Friday, September 30, 2011

ENOUGH ALREADY

Lawyer Darrin T Mish has provided an update of the new PTIM procedures in “Tax Preparers To Be Fingerprinted By IRS” at his IRS PROBLEM SOLVER BLOG.

In discussing the fingerprinting process he says –

Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries are not likely to be required to be fingerprinted. But they must declare whether they have been convicted in a felony the last 10 years. This is one of the standard questions in the PTIN application.”

Enough is enough!

It is bad enough that attorneys and CPAs are exempt from the initial proficiency test and required CPE in federal taxation, allegedly because they have already passed tests (with little if anything to do with 1040s) and are already required to take CPE (but not in federal taxation).  But if I have to waste my time and drag myself to some supposed central location and be fingerprinted in order to continue to make a living why not attorneys and CPAs who want to prepare 1040s?    

And conversely, if the IRS is willing to take the word of someone with initials already after their name that they have not been convicted of a felony in the past 10 years why is my word not just as good?  

Why this fingerprinting in the first place?  Registration is good, but this is going overboard.  Fingerprinting has nothing to do with verifying one’s ability to prepare 1040s. 

EA’s were not fingerprinted when they applied for the designation (according to an EA).  I do not believe CPAs or attorneys are fingerprinted before being awarded their initials (if I am wrong, please tell me).  I don’t know if engineers or architects or doctors are fingerprinted as part of their regulation regime, but I doubt it very much.  I do know that EROs (Electronic Return Originators) were fingerprinted, which is also ridiculous.

It is my understanding that the fingerprinting is solely for the purpose of doing the “background check”.  The fingerprint record will be destroyed once this has been processed, and not kept in a permanent data base.  This better be true!

The proficiency exams will begin soon, and I must pass it by 2013.  I am not rushing out to be among the first to be tested.  I will wait until they are sure that it works properly.

To be perfectly honest, I am secretly hoping that there will be so many problems with administering the test that the IRS will rethink its position and decide to do some kind of “grandfathering”.

Also exempt from the proficiency test are supervised employees of attorneys, CPAs, or EAs employed by a law firm, CPA firm, or other recognized firm, who prepare but do not sign, and are not required to sign, federal 1040s (and 1040As).  These are the “underlings” of CPA and legal firms who actually do all or most of the work but do not sign the return so the client thinks a CPA or lawyer prepared the return and will pay the excessive fee.  

These employees have not passed the CPA exam or the Bar exam (not that they are anh test of 1040 knowledge).  There is no proof, via the testing that is required of me, that they know their arse from a hole in the ground about federal income taxes.  So why are they exempt?

First of all there should be grandfathering. For example, as I suggested in my letter to the IRS on the subject back in the summer of 2009, “tax practitioners who have been preparing federal individual income tax returns consistently for five years (60 months), who have earned 50 hours of Continuing Professional Education credit in Individual Income Taxation in the two year (24 month) period prior to registration, and who are not currently prohibited from preparing federal income tax returns because of past bad acts will be exempt from taking the initial proficiency examination.”  This is merely my suggestion.  The look-back period and accumulated CPE could be different.

Second, ALL individuals who are required to have a PTIN – basically all individuals who want to prepare 1040s (and 1040As) for a fee – except Eas would be required to take the proficiency test, unless exempt under grandfathering, and maintain 15 hours of CPE in federal income tax annually.  This includes CPAs and attorneys and supervised employees.  Enrolled Agents would be exempt because they have already passed a more extensive test in federal taxation and have annual federal taxation CPE requirements in excess of the RTRP.  CPAs and attorneys who pass the test, or are grandfathered, and maintain the CPE will be endowed with the additional initials RTRP (i.e. John Doe, CPA, RTRP).  Only RTRPs and EAs will be allowed to prepare federal individual income tax returns for a fee.

TTFN

Thursday, September 29, 2011

LOTS OF INTERESTING STUFF


Have you checked out LOIS yet – my free monthly newsletter with Lots Of Interesting Stuff?

