Monday, July 30, 2012


I am sure there are several out there who knew it was inevitable that I would post my comments on the item “343,020 Reasons CPAs Should Talk Up Their Tax Expertise Now” by Jina Etienne, CPA, Director of Taxation of the American Institute of CPAs, at AICPA Insights - and have been waiting with baited breath.

Well – here it is!

Jina explains in the piece - “While CPAs have dominated the regulated tax preparation arena, that landscape is about to change.”  Thank the Lord that it is! 

And Jina tells us –

Unfortunately, the public doesn’t really understand the difference between a CPA and other tax return preparers.” 

I wholeheartedly agree with this statement, but not in the way Jina intended.  The public, and most journalists, have for years believed the totally untrue “urban tax myth” that a CPA was automatically a 1040 tax expert. 

Articles and columns on 1040 topics constantly suggest that readers “consult your CPA” when they mean “consult your tax professional”.  The two terms are not interchangeable! 

How many times do I have to say this?  Just because a person has the initials CPA after his/her name does not mean that he/she knows his/her arse from a hole in the ground when it comes to 1040 preparation.

The CPA exam is not a test of 1040 knowledge or competence.  I doubt there are any questions on the exam that have to do with 1040 preparation.  I expect any tax questions on a CPA exam are concerned with “entity” taxation (corporations, partnerships, estates and trusts).  The CPA exam is certainly no substitute for the initial competency exam now required of “previously unenrolled” tax preparers.

And while CPAs are required to maintain a designated number of hours of annual continuing professional education, there is no requirement that any of this CPE be in federal 1040 taxation.

However, CPAs should be afraid, very afraid, of the new Registered Tax Return Preparer (RTRP) designation.

It is not that there are all of a sudden tens of thousands of new tax preparers to “compete” with the CPA.  There have always been hundreds of thousands of educated, experienced, and highly competent “unenrolled” preparers(like me) out there (often having to fix mistakes made on 1040s by CPAs).  Actually the new regulation regime has, and will, actually reduce the number of non-EA and non-CPA preparers.

What the new designation will do is affirm the fact that those who earn it have proven themselves competent in 1040 preparation, and remain current by taking annual CPE in federal taxation each year.  It will indicate to the public that these individuals, and not CPAs, are proven, if not tax experts, at least competent tax professionals.

CPAs are currently exempt from having to prove basic tax competence by taking the IRS exam and are exempt from having to remain current in tax knowledge by taking at least 15 hours per year of CPE in federal taxation.  Yet the IRS says it is ok for CPAs to prepare tax returns - while the rest of us must go through the hoops.  There is no good reason for exempting CPAs who want to prepare 1040s for a fee from these requirements.

Many EAs, who are also exempt, and for good reason, from the RTRP test, are actually sitting for it so that they can add the initials RTRP to their name.  This is because of the widespread public confusion about what an EA is.  If a CPA wants to be held out as a tax expert he/she should sit for the exam, maintain 15 hours per year in federal taxation CPE, and get the RTRP credential.

Jina wants clients to know that “their CPA is the premier provider of tax services”.  While “their” CPA may indeed be a tax expert – it has nothing whatsoever to do with the presence of the initials CPA.   It is only because of the education, training, experience, ability, temperament, and other factors that are specific to that individual preparer.

The RTRP, and the EA, are the premier providers of tax services – not the CPA!


Saturday, July 28, 2012


Today’s BUZZ is like THE SOUP’s “Chat Stew” – “so meaty!”

* Right on, my brother!  Bruce McFarland (aka THE MISSOURI TAXGUY) tells it like it is in “Why Was My Voice Not Heard by The AICPA?

Bruce discusses his comment on the item “343,020 Reasons CPAs Should Talk Up Their Tax Expertise Now” from AICPA INSIGHTS – which was NOT initially accepted for publication.  As it turns out, Bruce’s comment was finally posted, as was another with of a similar vein.

Look for my comments on this item here at TWTP on Monday!

* Jason Dinesen, an EA, weighs in on the subject in his post “Enrolled Agents – The Lichtenstein of the Tax World” at THE DINESEN TAX TIMES.

