Tuesday, September 29, 2015


House Speaker John Boehner is resigning his Ohio House seat, and thus the U.S. House leadership post, at the end of October.  No great loss.  It is, however, very, very important that whoever replaces him as Speaker is NOT a member or supporter of or panderer to the Tea Party!

* Interesting.  Paul Blair of AMERICANS FOR TAX REFORM tells us “Taxpayers Fleeing Democrat-Run States for Republican Ones” -

In 2013, more than 200,000 people on net fled states with Democrat governors for ones run by Republicans, according to an analysis of newly released IRS data by Americans for Tax Reform.
'People move away from high tax states to low tax states. Every tax refugee is sending a powerful message to politicians," said ATR President Grover Norquist. "They are voting with their feet. Leaders in Texas and Florida are listening. New York and California are not.’"
* Years ago, when I was working in affluent suburban Summit NJ, I saw a pillow in a home that was embroidered with the statement “You Can Never Be Too Rich or Too Thin”. 

A client recently asked Sterling Raskie of GETTING YOUR FINANCIAL DUCKS IN A ROW “Am I Saving Too Much?  Perhaps the pillow should have included “And You Can Never Save Too Much”.

* MOTLEY FOOL brings up a good point in “How Much Tax Do I Have to Pay on Stocks If I Sell?” –

Make sure you know what you'll pay before you sell your shares”.

I often put clients in shock when I tell them what they owe – mostly because of large capital gains.  And they are sometimes subject to penalties because of underpayment of estimated tax or, because the final corrected brokerage statement frequently arrives late in the season, late payment of tax due to GD extensions.

Review your gains quarterly and make estimated taxes if necessary.

* Barbara Weltman lists CNN’s “Best Cities in the U.S. for Small Businesses” at BARBARA’S BLOG.

They are –

1. Manchester, NH
2. Dallas, TX
3. Richmond, VA
4. Austin, TX
5. Knoxville, TN
6. Nashville, TN
7. Houston, TX
8. Ft. Collins, CO
9. Boulder, CO
10. San Antonio, TX

The only city on the list I would even consider living in is San Antonio – and while I might consider it I would not move there.

* Jason Dinesen follows up on last week’s post on RMDs by explaining “How to Calculate an RMD” at DINESEN TAX TIMES.

As Jason points out –

In almost all situations, your IRA provider (or employer/third-party administrator if it’s a 401(k) plan) will calculate the RMD for you.”

However, when you have multiple IRA accounts but want the RMD for all to come from one you must calculate the RMD yourself and advise the IRA trustees.

It is very important that if you are required to take an RMD that you do – the penalty for not taking an RMD is very high.


Hey, Tronald Dump.  Just so you know.

Being “politically incorrect” is calling a native American an Indian, calling an African-American a black, or calling a disabled individual crippled.

Calling someone fat or ugly, or telling a women you want to see her on her knees, is NOT politically incorrect.  It is rude, obnoxious, and offensive.

And calling you a buffoon is simply telling the truth!


Monday, September 28, 2015


I have often blogged about my obligations as a tax preparer.  But what about the client?  A 1040 client also has obligations, responsibilities and requirements regarding their return.

In the letter that I give to clients with their finished returns I state –

There returns are subject to review and examination by the IRS and appropriate state tax agencies. We accept responsibility for the clerical and mathematical accuracy of all returns I have prepared. However, the burden of proving the facts reported on your tax return rests with you. You are responsible for keeping all of the necessary documentation of the income and deductions claimed on these returns for at least three (3) years.”

This letter also says - 

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 us immediately. It is extremely important that you verify the accuracy of all Social Security numbers on the returns before mailing.

As the NATP Standards of Professional Conduct says –

The client is responsible for any decisions made when the tax return is prepared. When the client signs the tax return, it has the force of an affidavit.

A client should not take the finished returns from his/her tax professional and just sign and mail without actually looking at them. The client should carefully review all the forms and schedules that make up the returns before signing the return, and ask the preparer if there is something that he/she does not understand.

And, as I continue to point out, just because a client does not understand something on a tax return does not mean that there is an error.  Never, never, never preface a question posed to your tax preparer, or a reference to a notice from the IRS or state agency, with the statement, “You made an error on my return”!

