AN URGENT CALL FROM A CLIENT

A client called me.  Or actually she tried but could not reach me, so she emailed me and said it was urgent that I call her right away.

When I did call her she said she had received a phone call this morning from a person who said he was from the IRS and needed information to satisfy a balance due.   

The client was skeptical and said she had never received a notice of any balance due.  The person on the phone said that a letter was delivered on November 15^th, but there was nobody at her home to accept the letter.

The client was told that she could not call anyone, not even her husband (who is deceased), and that if she hung up without providing the necessary information he would send someone to her home immediately to arrest her.  Thankfully she did hang up.  Obviously nobody showed up at her door.

1) The IRS will never initiate contact with a taxpayer by telephone or email.  The IRS will always send a written notice via postal mail.  If you do not respond to a written notice, if requested, on a timely basis you will receive several more letters or notices in the mail over a long period of time.  But everything will be done via postal mail.

2) If a letter from the IRS has been sent it will always be mailed through regular postal channels.  If the client had not been at home on November 15^th when the letter was supposedly delivered it would have been left in the mailbox, or, if, as is often the case, it was send via registered mail a green or orange card would have been left in the mailbox telling the assressee to go to the Post Office to sign for and pick up the letter.

3) Nothing with the IRS is ever immediate.  You have 90-days, 60-days, 30-days, and multiples thereof, in various situations to respond to any IRS notice. 

4) One spouse can always discuss the issue on a jointly filed return with the other spouse.  And you always have the right to contact a lawyer, or if dealing with the IRS an Enrolled Agent, to review any notice, request for information, or alleged balance due before responding.

5) The IRS will never threaten to, and will never, send a federal officer to your door to take you into custody if you do not agree to immediately respond to them.

6) The IRS does not need you to provide credit card or bank information to get money from you for a seriously outstanding tax debt.  If they want they can always obtain bank information via a legal search and place a lien or levy on, and garnish, any bank accounts you have.  But the Service will not resort to this for a long time.

I told all this to my client, who said she had figured it must be a phone scam but just wanted to be sure.

If you ever receive a telephone call from someone alleging to be from the Internal Revenue Service tell the person to “put it in writing” and immediately hang up.

If you ever receive an email allegedly from the Internal Revenue Service do not open it.  Forward the email unopened to phishing@irs.gov and delete it immediately.   

 

If you receive any correspondence in the mail from the IRS, or a state tax agency, give the letter, or a copy, to your tax professional immediately.

TTFN

WHAT'S NEW FOR NEW YORK INCOME TAXES FOR 2013

The New York State Department of Taxation and Finance tells us that the 2013 Form IT-201 (resident income tax return) and IT-203 (non-resident and part-year resident income tax return) “will not be available until sometime in January”.  However the 2013 instruction packages for both forms are available online – click here for the IT-201 instructions and here for the IT-203 instructions.

Here is what is new for New York State individual income tax returns for 2013 -

·      While the actual tax rates have not changed, for the first time the New York State standard deduction and tax rate schedules have been indexed for inflation.  And special tax calculations are required if the New York AGI is more than $102,900, the original $100,000 amount indexed for inflation.

·      If you have a balance due on your IT-201 or IT-203 and you are paying the tax by check you now must complete and submit the new IT-201-V ‘Payment Voucher for Income Tax Returns”.  The IT-201-V is used for both IT-201 and IT-203 payments.

 

·      Same-sex legally married couples must now file their NY state returns using the married filing status rules.  Under New York’s “Marriage Equality Act”, which took effect on July 24, 2011, all marriages, whether between same-sex couples or different-sex couples, are treated equally under the laws of New York.  For all taxes administered by the NYS Tax Department, any references in the Tax Law or department documents to “spouse “or “married individual” includes a person in a marriage with a same-sex spouse.

·      The return of the “Pease” reduction of federal itemized deductions is reflected in the calculation of the New York itemized deduction.

There is a new credit for “alternative fuels and electric vehicle recharging property” and some changes to existing credits and some new and revised “income modifications” – but none of these affect my clients, or most NY resident and non-resident filers.