* Back to Bruce – he touts an online tool for taxpayers who use their car for business in “Mileage Tracking With BizMileTracker".

While you are at THE MISSOURI TAXGUY don’t forget to check out the Store.

* Trish McIntire tells you how to get a “Tax Return Transcript” over at OUR TAXING TIMES.

It seems that many taxpayers now “need tax return transcripts for loans and student financial aid.”  Why?  I guess that some lenders and schools have realized that a tax return can be faked up with tax prep software and want something from the IRS.”

What is a tax transcript?  A tax return transcript is not a copy of the taxpayer’s tax return. It’s an IRS list of what is on the return you originally filed”.

* Kaye A. Thomas reports on a new court case on the basis of shares in a previously mutual insurance company received in “demutualization” in “Demutualization Soup: Another Ruling” at FAIRMARK.COM.

This new case agrees with the previous decision from 2008 that shares received in demutualization do have a tax basis (the IRS position is that the shares have zero basis), but did not did not indicate how to determine the basis.

For info on the previous case see my 2008 post “The Feeling is Demutual”.  Until there is further guidance on how to determine the basis I will continue to follow the 2008 decision.

A tip of the hat to Joe Kristan for “turning me on” to this item in his Thursday Tax Update.

* Wonder of wonders, miracle of miracles.  The idiots in the Senate actually passed a piece of legislation.  But, of course, as Kay Bell points out in “Good News, Bad News on Senate Tax Vote” over at DON’T MESS WITH TAXES, “the Senate tax bill is worthless legislatively. Per the constitution, all tax measures must come from the House.”

So instead of spending their time constructively the fools wasted it on a totally worthless piece of legislation.

What idiots!  I sincerely hope you will seriously consider voting against the re-election of any current member of Congress in November (let GRIP be your motto – Get Rid of Incumbent Politicians - just don't vote in anyone from or supported by the Tea Party "movement").

* And Kay tells us that today is a Sales Tax Holiday in the state with all the s’s in “Mississippi Sales Tax Holiday Begins Today”.  Actually it began yesterday (Friday) and ends at midnight tonight.

* Caroline Baum explains that “Making the Rich Poorer Doesn’t Enrich the Middle Class” at BLOOMBERG.COM.

* Peter J Reilly, who writes the blog “Passive Activies” (it used to include “and Other Oxymorons”) at FORBES.COM has been spreading the word about his fellow FORBES blogger Lowell Yoder, most recently in “Lowell Yoder Has Some Great Tax Posts - Read Them”, whose post “views” are apparently miniscule (Pete’s post on Lowell had more views than the post by Lowell that he highlights). 

I am always happy to help out a new competent fellow tax-blogger – so why not check Lowell out.  

* As I have been doing the past few Saturdays – I suggest you check out the TAX FOUNDATION’s “Weekly Tax Update”.

* I loved this quote from Christopher Bergin about the idiots in Congresss that opened Joe Kristan’s Friday “Tax Roundup" -

The point is that you could set these folks pants on fire and they still wouldn’t get it. Our tax system is a mess, and we are heading into another recession (yes, I’m ‘doubling down’ on that bet!). And these folks squabble like children.

The tax world is a microcosm of what is going on in Washington. Our political system is completely dysfunctional. Congress, when it manages to pay attention, is totally reactionary. Our lawmakers will do nothing but bicker until catastrophe hits. Bet on it.

But, sincerely, let’s all try to have a nice summer.”

* Tax pros – don’t forget to check out my Special Summer Savings!


Wednesday, July 25, 2012


* Clients often ask me “When to Take Social Security”.  I am not a Social Security expert, and have no experience, training, or knowledge that would allow me to answer this question for them.

To the rescue comes the Wall Street Journal’s WEEKEND INVESTOR, with a post on the subject that discusses several websites that have calculators and other resources to help you answer this question.

* My current commute in NJ is 2½ rooms – as I work out of a (tax-deductible) home office.  When I move to PA my commute will be 1 room!

Kay Bell reminds us of a tax-free fringe benefit for those who use a vehicle to commute, specifically a bicycle, in her post “Bicycling Commuters, You Might Qualify for a Tax-Free Workplace Benefit” at DON’T MESS WITH TAXES.