A client also has obligations to his/her tax preparer.  The client has the obligation to provide to the preparer all the information necessary to properly prepare a complete and accurate tax return, to be honest with his/her preparer, and to provide any documentation of the information provided if requested.

My 1040 engagement letter includes a section of “Taxpayer Responsibilities”, which includes –

“ • You agree to provide us all income and deductible expense information. If you receive additional information after we begin working on your return, you will contact us immediately to ensure your completed tax returns contain all relevant information.

You affirm that all expenses or other deduction amounts are accurate and that you have all required supporting written records.”  

So if you do your job right I can do my job right.


Friday, September 25, 2015


* Year-end tax planning time is almost upon us.  If you are looking for a tax professional to help with your planning you can begin your search at “Find A Tax Professional” – check out the advice and information section before starting the search.

And check out my “2015 Year-End Tax Planning Guide” for help with your year-end plan.

* Kelly Phillips Erb wonders “2015 Tax Season 'Miserable' For Many Taxpayers: Will It Get Better In 2016?” at FORBES.COM.

While the 2015 filing season was certainly not “miserable” for me – no worse than any other – I did hear from more clients whose federal refunds were delayed, for the weirdest reasons (see my post “You Can’t Make This Stuff Up”), than any other filing season in my 40+ years in the business.  With continued budget cuts I expect the 2016 season will also have many delayed refunds.

* WALLETHUB announces its list of “2015’s Most & Least Fair State Tax Systems”.

WalletHub analyzed and ranked the 50 states based on the fairness of their state and local tax systems — including income taxes, sales and excise taxes, and property taxes. To rank the states, Wallethub used the results of a nationally representative online survey of 1,050 individuals to assess what Americans think a fair state and local tax system looks like. Our analysts then compared public perception to data on the real structure of tax systems in all 50 states.”

According to WalletHub Montana is the most fair and Washington state is the lease fair.  I was truly surprised that New Jersey was the 18th “most fair” state.  I expected it to be much lower on the list.  My current home state of Pennsylvania is #35. 

Methinks somehow a more progressive tax system is considered to be more fair.  To me, a flatter tax system would be fairer.

* Russ Fox talks about a different take on state taxation in “Kiplinger’s Tax-Friendly and Least Tax-Friendly States: Bring Me (Mostly) the Usual Suspects” at Taxable Talk.

Delaware is the most tax-friendly state and California is the least tax-friendly.  New Jersey is the 3rd least friendly – now that is more what I expected to see.  PA is on neither the ten best nor ten worst lists.

* For those of you who are interested, Jeff Stimpson tell us that the IRS is providing “Tax Relief for Kentucky Storm Victims” at TAXPROTODAY.

President Obama declared the Kentucky counties of Leslie, Breathitt, Fleming and Perry federal disaster areas following earlier similar declarations for Carter, Johnson, Rowan and Trimble Counties. The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.”

* Sharon Epperson of CNBC reminds us of a “Little Known Tax Credit to Help You Save” for retirement.

She is talking about the “Retirement Savings Contributions Credit” aka the “Saver’s Credit”. 

I give details about this credit in my October 2014 post “The Saver’s Credit Numbers for 2015”.

* Peter J Reilly reports “Yogi Berra's Sayings Worked Their Way Into Tax Decisions” at FORBES.COM.

* Jason Dinesen explains “When Do I Have to Take My RMD?” at the DINESEN TAX TIMES.

* And Ray Martin of CBS NEWS’ “Marketwatch” answers the question “How Far Back Can the IRS Audit You?


Many years ago I came across a small plaque, which I still have today, with some excellent advice.

If only someone had given this advice to Donald Trump early in his career.

What does the plaque say?

It is better to remain silent and be thought a fool than to speak up and remove all doubt.”

Every time Trump speaks up he certainly removes all doubt!


Thursday, September 24, 2015


Good advice from Duke Ellington – especially for my 1040 clients when it comes to notices from the IRS or a state tax authority.

If you receive a balance due notice from the IRS or a state tax agency DO NOT AUTOMATICALLY PAY THE AMOUNT REQUESTED!