The “What’s New for 2013” section of the instruction booklets indicate that New York has a new Web File option, which will allow most New York filers to submit their income tax returns electronically via the Tax Department’s website free of charge (without purchasing flawed and expensive tax preparation software?) - similar, or so it seems, to the NJWebFile system.  However I have not found any specific information on this new option on the Department website.  I expect I will learn more about this at the January NJ-NATP state tax seminar, which includes a presentation on New York State updates.

I will let you know when the 2013 forms become available.

TTFN

WOULDN'T IT BE NICE

I learned from TAXPRO on Monday evening that “Obama IRS Nominee Koskinen Approved”.

So John Koskinen, who the article described as “a 74-year-old multimillionaire”, is the new head of the Internal Revenue Service.

The article also identified Kiskinen as -

“. . . a former chairman of U.S.-owned mortgage financier Freddie Mac with no experience in tax administration. . .”

And -

“. . . an executive who has built his reputation on turning around troubled enterprises. . .”

And tells us he -

“. . . has been city administrator of Washington, D.C., president of a corporate turnaround firm and leader of the federal government’s preparations for the year 2000. . .”

While I have no reason to oppose this appointment, Koskien would not have been my choice to full the spot.  My concerns lie in the fact that he is “a 74-year-old multimillionaire” with “no experience in tax administration”.

It would have been nice if the IRS Commissioner had some kind of experience in tax administration and tax preparation on his resume. 

Wouldn’t it be great to have a person who had actually prepared tax returns for a living in the position?  As long as, unlike a one-time number two man at the IRS, he/she had no ties to Henry and Richard or any other fast-food tax preparation chain.   

While 74 is not too old to be effective, I would have preferred a younger person.  And one who is actually dependent on his job to make a living, and therefore financially motivated to do a good and effective job.

I am thankful that he has experience in government agency administration, and “has built his reputation on turning around troubled enterprises. . .”.  The IRS is currently truly a “troubled enterprise”.

Only time will tell whether or not he will be an effective IRS Commissioner.

I have sent him a letter explaining what I think the IRS should do about the death of the mandatory RTRP regulation regime, as per my TAXPRO TODAY editorial “What the IRS Should Do About the RTRP”, and am waiting to see if and how he responds.  I will let you know if I get a reply.

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION

* If you haven’t already done so, please check out the December “issue” of THE LAKE REGION SOMETHING.   

* TAXGIRL Kelly Phillips Erb of FORBES.COM has kicked off her annual “12 Days of Charitable Giving” -

“Readers have suggested deserving charities over the past few weeks and I’ll be posting one a day for – well, 12 days (I’m clever that way).”

The first charity was “Kids Making It”.

* The MILWAUKEE CPA gives us a lesson in “How to Calculate ObamaCare Penalties”.

He reminds us –

“As you are likely aware, beginning in 2014, individuals without health insurance for up to three consecutive months will face a penalty on their income tax return.”

And, after explaining the calculation of the penalty, is makes the following observation -

“I think there are plenty of American taxpayers not to mention tax professionals, whose heads are spinning at the language, definitions and complications of deciphering the formulas. And obviously more than one formula must be used. In fact, the calculations have to be run three times. Using the term ‘greater than’ and ‘less than’ indicates a comparison and therefore requires the use of more than one formula to determine the correct answer.”

As he suggests, the calculation of the Obamacare penalty is another mucking fess – and more unnecessary non-tax-related work thrust upon the professional tax preparer.  The taxpayer is doubly penalized – first by having to pay a penalty for not having health insurance and second by having to pay more money to have his or her tax return prepared.  Talk about adding insult to injury!

The basic concept behind Obamacare is good – encouraging universal health care coverage and assisting individuals and businesses who cannot afford to purchase or offer health care.  But forcing individuals and families to get coverage by creating a complicated penalty is bad.  And having the Internal Revenue Service administer Obamacare compliance is just stupid and lazy, a perfect description of the idiots in Congress. 

As an aside, acquiring required health insurance coverage via the Obamacare marketplace website has proven to be perhaps more of a mucking fess than calculating the penalty.  I will be posting on my experience once the saga has concluded.

* A reminder from Chuck Saletta at the Daily Finance’s THE TAX CENTER – “This Is Your Last Chance to Avoid a Tax Penalty for 2013”.

I talk about a way to avoid the underpayment penalty in my MAINSTREET.COM article “Year-End Tax Essentials: News You Need to Use”.