* The TAX POLICY BLOG of the Tax Foundation gives us a map of the “Percentage of Filers Making Over $200,000” for tax year 2010.

New Jersey is #2 (I have heard that before – in a different context), with 5.26% of its resident filers earning over $200,000.  Connecticut is #1at 5.46%.  New York and California are #6 and #7 at about 3.92% each.  Mississippi is at the bottom of the list, with only 1.42%

This is a follow up to last week’s map of the “Percentage of Federal Income Tax Revenue from Filers Making Over $200,000”.  Connecticut was #1 again, but NJ was #3 (beaten by NY).

* The Tax Foundation trifecta ends with a slide show for "Putting a Face on America's Tax Returns", with “All the data you need to understand taxes on the poor, rich, middle class, and the Top 1%”.

* Trish McIntire of OUR TAXING TIMES “Learned a Couple of Things” from a recent CCH article.

* Joe Kristan of THE ROTH AND COMPANY TAX UPDATE BLOG returns from a week-off “gone fishing” with a beefy “Tax Round-Up”.

* A current tweet led me to an older post that I had missed during my tax season hiatus.  Peter Reilly speaks the truth when he says it is “Unfair To Knock Romney For Getting An Extension” at his FORBES.COM blog. 

As Pete points out, it would have been impossible for Mitt to file a proper return 2011 by the April deadline –

The reason it is not possible is because Mr. Romney is a partner in several partnerships.  Likely those partnerships are partners in other partnerships, some of which are also partners in partnerships.  Big fleas have little fleas.”

The deadline for filing a partnership return is the same as the deadline for filing a 1040.  I know from personal experience that many, if not most, partnership K-1s are not sent out until after the initial April filing deadline.  This is the source of several of my GD extensions.

And while, as a preparer, I personally hate GD extensions, I recognize that they are often necessary, and agree with Pete when he says –

So if your tax preparer is telling you that it might be a good idea to extend, don’t hold it against him too much.  Also don’t think that filing an extension is some sort of moral failure or not doing it should allow you to feel superior.”   

* Tax pros – don’t forget my Special Summer Savings.


Saturday, July 21, 2012


* Check out the TAX FOUNDATION’S “Weekly Tax Update”.

* Speaking of the Tax Foundation, a new study explains that “Tax Fairness Challenged by Rise of Nonpayers”.

Recent debates over the equity of the income tax system have centered chiefly on whether high-income Americans are paying their “fair share” in taxes. There has been less discussion about the growing number of Americans who pay no federal income tax—the so-called “nonpayers.”

I believe that the growth of “nonpayers” is a much bigger problem.  As the Foundation points out (highlight is mine) -

Recent IRS data reveals that in 2010, over 58 million federal income tax filers had no income tax liability after taking deductions and credits. This amounts to nearly 41 percent of the roughly 143 million tax returns filed that year. In fact, many of these filers actually had a negative income tax burden because they were eligible for “refundable” tax credits even though they had no income tax liability. These taxpayers did this through the wholly legal and legitimate use of deductions and credits provided in the income tax code.”

* I figure I will save $11,000 + per year by moving from NJ to PA.  ACCOUNTING TODAY tells us that “Jeremy Lin Expected to Save $1 Million in Taxes in Texas” by moving from NY to TX. 

I would not want to live in Texas – too damn hot!

* Thanks to instructions from the idiots in Congress, tax pros were required to include Form 8867, a “due diligence” checklist, with all claims for the Earned Income Credit beginning with 2011 returns.  I do not believe the form is required for “self-prepared” returns.  Taxpayers do not have to certify that they qualify for the credit, but we tax pros have to make sure they do – we are social workers as well as tax preparers.  

Thankfully I do not have more than a handful of clients who qualify for the credit.  In haste, I did forget to include a Form 8867 on a return of a couple with no children who claimed a small credit for the first time in 2011 due to very small earned income.  I remembered it after I had sent the finished return on to the clients – but when I contacted them they had already mailed the return.  Neither I, nor the client, had heard from the IRS about the oversight.

