Saturday, June 4, 2011


* Did you see my item on dependents and withholding on summer jobs at MAINSTREET.COM titled “Tax Tip: Get the Best Refund From a Summer Job” (FYI - I don’t write the titles).

* An item titled “Those Wacky Clients” by Robert D Flach appears in the June issue of the NCPE Fellowship’s TAXING TIMES. Of course you need to be a member of the NCPE Fellowship in order to download a copy.

* Russ Fox’s fine tax blog TAXABLE TALK is back after having experienced some “technical difficulties. In his post “
New Circular 230 Released: Welcome RTRPs!” Russ discusses the highlights of the new IRS “Circular 230”.

Perhaps most important -

Anyone preparing a Form 1040 series return will need to be an EA, CPA, attorney, or RTRP.”

This is something that the IRS needs to publicize more forcefully. The RTRP is the newly created “Registered Tax Return Preparer”. However, these initials will not be “granted” to qualified tax preparers until the new regime has fully phased in and the tax preparer has passed the initial competency test. We have three years to pass the test, so the RTRP designation will not be completely valid until this three-year period has passed.

I hope the IRS publicity about RTRPs mentions the fact that CPAs and attorneys are exempt from proving competency and currency in 1040 preparation via testing or required CPE, and therefore only the initials EA and RTRP have any meaning when it comes to 1040 expertise.

* Basically what is behind the ridiculous “pennies on the dollar” claims by disreputable so-called “tax resolution” companies is the IRS “Offer in Compromise” program. For the truth about the OIC check out the IRS website’s page on “What You Must Know Before You File an Offer in Compromise”- which I discovered via a “tweet”.

* Kay Bell reports that “Tax Refunds Lost to Identity Thieves is a Growing Problem” at DON’T MESS WITH TAXES.

We are an increasingly electronic society. But our dependence on online options makes it easier for identity thieves to steal our data and, in a growing number of cases, our tax refunds.

The Government Accountability Office reports that in 2010 alone, the Internal Revenue Service identified more than 245,000 incidents of identity theft. Granted, around a quarter of a million ID theft occurrences is minuscule in the overall tax filing population of 140 million individual returns.

But that figure represents a nearly five-fold increase in taxpayer identity theft between 2008 and 2010

Kay tells us (the highlight is mine) -

A big problem is the method of taxpayer involvement that the IRS encourages: electronic filing.

When one of the taxpayers who fell prey to tax return identify theft asked an IRS representative how a person could file a return without validation or proof the he or she was the taxpayer eligible for the refund, she was told, ‘Do you know how many people file electronically? We expedite the return and match up information later’

* Kay also brings an interesting Tax Court case to our attention in “Cat Lady's Feline Foster Care Tax Deduction Slashed From $12,000 to $250”.

First of all, the “cat lady” in question, Jan Elizabeth Van Dusen, should be applauded for the fine work she does for feral cats.

Ms Van Dusen “claimed $12,068 as a charitable contribution deduction on her 2004 tax return for unreimbursed volunteer expenses she incurred while caring for feral cats”. According to Kay –

The Oakland, Calif., attorney volunteered with Fix Our Ferals, an IRS-qualified 501(c)(3) organization. Van Dusen trapped feral cats, had them spayed or neutered, housed them while they recuperated, got the animals vaccinated and other necessary medical treatments and then released them back into the wild. She also provided long-term foster care to cats in her home.”

While the Tax Court did disqualify some of the individual expenses as not being directly related to her volunteer work, it did agree many of the expenses “were directly connected to the charitable organization's cat care services. These included 90 percent of Van Dusen's vet expenses and pet supplies and 50 pecrent of her cleaning supplies and utility bills.”

However “since Van Dusen did not provide the IRS (or the court) with contemporaneous written acknowledgement of her charitable gift from Fix Our Ferals, she's out of tax deduction luck. The court found that her cat care expenses of $250 or more were not deductible.”

As Kay points out, according to IRS instructions – “If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions”.

* In case you are thinking about running for public office in the future, Bruce, the MISSOURI TAX GUY, provides a good discussion of the “Nanny Tax” in “Household Employees – Avoid Penalties”. Great picture, Bruce!

While you are there check out his “Product Page”.

* Some good advice in Rob Teuber’s “Friday Tax Quote – June 3, 2011” at his TAX LAW FORUM blog.

* Here we go again – increasing the deficit foolishly. My home page had the headline “John Edwards Indicted Over Affair Cover-up”.

