Thursday, May 12, 2011


Over the past 40 years I have, at one time or another, belonged to just about every membership organization for tax preparers, except, of course, the AICPA and NAEA. Currently I am a member of the National Association of Tax Professionals (NATP) and the ncpeFellowship.

The ncpeFellowship is “an organization of tax professionals dedicated to being the best educated and technically proficient tax professionals in the business of tax” that is run by continuing professional education provider the National Center for Professional Education (NCPE).

Beanna Whitlock, EA is the Fellowship’s Executive Director, and the reason for my membership. She has been a tax professional of 42 years (she beat me by 2 years). She was the Director of National Public Liaison for the Internal Revenue Service and, upon leaving the IRS, the Executive Director of the National Society of Tax Professionals (NSTP) - leaving when discovering and opposing apparent greed among the Board of Trustees that has just about destroyed the viability of that organization.

It was Beanna who, when I raised my hand in answer to her question of “who still prepares tax returns by hand” at an NSTP conference several years ago, asked to shake my hand and announced to the audience that I was the only one in the room who really knew how to prepare 1040s.

The Fellowship, or actually Beanna, produces a monthly newsletter titled TAXING TIMES that is available to members online. Like the newsletter of NSTP back in the days when it was written by Tom Cooke and later Beanna, it is chock-a-block with information and statistics of interest to the tax preparer.

The May 2011 issue discussed, among many other items, the following -

+ The IRS has published preliminary date on the 140.5 million individual federal income tax returns that were filed for tax year 2009.

The numbers show the financial carnage wreaked on individual households by the economic downturn that began in 2008 and accelerated in 2009. However, retirement income was up, reflecting the first wave of baby-boom retirees, and, perhaps, the forced early retirement of many individuals.”

Here are how some of the significant numbers for tax year 2009 compared to those for tax year 2008:

· Adjusted Gross Income was down 6.9%
· Taxable Income was down 9.3%
· Total Income was down 15.4%
· The dreaded Alternative Minimum Tax (AMT) was down 9.1% (“the first time AMT has fallen since tax year 2001”)
· Salaries and Wages were down 3.7%
· Net Capital Gain was down 46.1%
· Ordinary Dividends were down 22.3%
· Taxable Interest was down $24.8%
· Charitable Contributions were down 8.2%
· Taxable Pension and Annuity Income was up 3.1%
· Taxable Social Security was up 3.8%

+ Former IRS officer Al Drucker of Manalapan NJ has created, “a website that allows informants to alert the IRS anonymously about suspected tax fraud”.

This new site allows informants to “fill out an easy-to-use form written in plain English. then forwards the information to the IRS and erases from its computer system information about the person making the allegation.”

Those who turn in tax cheats via this website will not be eligible to collect a “reward” from the IRS, since they are, in effect, blowing the whistle anonymously.

Methinks this site will be used more by angry ex-wives or ex-husbands and others who just want to cause agita for someone, and not by true whistleblowers.

+ The IRS has issued final regulations relating to the electronic filing “mandate” for tax return preparers.

The IRS has ridiculously equates “filing” a return with “mailing” a return – so that if I prepare a paper return for a client and actually put the sealed envelope, containing the signed return, in the mailbox at the Post Office I have “filed” the return. However, under the final regs –

Acts such as providing filing or delivery estimates, an addressed envelope, postage estimates, stamps, or similar acts designed to assist the taxpayer in his efforts to correctly mail or otherwise deliver an individual income tax return to IRS do not constitute filing by the tax return preparer or specified tax return preparer as long as the taxpayer actually mails or otherwise delivers the paper individual income tax return to the IRS.”

And the newsletter tells us that “Under Reg. S 301.6011-7(a)(4), an individual income tax return isn’t treated as filed by a tax return preparer or specified tax return preparer if the tax return preparer or specified tax return preparer who prepared the return obtains, on or before the date the return is filed, a signed and dated written statement from the taxpayer stating that the taxpayer chooses to file the return in paper format, and that the taxpayer, and not the preparer, will submit the paper return to IRS. If it’s a joint return, only one spouse needs to sign.”

So it appears that as long as I have such a signed statement on file I am “off the hook” and do not have to waste tons of money on flawed tax preparation software to be able to submit returns to the IRS electronically.

This issue of TAXING TIMES also included my end of tax season answering machine message under the category “Fellowship Members with Creativity” (see my April 17 post here at TWTP).

Now, back to the GDEs!


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