Now I find that, also from ACCOUNTING TODAY, “IRS Sends Warnings on Missing EITC Checklists”.  So I expect I will receive a letter, but no penalty.  However, the article tells us that “penalties will be assessed for 2012 that lack Form 8867”.   

* I don’t need any more proof that Rush Limbaugh is, like the members of Congress, an idiot.  But in case you do, Kay Bell tells us “Limbaugh Decries Bane/Bain 'Conspiracy'” over at DON’T MESS WITH TAXES.

FYI, as Kay points out, “Bane first appeared {in DC comics} in 1993.

* Tax pros – don’t forget my Special Summer Savings.


 A recent item on one of the entertainment news programs discussed various tv personalities’ “cost per viewer”, based on earnings and ratings.  The bit said that Spookie from the steaming pile of excrement known as “The Jersey Shore” (who has moved to Jersey City for a “spin-off” piece of crap with JCow – one reason why I finally decided to leave Jersey City and New Jersey) was relatively “cheap” on a per viewer basis– earning $1.2 Million per year.

Jesus H Christ – being a brain-dead drunken slut is certainly lucrative!

This is disturbing, considering that many, many people in the television industry with actual talent and ability (and personality), and who actually contribute to society, make substantially less.

This certainly goes to verify the “dumbing down” of America.


Wednesday, July 18, 2012


Better late than never!

Sorry no posts this week.  I have been busy with the closing on my condo in PA and getting things (utilities, cable, phone, internet, etc) set up.  I should return to regular posting (other than BUZZ) next week.

* BNA.COM reports “Congress Leaders Steam Toward Possible Tax Vote Showdowns in August” (highlight is mine) -

Leaders of the House and Senate continue to move forward with divergent plans for addressing the Bush-era temporary tax cuts, with leaders of both chambers setting up votes that may not come until the beginning of August. In the House, Republicans will offer bills to extend the 2001 and 2003 tax cuts for all taxpayers for one year and set up a process for overhauling the tax code, while in the Senate, Democrats will put forward a package that will extend the tax cuts for families earning $250,000 or less, consistent with President Obama's plan.”

While I would prefer the Republican bill (clearly the way to go at this point) to that of the Democrats, it is unlikely that either will pass, as neither party has enough votes in both house.  Nothing will be accomplished until after the election. 

* An IRS Summertime Tax Tip titled “A Lesson from the IRS for Students Starting a Summer Job” talks about the tax status of “paper boys” (or girls) -

Special rules apply to services you perform as a newspaper carrier or distributor. You are treated as self-employed for federal tax purposes regardless of your age if you meet the following conditions:

• You are in the business of delivering newspapers.

• All your pay for these services directly relates to sales rather than to the number of hours worked.

• You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.

If you do not meet these conditions and you are under age 18, then you are generally exempt from Social Security and Medicare tax.”

I do not know any school-age paper boys or girls who are “in the business of delivering newspapers”.  

My mentor did do returns for adults (I use the term lightly when referring to these specific taxpayers) who were actually “in the business of delivering newspapers” and filed Schedule C.  Thankfully none were left when I was gifted his practice.

* Janet Novack gives us another example of why you should not overpay Henry and Richard to prepare your tax returns in “Batman Faces Dark Night With IRS If He Takes H&R Block's Tax Advice at FORBES.COM.  They FU-ed Bruce Wayne’s tax return!

She quotes an appropriate reaction from a reader of the Block piece -

As one comment on the Block blog put it: ‘Hope they take more care with YOUR taxes than they did with Batman’s’.”

I expect that Bruce Wayne is smart enough not to go to H+R for tax preparation.

* Trish McIntire tells us that the Office of the Chief Counsel has now clarified their position on claiming Medicare premiums as an adjustment to income for self-employed health insurance in her post “Medicare B and the Self-Employed” at OUR TAXING TIMES -

“ . . . the Chief Counsel has ruled that Medicare B is a qualified insurance under Sec 162(l) and qualifies for the Self-Employed Health Insurance (SEHI) deduction. Medicare D (the drug plan) has always qualified for the special deduction.”

* Tax pros – don’t forget my Special Summer Savings.