In my 40+ years of preparing tax returns I have found that more often than not (actually in my experience it is more like 75% of the time) a balance due notice from “Sam” or your state is wrong.  And, again in my experience, notices from a state tax agency (at least when it comes to NJ and NY) are wrong more than ones from the IRS.

If you receive a balance due notice from any tax agency immediately mail, email, or give it to the tax professional who prepared the return, or your current tax professional if you have changed preparers since filing the return in question.  If you “self-prepared” the return, perhaps relying on a “box”, seek out a tax professional for advice.  You can start your search at FIND A TAX PROFESIONAL.


Even if the notice is correct, if it includes a penalty assessment for late payment, late filing, or underpayment of estimated taxes your tax professional may be able to get the penalty completely or partially abated using the federal First Time Abatement program, reasonable cause, or annualizing your income for estimated tax purposes.

And – very, very, very important – when sending the notice to your tax professional DO NOT SAY TO HIM OR HER, “HEY, YOU MADE A MISTAKE ON MY RETURN.”!


Wednesday, September 23, 2015


Once again the idiots in Congress have put off dealing with the now infamous “tax extenders”.  And once again these idiots will probably extend the entire lot for at least one more year at year-end.

But should all of these tax benefits be extended, or, much “more better”, be made permanent?  I don’t think so.  Rather than automatically extending them all for a year, the idiots in Congress should review each one individually and determine its “appropriateness” – and make permanent those that they determine to be appropriate.  Of course because , being idiots, they wait until the very last minute each year they do not have the time to do anything but temporarily extend them all.

Here is a look at the more popular of the “tax extenders” that affect 1040 filers, with my “thumbs up” or “thumbs down” vote -


This $38 - $70 gift from Uncle Sam is a nice nod to teachers, paying for a dinner out.  But why do teachers deserve this more than police officers or firefighters or nurses or other public service employees?  I see no real reason why this should be continually extended, or made permanent. 


While the American Opportunity Credit generally provides the best tax benefit for college expenses, and is available to more taxpayers due to the higher income threshold, it is not available for graduate students.  This deduction is available to graduate students, and undergraduate students who have already claimed the AOC for the maximum 4 tax years  It is often “more better” than claiming the Lifetime Learning Credit, and is available to more taxpayers due to its higher income threshold.  For those reasons it deserves to be extended or made permanent.  However, that being said, I firmly believe the Tax Code should not be used for distributing government benefits.  All education tax benefits should be removed from the Tax Code.  These benefits should be delivered through the existing programs for student financial aid of the Department of Education.


This provides a tax deduction for residents of states that do not have a state income tax, and I have found that it often provides a better tax deduction for retired seniors.  It should be extended or made permanent.   


I have absolutely no idea why this deduction was created – other than the aggressive lobbying of the mortgage insurance industry.  Mortgage insurance is life insurance, and life insurance premiums are not a deductible expense, other than as an employee benefit provided by employers.  I believe that potential homeowners should be encouraged to put more money down when purchasing a home – and avoid the need for mortgage insurance.  It certainly does not deserve to be extended or made permanent.


This allows retired taxpayers over age 70½ who do not need to take all or any of the required minimum distribution (RMD) from their IRA for cash flow purposes, but are statutorily required to do so, to avoid increasing their Adjusted Gross Income by using the RMD to make a charitable contribution.  By reducing AGI this tax benefit could also reduce the amount of Social Security or Railroad Retirement benefits that are taxed.  This is the most “appropriate” tax benefit of the lot and truly deserves to be extended or made permanent. {NOTE- One of the very serious problems with the custom of waiting until the very last minute to extend the extenders is that by the time the law is enacted it is too late to take advantage of this tax benefit.}

What do you think?


Tuesday, September 22, 2015


A lean BUZZ today.
* Jason Dinesen begins a new blog category he calls “Things Tax Preparers Say” with “Home Office Deductions”.

These posts will discuss errors made by other tax return preparers that Jason has discovered, presumably when he reviews the prior years’ returns of a new client.  The first installment reports on a serious error concerning the deduction for a home office.