The premiere issue – July 2011 – included:

·      Did You Know: Law and Order
·      IRS Increases Standard Mileage Allowance
·      Sometimes It’s OK to Say Never
·      Debit Cards VS Credit Cards
·      My Heart Will Be Blessed With the Sound of Music
·      On the Road Again: San Antonio

The August 2011 issue included:

·      Did You Know: South Pacific
·      Tax Bloggers Offer Their Best Advice
·      Tips for Completing Your Social Security Application Online
·      Unclaimed Property
·      LBJ Took the IRT Down to 4th Street USA. When He Got There What Did He See? The Youth of America on LSD!

And the September 2011 issue included:

·      Did You Know: It’s A Bird, It’s a Plane, It’s Superman
·      Is an MBA Deductible?
·      Update - More Unclaimed Property
·      1040 Basics – Taxation of Mutual Funds
·      Ramblings (of a Relatively Sane Mind)
·      Unanswered Questions

Each issue also contains SURFING USA and ALWAYS LEAVE ‘EM LAUGHING.

The October 2011 issue is almost ready to “go to press” – with more interesting stuff.

If you like LOIS you are welcome to pass it around and email it to all your friends and family – IT’S FREE!

TTFN
 

Wednesday, September 28, 2011

WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENIN’ – WEDNESDAY EDITION


Not too much BUZZ this time around.

+ Have you checked out the September issue of LOIS yet?   

+ I did an internal search for myself at FORBES.COM and found two blog posts referencing me and my opinions that I had not previously seen.

They are “Back to School: Do Tax Preparer Exams Keep Taxpayers Safe?” by TAX GIRL Kelly Phillips Erb” and “Tax Simplification Proposal” by Peter J Reilly.  Please check them out.  And I apologize to the authors for not acknowledging the mentions sooner.

As for Peter’s tax simplification proposal – it is an interesting, but as he points out, unlikely one.  I have not given it much thought, but my initial reaction is that I would not support it.

+ Kelly Phillips Erb explains “Back to School: Education Savings Bonds” at her FORBES.COM blog.

“When you cash in educational bonds in order to pay education expenses, you may be able to exclude the interest for federal income tax purposes. The bonds that qualify for the exclusion are those in the series EE issued after 1989 or a series I bond. The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners) and the owner must be at least 24 years old before the bond’s issue date (you’ll find the issue date printed on the front of the savings bond).”

+ And Kelly brings us good news (and completes a trifecta) in “New Jersey Says No To Tax Credit for ‘Jersey Shore’”.

New Jersey Gov. Chris Christie (R) has decided against a $420,000 tax credit for the hit MTV show, Jersey Shore, taking his veto pen to the credit after a call from the state Senate and taxpayers in the state.”

Right on, CC!

I am sure the producers lied in their credit application when describing the show.  Nobody in their right mind would give government funds to such a steaming piece of excrement with absolutely no “redeeming social value”.

+ So this doesn't become an ode to FORBES, Trish McIntire takes on the topic of “Using Your Home for Business” at her MOM AND POP’S small business blog.

Her bottom line –

Office in Home can be very confusing and as mentioned in this post, there several sets of rules. So, please check with your tax professional to see if you qualify.”

+ Nothing to do with taxes – but a tweet from a client took me to “11 Cruelest Aspects of Biggest Loser” at 11 POINTS (“Because Top 10 Lists Are For Losers”), which helps explain why the biggest loser is the person who watches the reality tv excrement known as THE BIGGEST LOSER (and this, apparently, includes the blog’s author). 

TTFN

Saturday, September 24, 2011

WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENIN’

The idiots in Congress have, through laziness and procrastination, missed an excellent opportunity to do something constructive.  October is almost here and it appears that they have forgotten all about reforming our convoluted Tax Code. 


I agree with the headline in a recent promotional issue of THE KIPLINGER TAX LETTER – “Thus, Congress isn’t likely to tackle serious tax reform anytime soon.”  Certainly  nothing of any consequence will be accomplished this year. 

+ Have you checked out the September issue of LOIS yet?   