* Jason Dinesen continues to inform on the same-sex marriage issue at DINESEN TAX TIMES.  His latest update is “North Dakota Taxes, Same-Sex Marriage, And a Really Bizarre Twist”.

“The North Dakota Attorney General issued an ‘advisory opinion’ on Thursday that, while not specifically addressing taxes, makes it clear that North Dakota will not under any circumstances recognize a same-sex marriage.”

What is the “bizarre twist”?  Read the post to find out.

 * Tax Mama Eva Rosenberg (again I ask, it there a Tax Papa?) answers the question “When Do I Pay the Taxes on Interest Earned from Savings Bonds?” at EQUIFAX.COM.

When it comes to state income taxes the answer is “never”.

* The National Society of Accountants (the “other” NSA) has announced “Senate Finance Committee Approves New IRS Commissioner Nomination” -

“The Senate Finance Committee has approved the nomination of John Koskinen as the next commissioner of the Internal Revenue Service after a hearing this past Tuesday. The nomination will move on to the Senate where it could be considered as early as next week. President Obama nominated Koskinen, former chairman and CEO Freddie Mac in August 2013.”

I already have a letter suggesting what the IRS should do about the RTRP (when the appeal of Loving v IRS is denied) ready to go once he is confirmed.

He was confirmed by the Senate yesterday - and this morning I mailed my letter.

 

* William Gale discusses a few of the highlights of “The Year in Taxes: From the Fiscal Cliff to Tax Reform Talks” at TAX VOX, the blog of the Tax Policy Center.

He ends the post with a warning –

“But the sorry state of tax reform can probably best be summed up by a small business owner who attended the New Jersey stop of a listening tour that the two chairmen held last summer. She urged the two leaders to ‘get rid of the deductions that don’t affect me’. As long as that attitude prevails, meaningful tax reform will not happen.

THE FINAL WORD-

There will be no Nativity Scene in Washington DC this year. 

This isn’t for any religious reason.  They simply have not been able to find three wise men in Washington. 

They had no problem, however, finding enough asses to fill the stable.

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

I was out at a CPE class on Schedule C all day yesterday – so I may have missed some good BUZZ. 

 

* Check out the December “issue” of THE LAKE REGION SOMETHING.  ‘Nuff said.   

* Need a hero?  How about an accountant?  Check out this music video from British blog THE LIGHTER SIDE OF ACCOUNTANCY AND TAX.  Click here.

* Kay Bell brings us “Tax Carnival #123: It's Beginning to Look a Lot Like Tax Time” at DON’T MESS WITH TAXES.

Kay begins the Carnival by taking a page from my book – a tax-related parody of a Christmas song -

“It's beginning to look a lot like Tax Time,

Everywhere you go.

Take a look in the tax pro's den, stuffed so full once again,

With year-end tips all filers need to know.

It's beginning to look a lot like Tax Time,

April's just months away.

But the smartest move to make is the tax break you can take

Before New Year's Day.”

* And Kay talks about “Tax and Other Fun at Deductible Office Holiday Parties” in a timely post.

* Tony Nitti, a member of the FORBES.COM stable of tax bloggers, has an informative, and entertaining, Tax Geek Tuesday entry on the “Tax Treatment of Commuting Costs”.

* ACCOUNTING TODAY tells us about the latest National Society of Accountants (the “other” NSA) survey of tax preparation fees, reporting that “Tax Prep Fees on the Rise” -

“Taxpayers can expect to pay an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, the survey found, compared to the $246 reported in last year’s survey.

The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year.”

Fees vary by region.  For my region – Middle Atlantic (NJ. NY, PA) the average cost of A Form 1040 with Schedule A and a state return is $274.00.

My clients – did you see that?  I trust you realize how lucky you are!

TTFN

PUT IT IN WRITING

You really can’t reach me by telephone during the year.  I know it is weird, but it’s just one of my trademark “eccentricities”.  I do not have a cell phone, and if I did I would use it for auto emergencies only and would not give anyone the number, and my land line is unplugged most of the year (except for January 15 through April 15). 

 

As a result, a client with a tax question will sometimes send me the following email –

 

“I have a tax question.  Please call me at 123-456-7890.”

 

I do not want clients to do this.  I really, really, really want clients to ask the question, and provide all the details, in the body of the email.