Recently I quoted from John Adams as interpreted in the musical “1776” concerning the inaction of the idiots in Congress.  I came across a good direct quote from Adams on the same subject in an AARP editorial.

In 1776 (the year, not the musical, Adams wrote of his fears that the Continental Congress’ decisions would be dictated “by noise, not sense; by meanness, not greatness; by contracted hearts, not large souls”.

No one can dispute that Adams’ fears have come true with the idiots in Congress today.  Their decisions, or more appropriately lack of decisions (but then again – not to decide is to decide), are certainly dictated by noise, meanness, contracted hearts, and idiocy.


Saturday, July 14, 2012


* Peter J Reilly, who took his excellently titled blog PASSIVE ACTIVITIES AND OTHER OXYMORONS to FORBES.COM a while back, gives us “The Discerning Person's Guide To The Tax Blogosphere”.  Peter lists three blogs that allow you to get a fair sampling of what is happening around the “tax blogosphere”.

I am honored that Peter leads the list with me, The Wandering Tax Pro, specifically referencing my twice-weekly BUZZ posts.  And I am certainly in good company – with Joe Kristan and Paul Caron (the undisputed king of tax bloggers).

Peter did forgot to mention my occasional rants on the steaming pile of excrement known as “reality tv”.

* As a follow-up to the item I referenced in Wednesday’s BUZZ about receiving an IRS notice, Trish McIntire provides an excellent post on instructions from a Tax Pro to a taxpayer who has received a notice in “IRS Notice - Tax Pro” over at OUR TAXING TIMES.

* Kelly Phillips Erb, another FORBES.COM blogger affectionately known as TAXGIRL, got to know Brian Borawski, CPA last Tuesday.  I turns out he had a very informative blog.

Sorry – so far that is 2 items now from last Tuesday that I found too late to include in last Wednesday’s BUZZ installment, due to the fact that I was in Baltimore attending the NATP National Conference.  Oh well – better late than never.

* Make that three – another post from Trish McIntire.  She warns about a phishing scam aimed at tax preparers in “Phishing for Tax Pros”.

I haven’t seen this in my inbox yet.

So tax pros watch out, with the IRS having to give our demographic info out as part of the Freedom of Information Act, I think we’ll be seeing more targeted phishing and spams.”

* Stephen Ohlemacher of the ASSOCIATED PRESS asks “Can IRS Police Both Taxes and Health Care Law?”.

It is not the IRS who will have to do the dirty work.  You do know to whom the buck will be passed, don’t you.  Tax preparers.  First we were forced to become Social Workers and determine if an individual or family qualified for federal welfare (the Earned Income Credit).  And now we will be forced to determine if a household is covered by health insurance.

* Reader Nancy Parker brought to my attention a post of interest to taxpayer who employ nanny’s and other household employees titled “Expert Insights: Questions and Answers with Stephanie Breedlove” over at eNANNYSOURCE.  

* The TAX POLICY CENTER has a Tax Fact page on “Historical Individual Income Tax Parameters” which shows “U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Tax Bracket Tax Rates and Tax Base for Regular Tax, Tax Years 1913-2012”.

* Check out the Tax Foundation’s “WeeklyTax Update”.

* Tax pros – did you check out my post on why “You Ought to Give the NATP National Conference a Try” over at TAX PROFESSIONAL?

* And tax pros – don’t forget my Special Summer Savings.


Another on the money editorial cartoon from USA Today last Wednesday.  In Congress a Republican wants to “Repeal Obamacare”, while a Democrat objects, “How can you repeal the Health Care bill when we haven’t even finished reading it?”

Obamacare is a clear example of the fact that more often than not the idiots in Congress do not actually read the legislation they vote on!


Friday, July 13, 2012


The last day of the NATP National Conference in Baltimore turned out to provide the best content – at least from my perspective.  I attended one morning session and two in the afternoon.

The morning class was “Form 4797 Basics” taught by Chris Bixby, EA.

I admit that I, like many other preparers, have always been somewhat confused by aspects of Form 4797.  I have taken several 4797 CPE classes over the years, but always have my Taxfinder Handbook in front of me when completing the form.

