Thursday, February 18, 2016
WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL TAX SEASON EDITION
An unprecedented tax season BUZZ! Some good stuff that needs to be spread around now – and could not wait until April.
* TAX NEWS gives us the word that “Bill To Terminate US Tax Code Gets 100th Cosponsor”.
The bill is the Tax Code Termination Act, “which would repeal the current tax code by December 31, 2019. It would require a two-thirds majority vote in Congress to change the termination date, and force Congress to approve a new federal tax system by July 4, 2019.”
The bill declares that the new US federal tax system should be "a simple and fair system that applies a low rate to all Americans; provides tax relief for working Americans; protects the rights of taxpayers and reduces tax collection abuses; eliminates the bias against savings and investment; promotes economic growth and job creation; and does not penalize marriage or families."
House Judiciary Committee Chairman Robert Goodlatte tells it like it is when talking about this bill –
“. . . it's clear that there is mounting support to scrap the tax code and start work on a new tax system. It has become all too clear that the current code is broken beyond repair and cannot be fixed – we must start over. "While I have yet to hear an argument for maintaining our current tax code, I hear argument after argument for why we need a new one.”
To be honest, I don’t think we should wait until 2019 to rewrite the Tax Code.
I invite fellow tax pros to join me in TAX PROFESSIONALS FOR TAX REFORM.
* Russ Fox posted “The Liberty to Commit Tax Fraud” about fraud committed by Liberty Tax Service franchises near Detroit.
This post points up several items –
First of all – avoid fast food tax preparation chains. Use an independent tax professional.
“This story does show two things. First, requiring every tax professional to obtain a license won’t stop tax fraud. The alleged fraud here was started by an individual with a PTIN, someone who assuredly could obtain the former RTRP designation or the current AFSP ‘seal of approval’. Second, the Department of Justice news release notes, “In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.” This is absolutely true, and the DOJ should be commended for their work. It also shows that licensing every tax professional isn’t needed to get rid of unscrupulous ones.”
* And further proof that fast food tax preparation chains are not your best option comes from the Comptroller of Maryland via its release from early February “Franchot Suspends Processing Returns from 16 More Liberty Tax Franchises, Four Other Tax Prep Sites”.
I talked about Liberty in my January post “Come in to the Office and Walk Out with Cash!”. And about Henry and Richard in “A New Gimmick”.
* Now, on to more reasons you should not use a “box” (tax preparation software) to prepare your return from Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES, also in early February – “Tax Slayer data breach is the 3rd tax software-related security issue so far this filing season”.
Kay told us
“Tax filing season is tax crime season, with yet another tax software company reporting that some of its customers' data apparently has been compromised.”
* Jason Dinesen proudly proclaimed “Why Yes, I Am ‘Just’ An Enrolled Agent” at DINESEN TAX TIMES.
Jason tells of an email he received from a CPA who had subscribed to his blog post feed, but unsubscribed upon learning that he was “just an Enrolled Agent” and not a CPA.
The AICPA believes that CPAs own the 1040 preparation “brand”, which is nonsense, and aggressively fights against any currently or potentially legitimate program that truly identified competent and current 1040 preparers.
The initials CPA have absolutely nothing whatsoever to do with knowledge, experience, competence, or currency in 1040 preparation. The initials EA most definitely do.
* And Jason answers the question “If a cash-basis business uses a credit card for business expenses, are those purchases deductible right away, or later on when the credit card debt is paid?” in “When Are Purchases Made With a Credit Card Deductible?”.
* Electronic filing is apparently not without its issues. PC World reported “Identity thieves obtain 100,000 electronic filing PINs from IRS system”.
Since I prepare all my federal returns manually, and my clients mail the paper returns to the IRS via the Post Office, this does not problem does not affect any of my clients.
* From Alistair M. Nevius, J.D at the JOURNAL OF ACCOUNTANCY - “President’s Budget Proposes Many Tax Changes”.
Understand that the items discussed in this piece are not pending tax legislation, but just BO’s final “wish list”, none of which will be enacted by Congress anytime soon.
There are some items worth discussing on the wish list –
· Increasing the Child and Dependent Care Credit. This is perhaps the only credit I believe actually belongs on the tax return.
· Extending the American Opportunity Credit to 5 years. While I believe this does not belong in the Tax Code, as long as it is there it really should cover 5 calendar years.
· Increasing the “portability” of employee pension plans.
Of course there are also many tax components that are bad ideas and should not be acted upon.
OK, back to the 1040s!