tag:blogger.com,1999:blog-6318055043707993918.post3443644375097560625..comments2024-02-20T02:12:18.090-05:00Comments on THE WANDERING TAX PRO: THE NEW E-FILE MANDATERobert D Flachhttp://www.blogger.com/profile/06034127763662917220noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-6318055043707993918.post-14187621151317987582010-09-28T11:30:13.441-04:002010-09-28T11:30:13.441-04:00"the requirement to file a return lies solely..."the requirement to file a return lies solely with the taxpayer"<br /><br />Actually, the requirement in the law lies solely with the Secretary. So I'd say the distinction is irrelevant.<br /><br />The requirement for preparers to obey the regulations which are passed by Secretary likely lies elsewhere in the law, though I don't have an opportunity to find it right this instant.Anthonynoreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-50256244647569484622010-09-21T21:47:20.162-04:002010-09-21T21:47:20.162-04:00I left you a message on the NATP Member to Member ...I left you a message on the NATP Member to Member site. Proposed Regs say that it will be 'disreputable conduct' to not e-file. I'd hate to see you get thrown out by Circular 230 as soon as you've been covered by it! -Kevin Huston, EAAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-29211462347186584132010-09-21T01:16:28.243-04:002010-09-21T01:16:28.243-04:00The history of the bill, as well as other bill tha...The history of the bill, as well as other bill that were in the hopper at the same time, is interesting as it gets to Congressional Intent. In his comment, Riles provides a quote from a Committee report. <br /><br />What became the Worker, Homeownership, and Business Assistance Act of 2009, 26 USC 6011, began in the House as H.R. 3548. HR3548 was a bill to temporarily expand emergency unemployment compensation. The return preparer provision was not in the original bill. The provision was added on October 29, 2009 by Senator Reid, on behalf of himself and others. The amendment was Senate Amendment 2712. The provision comes seemingly ‘out of the blue’.<br /><br />The CRS summary of the applicable section of HR3548 on Thomas states: “(Sec. 17) Requires tax return preparers who expect to file more than 10 tax returns to file such returns electronically.”<br /><br />At the same time HR3548 was under consideration in the Senate, H.R.3901 the Homebuyer Tax Credit Improvement Act of 2009 was introduced in the House by <br />Rep John Lewis on October 22, 2009. It contains near identical language to the Reid amendment in the Senate.<br /><br />The CRS Summary of HR3901 on Thomas states one of the purposes of the bill as: “Requires tax return preparers to file tax returns electronically unless they reasonably expect to file 100 or fewer individual income returns in a calendar year.”<br /><br />On October 26, 2009, Sen Robert Casey introduced S.1930 The Homebuyer Tax Credit Oversight and Accountability Act of 2009 in the Senate. This also contains language very similar to the language of HR3548. The CRS summary of that bill is: “Requires tax return preparers to file tax returns electronically unless they reasonably expect to file 100 or fewer individual income returns in a calendar year.”<br /><br />The summaries appear to be using two different meanings of ‘file’. The first ‘file’ is clearly a reference to electronic submission of returns. The second ‘file’ could be interpreted (and probably is going to be interpreted) as ‘prepare’.<br /><br />Finally, as further evidence that ‘file’ means both ‘submission’ and ‘prepare’ is H.R.4981. The title of HR2981 is “To amend the Internal Revenue Code of 1986 to provide a religious exception to the requirement that certain tax return preparers file returns on magnetic media.” This was introduced by Rep Collin Peterson on March 25, 2010. The CRS Summary of HR4981 is: “) Exempts tax return preparers who object to the use of magnetic media on religious grounds from the requirement to file returns electronically.”<br /><br />If ‘file’ only meant ‘submit’ as your post suggests then HR4981 is unnecessary since no preparer can be forced to ‘file for any reason. Only the taxpayer would ‘file’. However, if ‘file’ includes ‘prepare’ then HR4981 is necessary to protect the religious scruples of those who prepare returns but do not file them electronically for religious reasons.<br /><br />On April 4, 2010 Rep John Lewis introduced H.R.4994, the Taxpayer Assistance Act of 2010. HR4994 has near identical language to HR4981. The House passed the bill on April 14, 2010. The Senate referred the bill to the Finance Committee where it remains. If ‘file’ does not include ‘prepare’ then HR4994 would also not be needed.