 

For one thing, clients who do this will get a much quicker answer from me.  I often find myself at my desk between 6-7 AM, and the first thing I do each morning is check my “in-box”.  I obviously am not going to pick up the phone and call a client at 6:30 AM or even 7:30 AM.  It is much easier for me to send a reply, or do some quick research and send a reply, immediately at that hour of the morning.

 

I am bad at returning calls.  If I do actually decide to call the client it could be many days later.  Sometimes the answer is needed promptly.

 

But the main reason I want the client to put the question in “writing”, with all the pertinent details, in the body of an email is so that we both will have a written documentation of the question and, as I will provide my answer by return email, my answer, so there is no confusion about what was asked and what was answered in the future.  I also think it helps the person asking to see his question in text.

 

Unfortunately, due to the world we live in, I feel it is important to have a written documentation of both the question and the answer to cover both of our arses.  Not that I anticipate the client will do this, but it prevents him or her from saying, “you told me to do this” if the return is questioned when I actually told the client to do that.  And I cannot say to the client, “but you asked me that” when he or she actually asked me this.

 

I also get emails that say –

 

“I got a notice from the IRS.  Call me at 123-456-7890”.

 

Again this is a total waste of time.  As I say in the memo I include with each finished tax return –

 

“If you receive correspondence from any of your “uncles” (or “aunt”) during the year relating to a tax return I have prepared send it directly to me immediately.  DO NOT CALL FIRST.”

 

If I did call the client in response to the email the first thing I would say is “mail me the notice”.  And that is exactly what I say to the client in my responding email.  I cannot do one damned thing until after I have actually read the notice.  And I will need to send a copy of the notice in any response I may make directly to the IRS or state tax agency.

 

So if you have a tax question you want to ask your preparer, instead of picking up the phone submit the question in an email, with all the pertinent facts.  And if you receive a notice from the IRS or your state, mail it to your tax pro immediately.

 

I hope my clients read this post.

 

Fellow tax pros, what do you think?

 

TTFN

SOME GOOD CONVERSATIONS ON TAX PROFESSIONAL ISSUES

TAXPRO TODAY recently posted my editorial “Who Speaks for the Tax Preparer”, in which I called for an independent lobby to champion the interests of tax preparers to Congress and the IRS.  

While my past TAXPRO TODAY editorials have not always generated good, thoughtful comments (on one occasion it was truly a mucking fess), this time I actually received a good, thoughtful and responsive reaction from fellow tax pros.

A commenter identified as “Jeanieb1” (what be Jeanie?) had this to say -

“Nice, Robert. Been doing returns since 1978 and have long since thought the preparer community needed a voice. We are doing the IRS auditing for them prior to filing a return or else face due diligence problems. EITC, Child Care & Education credit, to name a few, on the ever growing list we have no control over. All the prior points are valid. However, if every one of the current professional organizations added $5.00 to their dues to help fund a PAC for all, it might be beneficial. The PAC would have no other agenda than to let the preparers prepare; and, let the IRS auditors audit. The IRS needs to implement some safeguards of their own, such as not sending 10+ EITC refunds to the same address! They could practice some due diligence and professional responsibility.”

My reply to Jeanieb1 was - 

“The idea of a PAC to lobby for the interests of paid 1040 preparers (including CPAs who prepare 1040s for compensation) funded by voluntary $5.00-$10.00 contributions as part of the annual membership fee of NATP, NSTP, NAEA. NSA, etc., and even AICPA, is certainly something to consider. As long as the PAC is independent of the individual supporting organizations and is not "beholding" to AICPA as a major contributor.

I may be prejudiced, but I do not believe the AICPA as an organization is interested in helping the non-CPA 1040 preparer. AICPA is only interested in perpetuating the ‘urban tax myth’ that CPA = 1040 expert, which, obviously, is just not true. Perpetuating this myth does not benefit the paid tax preparer or the taxpayer public.”

From taxprO -

“I would join and support an organization dedicated to representing the interests of qualified tax preparers not already governed by some authoritative organization. This organization could establish credentialing requirements, in addition to lobbying for fair practice requirements. IRS should not be dictating these issues as long as there is a mostly adversarial relationship between it and tax preparers.”

Another interesting idea – the organization created to lobby could also be the independent industry-based organization that administers a voluntary RTRP-like credential that I had talked about in an earlier TAXPRO TODAY editorial.  So we could kill two birds with one stone.

