Friday, April 24, 2015


BUZZ, BUZZ – the BUZZ is back!

Sorry I have been late in returning to regular posting.  I have been working away on the GD extensions – and have made some good progress.  I want to have all of the returns for which I have information done by the end of April.

Are you celebrating?  Do you know what day today is?  The TAX FOUNDATION tells us “Tax Freedom Day® 2015 is April 24th”!

Here are some items of interest that appeared during my tax season hiatus, and some more recent BUZZ-worth stuff.

* Barbara Weltman reminded me of some history that I had forgotten on one of “The President’s Tax Proposals” at BARBARA’S BLOG (highlight is mine) -

The concept of carryover basis for inherited property was created by the Tax Reform Act of 1976 and was set to take effect for property inherited from decedents dying in 1977 and later. Heirs and tax practitioners soon realized that it was unworkable - it was impossible in many/most cases to know what a decedent had paid for property or whether that property had originally been acquired by gift or inheritance, and whether any improvements that would increase basis had been made. A moratorium was in place until 1978; it was repealed in 1979.”

Some wise advice from the Professor -

“ . . . the Internal Revenue Code ought not be used to accomplish goals that ought to be spelled out in other legislation.”

Speaking of the 1095-A FU Jim correctly states -

If it is outrageous that the IRS has caused problems for almost a million taxpayers, is it not even more outrageous that the IRS was put in this position because the Congress was unwilling to charge HHS with the responsibility for administering the Affordable Care Act?

* And Jim brings to our attention a recent survey on “Testing Tax Knowledge”.

While not the intention of the post, it gives a good reason why relying on a box (tax preparation software) to prepare your return is a bad idea.

According to a report on a recent NerdWallet survey, ‘[m]ost American adults get an ‘F’ in understanding income tax basics’. The survey posed 10 questions to 1,015 people. The average score was 51 percent.”

Professor Maule has an excellent suggestion -

It would be fun to require members of Congress and candidates for that office to take this survey, or one like it. I cannot imagine the outcome would be any better than that achieved by the 1,015 survey takers.”

I expect the outcome would be worse.

* Over at DON’T MESS WITH TAXES Kay Bell advised taxpayers “Don't Bet on Fooling IRS with Bought Losing Lottery Tickets”.
I know of tax preparers who had stockpiled losing lottery tickets for clients to use in audits.

I have also been advising clients for years that if they are hoarding losing racetrack tickets to substantiate claimed losses make sure they do not have shoeprints on them.

* Let’s make it a Kay Bell trifecta with “IRS Telephone Tax Help Was a Dismal 38.5% this Filing Season”.

The IRS leadership chose to give taxpayer service the biggest hit from the budget cuts, hoping this would anger taxpayers and cause them to complain to the idiots in Congress.

In 44 years I have never called the IRS.  I conduct all my business with the Service via written correspondence.

* ACCOUNTING TODAY discusses one reason why IRS telephone tax help was so dismal in “IRS Accused by Congress of Diverting Funds from Customer Service”.

The House Ways and Means Committee released a new report Wednesday on the Internal Revenue Service’s declining level of customer service during the 2015 tax-filing season, blaming the IRS for diverting funds away from taxpayer service to finance other priorities such as implementation of the Affordable Care Act.”

The report found that -

. . . the IRS made a 73 percent reduction in user fees allocated to customer service, and a 6 percent decrease in total funding for taxpayer assistance. On the other hand, the IRS awarded $60 million in bonuses to its employees, at a time when the IRS did not yet know what its budget would be for fiscal year 2015. The amount of time IRS employees spent on union activity would allow for over 2 million additional taxpayer-assistance calls, according to the report.”

* Jason Dinesen joins me in reviewing the 2015 tax filing season, identifying some trends he noticed in “Tax Season Recap 2015: What a Strange Season, Part 2 (Trends I Noticed)”.

Jason agrees that the new Obamacare tax return requirements were not such a big deal after all –

The ACA wasn’t really that big of a deal. I keep reading all these horror stories online about accountants saying this was the “worst season ever” because of the ACA. Yes, it meant asking more questions and possibly filling out more forms, but I don’t get what was so horrific about it from a tax-preparation standpoint.”

* ACCOUNTING TODAY reported that “IRS Commissioner Thanks Tax Pros for Surviving Tax Season”.

While Commissioner Koskinen did “thank all the tax professionals and other partners who have helped to make a challenging filing season run as smoothly as we could have hoped”, he specifically identified –

The work of attorneys, Certified Public Accountants and Enrolled Agents as well as the software industry and payroll community has been extremely helpful—and essential—to running the tax system and helping the nation.”

Obviously Enrolled Agents need to be thanked.  But attorneys?  I can’t imagine anyone using an attorney to prepare a 1040, unless it was extremely complicated and involved unique legal issues.  The cost would be prohibitive.  And why single out CPAs but forget the tens of thousands of competent and qualified “unenrolled” preparers.  These preparers are more essential and helpful to running the tax system than the CPA industry.  Further erroneous perpetuation of the urban tax myth that CPAs are automatically 1040 experts.

Now – back to the GDEs!


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