Friday, April 29, 2016


It seems a bit funny, and sometimes bothersome, that the public often thinks that just because a person - say a tax preparer - is trained and experienced in one set of government forms – say preparation of federal and state individual income tax returns – he or she automatically knows how to fill out every other federal and state government form.

A client recently asked me if he should report his sideline business, a loss-generator, on a Financial Disclosure Statement.  How do I know?  I have never seen, let alone filled out, a Financial Disclosure Statement.  Back in “the day”, when I was an apprentice preparer with JP Gill at his storefront office near Journal Square in Jersey City, clients would bring their census forms to us.

I am trained and experienced in preparing tax returns.  I have no clue when it comes to census forms, immigration forms or applications, FHA or other mortgage or loan applications (I have never had a mortgage), prescription drug or utility discount applications, FBAR or FinCen filings, college financial aid applications (I have never had a child), etc, etc, etc.

If it does not have anything to do with the proper and complete preparation of a 1040, or 1040A, I don’t know it – and I do not want to know it.  Homey don’t play that! 

While other tax preparers may want to establish a post-season side-practice preparing college financial aid applications or something similar, I certainly do not – especially at this point in my career as I am winding down 1040 preparation.

It is not that I do not sincerely want to help my clients if I can – but I do not know anything more about these forms and applications than they do.  And often less than they do.  There is nothing I can do that they cannot do themselves – and there is no special “insight” or “trick” on completing the form that I can provide.

It is somewhat bothersome if I am asked to fill out these forms during the tax filing season.  From February 1 through April 14th I barely have time to relieve myself, let alone do anything that does not involve preparing a 1040 or 1040A.

What I do tell my clients is that I can provide them with any information from their tax returns that is applicable to the form.  For example, NJ has a “Property Tax Reimbursement” program for senior and disabled homeowners.  While I will not prepare the application in full, I will complete the section of the form that asks for income, based on the information used in preparing their tax return.  But this I will not do until May.

So, clients, do not assume that just because your tax preparer knows all about individual income tax returns that he or she knows anything about any other government form or application.

And tax preparers, don’t be afraid to tell your clients, nicely of course, that “Homey Don’t Play That” when they ask you to fill out non-tax forms and applications that you know nothing about. 


Wednesday, April 27, 2016


A day late – but hopefully not a dollar short.  I am back at my desk working away on the GD extensions.

* Did you celebrate this past Sunday?  According to the TAX FOUNDATION “Tax Freedom Day 2016 is April 24”.

Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. In 2016, Americans will pay $3.34 trillion in federal taxes and $1.64 trillion in state and local taxes, for a total tax bill of $4.99 trillion, or 31 percent of national income.”

It appears “Tax Freedom Day is one day earlier than last year, due to slightly lower federal tax collections as a proportion of the economy”.

Each state also has its own Tax Freedom Day.  New Jersey’s Tax Freedom Day is May 12th- #49 on the list - a day after New York’s.  Connecticut has the latest Tax Freedom Day – May 21st.  Pennsylvania’s was April 22nd - #32.  Mississippi was #1 – celebrated on April 5th.

* Good news from Michael Cohn at ACCOUNTING TODAY – “Senate Committee Drops Tax Preparer Regulation from Identity Theft Bill”.

* Do you really need more reasons not to use a fast food tax preparation chain to prepare your tax returns?  Well, here, also from ACCOUNTING TODAY, is another one – “Liberty Tax Shuts Down More Offices”.

* This week Jean Murray deals with “Starting a Corporation - The Details” at ABOUT.COM.   

* And Jean provides a primer on “How and When to File Form 941 for Payroll Taxes”.
* CCH has published a “2016 Post-Filing Season Update”.

* Fellow tax pro and tax blogger Russ Fox of TAXABLE TALK also feltThe 2016 Tax Season” went smoothly (did you see my assessment?).

While certainly I do not oppose the use of tax preparation software by tax professionals, I do not agree with Russ that “it’s essential for any tax professional” or that “it would be impossible for most tax professionals to complete complex returns without it”.  But then, I guess I am not “most tax professionals”.


