Thursday, December 31, 2009


Welcome to the final BUZZ of 2009.

* I liked TAXGIRL Kelly Phillips Erb’s Christmas Day tax quote –

Christmas is the time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell government what they want and their kids pay for it.” - Richard Lamm

* TAX PROF Paul Caron reports on the release of the IRS Fiscal Year 2009 Enforcement Results, and tell us “IRS Releases 10-Year Enforcement Data: Business Audits Down, Individual Audits Up

* The PTB (powers that be) in New York State are real MFPs (this does not stand for “mighty fine people!”).

First they decide to no longer accept Copy 2 of Form W-2 attached to the state income tax return as verification of withholding. They require us to fill in the information from each W-2 on a Form IT-2, which wastes a lot of my time during tax season.

Then they decide not to send out tax forms and instruction packages to taxpayers and make me pay to get NY state tax forms.

And then they decide that pretty much any tax preparer who prepares NY State income tax returns must pay them $100, regardless of where they are located and even if they have absolutely no physical presence in New York State.

Now fellow tax blogger John Sheeley has told me, via a “tweet”, that NY State is no longer mailing out Form 1099-G - Statement for recipients of State Income Tax Refunds – to report the amount of NY state refund received in 2009. You have to go online to download the form. More time wasted.

The MFPs!

* Trish McIntire, and other sources, has reported what she calls “Bad News Before Christmas” at OUR TAXING TIMES. This is one area where Trish and I disagree – because I consider it good news.

Trish tells us –

On December 24th, Pacific Capital Bancorp announced that they want to sell their tax business to a private equity fund because regulators have barred it from originating any Refund Anticipation Loans in 2010. The thrust of the article is the impact on Jackson Hewitt which relies on Pacific Capital's tax business (Santa Barbara Bank and Trust) for 75% of their RAL funding. Beside Jackson Hewitt, SBB&T has a large part of the independent RAL market.”

I join many consumer protection organizations in saying that Refund Anticipation Loans are bad and that tax preparers should not be allowed to offer such a product. See my posts “One More Reason to Avoid H+R and Their Ilk” and “Testimony from the Consumer Federation of America”.

God forbid Jackson Hewitt should have to rely on its ability to prepare competent and accurate income tax returns, instead of offering usurious loans, to earn a profit – it would certainly go bankrupt. No great loss if that happens.

I see that fellow tax blogger Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG shares my opinion (great minds do think alike!) –

While I fully support the right of consenting adults to engage in finance, however foolishly they may do so, I can't help but smile at reports that Jackson Hewitt customers may lose the opportunity to engage in some of the most expensive borrowing out there -- and that the franchise tax prep firm's stock is taking a beating as a result.”

I do somewhat agree with Trish’s point that some tax preparers feel they must offer RALs to clients in order to remain competitive. However if the only reason a taxpayer chooses a tax preparer is because he/she offers RALs, that taxpayer may not be the type of client you want.

The solution to the issue Trish raises is to ban all tax preparers from offering RALs – or better year force RALs to carry reasonable fees and interest rates so that it will no longer be attractive for any bank to offer the product.

* New Jersey taxpayers - be sure to check my post “What’s New for New Jersey State Income Tax For 2009” over at the NJ TAX PRACTICE BLOG.

* The December 23rd edition of THE KIPLINGER TAX LETTER tells us that “a group wants a court to void the tax exclusion for parsonage allowances and the deduction for real estate taxes and mortgage interest that is available to recipients of these allowances”.

Currently the Tax Code allows ministers to “double dip”. The can exclude from federal income tax the parsonage allowance that they are given by their congregation and they can claim an itemized deduction for real estate taxes and mortgage interest that they pay using the tax-exempt parsonage allowance money.

The group appears to be the Freedom from Religion Foundation (protecting the constitutional principle of the separation of state and church and working to educate the public on matters relating to nontheism), and the case, which “will require the district court to uphold or nix the breaks” is Freedom From Religion Foundation v. Geithener, D.C., Calif.

* A while back a visitor to TWTP asked me if I knew of any tax blogs that dealt with Canadian taxes.

If you are still out there I just came across one – CANADIAN TAX RESOURCE (Canadian Tax Help and Financial Planning Resources) - written by a new twitter “follower

* Russ Fox continues to keep us up-to-date on the issue of gambling losses, reporting on a recent Tax Court case in his post “A Loss for the Taxpayer but a Win for Gamblers” at TAXABLE TALK.

The decision upholds the concept that I have discussed in a couple of earlier posts here at TWTP.

While I have also said this in my gambling posts – Russ’s bottom line bears repeating -

You need good records. By far, the lack of backup documentation is what trips up most gamblers in audits.”

* Over at the Tax Policy Center’s TAX VOX blog Howard Gleckman provides a glimpse of what we have to look forward to tax-wise in 2010 in “2010: Get Ready for a Tax-a-palooza”.

I will be addressing this topic in an upcoming post here at TWTP

* Kay Bell tells us that “Girls Gone Wild Founder Sues IRS” over at DON’T MESS WITH TAXES.

Arsehole Joe Francis committed tax fraud. As Kay reminds us – “This fall, Francis pleaded guilty to two misdemeanor counts of filing false tax returns. The plea deal also mandated that Francis pay back taxes and interest totaling $249,705, as well as a $10,000 fine.”

But he avoided the opportunity to play “who’s got the soap” in a prison shower because “a judge sentenced him to the time he had served while waiting for resolution of the case”.

The IRS apparently froze Francis’ bank account to make sure they would get the approximately $260,000 to which they are entitled, and which Francis has apparently not yet paid – so he is suing the IRS claiming they are “just irked that he got off so lightly in connection with the false returns case”.

He did the crime, but didn’t have to do the time. He should pay-up and get it over with.


PS – Best wishes for a “successful” New Year’s Eve

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