Thursday, April 28, 2011


I am a bit late with my annual review of the tax filing season – but I have been working away on GD extensions, payroll tax returns, and just plain catching up.

There was nothing special or significant about this tax season.

No new tax “gimmicks” – just a repeat of last season’s refundable Making Work Pay credit; it continued to FU withholding, especially for those receiving pensions.

No car, computer or other problems that took valuable time away from 1040 preparation – although my car was stuck in ice and buried under snow for three weeks early in the season causing me to rent a car on week-ends.

And I did not notice any recurring “theme” this season - one year every third client won the lottery, another had a lot of sales of residence, and recently a ton of refinances.

Because of the procrastination of the idiots in Congress the IRS was delayed in processing certain returns until mid-February, but this did not affect me in the least.

My main concern at the beginning of the season was being able to get enough 1040, 1040A, Schedule A and Schedule B forms. The local Post Office branch usually has a generous supply of all these forms – but this year when I went looking I found that only certain forms were sent to certain branches. Only Schedule M, Schedule B and 1040EZ were at my local branch. I had to travel to various other branches to find the 1040s, 1040As and Schedule A. Eventually, late in February, my branch got all the forms.

I continued to prepare all my federal returns manually, as I have always done (and always will – e-filing only when it is available free of charge, without benefit of flawed software, via the IRS website). To cover my arse under the new federal electronic filing mandate I had my clients sign a brief statement that I do not “file” their returns for them, I give them the finished return and they “file” the return themselves, and attached this to my file copy of the return. The IRS did not contact or penalize me for not e-filing. Neither did New York State, because it was obvious that I do not use flawed tax preparation software and therefore exempt from their mandate (one thing that NY actually does right).

I also continued to encourage my clients to request direct deposit of their federal and state refunds wherever possible. In the case of NY returns this was an absolute must, as we were told that taxpayers who did not request direct deposit of NY state refunds would have to wait months to get a paper check in the mail.

Speaking of New York State, this year the DFBs in Albany decided not to sell bulk copies of their tax returns to preparers any more. They had stopped sending out booklets to taxpayers a few years ago, but I was able to buy copies of the state’s forms from the Department of Taxation and Finance. For 2010 returns I had to download the forms from the Department’s website. And NY continued to waste valuable time by making me handwrite the information from W-2s on an IT-2 instead of just including the W-2 with the mailing of the return like everyone else.

Thankfully New Jersey still mailed out tax return booklets to those who filed manually for 2009. But the booklets were not available at local Post Offices this year.

I used the NJWebFile system to submit full-year resident returns online where possible, and when a client did not specifically “opt out”. However I could not submit the returns for clients with NJ Gross Income of more than $150,000. For 2009 returns $150,000 meant something – it limited the property tax deduction. But for 2010 this restriction was no more and $150,000 meant absolutely nothing. The cafones in Trenton were too cheap to pay someone to update the system’s software. Each day from February 1 through April 16 found me at my desk from at least 4:00 AM till around 5:00 PM, with brief breakfast and lunch breaks. I "hit the hay" each night at 8:00 PM (or earlier). I strictly enforced my “read my lips – no new clients” rule. I also enforced my new cut-off date for accepting returns to be prepared by the deadline. Any returns that were not literally in my hands by end of business on March 25th (regardless of the postmark) were automatically extended.

I tried to maintain a FIFO (first-in, first-out) system of preparation, but, as usual, this was not always done. I did, once again, make sure that all returns (with the exception of one that fell victim to the “Curse of the Red File”) received in my hands in February, with all the necessary information, were completed before tackling the returns received in March. Red files (those that needed more information), with the one exception, were completed once the missing information was received.

In the first two weeks of February turn-around time is quick – sometimes only one or two days. By mid-February this increases to at two weeks and becomes three by the end of the month. For returns received in March the turn-around is really 4 weeks – so returns received after March 15th, if involved at all, are most likely extended.

I did not notice any more late corrected Consolidated Form 1099 Statements from brokerage houses than usual this year, as has been suggested by NATP and others. But the issuance of one, or more, corrected statements as late as mid-March continues to cause serious delays, sometimes resulting in extension.

The additional 3 days of this year’s tax season – a result of Emancipation Day in Washington DC – really did not help me much this year. I still “ran out of steam” around the 14h, as always happens. For 2009 my biggest 1040 extended, but did not do so for 2010. This set of returns took away about a day and a half – canceling out the addied days. The season ended for me on Saturday, April 16th.

Despite the relative smoothness of the season I still ended up with 40 or so GD extensions – some of which were due to my workload and not late or no receipt. Unfortunately this means I really need to “thin the herd” a bit for next year – and not just say I need to.

Several long-time clients went to their final audit this year – a few way too soon. That is not how I want to “thin the herd”. They will truly be missed.

While I did go to the Jersey Shore from April 17-19 to recover, once I returned home I hopped right on the GD extensions. I will continue to work on the GDEs, at a relaxed pace, through next Tuesday (May 3rd), hoping to have at least 20 done by then. On May 4th I leave for a few days of relaxation on Long Beach Island.As usual I was "on hiatus" from posting to TWTP or my NJ TAX PRACTICE BLOG during the season, although I did write a tax season column of initially twice-weekly and eventually week-day daily TAX TIPS for It is good to get back to the tax blogosphere.

So fellow taxpro bloggers - how was your tax season? TTFN


Peter Reilly said...

Nothing that exciting about this tax season. We have lots of extensions. Usually its planned that way. Lots of clients in hedge funds and the like. I was able to keep up my blog. This is the really the first tax season that I've been doing it seriously. I have about 60 items that will work their way into posts in the next month or so. I find its a real trade off between having the material fresh and well written.

I'm thankful and you should be too that I didn't have a bunch of California registered domestic partners to do. They can't file joint returns but have to apply community property laws.

Robert D Flach said...


I am thankful that I didn't have any California returns to do.

It is hard enough keeping up with NJ, NY and PA.


Robert D Flach said...


And, BTW, I look forward to your upcoming posts.