EA Joseph F. Kerner feels -

“We do not need another organization. The current organizations, NATP, NAEA, CPA groups, and the several other Tax Clubs that I get emails from on meetings, webnairs, etc must work together.”

Lee Willard, an EA and a CPA, agreed with Joseph, and also has another suggestion.

“1. We need not have a single large organization of tax professionals. All we need do is have present organizations work together to jointly fund a special advocacy team in Washington.

2. But speaking of things that need to be changed for tax professionals, Enrolled Agents should be professionally responsible to an authority outside of the IRS - and perhaps other tax professionals as well (other than CPA's and attorneys supervised by state authorities). An authority within the Treasury Department, or even the Taxpayer Advocate, would be a definite improvement in this regard. Why should the fox guard the henhouse?”

A tax preparer lobby would certainly need the existing membership organizations to work together.  Lee’s idea to “jointly fund a special advocacy team in Washington” is fine – but the advocacy team would need to be independent of the individual funding membership organizations.

Lee’s “#2” is indeed interesting.  Perhaps the independent industry-based organization created to administer the voluntary RTRP-like credential could also take over administration of the EA designation, offering a 2-tiered credentialing program like the one I suggested for the IRS to institute in the wake of the death of the mandatory regulation regime.

Hezzy merely wanted to rant, making some good points in the process (highlight is mine) –

“I don't know about all of you, but the fees I have been receiving for the preparation of tax returns is hardly worth the time and anxiety over audits, penalties and increased regulations and responsibility to assure the information given to me is accurate and truthful. That on top of the total waste of time and money with my passing the RTRP exam which the IRS did not have the authority to impose. The IRS is so overburdened with responsibility it can no longer function in the capacity for which it was formed. Now more of their burden in issuing bogus EITC to criminals and illegals will be placed on us. We might as well give it up to the big lobbied tax preparation firms who seem to get away with anything since they fund the political parties.”

I also received some good response to my TWTP post “Should the RTRP Survive? My More Than 2 Cents Worth”, a response to another TAXPRO TODAY item.

Over at Twitter, fellow tax blogger Jason Dinesen of DINESEN TAX TIMES tweeted his reaction to the post -

“I believe in leaving things as they are and encourage the unenrolled to become EAs, rather than creating a new designation.”

And asked -

“But is there really a ‘need’ for a voluntary RTRP designation?”

Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG shared his agreement with Jason.

I replied to the guys -

“Still see need for a ‘less extensive’ credential, & like the 2-tier idea. All taxpros don't want to represent.”

Joe admitted -

“I could get behind an industry based {RTRP - rdf} credential.  I only oppose IRS role.”

But just said “no” when I asked -

“Do you think the current EA designation should be administered by an independent organization instead of IRS?”

My final tweet to Joe and Jason was -

“Whatever happens, the most important thing is that the IRS should not be able to force all unenrolled preparers to become RTRPs.”

 

Chris Johnson, EA, a frequent commenter to TWTP, submitted this comment to the post -

 

“Great post, Bob!

 

I'm an EA who has posted here before who actually agrees with this post, for the most part. I'm not totally against regulation of tax preparation, but don't have anything good to say about the RTRP designation either, partly because I believe it would dilute the value of my own EA designation but also partly because mandating such a designation would only push the "underground" tax preparation business further underground. You know what I'm talking about- people who prepare tax returns, sometimes using pirated software, only take cash for their services, no PTIN on the return and there is no written record of them preparing the return anywhere. The RTRP designation is not going to put an end to that. Also, there are many other unenrolled prepares like yourself who have prepared returns for satisfied clients for many years without any real problem. While I believe my EA designation adds to my marketability (and also allows me to do other things such as audit representation, which I actually enjoy sometimes), I think that would-be clients should be free to choose who prepares their returns and it all comes down to personal choice.

 

There are some people out there who will only go to a CPA to prepare their taxes, no doubt I've lost out on a few would-be clients because of that, but I do just fine as an EA, and from the looks of it you do just fine as well.

 

I do think that continuing education is essential in the tax business, as tax codes are always changing and you can never know too much tax and of course I must do it to maintain my EA designation. While it's great that you choose to do continuing education, I am certain that not every unenrolled preparer chooses to do so. Perhaps the IRS thinks that the RTRP designation would force more of those in the business to take continuing education but again, those in the "underground" tax preparation community will never abide by such a rule anyway.

