Saturday, October 24, 2009


* Before I get underway a thank-you and tip o’ the hat to TAX GURU Kerry Kerstetter for the above picture.

* While I have had my “Final Word” on the topic of “Who Is A Professional” others continue to weigh in on the subject, supporting the position of Bruce MacFarland (the Misourri tax guy) and myself and objecting to the initial argument by the “offending blogger”.

Stacie Clifford Kitts, a CPA, has her say in “For Cry'in Out Load - Another Tax Blog Throw Down” at STACIE’S MORE TAX TIPS. Stacie says of the offending blogger –

Yeppers - how bored do you suppose this guy was to come up with that? Although his post really seems to be directed at unenrolled tax preparers, the post manages to be insulting to - well - just about anybody who has worked hard to obtain a position but did it without a college degree or a state license.”

Comment #7 to Missouri tax guy Bruce MacFarland's supportive post “A Little Professionalism, If You Please” from Kim B, who is “not a tax preparer (although I used to be years ago)” really gets to the point and says what needed to be said –

I find it absolutely ludicrous that this tax lawyer and CPA . . . thinks he’s somehow better than others in this profession/business just because he has a piece of paper from a school(s) saying he’s taken classes on the subject or because he took and passed some regulatory state test(s) that allow him to display a plaque on his wall. It’s actually not only quite insulting to so many preparers and people in this PROFESSION who are great at what they do and make their living at it . . . but it’s also insulting to millions of other hard-working people who go to work each day just like him and do their job efficiently and help keep this country running, but by his definition are not professionals. It just really shows such an arrogance.”

And, if I can be permitted one more on the money quote –

Then the audacity of this man to go on to continue to argue the point – almost to death, showed me nothing more than his self-righteousness and elitist attitude to get in the last word, somehow thinking that was going to make such a difference or impact on us all.”

But, of course, the cafone continues to maintain that those who earn their living in a profession are not professionals – and continues to blather on about his twisted logic ad nauseum. Hey, we get it. You are wrong, but stubborn, and can’t admit that such a thing could be possible. So let’s move on to more important tax topics.

* Trish McIntire of OUR TAXING TIMES continues her series of “Buyer Education” with an important warning in “Contingency Fees Are a No-No!”. The highlight in the following quote is mine -

You call a new preparer and of course you ask about fees. You probably won't get an exact quote but they should explain how they calculate fees. I charge by the forms required to prepare the return. (I'll add a time charge if I need to do bookkeeping first.) Some preparers just use time. Others based their fee on the level of complexity. But if you are told the fee is based on the refund, thank them and keep looking. This is a contingency based fee and the preparer now has a interest in the outcome of the return. The bigger the refund the bigger the fee.”

In such a situation, as Trish puts it – “So if the preparer wants to make money, it is in his/her best interest to beef up the refund”. You can be 99 and 44/100% sure that the preparer will add phantom deductions to increase the refund to, in turn, increase his/her fee!

Back when I was accepting new clients and I was asked what was my fee I would say something like, “anywhere from $25 to $200”. I was not trying to be cute or evasive. It is literally impossible for a competent and ethical tax preparer to give an exact quote on the cost of preparing a tax return without actually preparing the return. A client might tell the preparer, “Oh, it’s a simple return” - but it rarely is.

But what I would never, ever say was, “20% of your refund”.

* Chad Bordeaux of BEANCOUNTER RAMBLINGS has ended his 5-part series on ROTH IRA conversions with “Planning Ideas – What is the Pro-Rata Rule?

A great and informative series! Have you read all the entries?

* The Tax Foundation’s TAX POLICY BLOG lays it all out –

New Jersey has the least-business-friendly tax climate of all 50 states. The Garden State has the highest median property taxes in the nation, the second-highest state-level sales tax rate, and the third-highest top individual income tax rate.

All of these factored in to New Jersey's recent last-place ranking in the Tax Foundation's ‘2010 State Business Tax Climate Index’, which measure's states' tax-competitiveness

Why would anyone who is not a direct beneficiary of NJ’s statewide political corruption vote to re-elect Jon Corzine or any incumbent politician. Get a GRIP (Get Rid of Incumbent Politicians) this coming November!

* The IRS tells us that a “New Form Aids Processing of Mortgage Applications, Makes Ordering Tax Transcripts Simpler”.

Taxpayers can use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge.”

* G Christopher Wright reports at THE TAX LAW REPORT blog about a Tax Court case (McCormick v. Commissioner, T.C. Memo. 2009-239) in which “Settlement of Disputed Debt Does Not Result in Cancellation of Debt Income

* Certified Tax Resolution Specialist Michael Rozbruch lists the “Top 7 Tax Resolution Lessons Learned from the Worst Cases of Celebrity Tax Evasion” over at the TAX RESOLUTION UNIVERSITY.

A great list and some great lessons. Michael goes back as far as Abbott and Costello’s tax problems from the mid 1950s.

* Kay Bell of DON’T MESS WITH TAXES brings us up-to-date on the First Time Homebuyer Credit controversy with “$10 Billion Paid Out in Home Buyer Claims, But How Many Were Bogus?”, “First-Time Home Buyer Credit Testimony”, and “H.R. 3901 Aims to Halt Home Buyer Fraud”.

Kelly Phillips Erb also covers the topic at TAX GIRL with “Cheater, Cheater, Pumpkin Eater: Home Buyer Credit Fraud Rampant” and “Hey Kid, Wanna Buy a House?

I will resist the temptation to say, “I told you so!”.

* Here’s an interesting item from the Wall Street Journal – “Cash for Clubbers: Congress's fabulous golf cart stimulus”.

Thanks to the federal tax credit to buy high-mileage cars that was part of President Obama's stimulus plan, Uncle Sam is now paying Americans to buy that great necessity of modern life, the golf cart.”

* Prof Jim Maule discusses the recent TIGTA report on the large number of errors made by IRS-trained volunteers in “Getting Ready for More Tax Errors of the Ominous Kind”.

As usual Jim’s post includes some wise observations -

Part of the problem is that even some employees of revenue agencies, including the IRS, don’t understand tax law or understand it insufficiently to get it right enough of the time.

The solution, of course, is a tax system that does not provide as many traps for the unwary, opportunities for error, and unwarranted complexity as does the current arrangement. Until that happens, stories of mistake-filled returns, erroneous refunds, audit blunders, and other failures will multiply, and the resilience of a tax system built on self-compliance, which requires taxpayer confidence in the system’s fairness and reliability, will weaken to the point of collapse

* It is a rare occasion indeed when I agree with the AICPA. However we see eye-to-eye on the issue discussed in the JOURNAL OF ACCOUNTANCY article “Coalition Urges Congress to Ban Tax Strategy Patents”.

I have often spoken out against the patenting or copyrighting of tax strategies here at TWTP.



Kelly said...

Oh, I think an "I told you so" is almost always appropriate...

Anonymous said...

Thanks for mentioning my article on tax resolution lessons we can learn from the rich and famous! Don't run into IRS problems like these guys! And if you do, get expert help or else your troubles can quickly multiply...