Monday, April 25, 2016


And another one bites the dust – another tax filing season that is.  It was my 45th!  Only 5 more to go.

The message on my answering machine on the last day of tax filing season (this year April 18th) begins –

Tax season’s over!  My face it has a big smile.”

My face really had a big smile on April 18th.  I was apparently especially efficient this season - I ended it with slightly less than half the number of GD extensions than last year – only 24.  Perhaps the least amount of GDEs since I began keeping track of season-end GDEs! 

11 were because the client’s package was received after my deadline for timely filing of March 19th.  5 were “red-filed” – needed more information.  And 4 were requested by clients who did not send me any 2015 tax info yet.  

Only 4 were due to my workload, and were for “expediency” sake.  Each of these sets of returns were received before March 19th and were opened and the federal and NJ returns were worked up to determine, or estimate, a liability.  The expediency issue was to postpone the time consuming process of writing up, compiling, copying, and collating the actual returns – each one was a project. 

One of these was extended because the client had more than 30 dreaded GDMF limited partnership K-1s (limited partnership K-1s are worse than the dreaded AMT and GD extensions combined).  Another one would require the preparation of a Massachusetts state return for the sale of rental property by non-residents.  I have never prepared a Massachusetts state return, and am only doing so in this case because of the relationship of the client.  I was certainly not going to stop everything and learn how to prepare a Mass state return during the last week of the tax season. 

So, to pat myself on the back, all returns that were in my hands by the deadline of March 19th that I announced to clients in my annual January mailing were dealt with. 

The season-end GDE results are testimony to the fact that my 2016 filing season ran smoothly.  There were no weather, equipment, computer, or other issues.  The idiots in Congress passed the PATH Act in mid-December, which, in a rare show of intelligence, made permanent many of the more appropriate “extenders”.  So there was no delays in the beginning of tax return processing or the availability of IRS forms.  I do not know if electronic filers experienced any delays – but such delays would not affect me.  I was able to begin my tax season as always on February 1st. 

IRS consumer service and return processing reached historic lows last season – due to the continual reduction of the IRS budget by the idiots in Congress and continued IRS mismanagement.  I heard from more clients about seriously delayed refunds and processing FUs last year than in all the years before combined – including one client who was told by the IRS that his refund could not be processed because he was dead (he had to have the Social Security Administration certify that he was still alive – and finally got his refund 8 months after filing the return).  But there were no similar FUs or delays, that I was made aware of, this season.  I only heard from two clients whose NJ refunds appeared to be a bit late.  I expect this is because the states, and the IRS, was taking a bit longer to process returns in attempts to avoid identity theft.

As the basis reporting requirements become “older”, more and more investment transactions are becoming “covered”, which increases filing efficiency.  And there is now more uniformity in 1099-B reporting by brokerage and mutual fund houses.  While there were still corrected Year-End Tax Reporting Statements issued by brokerages, there seemed to be less corrections (not more than one per account), and they were issued earlier in the season than past years.

This was the first year that Obamacare Forms 1095-B and 1095-C were required.  In most cases, as I have been telling clients when they ask about these forms, they are just additional wasted government paperwork.  Generally I do not need these to determine if clients are covered by “appropriate” insurance.  And I do not need actual “proof”, other than a client’s representation, that all applicable family members are covered. 

The IRS delayed the filing deadline for these forms until mid-March.  Some were sent out early, but most arrived late - often after I had already prepared a client’s return.  I got tons of emails in late March with attachments of 1095-Bs and Cs, which wasted some valuable time.  The few 1095-As I needed were all issued in early February, so no delays there.

This season none of my clients had to pay the Obamacare “shared responsibility” penalty, the very few without insurance were exempt due to “affordability”, and only a handful of returns involved the advance premium credit reconciliation. 

I did discover an issue involving the “second lowest cost silver plan” numbers that are included in the calculation of the allowable credit.  In one case the numbers provided for 2015 were substantially different, higher (and therefore resulting in a lower allowable credit amount), than the numbers given for 2014 for the same family situation.  When I went to the Marketplace website tool to search for the SLCSP numbers for 2015 using the family’s information I came up with different, lower, numbers.  I used the lower online amount in the reconciliation, with an attached statement of explanation, which resulted in a smaller credit payback.   