+ NJ preparers should check out my post on the “NJ-NATP Annual Meeting” on my NJ TAX PRACTICE BLOG.  Read down to the end and you will discover that – “they like me, they really like me”!

+ I do not find David Letterman funny at all.  The only occasional funny moment on his late night show is the TOP TEN LIST.

Kay Bell recounts the “Top 10 Highlights of Obama’s Deficit Reduction Plan” at DON’T MESS WITH TAXES.

+ And Kay Bell summarizes what is currently happening “As the Congress Turns” in “Tax Juggling on Capitol Hill". 

It seems the idiots have a lot of balls in the air.  Let’s hope they can get something accomplished (not holding my breath). 

+ Finishing out a trifecta Kay reviews 4 Roth Recharacterization Considerations” at her BANKRATE.COM blog.

+ The IRS has a good basic starting point for “Deducting Business Expenses”.

+ Over at FORBES.COM Deborah Jacobs tells us the good news that there are “No More Patents For Cute Tax Tricks”.

Under a provision in the far-reaching patent reform bill, it’s no longer possible to get a patent on a strategy for reducing, avoiding or postponing taxes.

+ Bill Bischoff, SMARTMONEY.COM’s “The Tax Guy”, discusses a 2010 tax court decision in “Free Lunch: Deducting Expenses You Never Paid”.

The moral of his story –

When it comes to deductions for certain expenditures, the question of who actually paid for them may not decide who is entitled to deduct them. Do not automatically assume you can't deduct expenses that were actually paid by someone else. Sometimes there is such a thing as a free lunch. Contact your friendly tax pro when you have questions about who is allowed to claim write-offs in various circumstances. You may be surprised by what you hear.

+ The Wall Street Journal warns us of “The Buffett Alternative Tax”.

"Washington has repeated nearly every economic policy mistake of the 1930s in recent years, so why not repeat one of the bigger blunders of the 1960s too? We refer to President Obama's proposal yesterday for a new 'Buffett Rule' to raise taxes on Americans earning more than $1 million a year. This may sound familiar to readers of a certain age, because it is how the current, and much-hated, Alternative Minimum Tax was born."

+ Russ Fox gives us the word that "California Leads the Way: Worst State for Business" over at TAXABLE TALK

The post also points out that New Jersey is Number 47 on the list – the 4th worst state for business. Actually this is an improvement for my home state. Perhaps Christie is making some progress.

+ Trish McIntire explains the new IRS program for “
Voluntary Worker Re-Classification” at OUR TAXING TIMES.

+ William Perez explains that “
Estate Tax Deadline Extended Again” at ABOUT.COM TAX PLANNING: US.

TTFN

Friday, September 23, 2011

OOPS! HE DID IT AGAIN

Peter J Reilly has posted another guest post from yours truly over at FORBES – titled “Wandering Tax Pro Will Not Be Loved In Real Estate Community”. Check it out.

I look forward to reading the comments – yours included.

TTFN

Thursday, September 22, 2011

ONE STEP BEYOND

There is a local free weekly newspaper that I often pick up, mostly to read the Death Notices.  It is not that I am of the age yet that I look to see if I am included - I look for clients or friends of my parents.

I have not seen an issue for a couple of months.  Yesterday, while in the Post Office mailing a completed GDE, I came across a copy of the latest issue on one of the tables and took it.

When I turned to the Death Notices I found listings for two clients who had gone to their final audit!

Spooky! 

DR SEUSS AND TAXES

Traci Wheeler recently posted “5 Tax Professionals Share Their Thoughts on TheirProfession” at the INTAXICATION blog (“Tax Buzz With A Twist”) of RED MOON SOLUTIONS, LLC.

Several weeks ago, I wrote ‘Oh, the Places You’ll Go…in Tax, a post where I talked about the need to excite kids today about math in an effort to fuel the talent required for future tax departments. While it did not generate many comments here on the blog, there was quite a bit of discussion in one of the LinkedIn groups for tax professionals about what people going into their profession should do and consider. I enjoyed the feedback I got so much that I decided to write a follow up post so I could share some of their thoughts with our readers.”

