Tuesday, October 12, 2021

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

 

* Patience is still needed.  Roger Russell reports “Service levels hit new lows at swamped IRS” a ACCOUNTING TODAY.  

Paper returns have piled up — there are 5.5 million Form 1040s and over 4 million business returns that have been opened but not processed. The goal is that by year-end, the paper returns will be processed. However, there are an additional 4 million returns anticipated by mid-October.”

A reminder – do not call or email your tax preparer to ask about your late refund.  There is absolutely nothing he or she, or you, can do to expedite the processing of your tax return or the issuing of your refund!

* From Professor Annette Nellen at 21st CENTURY TAXATION – “Let's Avoid Unnecessary Costs and Complexities” –

Let's look at all of the new credits and be sure they meet principles of good tax policy including equity, neutrality and simplicity. Also, let's be sure each has three good reasons why it is needed and that there is no alternative other than providing a tax rule.”

Right on, Sister Annette!  More complexity in the Tax Code we don't need.

* Kay Bell tells us “Farmers and ranchers in most of U.S. get drought tax relief” at DON’T MESS WITH TAXES.

* And Kay explains “ABLE accounts offer tax-favored savings help to disabled individuals”.

*  The JS Tax Corporation’s WEEKLY TAX TIP gives us “Five Tax-Loss Harvesting Tips”.

THE LAST WORD

Please read and share AMERICA IS NOT A CHRISTIAN COUNTRY.   

It is very important that this be understood.

TTFN












Thursday, October 7, 2021

ATTENTION NEW JERSEY TAXPAYERS

 FYI -

According to the Internal Revenue Service (highlights are mine) – 

Individuals and households affected by Hurricane Ida that reside . . . in Bergen, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Morris, Passaic, Somerset, Union, and Warren counties qualify for tax relief. 

This means that individuals who had a valid extension to file their 2020 returns, due to run out on October 15, will now have until January 3, 2022 to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.”   

And according to the New Jersey Department of the Treasury (highlights, again, are mine) - 

“. . . the New Jersey Division of Taxation is following the lead of the IRS and extending tax filing and payment deadlines for certain taxpayers impacted by Tropical Storm Ida.

This means that individuals who had a valid extension to file their 2020 returns, scheduled to run out on October 15, will now have until January 3, 2022, to file. In addition, taxpayers may be eligible for abatement of penalty and interest on underpaid tax that would normally accrue during the period of the postponement.

Be aware that if you owe Uncle Sam additional tax with the eventual filing of the 2020 Form 1040 (or 1040-SR) you will still be assessed penalty and interest on the amount due because, as the IRS announcement correctly stated, “tax payments related to these 2020 returns were due on May 17, 2021”.   A valid extension is only an extension of time to file - and not time to pay.  But, surprisingly, Uncle Phil may abate late payment penalty and interest.

TTFN









Wednesday, October 6, 2021

CORPORATE INCOME TAX RATES

 


Just a reminder.  Regardless of the rate charged - corporations do not pay federal or state income tax.

Income tax is a corporate expense – a part of overhead.  Income taxes paid by a corporation are included in the price charged to customers and clients for goods and services.  And it could also reduce the amount paid out as dividends to shareholders.  So, the individual consumer/investor ultimately pays 100% of all corporate income tax either by increased prices or reduced dividends.

I have always believed corporations should have a “dividends paid” deduction – corporations should be able to deduct from taxable income dividends paid to shareholders.  If this were instituted there would be no need for special lower tax rates for qualified dividends (although the lower rates would remain for long-term capital gains) – all dividends would be taxed as ordinary income – and really no need for Section 199a.  

And, of course, all industry-specific or general corporate loopholes and special deductions and credits should be repealed.

Am I wrong in my thinking on either issue?

TTFN










Tuesday, October 5, 2021

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

 

*  Something to think about, from the NEW YORK TIMES – “The I.R.S. Can Register Voters as Well as the D.M.V., and Maybe Better”.

* Kay Bell, the yellow rose of taxes, starts the month off with “4 tax moves to make & deadlines to note in October 2021”.

* If you haven’t already done so, please read my post “Why I Speak Out”.  

* And don’t forget to check out this week’s ramblings at BOBSERVATIONS.

* Bob Carlson explains “What You Need To Know About The Confusing Roth IRA Five-Year Rule” at FORBES.COM.

* Jim Bkankenship tells you “How to Check Your Social Security Benefits” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

It is a good idea to check your Social Security account regularly for errors.  I have had clients in the past who discovered omissions on their account.  If there is an omission, which could affect future benefits, you have a limited time to fix the FU.

THE LAST WORD

We must NEVER give Trump any respect or consideration because he is a “former President”.  We must not compound the error of putting Trump in the White House.