I asked Jason - was the preparer who made the mistake was a CPA?  Here is his response (highlight is mine) –

The answer to your question in the comments section is yes!

As with you, almost all of the f-ups I see are from CPAs, or H&R Block.”

* I agree with David Brunori of FORBES.COM that this is perhaps the “Silliest Tax Proposal of The Year – Really” –

State Sen. Tom Kean Jr. (R) is proposing a bill (S 2721) that would grant income tax exemptions to some entertainers performing in Atlantic City and other New Jersey cities. Now, Atlantic City has hit hard times. Several casinos have closed, and tourism is down. This is partly due to the proliferation of gambling all along the Eastern Seaboard. But Kean’s idea represents all that is wrong with the way we approach taxes in America.

Kean wants to exempt A-list performers from income tax. The idea is that these A-listers will be motivated to perform in Atlantic City. They will come and sing and dance more often. And people will flock to the Jersey Shore once more.”

David is correct when he observes -

It is troubling that politicians look to the tax laws as a panacea for whatever ails society. And the resulting policies are never sound.”

This is why our current US Tax Code is such a mucking fess.

* I have several clients who work for the federal government, in most cases the Post Office.  Perhaps they would be interested in “A Brief Explanation of the Thrift Savings Plan (TSP)” from Sterling Raskie at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* Not a tax issue, but worth referencing.  Over at EQUIFAX.COM Teri Cettina lists “Four Risky Places to Swipe Your Debit or Credit Card”.

Teri points out –

Unlike a credit card, a debit card is essentially a direct line to your bank account, so you may need to be more careful when using it to make purchases. Money is deducted directly from your bank or credit union account when you use your debit card.”

I have been talking about, and warning clients and readers about, the differences between debit and credit cards for many years, most recently in “Debit Card Vs Credit Card” at my former BOB’S BABBLINGS blog, where I ask the question, “When should you use your debit card to make an online purchase?”.  The answer – NEVER.  


Is a puzzlement.

I do not understand why Republican candidates feel they have to pander to the religious right when it comes to issues like abortion and same-sex marriage to be considered true conservatives.

Am I wrong in believing that one of the basic tenants of conservative philosophy is a minimal intrusion by government in the personal and business lives of citizens?

The religious right wants the government to tell citizens how to live their lives by forcing the specific religious beliefs of fundamentalist Christianity on them.

Someone please explain.

The following observation is on display at “The Starving Artist” eatery in Ocean Grove –

The last time we mixed politics with religion people got burned at the stake!


Monday, September 21, 2015


As a professional “commercial” tax return preparer, regardless of where I live or practice, if I want to be able to prepare New York state income tax returns for compensation, and I am not a CPA, attorney, or Enrolled Agent (EA), I must register with the state of New York, pay a $100 fee, and receive a “New York Tax Preparer Registration Identification Number”, much like I had to register with the IRS, pay a fee, and receive a Preparer Tax Identification Number (PTIN).  The $100 fee to NY State is due each year to renew my authority to prepare NY returns, just as the IRS charges an annual fee to renew my PTIN.

Before 2015 there was no CPE or testing requirement for registration.  You just had to pay the annual $100 fee.  I recovered this expense by charging each of the 20 or so clients for whom I prepared a NY resident or non-resident individual income tax return (IT-201 or IT-203) $5.00, which I separately identified on my invoice as “NY State Tax Preparer Extortion Fee Surcharge”.

But now, in order to renew my authority to prepare 2015 NY State returns, I not only have to pay $100, but I also must complete a special 4-hour program of continuing education.  I qualify for the limited 4-hour program because I have prepared ten or more New York State personal income tax returns during the years 2011, 2012, and 2013.  All other preparers must complete a 16-hour program.

While it is obvious why Enrolled Agents are exempt from the required CPE, there is no reason why CPAs and attorneys who want to prepare NY State tax returns should also be exempt.  If New York is sincerely concerned about assuring the competence and currency of tax preparers they should expand the CPE, and eventual testing, requirements to CPAs and attorneys.  A recent post from Jason Dinesen that I will reference in tomorrow’s BUZZ installment highlights the fact that CPAs make at least as many errors on tax returns as “unenrolled” preparers.  CPAs and attorneys were only exempt from the $100 annual extortion fee because the state already got a registration fee out of them.