Chris did a great job of explaining the concepts of Sections 1231, 1245 and 1250 property and recapture, unrecapture, and nonrecapture in such a way that I do believe, by Jove, I have finally got it!

I spent the afternoon with Larry Gray, CPA, a 35-year veteran tax pro and long-time NATP instructor (and former President).  Larry led back-to-back “Did You Know?” sessions on Form 1041 and the dreaded Alternative Minimum Tax (AMT). His format was unique, and, rather than working his way down the individual forms, dealt with specific questions clients might have about differing 1041 and dreaded AMT situations. 

While I have no desire to prepare 1041s, I am occasionally forced to prepare one for a long-time client who has gone to his/her final audit.  Larry gave me some new insights.

His dreaded AMT class demonstrated what a real monster the parallel tax system truly is – and why it should be destroyed.  It also discussed tax planning suggestions and alternatives for various dreaded AMT scenarios.

These classes reinforced that no taxpayer faced with Forms 4797, 1041, or 6251 should attempt to prepare his/her own tax return – and should certainly not rely on a “box”. 

As usual NATP did a good job offering some great education.  While no longer really cost effective for me, the National Conference is still a good value for most other tax pros.

Unfortunately I am heading back to New Jersey as you read this – although thankfully not for long.  I close on my condo in PA next Tuesday!


Thursday, July 12, 2012


This morning I returned to the Baltimore Marriott Waterfront for more educational sessions at the NATP National Conference – although I did not have to arise as early as I did on Monday morning.

I had scheduled one session before the free box lunch break and two after – but ended up with only one afternoon session.  I had originally planned to attend the session on Current Developments – Business, but after reviewing the session workbook I determined there was really nothing new for me to learn.  Rather than sit around the hotel for the 50 minutes between sessions I decided to head back to my Mount Vernon Cultural District located hotel to check email and work on my post.

While there are a multitude of educational sessions to choose from at Conference each year, I am in a unique situation.  I do not accept any new 1040 clients, and do not accept any “entity” clients (partnerships and corporations).  I have no desire to represent taxpayers before the IRS (other than to attend audits of returns I have prepared).  And I will be sleeping through the required 2 hours of ethics preaching at the NATP year-end update in November – so no need to waste the 2 hours (actually 100 minutes) now.  In reality there are only so many sessions of interest, or actual value, to me – one reason why I often find the annual National Conference not cost effective.

My morning session was another attempt at “Stump the Stars” (actually Stump the Instructors).  Over the years NATP has tried this type of format in various incarnations – Panel of Experts, Ask the Research Director, Frequently Asked Research Questions, etc – with an individual or panel addressing a variety of questions on all aspects of taxes either submitted prior to the session or from the floor.  I have always liked this kind of session, and always attended when offered, and wish it were an annual offering (like Current Developments).

This session had three of the current instructors (one of whom was Beanna Whitlock, who was more serious this time around) answer questions, some previously submitted via email (I had received an email solicitation last week, and did not submit a question) but most from the floor.  

One question from the floor concerned the reason for one of my “eccentricities”. 

A preparer thought she had taken care of a client issue with an IRS representative over the phone, and had submitted via fax all required information to facilitate the settlement as per what she had been told by the IRS person.  However a few months later the client received an IRS notice that a lien had been placed on his business property – which ended up FU-ing the mortgage refinancing process that he was going through.  So the issue was not settled as the preparer had thought – the IRS staffer lied and totally ignored what had been agreed upon.

Over the years I, and my clients, have been lied to left and right over the telephone by IRS employees and NJ Division of Taxation representatives.  I decided several years back never to address a federal or state tax issue over the phone.  If an issue arises I will never initiate contact via a federal or state “practitioner hotline”, but will always contact the IRS, or NJDOT, in writing – so I have a written record of my contact and the agency’s response.  It takes longer – but it usually ends in a satisfactory resolution and minimal, if any, agita.

Nobody was able to “stump” the instructors – who gave good (and in my opinion correct) answers to all questions.

The afternoon session was “Audit Proof Your Client’s Return” – with every seat filled and several attendees sitting on the floor.  The instructor was new to me, and I think NATP as well, and provided some good suggestions.