 

Anyway, keep up the good postings!”

 

When asked his thoughts on my suggested IRS administered two-tiered credentialing program Chris replied (highlight is mine – I couldn’t resist) –

 

“The two-tiered credential program involving the RTRP and EA would probably be a good idea - the EA designation would be less obscure and wouldn't be diluted by the RTRP designation like it has been (to some small extent anyway). Both credentials are administered by the IRS anyway, so how hard could it be for them to do?

 

At the end of the day, it could be a lot of free publicity for the EA designation, so I guess I'm all for it! Too many automatically assume that CPAs are the only people who can do tax returns, yet plenty of CPAs don't belong anywhere near a tax return.”

 

So, taxpros and taxpayers alike, what do you think about these issues?

 

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION

* Check out the December “issue” of THE LAKE REGION SOMETHING.  ‘Nuff said.   

* Taxpros, I still want to hear your comments on my TAXPRO TODAY editorial “Who Speaks for the Tax Preparer".

* Just a reminder – last Friday the IRS released the 2014 standard mileage allowance rates.  Click here.

* Don’t expect any more tax legislation this year – including the annual extension of the extenders.  CCH tells us “Camp Delays Release of Comprehensive Tax Reform Legislation to 2014” –

“With just over a week before the end of the first session of the 113th Congress, House Ways and Means Chairman Dave Camp, R-Mich., has acknowledged that he will not introduce comprehensive tax reform legislation in 2013. Following a closed-door meeting with other lawmakers on December 4, Camp told reporters that work on reform legislation will continue in 2014, but no measure will be marked up this year.”

And last week’s TAXPRO WEEKLY email newsletter from NATP had the following item -

“House Ways and Means Committee Chair Dave Camp, R-Mich., told reporters not to expect a tax reform bill or legislation to renew dozens of tax provisions scheduled to expire at the end of 2013, including:

•The state and local sales tax deduction.

•The deduction for mortgage insurance premiums as interest.

•The deduction for qualified tuition and related expenses.

•The $250 deduction for certain expenses of elementary and secondary school teachers.

•The Work Opportunity Tax Credit.

•The increase and expansion of §179.

•The Research and Experimentation Tax Credit.

•The MACRS 15-year straight line cost recovery for qualified leasehold, restaurant and retail improvements.”

Also on the list is the ability to make a charitable contribution via direct transfer from an IRA to satisfy your RMD requirement.

* Jamaal Solomon of THE TAX FACTOR has posted the second installment of his “Things I Can Learn About Taxes from a Newborn Child” series.

This installment has important advice for both taxpayers and tax preparers. 

 

Tax preparers are not on “24-hour call”.  We are available for tax business during normal business hours.  As JS states – “There is no such thing as a ‘tax emergency’ that needs to be handle on a Sunday afternoon”.

And tax preparers must set guidelines and boundaries for their clients.  You do not need to be available to your clients 24/7.  Do not worry about losing a client.  Clients that will pester you on a Sunday morning or at dinnertime are not worth the agita.

* Barbara Weltman lists “5 Rules for Deducting Business Meals” at ENTREPRENEUR.COM.  

* Did I mention this in a previous BUZZ?  TAX PROF Paul Caron has a BUZZ-like “Weekly Tax Roundup”.  Unlike the BUZZ, and Joe Kristan’s daily tax roundup, Paul’s weekly post has no commentary – just links to Paul’s pick of tax-related posts of interest from the week.

* Speaking of Joe Kristan, over at the ROTH AND COMPANY TAX UPDATE BLOG Joe talks at length about the new final regulations for the convoluted 3.8% surtax on net investment income in “Self-rental, Business Sales Benefit from New Net Investment Income Tax Regulations”.

Just a reminder, in case this tax myth is still making the rounds of emails (I heard fellow patrons at a local bar spewing this nonsense a few months ago) – the surtax on net investment income for higher income taxpayers is NOT a 3.8% sales tax on the sale of your personal residence!

* Tom Herman gives us a good year-end reminder to “Be Careful With the 'Wash-Sale' Rule: It Applies Both Before and After a Stock Sale” in the ASK DOE JONES blog at the Wall Street Journal.