The State of New York is the only authorized provider of the 4-hour requirement, and the 16-hour one for new preparers.  And they are currently only offered online.  I tried for a long time to register online for the 4-hour program, but without any success.   

When I was finally able to gain access to the registration for the webinars the process was easy.  This was actually my first experience with online webinars.  Looked at objectively the presentations and content were more than satisfactory.  But looking at them in terms of substantive continuing education value is another thing altogether. 

While I had originally preferred to attend an actual live seminar, as it turned out, considering the content and methodology, I was much happier satisfying the requirement online.  I have no problem whatsoever taking 4 hours of NY State CPE via free online webinars of this kind each year, as long as they provide 3 1/3 hours of substantive continuing education value (a CPE hour is traditionally 50 minutes of actual content).

The required four hours consisted of 5 separate webinars –

·      Overview of Preparer Role and State Oversight (20 minutes)
·      Federal Update (1 hour)
·      New York State Tax Law Update (1 hour)
·      Common Errors (1/2 hour)
·      Standards of Conduct and Penalties (the longest session - 1 hour 10 minutes)

I “took” the sessions in two separate “sittings” of approximately 2 hours each.  I was indeed pleased that it could be done in parts at my leisure.

There are a series of multiple choice review questions asked after each session.  However this is not a “test”, but a review of the material covered.  The answer is only recorded once you get it correct.  If your first choice is wrong you are told so and can continue until you get it right before proceeding.  I was very pleased with this process and found that it is actually better for comprehension of the material.

And after each presentation one can print out a Certificate of Completion.  Before printing you are asked for your full name and “OLS User ID”, which is printed on the certificate.  I had absolutely no idea what my “OLS User ID” was – so I entered my New York Tax Preparer Registration Identification Number.  It did not reject the number, so I guess it was ok. 
To be perfectly honest all of the four-hours of sessions were a total waste of my time.  They were either redundant or unnecessary or covered the wrong year. Thankfully there was no charge or related out-of-pocket expense (such as travel) involved (other than the annual $100 registration fee).

The overview was basically an explanation of the NY State tax preparer registration program.  Of no substantive value as continuing education.

The federal update component is redundant and a true waste of time for me, and for any serious and responsible tax preparer who is already taking federal update CPE elsewhere.  The federal update class I sat through is actually a total waste of time for all preparers – as it concerned changes, mostly the inflation adjusted numbers, for tax year 2014 and NOT 2015.  I could have been watching an episode of “Hart to Hart” on the “Hallmark Movies and Mysteries” cable channel instead!

The New York State update webinar was obviously the only one with any potential continuing education value for me.  Unfortunately it, too, was an update for tax year 2014 and NOT 2015.  Another total waste of my time.  I will have to wait until January 2016 to learn what’s new for NY State for 2015 from Kathryn Keane at the NJ-NATP annual “Famous State Tax Seminar”.  I did actually learn a few new things – but they were general information items and nothing that would actually affect any of my existing NY State filers (I do not accept any new clients – so I really don’t need to know this new stuff and it was of no real value to me).  The presentation also covered some corporate, estate, and trust items, which is fine but of no value to me (I do not prepare NY State corporation, estate, or trust returns).

A common error component is not a bad idea, but the errors discussed were basic and mostly of a procedural nature.  The session did not cover detailed specific tax law errors.  While of no real substantive value as continuing education for me, it was an adequate basic review.

The Standards of Conduct and Penalties section was the ethics class.  As noted above, this was the longest of the 5 presentations.  It was a total waste of time – with no substantive continuing education value for me.  How many times do I have to say this – forcing a crooked (or ethically-challenged) tax preparer to sit through annual redundant ethics preaching ain’t going to turn him/her honest!  This session repeated much of the discussion from the overview component, and there were also redundancies within the presentation.  Unfortunately I already have to sit through at least 2 hours of federal redundant ethics preaching each year (not because I am required to, but because most providers of day-long federal CPE update presentations feel they have to include ethics preaching) – this just added to the number of hours lost to me that I will never get back again.

