Saturday, July 16, 2011


* If you still haven’t done so, also check out the premiere issue of my new FREE monthly (except February and March) newsletter LOIS (Lots Of Interesting Stuff). It is full of, well, lots of interesting stuff. AND IT'S FREE!

* Mary Beth Franklin of KIPLINGER gives us an “Insider Interview: IRS Taxpayer Advocate Nina Olson”.

Here are some of the questions asked (highlighted) and part of Nina’s answers -

What’s the most frustrating part of your job? At the moment, it’s dealing with the First-Time Homebuyers’ Tax Credit.

Tell us about one of your recent successes. New rules requiring tax preparers to register with the IRS and pass a competency exam took effect this year

What’s wrong with the current tax code? It’s too complex. It leads to innocent errors and creates opportunities for smart people to exploit loopholes. It also favors people who can afford representation and counsel and discriminates against people who can’t afford to pay for advice.

What’s the biggest myth about tax reform? Narrow tax breaks certainly exist, but the reality is that the biggest “special interests” are us -- the vast majority of U.S. taxpayers. We must under­stand that in exchange for lower tax rates, some tax breaks will be eliminated

* Kay Bell explains what to do if you find yourself exclaiming “Hey, dude. Where’s my check?” in her post “Tracking Down Your Tax Refund” at DON’T MESS WITH TAXES.

* California is offering a different kind of Tax Amnesty with its “Voluntary Compliance Initiative 2”, which is available from August 1, 2011 to October 31, 2011

Voluntary Compliance Initiative 2 (VCI 2) is an opportunity for taxpayers who underreported their California income tax liabilities, through the use of abusive tax avoidance transactions (ATAT) or
offshore financial arrangements (OFA), to amend their returns for 2010 and prior tax years and obtain a waiver of most penalties.”

* TAX GIRL Kelly Phillips Erb tells it like it is regarding the exemption of attorneys from testing and CPE under the new tax preparer regulation regime in her post “IRS Targets 100,000 Tax Professionals for Noncompliance” at FORBES.COM.

The problem – and my counterparts are eager to point this out – is that while tax geeks like me rush to sign up for tax-related continuing education hours, there is nothing that requires that I do so. In fact, I could attend 15 hours of criminal law continuing education hours in order to meet my own state’s requirements and still be exempt from the IRS requirements without a single drop of tax law.

Further, while the three (and in some states, four) days of testing required to pass the bar examination test you on a wide range of legal issues, it’s not tax-specific. On the essay portion, some of the questions may be related to tax but then, some may not. The test questions for the MBE (Multistate Bar Examination) portion focus on Constitutional Law, Contracts, Criminal Law and Procedure, Evidence, Real Property and Torts. Tax is not a focus

The same could be said of CPAs, although I expect the initial CPA exam would have a few more tax questions than the Bar exam (though nowhere near enough to show 1040 competence).

* Eva Rosenberg, the internet’s TAX MAMA (Where’s Poppa?), gives good advice in her post “Tax Preparer Errors".

It seems a reader’s tax preparer made significant errors in her 2010 tax return, which she didn’t discover until too late because she didn’t get to see it before the preparer e-filed it. Mama’s opening remarks (highlight is mine) -

I am so sorry your preparer was so careless. However, it IS good that you have become familiar with the importance of reviewing your tax returns before they are filed. Never let anyone file anything for you until after you have seen it.

Do NOT sign the Form 8879 until you have reviewed your tax return

My cover instructions to clients, which I include with each set of finished returns, states the following (the highlights are as they appear on the instruction memo)-

Please examine these returns carefully to be sure all items of income and deductions have been accounted for properly. You are responsible for all the information reported on the returns. If you find anything that is not in order, or that you do not understand, contact me immediately. It is extremely important that you verify the accuracy of all Social Security numbers on the returns before mailing.”

The issue in Eva’s post also raises a concern about e-filing. Apparently the tax preparer “filed” – in reality submitted - the return without first showing it to the taxpayer. In my case I prepare a manual return and give it to the client to mail. It is impossible for a client to say he/she did not have the opportunity to review the return before mailing.

* Right on! “Restaurant Bans Young Children”. Too bad it is outside Pittsburgh. And I would up the cut-off age to at least 10 years old.

I am a firm believer in the old adage – “Children should be neither seen nor heard!”.


1 comment:

Alexander said...

An interesting interview. I agree with Nina olson. The current tax code it`s too complex and discriminates against poor people .