The post ends with a great item -

And finally, a great ode to Dr. Seuss, tailored for the tax professional, left by Patrick A. Haggerty. It sums it up in a nut shell –

Well, it does have its ups and downs
and decisions, good and poor,
but certainly one can soar,
But to do tax,
one has to know facts,
we cannot grow lax,
but also must know we need time to relax
’cause during the season (and not without reason)
We get so many Form W-2′s
that sometimes we simply end up with the blues,
But the field’s wide open, whatever your strengths
even though those in Congress seem to go to great lengths
to make changes galore – and then more and more
‘til reading the fine print makes our eyes sore.
Although with our Congress much change is a surety.
What it adds up to is great job security.

INTAXICATION also has a great post of “Famous Tax Quotes to Amuse You”.  Here is my favorite –

Taxation with representation ain’t so hot either.” Gerald Barzan

Especially with today’s representatives!

TTFN  


Wednesday, September 21, 2011

WHAT'S THE BUZZ? TELL ME WHAT'S A HAPPENNIN' - WEDNESDAY EDITION

The BUZZ is back!

+ Thanks to Jason M. Jones, MBA for the shout out to TWTP in his STRATEGEM CFO blog post “Rebuttal To a Blogger on Morals and Ethics”.     

Jason told me he has been following TWTP for over two years. 

I had an accounting and tax practice, but abandoned it in 2010 to start a CFO firm. Nevertheless, while I no longer am in the business of tax preparation, I still am an avid follower of your blog.”

His blog post talks about the offending blogger who thinks his word is gospel and that CPAs and lawyers walk on water.  While he softens on the offender in the end, if you read through his comments on the post of the offender with which he disagreed you will note that he correctly observed (about the offender) - 

. . . you do have a very condescending and self-righteous attitude and it shows throughout your blog.

+ I recently came across a new tax/accounting blog – DUE DILIGENCE by tax lawyer Brian Mahany.

In a recent post titled “IRS Overwhelmed By New Tax Law Changes” Brian discussed a recent Treasury Department Inspector General for Tax Administration (”TIGTA”) audit of the IRS –

The Inspector General concluded that, ”During FY 2010, the IRS encountered many challenges, including a variety of tax provisions that were created, extended, or expanded.” There were over 100 new provisions alone just from the American Recovery and Reinvestment Act and the Patient Protection and Affordable Care Act.”

Brian also pointed out that -

According to the report, the tax changes last year were the most significant faced by both the IRS and taxpayers in at least 20 years.”

He rightfully observed -

If the Service can’t keep up despite thousands of new agents, how is a small business owner supposed to keep up? The net effect of such a complex and ever-changing tax code is to turn taxpayers into what I call ‘innocent criminals’. Criminals because they broke a law or regulation but ‘innocent’ in that they had no idea that they were breaking the law.”

Brian published a guest post from yours truly titled "5 Ways to Avoid IRS Problems" yesterday.  Check it out!

+ And here is another new, to me, tax blog – THE TAX TRANSLATOR by Steve Hoffman, “A blog about my thoughts on higher education and nonprofit organizations and the taxation of them. I work with higher education and nonprofit organizations to help them keep their most valuable asset - their tax exempt status”.

+ The IRS recently released IR-2011-89 IRS ReleasesSpecifications for Registered Tax Return Preparer Test”. The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.  Click here to download the IRS specifications.

Fellow tax blogger Stacey Clifford Kitts provided some appropriate comment on the subject in her post “IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t It Just Give You the Chills?” at STACIE’S MORE TAX TIPS.  (the highlight is mine) -

Here it is, what all un-registered (non CPA’s, attorneys, or enrolled agent) tax preparers have been waiting for. The specs for the competency test that will award those who pass the title of ‘Registered Tax Return Preparer’.

Wowwee doesn’t it just give you the chills….