It seems obvious to me that preparers who are required to take the 4-hour program should be allowed to use CPE from other qualified providers to satisfy the update (at least federal) and ethics components.  I take a the NATP 8-hour year-end Essential 1040 federal tax update each year, and attend the NJ-NATP “Famous State Tax Seminar” each January, which usually includes at least 1 CPE of NY state tax updates.  And, of course, as mentioned above, just about every CPE offering includes redundant ethics preaching.  My attendance at these offerings should be able to satisfy most of the 4-hour requirements so I do not have to waste my time sitting through the state’s redundant online sessions.  While there is no charge to take the NYS sessions online – my time is worth money!

So, having totally wasted 3+ hours of my valuable time, now all I have to do is send my $100 to New York in December.  Along with my annual PTIN renewal fee this is the business expense that I hate paying the most.

At some point in the next 3 years it appears that I must pass a NY State “competency” test.  As with the now dead IRS RTRP regulation regime, I feel that, as a veteran preparer of NY State returns, I should receive a “grandfather” exemption from this test.  But that is not going to happen.  I am, however, glad that I will be able to take the test free of charge (?) online on my home office computer.

I would be interested in hearing the thoughts of my fellow tax professionals on this subject.

And I would hope New York tax professionals with the proper contacts will pass this post on to their colleagues and appropriate members of the NY Department of Taxation and Finance.


Friday, September 18, 2015


He who laughs last thinks slowest.”

* Attention tax professionals – my THE TAXPROFESSIONAL website has evolved.  The new format includes some recent TAXPRO BUZZ.  Check it out.

* Over at TAXABLE TALK Russ Fox admits “The NAEA Won’t Like This Post”.  But I do.

I’ve been asked by members of the NAEA why I’m against preparer regulation. All it does is increase a bureaucracy, decrease consumer choice, increase prices to the general public, and uses limited IRS resources instead of where they could be better used. I don’t mind competition, and the IRS currently has means of going after bad preparers.”

Right on, Brother Russ!

* BTW – the latest news, and it is good, on the attempt to regulate all tax return preparers is a “tweet” this Wednesday from @GOPSenFinance - “Markup of Bipartisan Bill to Prevent Identity Theft & Tax Refund Fraud {and Regulate Tax Preparers – rdf} is Postponed Until Further Notice”.  The reason for the postponement is the result of well-founded concerns about giving the IRS too much power to regulate tax preparers.

* Preparer Regulation – a definite NO!  But there is a need for a voluntary industry-based tax professional designation/credential to acknowledge and identify competent and current tax preparers.

See my January 2013 ACCOUNTING TODAY editorial “It’s Time for Independent Certification for Tax Preparers”.

* Did you know I am on Twitter?  I am just short of 1000 followers and looking to reach that goal by end of September.  Why not follow me - @rdftaxpro.


What a buffoon!

I had planned to spend 3 hours on Wednesday night watching the second Republican debate on CNN.  But after 15 minutes I could watch no more, and I changed to the Disney channel. 

It started out fine with the candidates introducing themselves, but soon it was clear that dealing with the comic relief would replace any serious discussion of issues.

Tronald Dump proved that everything Bobby Jindal, and others, have said about him is true.

While some candidates showed cowardice by avoiding the question of the Dumpster’s temperament and Presidential access to our nuclear arsenal, my sentiments certainly mirror those of Goldman Sachs CEO Lloyd Blankfein, who said, “It’s hard to imagine his finger on the button. That blows my mind.     

God forbid Trump is elected President and Putin criticizes him.  There goes Russia!

It was good to hear Paul Rand correctly observe that Trump had the maturity of a junior high school student (he was kind – more like a 5th grader).  Trump’s reply proved Rand’s point – “I never attacked him on looks, and believe me, there is plenty of subject matter there. That, I can tell you.”  Isn’t that basically saying, “you’re ugly”?

The state of the union is truly troubling with Trump as the Republican front-runner.


Thursday, September 17, 2015


I have finished most of the work on my 2015 YEAR END TAX PLANNING GUIDE – I am just waiting for the IRS to announce the inflation adjusted information for tax year 2016.  This report should be ready to “go to press” by the end of October.