I have three more sessions tomorrow.  I do believe I will meet my 15 hour CPE requirement at Conference, although I will be short 1 hour of “updates” (more than covered by the year-end class in November) and the 2 wasted, but required, hours of “ethics” preaching. 


Wednesday, July 11, 2012


* Bruce, aka THE MISSOURI TAXGUY, has a guest post with some good advice by Jen Carrigan that explains “How to Reduce the Chances of an IRS Audit”.

And while you are these be sure to check out the STORE.

* TAXPRO TODAY tells us that “IRS Announces Debby Relief” -

The IRS has announced that victims of Tropical Storm Debby that began on June 23, 2012, may qualify for relief from certain deadlines. Certain deadlines falling on or after June 23 and before August 22 have been postponed until Aug. 22, 2012.”

* Kay Bell considers “Tax Deductions for Pets, Our Furry Little Family Members” – a topic I have discussed in several past posts here at TWTP – over at DON’T MESS WITH TAXES.

If I can add to her topic “Pets and charitable gifts” – see my post “Doggie Deductions”.

* Bill Perez discusses a “Tax Reform Proposal from the Bipartisan Policy Center” at ABOUT.COM.

On June 19, 2012, Dr Alice Rivlin and Senator Pete Domenici testified before the Senate Finance Committee on the topics of debt reduction, tax reform, and federal spending. They presented a set of budget and tax proposals developed by the Bipartisan Policy Center's Debt Reduction Tax Force.”

While the plan does somewhat simplify the Tax Code, the major problem is that it has too many refundable tax credits.  Refundable credits = tax fraud! 

* Claudia Hill, of FORBES.COM’s Tax Watch blog, takes a look at “IRS Notices & Letters: It's Stop the Machine Time Again”.

The post provides “a checklist for the next time you find an IRS notice in your mail”.  Her #2 point is most important -   

Don’t assume it is correct.”

Over the years I have found that more than 2/3 of all notices from the IRS, or state tax authorities (actually more like 75%), are wrong!

Commenter Bill Brown hits the nail on the head when he gives his #1 tip for what to do when you receive an IRS notice -

Engage the services of a qualified tax professional. If you paid for that return to be prepared, contact the preparer.”

* And Janet Novak, also of FORBES.COM, gives us the word that “It's Official: Tax Gridlock Until After November Election”.

While BO would sign a bill to extend the “Bush” tax cuts for those with incomes under $200,000 ($250,000 for married couples) today, he “won’t sign an extension of the Bush era tax cuts for the wealthiest Americans before the election”.  And the Republicans are in typical no-compromise stance – wanting all or nothing.

So, as expected, the idiots in Congress will do absolutely nothing on taxes, or any other issue, until after the election.  And the IRS will be unable to properly “go to press” with 2012 forms and instructions in October.  And the processing of 2012 tax returns will be delayed in 2013, causing inconvenience and agita for all. 

Is there any doubt in anyone’s mind that the members of Congress are idiots – and that none of the current members should be re-elected in November?

* Tax pros – don’t forget my Special Summer Savings.


The editorial cartoon in Monday’s USA Today showed a mother yelling at her recently graduated son for spending his days lying on the couch and doing nothing.  The father, reading a newspaper with a headline about the inactivity of the idiots in Congress, comes to his son’s defense and announces that he is preparing for a career in politics.

Tomorrow – more from the NATP National Conference in Baltimore!


Tuesday, July 10, 2012


After publishing my post on the first day of NATP’s National Conference in Baltimore I realized that I forgot to include my pet peeve with NATP (although NATP is certainly not the only offender – it is a common complaint) when announcing the lodging facilities of conference, workshops, and seminars.

NATP, and just about every other provider, will tell you in its publicity that the event or activity will be held at the High End Hotel in Hottown, and that the special event or activity room rate is, let’s say, $149 per night.

This is a lie!  You will not pay $149 per night for your room.  After adding in various state and local taxes and other charges, different for each location, you will actually pay over $170 per night.  Plus, if you drive, as was an option for me for the Baltimore location, you will pay perhaps an additional $10-$18 for parking at the hotel.

