Wednesday, April 27, 2011


* My run of tax season TAX TIPS at ended with “Dude, Where’s My Refund?”. I will continue to write on taxes for MainStreet during the year, and will let you know when articles appear here at the BUZZ.

* I like to use the Form 941 that is sent to my payroll tax clients each quarter because it is pre-printed with the employer's name, address, EIN, etc, has certain information keyed in via barcodes, and includes a pre-addressed envelope.

Now I just learned that the DFBs at the IRS (clean version is Damned Fool Bureaucrats) are no longer sending out Form 941 packages, and other payroll and business packages, in an attempt to save money. See “More Business Package Mailings End Following Growth of e-File”.

The fools! If I just found out, think of the thousands of small employers who do their own 941s that are waiting to receive them in the mail – and will end up filing late and getting penalized unnecessarily.

* Eric Toder has a good post on the difference between tax loopholes, tax earmarks, and other “tax expenditures” in his excellent post “Tax Expenditures are not Loopholes” at TAXVOX, the blog of the Tax Policy Center.

* Trish McIntire explains the often confusing difference between two different programs that provide tax relief for spouses filing joint returns in “Injured Vs Innocent” at OUR TAXING TIMES.

Trish tells us -

The IRS has two programs to help spouses who are victims of debts they didn't create; Injured Spouse and Innocent Spouse. The Injured Spouse can help a spouse get their part of their refund back while the Innocent Spouse program helps a spouse who could be saddled with a tax debt of which they had not knowledge.”

* The Energy Star website provides an excellent resource for information on the “2011 Federal Tax Credits for Consumer Energy Efficiency”.

The residential energy credit is still around, but is much less and more restrictive than the credit allowed for 2009 and 2010. This credit is more like the one that was available in 2006 and 2007.

The site also has information for the credit allowed for 2010.

You can check to see if your state has any energy tax credits or incentives at the “Database of State Incentives for Renewables and Efficiency”, a “comprehensive source of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency”,

* A “tweet” led me to “Fraudulent Tax Returns Surge 181%” at CNN.MONEY.

The number of people trying to cheat on their taxes rose 181%, according to a study of 2010 tax returns as of March 4. The Internal Revenue Service found 335,341 returns that claimed $1.9 billion in fraudulent refunds, usually from taxpayers claiming deductions or credits for which they didn't qualify.”

* Speaking of “tweets”, here is a recent one from fellow tax pro Bruce “The Missouri Tax Guy” that bears repeating -

Tax Professionals - Tell your clients how H&R preparers are instructed, encouraged and trained to up sell services like Audit Protection even when circumstances mean that they provide no benefit to their clients. For example, young person with a W-2 and standard deduction is NEVER going to get audited. Tell your clients to read their H&R engagement letter that strictly says over and over again that they are NOT tax return professionals, merely preparers. Let them know what the difference is (Say it nicely though).”

* Ok – I give up. Spend the extra $5.00+ if you want. It seems that the IRS does actually give some weight to a green return receipt card when it comes to tax returns lost or delayed in the mail. Russ Fox adds his personal experience with the IRS in “Pound Wise, Penny Foolish” at TAXABLE TALK. It is just that in 40 tax seasons I have never used certified mail with return receipt for 1040s, and never had a situation where I needed to produce a green card.

* When explaining our tax system I have always said “The Tax Code says everything is taxable except . . . , and nothing is deductible except . . .”.

Kelly Phillips Erb, the web’s TAX GIRL, lists some of the “excepts” of income in her article “Seven Checks You Can Cash Free of Federal Income Tax” at WALLET POP.

She ends by correctly pointing out “These rules apply to federal income tax only. There may be different rules for your state or local taxing authorities.” I seem to recall from past experience of many years ago that some states tax federal refunds, because federal income taxes are deductible on the state return.

* Right on, my brother! I agree with the bottom line to Joe Kristan’s post “Zombie Tax Notices” at the ROTH AND COMPANY TAX UPDATE BLOG -

Fair's fair. When state agencies ignore taxpayer responses, we should be able to impose penalties on them, just like they impose on us if we ignore them.”

* Joe also has a great post in “That Mileage Log Isn’t Worth Much If You Don’t Fill It Out Right”.

I like how the Tax Court described the H+R Block preparer in the case Joe discusses -

It is not clear whether the return preparer made any attempt to distinguish deductible from nondeductible expenses or whether the return preparer simply added up the receipts and deducted the sum as unreimbursed employee business expenses.”

Joe’s moral deserves repeating in full -

The moral? The tax law has very specific substantiation requirements for deducting travel and entertainment expenses, including vehicle expenses. You must substantiate:

(1) the amount of the expense or item;
(2) the time and place of the travel, entertainment, or expense;
(3) the business purpose of the entertainment or expense; and
(4) the taxpayer's relationship to the person or persons entertained.

The mileage log needs to include this information, or you need to be able to be able to support it with other items, like a travel calendar. The tax law doesn't allow you to make a good guess. No substantiation, no deduction

* William Perez tells us about “Obama’s 2010 Tax Returns” at ABOUT.COM TAX PLANNING:US.

* CPA Allan S. Boress suggests a change to the “tax season” that I have heard before over the years in his blog post “Let's Kill Tax Season Before it Kills Us” at ACCOUNTING WEB.

I have always been against this change. I am used to the 12-hour-a-day. 7-day-a-week tax filing season – and can put up with it knowing that on April 15th or so it is over – and I can work maybe 2 or 3 days a week at most the rest of the year.

* I’ve always wondered why anyone would abandon all self-respect and share their lack of intelligence, arrogance and bad behavior with the public on a reality tv show. I found the answer in “Who’s Made the Most Money Off Reality TV”.

If you would like to be rich perhaps you might want to answer the following ad –

“Wanted – individual to participate in new reality tv show. Must be excessively greedy. Below average intelligence and high self-importance required. Must not be able to work or interact well with others. Individuals with any self-respect or common courtesy or decency need not apply.”


1 comment:

Hal Leahy said...

I am a bit surprised at the Missouri's Tax Guy's statement regarding the H&R Block Client Service Agreement aka Letter of Engagement. It does not say what he claims it says regarding H&R Block Tax professionals. The 2007 CSA was posted by a third party and can be found at

It follows the Privacy Policy. The list of products has changed but the wording is essentially the same.

The document refers to HRB service as professional at least twice. The document does state that a client should check with legal and/or financial advisors if necessary. But no where does it state that HRB preparers are not professionals.