During the last two months of the year you can do a lot to make sure you pay the absolute least amount of federal and state income tax for 2015 and 2016.  My guide discusses year-end tax planning strategies and includes a 2015 Preliminary Return worksheet, a 2015 Alternative Minimum Tax worksheet, and the tax information for 2015 needed to prepare your preliminary return as well as the information for tax year 2016.

The cost of this special report is $3.00 for a pdf email attachment and $4.50 for a print copy.  However I am making a special “pre-publication” offer to readers of TWTP.  If your order is postmarked before October 15th you will receive a 25% discount – so the pdf version is $2.25 and the print version is $3.35. 

Send your check or money order, payable to Taxes and Accounting, Inc. or T&A, Inc., and your email address or your postal address to –



Wednesday, September 16, 2015


One of the sessions at the recent National Association of Tax Professionals’ Tax Forum and Expo that I attended reminded me that the potential “shared responsibility” penalty has been doubled for 2015 – going from 1% of annual household income to 2% of annual household income.  This brings up an issue I have with the “self-assessment” of this penalty.

The facts and circumstances associated with a tax return might indicate that the taxpayer(s) may be subject to a penalty for underpayment of estimated taxes.  But as a tax preparer I will not, nor am I required to, calculate the penalty and include it in the filing of the return.  If the IRS wants to assess my client(s) a penalty for underpayment of estimated tax they are welcome to do so.  If they do I will attempt to reduce the penalty assessment via one of the exceptions available on Form 2210.

Preparing a Form 2210 “upfront” involves additional work and an additional fee.  Why should a taxpayer pay me a fee to assess a tax penalty?  If a penalty is assessed by the IRS, which it may not be, then it is appropriate for me to charge the client(s) a fee to reduce or eliminate the penalty assessment.

Would the same logic not also apply to the shared responsibility penalty?  If the IRS wants to assess a taxpayer a penalty for not having full-year minimum essential health insurance coverage then they are welcome to do so, at which point I will attempt to reduce the penalty assessment using one of the exceptions for a fee.  But, as with underpayment of estimated taxes, why should the taxpayer(s) have to pay me a fee to be assessed a penalty? 

To be honest, I do calculate any penalty for premature withdrawal from a pension account on Form 5329 as part of the filing of a client’s return, but I believe this is somewhat different.  The penalty assessment is automatic and straight forward and is simple to calculate.

So fellow tax professionals, what do you have to say about my issue with the shared responsibility penalty?


Tuesday, September 15, 2015


Light travels faster than sound.  This is why some people appear bright until you hear them speak.”

I enjoyed a matinee performance of Jason Robert Brown’s THE LAST FIVE YEARS on Sunday at the Shadowland Theatre, an intimate equity venue in Ellenville NY.  It tells the story, in song only, of the 5-year relationship of novelist Jamie and actress Cathy.  Jamie tells the story chronologically and Cathy tells it from end to beginning.  There are two week-ends left to catch this show.  Two thumbs up!

* Just a reminder – today (September 15th) is the day to mail out your 3rd Quarter federal and state estimated tax payments.

* Attention Iowa tax pros – Jason Dinesen announces the “Iowa Society of EAs to Host CPE Extravaganza”.

* Kelly Phillips Erb, FORBES.COM’s TaxGirl, reports “Over 2,000 Businesses Send Letter To Congress Demanding Attention To Tax Extenders Bill”.

Kelly quotes from the letter –

The undersigned organizations, representing millions of individuals, employees, businesses of all sizes, community development organizations and non-profit organizations, urge Congress to act immediately on a seamless, multiyear or permanent extension of the expired and expiring tax provisions, including appropriate enhancements. These tax provisions are critically important to U.S. jobs and the broader economy.

Failure to extend these provisions is a tax increase. It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace. Acting promptly on this matter will provide important predictability necessary for economic growth.

The expired provisions should be renewed as soon as possible this year. We urge all members of Congress to work together to extend seamlessly on a multiyear basis, and where possible enhance or make permanent, these important tax provisions.”