<br /><br />As Russ wrote on his blog, this will come down to the meaning of ‘is’ – really ‘file’. There is a very good case to be made that by Congressional intent – ‘file’ includes ‘prepare’.Hal Leahyhttp://home.comcast.net/~halhrb/noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-17444842092553786222010-09-20T18:47:29.107-04:002010-09-20T18:47:29.107-04:00Well it seems the story is the same in that no one...Well it seems the story is the same in that no one believes you’ll win “the fight/battle” but the consensus is the same, you are right. <br />Yes the new rules say this is how it will be. But your play on the word isn’t so much play. I mean let’s face it our laws and most covered in our post the tax laws are full of word play and interpretation. <br />Your interpretation of the wording of this new requirement is just and in my own mind sound. As has been agreed by our colleges. <br /><br />Sadly I feel as the others. I have mentioned this to you many times in the past in our emails; one quote comes to mind “I don’t think the IRS is going to wait until you retire with 50 years in.” Alas the time just over a year away. Sadly, my friend, “playing the game” is just what you will have to do.<br />I commend your efforts for exclusion and if I can be of assistance I hope you will call on me. However, even with all the funding you’d need, I fear you’d be penalized for not being compliant. The end result, as stated by Russ, in my mind correct, you’ll then find yourself facing an administrative hearing. As the wheels there are very “large”, you would still need to comply. The big boys would interpret the rules, and their ruling, to their means and way.<br /><br />Sadly I even fear that this power fight or flight is going to back fire. My thought is, with all the attention you are bringing to yourself over this is a great stand and your voice is being well heard. Everyone is hearing you, and I can see a federal prosecutor even now, piling up a case against you and when all 400 plus of your clients “opt out”, it will be “suspicious” and questionable. Are you ready to put all of your clients through that inquiry? Will they all announce it was their intention not to have their return e-filed, not being coerced by you in any way?<br />I agree with Joe, as a policy matter, the IRS is out of line on this mandate. I agree with Riles in that this will all be lost on Congress.<br /><br />I wonder now why more of our colleges haven’t chimed in as of yet. Monica, Kelly, Michael R., Stacie, Trish, Jim, Kay, and a few other Joes, why haven’t you let us know some more. Where are your two cents?<br /><br />Lastly my friend. As I mentioned last year (or was it just earlier this year?) I have been using software for many of my years as a preparer. I agree on certain fronts it is “potentially flawed and expensive”, however there is software out there that is inexpensive and would suit your needs and allow you to comply with the new coming rules. You would basically prepare your clients returns by hand has you always have, then type your numbers into your software and transmit. In some cases it would help as it would handle state returns as well.<br /><br />Hey, Mr. Congress person and IRS man. Instead of going at it the you are why not try mandating ERO status, thus prepares being able to offer E-file but leaving the choice up to the individual taxpayer. You make us buy software that depending on the vender charges extra for e-filing services or even extra for the e-filing software on top of prep software. I say Meet us half way will ya’?Brucehttp://themotaxguy.comnoreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-19891793692020917232010-09-20T11:16:33.614-04:002010-09-20T11:16:33.614-04:00I agree with Mary above regarding electronically f...I agree with Mary above regarding electronically filing Federal Returns. I am located in Indiana and this year we had the pleasure (?) of dealing with Fresno, California when processing all paper returns. This has been a nightmare. They have lost multiple returns in whole, pieces of returns and in general do not have enough staff to process the volume they saw this year. These are just a small number of our returns that could not be filed electronically for one reason or another. <br /><br />You do make an interesting distinction in your post. I wonder, do you plan to have all your clients sign the electronic filing opt out that is supposed to be available?Elizabeth R., EAhttps://www.blogger.com/profile/14646819942539642487noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-7242978245639334982010-09-20T11:11:48.183-04:002010-09-20T11:11:48.183-04:00I've posted a response on my blog at http://ww...I've posted a response on my blog at http://www.taxabletalk.com/2010/09/20/it-depends-on-the-meaning-of-the-word-is-is/<br /><br />The short answer is that I think you're technically correct. The long answer is it could cost you a lot of money to fight this battle.Russ Foxhttps://www.blogger.com/profile/07933608424060861369noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-84993112638000563972010-09-20T10:52:01.775-04:002010-09-20T10:52:01.775-04:00MOK-