Remember – Trump was not elected President by the American people in 2016. He was put in the White House by the outdated and ineffective Electoral College

Trump MUST be investigated, indicted, tried, convicted, and incarcerated for his many crimes the same as any other America.

TTFN











Monday, October 4, 2021

WHY I SPEAK OUT

 

"If you're not part of the solution, you're part of the problem."  

"One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."  

The only thing necessary for the triumph of evil is for good men to do nothing.”

Historically this blog has only touched on politics when discussing tax policy.  But for the last 6 years I have felt it necessary – actually vital – to speak out here at The Wandering Tax Pro.  This is because ignorant, incompetent and totally self-absorbed reality tv cartoon clown Donald Trump was taken seriously as a Presidential candidate, won the nomination of the Republican Party, and was put in the White House despite having lost the election by 3 Million votes.  This was, to me and other intelligent Americans, surprising and truly disturbing.

Donald Trump the man is a cancer.  He has already destroyed the Republican Party and could destroy America if not stopped.

Trump cares about absolutely nothing or no one but himself.  He is completely devoid of humanity and intelligence, does not possess a single redeeming positive human quality or value, and has never performed a single totally unselfish act in his entire adult life. 

I sincerely believe the greatest threat to America, the American people, American values, and American democracy is Donald Trump and, by embracing Trump and his lies, the Republican Party.

I will continue to vocally and aggressively oppose and denounce Trump and today’s Republican Party, here and elsewhere, until he is convicted and incarcerated for his many crimes and the Republican Party is either replaced or returned to normalcy.

As I have always said – it is not politics, it is patriotism.

TTFN












Friday, October 1, 2021

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

 Once again, I didn’t want to end the week without any BUZZ.

* Guess what?  IRS still behind in processing returns and issuing refunds.”  So Kay Bell tells us at DON’T MESS WITH TAXES.

IRS Commissioner Charles Rettig had admitted that "despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations across the agency, including the processing of tax returns and refunds."

He reported “the inventory of remaining individual tax returns is being reduced, even as the IRS is receiving 2020 returns that are coming in prior to the Oct. 15 extension deadline.”

Kay reminds us –

Until the IRS gets everything back into more normal pre-COVID ranges, we're all stuck with the frustration caused by the large amount of manually processed returns, limited information on tax return processing status, refund delays, and the difficulty reaching IRS employees, especially when seeking help in connection with new tax issues from recent legislation.”

What does Kay recommend?

. . . patience. And maybe a yoga and/or meditation class or app.”

* Ken Berry (not the actor – I do believe he has gone to his final audit) discusses “2021 Tax Deductions for Self-Employed Business Vehicles” at CPA PRACTICE ADVISOR.  

Remember - employee business expenses are no longer deductible on Schedule A.

* Don’t forget to check out my latest ramblings at BOBSERVATIONS.

* The final deadline for timely filing 2020 tax returns is October 15th.  If you have waited this long Russ Fox tells you to “Prepare to Panic!” at TAXABLE TALK

* Davie Rae explains “How Will 10 Types Of Retirement Income Be Taxed?” at FORBES.COM.

THE LAST WORD

The MAGA morons who attacked the capital on January 6th are NOT patriots.  They are traitors and terrorists, and should be treated as such by the public and the courts – including all those who instigated, incited and facilitated the attack.   

Supporting and defending these terrorists is the same as supporting and defending Al-Qaeda after 9/11.  There is absolutely no difference!

If you support or defend these traitors and terrorists or attempt to downplay the attack you, too, are a traitor to America, American values and American democracy.  This includes deplorable and despicable Republicans in Congress.

TTFN












Monday, September 27, 2021

WHAT THE TAX PREPARATION INDUSTRY REALLY NEEDS


Once again, the issue of tax preparer regulation is in the news.  There has recently been talk of giving the IRS the authority to regulate all preparers via proposed economic and budget legislation and of a revival of the Registered Tax Return Preparer (RTRP) program that was done away with by the US Tax Court in January of 2013.

The Internal Revenue Service already regulates preparers, those permitted to “practice” before the IRS, like CPAs, attorneys and Enrolled Agents, and “unenrolled” preparers, via Circular 230.  

I do not oppose requiring PTIN-holders to complete a minimum number of CPE hours in federal income taxation to maintain their PTIN.  In fact, I support this.  It is vital that every sincere and competent paid Form 1040 tax preparer take CPE in income taxation each year to keep up-to-date on tax law changes.  I have taken on average at least 16 hours of CPE in federal income taxation each year consistently for decades. 