No – well maybe that’s because CPA’s and attorneys can sign tax returns even if they don’t have a single clue what they are doing. They get to do this without passing a test (other than the initial licensing exam which he/she could have taken a hundred years ago – so not even relevant today) or taking a single hour of tax related continuing professional education. You know, training that would keep you up to speed on the actual tax laws that apply to tax return preparation.”

Fixing the mistakes of these so called professionals is a large part of my practice. I guess I should be grateful instead of loosing my mind over the absurdity of it all.”

+ I received an email a while back from Angela Wilder of ishade.com -

Dear Robert-

Your blog has been recognized as one of the top blogs in the accounting profession. Congratulations on this awesome accomplishment.

I am reaching out to you today to introduce you to iShade (if you haven't already heard of it) and to ask you to join us.

iShade.com is the online profession online. A community for accountants that provides access to unique resources, information and training that can't be found anywhere else. We are a content "aggregator" where the reflections of the profession's thought leaders can be compiled and organized in a single user-friendly environment.

This is where you come in. In the Blogs section of the site, iShade provides a space for the leading accounting bloggers to either host or mirror their blogs. As an added benefit for the iShade user, these blogs can be searched collectively - allowing our users to easily find what multiple experts are thinking about any given topic or issue. This functionality eliminates the user from having to visit multiple sites to search for the information they need. Instead, they can just search for what they're looking for within iShade.

Sharing your expertise in iShade.com will enhance your reputation and expand your reach.”

I registered with the site and gave it a brief look-over, but have not had the time to review it thoroughly yet.

+ Kay Bell, the yellow rose of taxes, tells us about the “Millionaire Tax Proposed By Obama” over at DON’T MESS WITH TAXES.

Obama wants a new minimum tax rate for individuals making more than $1 million a year.

The goal, according to the Administration, is to ensure that richer Americans pay at least the same percentage of their earnings as middle-income taxpayers.”

Obviously I oppose a “millionaire tax”.  Hey, if Warren Buffet feels he is not paying enough taxes he can always make a voluntary contribution to the Treasury.

While checking out the post be sure to participate in Kay’s survey onShould the rich pay a higher top tax rate?”

+ And Kay posts about the CCH projected inflation-adjusted tax numbers for 2012 – i.e Standard Deduction, personal exemption, tax rates - in “Tax Amount Projections for 2012”.

+ On the subject of the “millionaire tax” – check out the editorial Playing Robin Hood Isn't Leadership, Mr. President” from the WASHINGTON EXAMINER.

+ The following quote is from fellow “twit” Jill Senso –

Golf is a lot like taxes - you drive hard to get to the green and then wind up in the hole.”

+ Trish McIntire reports that “Installment Agreements Go Online” at OUR TAXING TIMES.

Who qualifies to use the Online Payment Agreement? The IRS estimates that 95% of taxpayers will be eligible to use the online method. This includes individuals with outstanding balance dues and taxpayers who have a balance due on this year’s tax return.. Also, taxpayers with current installment agreements can make changes to agreements which are already in effect with the IRS. Taxpayers must owe less than $25,000 in total. That includes all taxes, interest and penalties. And of course, all applicants must have filed all tax returns.”

+ Susie Poppick tackles year-end tax planning in “You Can Lower Your Tax Bill, But Move Fast” at CNN.MONEY.

Next April may feel light-years away, but December will be here before you know it -- and many of the benefits you can reap on tax day require you to act well before the end of the year.

‘The further ahead you start your tax planning, the more strategies you will have to save money,’ says Indianapolis accountant Kevin Aaron. The early-bird tactics that follow can together keep thousands of bucks in your pocket.”

+ Speaking of tax planning, Joe Kristan makes the obvious statement “Tax Planning Beats Tax Cheating” at the ROTH AND COMPANY TAX UPDATE BLOG.

+ Professor Jim Maule asks “Do Lower Taxes, Less Regulation Create Jobs? Do Payroll Tax Cuts, Employment Credits, More Section 179 Expensing, and Unemployment Benefits Create Jobs” at MAULED AGAIN(http://mauledagain.blogspot.com/#7251017179536606410). 