Please, please, please – when announcing the “special room rate” give the true rate, with all taxes and additional charges included.



I am here to attend the annual National Conference of the National Association of Tax Professionals (the 31st, I think) – being held at the Baltimore Marriott Waterfront. 

NATP had informed me that I am now a 25-year member, and I have attended probably to 20 of these conferences in my 25 years as a member.  It used to be an annual event – but I have found lately that with the increased costs (and general PITA) of flying and increased costs of lodging it is not cost effective.

Baltimore is nearby, and accessible by train, and I found an alternative hotel that is less than half the cost of a room at the host hotel, and so I am here.

My other ongoing complaint about the conference – it is always held in a hot location (I am referring to the heat from the sun) at the hottest time of the year.  Why not have the conference in late September or early October – or have it in Seattle or Portland, Maine?

In its favor, the conference is always chock-a-block with great education on all aspects of tax practice.

It seems that my reputation preceded me this year.  When checking in with NATP staffers Greta and Cindy at the registration desk yesterday (Monday) morning, before proceeding to the Annual Meeting, I was greeted with “Robert Flach is a name we know – welcome Wandering Tax Pro!”

During the opening ceremonies I was pleased to learn that my soon to be former home chapter, the New Jersey chapter, was selected as Chapter of the Year (again) and its former president Marilyn Ayers was the 2012 Chapter Person of the Year.  I have been told that my blogging, and other writings on issues of concern to tax pros, had contributed to the chapter’s winning of the award.

The keynote speaker was David Williams, the IRS’ tax preparer regulation czar, who spoke on, what else, the new IRS preparer regulation regime.  I discuss David’s presentation over at THE TAX PROFESSIONAL blog.

I attended the general session discussion of “Current Developments – Individual Issues” in the morning, and “A Choice of Options” (which was actually on puts and calls, a topic that has always somewhat confused me over the past 40 years – although I had initially thought it concerned the various options offered to taxpayers in different situations) and “Tax Potpourri” in the afternoon.

There were not many current developments for 2012, as compared to past years, because of the procrastination by the idiots in Congress.  2012 being a presidential election year almost guaranteed that nothing would be done in the area of taxes – or any other area.   

The session highlighted some of the many provisions that expired at the end of 2011 and have not yet been extended for 2012 or beyond –

·      general sales tax deduction on Schedule A,

·      above-the-line tuition and fees deduction,

·      $250 educator expense deduction,

·      mortgage insurance premiums as interest expense,

·      100% bonus depreciation,

·      15-year recovery for qualified leasehold improvements,

·      tax-free direct distribution from IRA to qualified charitable organization,

·      personal non-refundable tax credits allowed to offset the dreaded AMT,

·      increased dreaded AMT exemption amounts, and

·      non-business energy property credit.

And it looked at some of the tax increase provisions of the recently upheld “health care reform” bill that take effect beginning in 2013.

Such as the .9% Hospital Insurance tax on individual wages (and self-employment earnings) in excess of $250,000 for joint filers ($125,000 if married filing separately) and $200,000 for single and head of household filers.

And the “Medicare Contribution Tax” of 3.8% on the lessor of net investment income or the excess of “modified” Adjusted Gross Income (MAGI) over, again, $250,000 for joint returns ($125,000 for separate filers) and $200,000 for single and head of household filers.  This is the tax that right-wing idiots have been lying about for the past couple of years – calling it a “sales tax” on the profit from selling one’s personal residence.

My buddy Beanna Whitlock, who once told a gathering of tax pros that I was the only person in the room who really knew how to prepare tax returns when I raised my hand to indicate that I still prepare 1040s by hand, had us rolling in the aisles at her “Tax Potpourri” session.

In between laughs she detailed an example of one of the truly egregious inequities in the Tax Code – how $7,500 in gambling winnings (and $8,000 in documented gambling losses) increased the taxable income of a couple with one spouse collecting Social Security by over $13,000!  The bottom line – about $2,000 in additional federal income tax on $0 of net income.

I have the day off today (Tuesday) - with no educational sessions.  So look for the mid-week installment of the BUZZ tomorrow.