today is August 15th. For those of us in the tax profession that used to mean something – but not any more.

Prior to this year, taxpayers who filed federal Form 4868 (Application for Automatic Extension of Time to File US Individual Income Tax Return) initially had four months to complete and submit their Form 1040. The return, or a second extension request on IRS Form 2688, had to me in the mail by August 15th (unless the 15th fell on a Saturday or Sunday – when the deadline was the 16th or 17th). The second extension request would give you another two months, until October 15th, to file. It was not automatic - you had to give a reason why you needed an additional extension - and it had to be approved by the IRS (although most were).

For 2006 tax returns the initial automatic extension granted by filing Form 4868 has been extended to the full six months – you now automatically have until October 15th to complete and submit your return. There is no second extension request – October 15th is it.

So August 15th has no significance any more.

However, for me it is a time to sit down and figure out, like that famous lost Indian tribe proclaimed, “where the fakawi”.

(1) I have completed all the required 2nd quarter 2007 payroll tax returns for my few remaining year-round business clients.

(2) I have kept up-to-date on all federal and state tax return correspondence. As notices or letters come in to clients regarding income tax returns I have filed, and they send them to me, I have responded promptly, in most cases explaining to the appropriate tax agency its errors.

(3) I have kept up-to-date on all email questions from clients (other than “are we there yet” inquiries from clients with GD extensions). As questions are posed I respond promptly with an appropriate answer.

(4) As missing information, and answers to questions and inquiries, relating to red files are received I have promptly completed and mailed out the returns.

Here is where I stand on the GD extensions:

· I have one red file for which I just last night received the answer I was waiting for (although not the one I was hoping for). I expect to have it in the mail by Thursday afternoon.

· I have three (3) remaining red files for which I need additional information from the client. Two are for “lost lambs” who sent their stuff to me late after a two-year absence – I have requested copies of their 2004 and 2005 returns. One is waiting for a K-1 from a hedge fund investment.

· I have five (5) returns for which I have received absolutely nothing yet for 2006 (although one did send me her 2005 “stuff”). One of them I have given up on and will not do – I need to send her a note to that effect.

· I have two (2) relatively normal returns, received late, that I need to do – and should have them done by the “end of business” on Friday (unless, of course, they become red files).

· I have one real project that I have saved for next to last. I can kick myself for saying this, but it is a new client - a retired couple, friends of my parents, with all kinds of “stuff” whom I never should have agreed to accept. To be perfectly honest, at this point I have absolutely no desire to do their returns – but it is too late now. It has nothing to do with the clients themselves – I just should have obeyed my own rules and “read my own lips” when I said “no new clients”. I will most definitely enforce this rule next tax season – absolutely, positively, under no circumstance, regardless of who the person(s) is/are, who referred him/her/them, or their relationship to me or my family NO NEW CLIENTS!

· The very last is a three-year project (2004-2006) regarding like-kind exchanges, hurricane damage and self-employment income for two unmarried but connected clients, for which I have not yet received the 2006 “stuff” for one of them. They are from Florida, so at least there are no state returns involved.

And when all that is done I have a box of miscellaneous work (amended returns, NOL carrybacks, review for possible amendment, analyses to prepare, etc) to do.

I also have two fiscal-year ending June 30th sets of corporate income tax returns (federal return due September 15 and state return due October 15) to do. I only have four corporate return clients left - a personal friend, a long-time client of my mentor Jim Gill, a long-time client of mine, and the owner of my mail drop – two calendar years and two fiscal years.

What I need to do after finishing and mailing out the three basic GD extensions by the end of Friday (cross your fingers) is take time out to do some housecleaning to my home office area. Then I will do the two corporate returns. After that it is the new client with the big project, and the rest of the GD extensions as they come in, with the miscellaneous work in between.

Oh well! Next year will be better – no multi-year projects left and only those GD extensions that are absolutely necessary. And NO NEW CLIENTS!

TTFN

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