As long as Edwards’ partner was not underage or a sheep, he did not force himself on her, and he did not disclose classified government information during pillow talk that was passed on to our enemies, who gives the proverbial Flying F**k! Edwards is no different that at least 75% of his colleagues in elected office – except that he got caught.

If this case is truly about actual misuse of campaign funds – i.e. using money contributed to his election campaign for personal expenses – then it has some merit. However I am strongly against wasting government money investigating the personal infidelities of politicians. We all know that, for the most part, politicians are self-centered idiots with lots of human frailties.

* Let me end on a non-tax note by taking you to a great article from SJ Magazine by Jen A Miller titled “The Real Jersey Shore”.

This we know: What you see on MTV is not the Real Jersey Shore. The cast isn’t from New Jersey, and what they present – the drinking, the fights and the more drinking – is present in only a small sliver of a North Jersey beach, amped up to nightmarish cartoons for the sake of attracting viewers.

The fictional Jersey Shore of MTV’s creation doesn’t make room for sunsets in Cape May, or slipping down the water slides at Raging Waters in Wildwood. It doesn’t make room for riding the antique carousel in Ocean City, wing night at the Windrift in Avalon or taking that long walk down the promenade in Sea Isle City. This Jen – me, not JWoWW – is the real Jersey Shore Jen. I spent my summers in Avalon. I’m tan from running. My blonde hair color is the real deal. I’m also an actual Italian American. Oh, and I’m from New Jersey.

But none of that will get the same kind of ratings as stuffing buffoons in a house with cameras and plenty of alcohol and proclaiming that this is a snapshot of the Jersey Shore

I have enjoyed the Jersey shore my entire life. And continue to do so. The so-called reality tv show THE JERSEY SHORE, like all reality television, has absolutely nothing to do with reality. As I have said many times before, it, and the entire genre, can best be described as a steaming pile of excrement. It is human garbage appearing in garbage that only idiots would watch.

I continue to dare anyone with any amount of intelligence to tell me what value this show provides – entertainment, socially redeeming, or otherwise – other than as an example of just how stupid people can act.



Peter Reilly said...

OK Bob here's the story on CPA's and CPE. Do you really think that CPA's who prepare 1040's choose to fulfill their 40 hour requirement without taking any tax CPE ? The alternative is ghastly. 40 hours of GAAP. Actually some states like Florida set a minimum of AA hours (just to torture us). CPA's are also ethically proscribed from doing work they are not qualified to do. On the other hand I'm thinking of taking the test anyway.

Anthony said...

Having never seen The Jersey Shore I'll have to defer to your judgement on the entertainment value of it. But the show does create hundreds of jobs without violating anyone's rights.

Robert D Flach said...


I have no doubt that most CPAs who prepare a substantial number of 1040s do indeed already take more than 15 hours of CPE in 1040 topics each year, as do many previously “unenrolled” preparers (like myself). So making CPAs who want to prepare income tax returns subject to this requirement is not an additional burden or cost.

My concern is that CPAs who prepare 1040s should be able to so identify themselves by being able to take advantage of the RTRP designation. This would help these CPAs as well as the taxpayer public.

The initials CPA in and of themselves in reality have no bearing on experience, competence or currency when it comes to 1040 preparation – although the public has for years erroneously assumed they did. Making CPAs, and attorneys as well, who prepare 1040s subject to the same standards and requirements as the previously unenrolled when it comes to testing and required CPE would clearly identify a “CPA, RTRP” as being competent and current in federal individual income taxes.


Anthony said...

The initials EA also have no bearing on experience, competence, or currency when it comes to 1040 preparation. One need never have prepared a 1040 to become an EA. There are no questions on the EA exam which reference the 1040. And it is perfectly possible to complete one's annual CPE requirement without ever learning about or indeed ever seeing a 1040.

Robert D Flach said...


I doubt that very much.

However, I am not an Enrolled Agent, and I have never taken the EA test. So I would call upon my EA readers to respond to your comment.


Anthony said...

You can view the 1999-2005 special enrollment exams at,,id=137267,00.html

You can view the application for enrollment at

And you can read the CPE requirements at,,id=123418,00.html

johnseomaven said...

For Accountants who wish to take an Online CPE for CPAs, you can search the best CE providers all over the web by using these keywords in most search engines: "online CPA CPE", "CPA CPA" or "CPA continuing education". Different State Department websites also provide resources for your CPA CPE.