I do oppose requiring all paid tax preparers to take a government-administered competency test, either one time or annually, to maintain their PTIN and continue to be allowed to prepare tax returns.  I would only support a one-time initial competency test if there was a grandfathering exemption for tax preparers who have been consistently preparing 1040s for at least 5 years.  After 50 tax seasons of preparing 1040s without incident I have no intention of taking a test now to prove I know what I have been doing for all these years..

I do support voluntary Form 1040 competency designations that recognize and identify the competence of unenrolled 1040 preparers.  Such a program would benefit the tax preparation industry, the taxpayer public, and the federal government. 

Currently any Tom, Dick or Harriet can hang out a shingle as a “tax preparer,” regardless of education or ability.  And, thanks to tax preparation software, any Tom, Dick or Harriet, with absolutely no training, experience or knowledge, can simply purchase a tax preparation software package and try to pass themselves off as a “tax professional”.  The taxpayer public does need a way to determine the relative competence of a potential tax preparer.

I would support the Internal Revenue Service establishing an RTRP designation as part of a voluntary two-tiered certification program that includes the current Enrolled Agent designation.

A voluntary Form 1040 competency designation would allow qualified “unenrolled” preparers the acknowledgement they deserve based on their knowledge and experience. Allowing CPAs and attorneys who prepare tax returns to become an RTRP under the new voluntary program would provide these professionals with a credential in 1040 preparation, and therefore provide recognition of their competence and currency in preparing individual income tax returns.  The CPA designation alone does not indicate the holder has any competence or currency in 1040 preparation.

A preparer, including CPAs and attorneys, would first apply for and be granted the RTRP designation by way of a test that is limited to Form 1040 preparation.  Minimum annual CPE in federal tax topics would be required once the RTRP designation was granted.  

After a year, an RTRP could elect to take a second test, with emphasis on taxpayer representation issues and other advanced topics, to become an ETRP (Enrolled Tax Return Preparer), a new title for the current Enrolled Agent (EA), and be permitted to “practice” before the IRS.  CPAs and attorneys who become RTRPs would have no need to go on to become an ETRP, as they are already permitted to practice before the IRS.

What I strongly believe should be done is to create a national board consisting of representatives of all current tax return industry membership organizations to issue and maintain a universally accepted independent voluntary professional designation – CTRP for Certified Tax Return Preparer - based on testing and maintained by required annual continuing professional education in federal taxation.

In the case of all other professions, like CPAs, attorneys, architects and medical doctors, the maintenance of the professional certification designation is done by an independent industry-based organization such as the American Institute of CPAs, the American Bar Association, the American Institute of Architects, and the American Medical Association.  The new 1040 credential would be administered by the National Institute of Certified Tax Return Preparers.

The Institute would be an independent, nonprofit organization established solely for the purpose of issuing, maintaining and promoting the CTRP designation. Its governing board would consist of a representative (perhaps the executive director or board president) of the National Association of Tax Professionals, the National Society of Tax Professionals, the National Society of Accountants, the AICPA, the American Bar Association, and any other appropriate tax-related membership organization, and at least two independent “previously unenrolled” practicing tax professionals.

In order to be designated as a CTRP, a candidate must possess a valid PTIN and pass a competency test on federal 1040 tax law. A “grandfathering exemption” from this test would be allowed for:

• Tax professionals who have been consistently preparing federal income tax returns on at least a half-time basis (during the traditional tax filing season) for at least five full years and who have successfully completed a total of 48 hours of continuing professional education in federal taxation in the three-year period (36 months) prior to applying for the designation.

• Tax professionals who have been licensed or certified to prepare income tax returns under a required state program that includes a competency test.

• Individuals who have successfully completed a certificate or certification program in federal income taxation offered by an accredited educational institution or a qualified membership organization that includes testing, like the tax programs of Accreditation Council for Accountancy and Taxation (ACAT).

CTRPs would need to renew their designation every three years by submitting proof of completion of a total of 48 hours of CPE in federal taxation during the three-year period, with at least eight hours each year. The 48 hours must include three hours of “tax updates” per year (a total of nine hours) and one hour of “ethics updates” during the three-year period.

Qualified CPE providers would include accredited educational institutions and organizations/companies accepted by the National Registry of CPE Sponsors. The NICTRP would not need to separately approve CPE providers.

CPAs and attorneys would be welcome to apply for voluntary certification under the National Institute of CTRPs as a way to acknowledge and identify their knowledge of and currency in 1040 preparation.

With the institution of such a voluntary certification program taxpayers will be able to identify true “tax professionals” from among the choices they are faced with.  More accurate and competent returns will be prepared. And competent, experienced and ethical “previously unenrolled” tax preparers will finally receive the recognition and respect that they deserve. Everyone benefits.  

So, fellow tax pros, what do you think? 

 TTFN