The Professor does not think so. Of all the current proposals he feels that only “the proposal to spend money to fix America’s crumbling infrastructure, makes sense.”

+ I liked Ron Teuber’s 9/16 weekly tax quote at his TAX LAW FORUM blog -

Like mothers, taxes are often misunderstood, but seldom forgotten.”- Lord Bramwell.

Actually I have known a few who have actually forgotten about their taxes.

+ The Tax Foundation’s TAX POLICY BLOG tells us that “The Internal Revenue Code Book Could Be Used as a Paperweight in a Tornado”.

The United States Internal Revenue Code (IRC) is complex. This is immediately obvious once you open it and realize that, depending on your edition, it's about 10,000 to 11,000 pages long. What's more is that these pages are phone-book thin.

Reading these pages is even more disheartening. It is a harder read than James Joyce's Ulysses and Finnegans Wake combined—and just about as thick.”

Tell me something I don’t already know.

+ And the TAX POLICY BLOG’s David Logan feels that “President Obama’s Deficit-Reduction Plan Would Do More Harm than Good”.  I do not necessarily disagree.

+ Jean Murray interviews CPA Gail Rosen on the question “How is My HomeBusiness Deduction Affected By the Sale of My Home?” at ABOUT.COM-US BUSINESS LAW/TAXES.

TTFN

Tuesday, September 20, 2011

DISASTER RELIEF FOR NEW JERSEY

The IRS has expanded hurricane tax relief to cover taxpayers from all 21 counties in New Jersey.

The President has declared the following counties a federal disaster area: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 27, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 27, and on or before Sept. 12, as long as the deposits are made by Sept. 12, 2011.”

The State of NJ is following the federal government in providing extensions to affected taxpayers.

According to the NJDOT website -

The New Jersey Division of Taxation is following the federal guidelines for tax relief as recently provided in the Internal Revenue Service announcements NJ-2011-42 and IR-2011-88 issued September 1, 2011 for victims of Hurricane Irene.

New Jersey’s tax relief, however, extends to taxpayers who reside or have a business in all 21 counties of New Jersey impacted by Hurricane Irene and New Jersey considers an affected taxpayer qualifying for tax relief to include businesses, individuals, those with tax records, and relief workers in areas disrupted by Hurricane Irene.


Taxpayers now have until October 31, 2011 to file their New Jersey tax returns such as individual income tax, corporation business tax, sales tax, inheritance tax, estate tax, partnership and other business taxes administered by the Division of Taxation and to submit payments for any return and/or payment, including estimated payments which have either an original or extended due date occurring on or after August 27, 2011 and on or before October 31, 2011.


The extended due date permits individuals and businesses that received a filing extension until October 17, 2011 to have until October 31, 2011 to file their returns. Businesses that previously obtained a filing extension to September 15, 2011 are also covered by this relief and have until October 31, 2011 to file their returns. Estimated tax payments for the third quarter of 2011 are now due October 31, 2011 instead of September 15, 2011.


In addition, taxpayers whose preparers were affected by Hurricane Irene have until September 22, 2011 to file returns normally due September 15, 2011. The taxpayer’s preparer must be located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene, even if the preparer is located outside of the federally declared disaster areas. This relief, which primarily applies to corporations, partnerships and trusts that previously obtained a tax filing extension, is available to taxpayers regardless of their location. This relief does not apply to any tax payment requirements.


If you receive a billing notice from the Division, you should call our Customer Service Center at the number listed on the notice to explain your circumstances. If you have additional questions about New Jersey tax relief for Hurricane Irene, call 609-292-6400 or
e-mail the Division.”

It appears that for both federal and NJ returns there is no need to write “Hurricane Irene” or anything special on returns filed within the newly extended deadlines.  Both Sam and Chris should automatically identify your qualification when processing the return.  If you are penalized for late filing or paying, and you qualify as an affected taxpayer, you should write to Sam or Chris and the P+I will be abated.

While Irene did not affect me personally, my computer’s diarrhea caused delays for me, and I am happy to have the deadlines extended.

TTFN