As the letter states, the idiots in Congress need to shit or get off the pot.  Waiting until the very last minute causes problems for the IRS, tax preparers, and taxpayers. 

It is especially important that if the ability to make a direct transfer from an IRA to a charity as satisfaction of an RMD be passed ASAP so taxpayers can actually take advantage of this benefit.

* Prof Jim Maule likes to post when he finds “interesting tax topics when I watch television court shows”.  His most recent post is “Tax Client and Tax Return Preparer Meet Up in People’s Court”.

I do not watch tv court shows.  Let’s face it, the cases on these programs are not chosen because they highlight an interesting or important point of law.  These shows are part of the disturbing trend in tv programing in which the main purpose is to humiliate stupid people who abandon all self-respect for their 15 minutes of fame (a good description of anyone who voluntarily participates in so-called “reality tv”).  The “adversaries” on these tv court shows are usually idiots – and their idiocy is further proven by their decision to appear on these shows.  To be honest, I am surprised that Prof Maule watches them.

Anyway, that said, here is the issue covered in the “trial” (highlight is mine) – the tax preparer claims the client “had asked him not to report the lump-sum payment on the state income tax return”.

The taxpayer does not determine if a distribution is taxable and should be reported on the federal or state tax returns – federal and state tax law does!  The tax preparer is a fool.  If the amount was indeed taxable, and I am not going to say whether it was or not as I do not know all the facts and circumstances, the tax preparer is obligated to include it on the return.  If the taxpayer/client did not want to report it, and it was indeed taxable, she should have been told to go elsewhere.

And when the taxpayer received the underpayment notice from the state she should have contacted the tax preparer immediately, before making any payment to the state.

In his bottom line Professor Maule tells us “there are so many lessons to be learned from this episode”, and goes on to list them.

* Yesterday (Monday) Joe Kristan’s week-day daily Tax Roundup at THE ROTH AND COMPANY TAX UPDATE BLOG discussed as his opening topic new pending legislation aimed at combatting identity fraud and tax refund fraud that includes a provision that gives “the Treasury Department and the IRS with the authority to regulate all aspects of Federal tax practice, including paid tax return preparers, and overrides the court decisions” in Loving vs IRS.

As Joe correctly points out (highlight is his) –

Of course, increasing preparer regulation does absolutely nothing to fight identity theft.”

I suggest you follow Joe’s bottom-line advice -

They plan to Mark up the bill Wednesday morning.  Contact your senator and representative to oppose this IRS power grab on behalf of its friends Henry and Richard.”

* Kelly Phillips Erb also weighs in on this issue in “Congress May Give IRS Authority To Regulate Tax Preparers” at FORBES.COM.

Kelly correctly observes (highlights are mine) -

It’s my feeling that the bad guys are the bad guys: forcing you to take ethics courses doesn’t change that. Incompetent and lazy preparers are incompetent and lazy: forcing someone to sit through continuing education courses (likely while text messaging, trust me, I’ve been a speaker at these things) doesn’t make that person smarter or more conscientious. The reality is that smart, competent tax professionals do the right things already. But that doesn’t make for good press. So, instead, we add more layers.”

Even if this law passes, and I do not think it will, it will not affect the 2016 filing season (for filing 2015 tax returns).  As with the previous failed RTRP program it will take several years to phase-in. 


Finally a Presidential candidate who has the courage to call a spade a shovel.
Louisiana Gov. Bobby Jindal correctly observed “Donald Trump is not a serious candidate.”
He perfectly described Trump as “an unserious and unstable narcissist” and a “circus act”.

Jindal also accurately stated -
Like all narcissists, Donald Trump is insecure and weak, and afraid of being exposed. And that’s why he is constantly telling us how big and how rich and how great he is, and how insignificant everyone else is.  We’ve all met people like Trump, and we know that only a very weak and small person needs to constantly tell us how strong and powerful he is. Donald Trump believes that he is the answer to every question.”
And –

Trump “is shallow. Has no understanding of policy. He’s full of bluster but has no substance. He lacks the intellectual curiosity to even learn.”

Hats off to Jindal for not being afraid to speak the truth.