Thanks for your comments - I always look for...MOK-<br /><br />Thanks for your comments - I always look forward to hearing from you on tax policy topics.<br /><br />You are correct that electronically filed returns can result in the quicker direct deposit of a refund than a paper return which requests direct deposit. However I have found that the direct deposit of a refund requested on a paper return takes less than 4 weeks.<br /><br />As I mentioned in the post I acknowledge that "it is cheaper and more efficient to process returns that have been submitted electronically".<br /><br />TWTPRobert D Flachhttps://www.blogger.com/profile/06034127763662917220noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-45552960389134928462010-09-20T10:36:17.056-04:002010-09-20T10:36:17.056-04:00On another issue, I strongly take exception to som...On another issue, I strongly take exception to something else you wrote above.<br /><br />You wrote: "There is really no additional benefit to the taxpayer for filing federal returns electronically, as refunds on paper-filed returns can request direct deposit."<br /><br />True, paper-filed returns can request direct deposit, BUT processing of paper-filed returns typically takes four to six weeks, even if direct-deposit is requested on the paper-filed return.<br /><br />By contrast, the IRS typically processes e-filed returns requesting direct deposit in one to two weeks.<br /><br />Big difference! Why the big difference? When you submit a paper return, it has to go through the mail, then sit in a bin awaiting an IRS employee to manually retype the information from your return into their system, then presumably some sort of error-checking quality review of that typing and transcription process. It's especially important for the IRS to double-check that they properly typed your bank account information properly during their transcription process. All this takes time. And, of course, there has to be careful oversight to make sure that a rogue employee doesn't type his own bank account information in during the transcription process, etc., etc.<br /><br />All these kinds of controls are faster to manage electronically.Mary O'Keeffehttp://bedbuffalos.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-49227829264651425692010-09-20T10:25:19.529-04:002010-09-20T10:25:19.529-04:00I agree with Riles. You make an important distinc...I agree with Riles. You make an important distinction between preparing and filing. <br /><br />(The confusing reference to who is "filing" the return reminds me of the word play in Shakespeare's Much Ado About Nothing in the interchange with the friar about who is "marrying" who. Does the friar marry the bridge and groom or do they marry one another.)<br /><br />The legal usage of the term "filing" to refer to what the preparer does when he submits a return on behalf of a taxpayer does appear to require more clarification.Mary O'Keeffehttp://bedbuffalos.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-6318055043707993918.post-83364428535835797582010-09-20T09:22:36.664-04:002010-09-20T09:22:36.664-04:00Interesting problem. I appreciate your distinctio...Interesting problem. I appreciate your distinction between preparing and filing. I'm worried it may be lost on Congress though. The Committee report says:<br /><br />Explanation of Provision <br /><br />The provision generally maintains the current rule that regulations may not require any person to file electronically unless the person files at least 250 tax returns during the calendar year. However, the proposal provides an exception to this rule and mandates that the Secretary require electronic filing by specified tax return preparers. "Specified tax return preparers" are all return preparers except those who neither prepare nor reasonably expect to prepare ten or more individual income tax returns in a calendar year. The term "individual income tax return" is defined to include returns for estates and trusts as well as individuals.Peter Reillyhttps://www.blogger.com/profile/01473701483727808782noreply@blogger.com