Let me add another reminder/warning – an automatic dividend reinvestment is a purchase and can trigger a wash sale.

 

And the wash sale rules do not apply if you sell an investment at a profit.

* TAXPROF Paul Caron reports that “ District Court Upholds IRS's Authority to Charge PTIN Fees”.

The question is not whether or not the IRS can charge tax preparers a fee to renew their PTIN (Preparer Tax Identification Number) – the question, as I ask at TAXPRO TODAY, is “Why Is There Still an Excessive PTIN Fee?” when it is no longer needed to fund the IRS mandatory RTRP regulation regime that was shot down by the court.  $10 maybe – but not $63.

THE FINAL WORD –

I noticed a tv ad from our friends Henry and Richard recently.  They want you to come into their office now.

But they do not want you to come in to discuss year-end tax planning strategies, which would be a legitimate reason to visit a tax preparer at this time of the year.  They want you to come in to get an expensive paycheck loan, a variation on their usurious Refund Anticipation Loans of the past. 

Here’s some good advice – just say no to H+R’s, or anyone else's, paycheck loans.  And, during the upcoming filing season, just say no to overpaying H+R to prepare your tax returns.

TTFN

HERE'S A THOUGHT - A FEW MORE CENTS ON A VOLUNTARY CREDENTIAL FOR TAX PROS

Here is a thought.

 

As I mentioned in my post on the “Should the RTRP Survive? My More Than 2 cents Worth”, the Accreditation Council for Accountancy and Taxation, a non-profit independent testing, accrediting and monitoring organization established in 1973, currently offers the Accredited Tax Preparer (ATP) and Accredited Tax Advisor (ATA) credentials.  The ATP is for 1040 preparers and the ATA is for preparers of estate and trust and business entity returns.  The Council also offers two additional accounting-related credentials.

 

Both designations require the applicant to pass a 100 question multiple-choice test, and the ATA also requires five years of experience in tax preparation, compliance, tax planning and consulting, of which 40% must be in tax planning and consulting.

 

The exams are conducted by PSI, an independent organization that provides assessment and evaluation programs for businesses, state governments and professional associations. PSI develops a range of assessments for pre-employment selection, evaluation, placement, and licensure and certification.  The cost of the exam for each credential is $200 plus a $50 registration fee.

 

ACAT offers online ATP and ATA preparatory courses and practice exams.

 

Maintaining the ATP credential requires 72 hours of CPE during each three-year cycle or 24 CPE hours per year.  The 72 hours includes at least 68 hours in taxation or related subjects (accounting, finance, technology, business law) or subjects that relate to your particular area of practice or employment plus 4 hours in ethics (better than 2 hours per year).  The ATA credential calls for 90 hours of CPE during each three-year cycle or 30 CPE hours per year, again 4 of the 90 being in ethics.  I personally believe these CPE requirements are more appropriate than those under the IRS mandatory RTRP regime.

 

There is an $80 annual renewal fee for each credential, or $125 if you possess both.  Neither credential allows the holder to practice before the IRS.

 

ACAT is “affiliated” with the National Society of Accountants (the “other” NSA). The NSA website explains that the ACAT was “established in 1973 by NSA”.  I expect the ACAT is administered by an NSA staff person. 

 

If the IRS does not decide to go ahead with a voluntary RTRP program after it loses the appeal of Loving v IRS, I have proposed an independent industry-based organization to administer a voluntary RTRP-like tax preparer credential in my ACCOUNTING TODAY editorial “It’s Time for Independent Certification for Tax Preparers”.  The ACAT could be this organization by severing its direct ties to NSA to become a truly independent organization and expanding its affiliations to include, along with NSA, the National Association of Tax Professionals, the National Society of Tax Professionals, and any other existing legitimate non-profit tax preparer membership organizations, with representatives of these organizations given seats on its Board of Directors.

 

While the IRS would not necessarily endorse the ACAT credentials, nor would it allow those possessing these credentials to practice before the Service, it could be asked to acknowledge that the ATP and ATA designations are legitimate in representing the level of tax competence and currency of those who possess and maintain them. 

 

The bottom line - why go through the long and expensive process of creating a totally new organization when one already exists.

 

I have not discussed this idea with any ACAT or NSA representatives, but certainly welcome their comments on this idea.

 

So what do you think?

 

TTFN