On the state side – I was extremely pleased with New York’s new “enhanced” online Form IT-201 and IT-203 “fill-in” (but manually filed) forms.  The “enhancement” automatically did the math and actually calculated the tax – saving valuable time.  I used the new enhanced process for all of the 20+ New York returns I prepared – and continued to add to my invoice a $5.00 “New York State Tax Preparer Extortion Fee Surcharge” for all clients with NY state returns.

I continued to use NJWebFile to electronically submit NJ-1040s directly to Trenton, free of charge and without a “middleman” (I wish the IRS would initiate a similar program), whenever possible (unless specifically forbidden by the client’s request).  However there are still too many situations where this option is not available.  When I had to manually prepare the return for the client to mail I used the online “Fill-In” Form 1040, which did some math but did not automatically calculate the tax.   I did not encounter any issues with NJ returns – yet.

I do think the delayed filing deadline – April 18 instead of April 15 this year – and the additional day provided by being a leap year did help somewhat in reducing season-ending GDEs.  As usual the tax season ended for me not on April 18th but on April 17th (see my 4/18/16 post). 

So there it is – another tax season come and gone.  Let’s hope the next 5 seasons go just as smoothly as this one – and I continue to reduce the number of season-end GDEs.

As I usually ask my fellow tax pros at the end of this post each year – did I miss anything?


Wednesday, April 20, 2016


This is not a political blog – it is a tax blog.  My political posts have been limited to discussing the politics of tax reform and tax legislation, and to call out the idiots in Congress for continuing to prove by their actions, or inaction, that they are indeed idiots.

However a very disturbing political development almost demands that I write this post.

Since the beginning of the Presidential campaign I have said that the most disturbing political development in my lifetime (I was born in 1953) is that fact that buffoon Donald Trump is being taken seriously as a candidate for President.

The problem with Donald Trump for President is not his alleged policy proposals, or the nonsense that he spews.  The problem with Donald Trump for President is . . . he is Donald Trump!

Why do I oppose the candidacy of fool Trump, and cannot conceive that anyone with any intelligence or any concern for the future of the country, the American public, and, frankly, the world would ever even consider Trump as a candidate for any elected office?  Let me count the ways –

(1)  He is the ultimate narcissist.

A narcissist is a person with an inflated sense of their own importance, a deep need for publicity and admiration and a lack of empathy for others. Behind this mask of ultra-confidence lies a fragile self-esteem that's vulnerable to the slightest criticism. 

Lookup the word narcissist in the dictionary and you will find a picture of Trump.

The only reason Trump does anything is to feed his undeservedly enormous ego.  The only reason he is running for President is because he has become the top news story in almost every venue almost every day.

Trump considered running for President in 2012.  But that time he was not taken seriously – his possible campaign, and he himself, was treated as the joke that it, and he, was (and still is).  So he did not run because it did not feed his ego.   

Obviously a presidential candidate needs some degree of ego.  But he, or her, also must have character and substance.  Trump is all ego and, while he is a character, he has no character and certainly no substance.

(2)  He is totally incapable of dealing with criticism or challenges like a mature adult.

Trump’s response to anyone who criticizes him, disagrees with him, or challenges him is “You’re fat, you’re ugly, you’re hormonal, you’re a loser, you’re a liar, you’re a nobody, etc, etc, etc”.  Anyone who criticizes or challenges him has no value, so therefore his, or her, opinion has no value.

The classic example is Rosie O’Donnell.  When Rosie correctly criticized Trump for screwing his shareholders his response was “You’re fat”.

What will happen if “President” Trump is criticized or challenged by another world leader?  Will his response be, “You’re ugly”?

(3) He is a reality tv clown.

His claim to fame is telling other self-absorbed buffoons “You’re fired” on reality television excrement THE APPRENTICE.

Early in its run someone correctly observed “The Apprentice is to the real business world what Homer Simpson is to real fatherhood”.

Speaking of the famous cartoon patriarch, at the beginning of the campaign I wrote in a letter to the editor of my local newspaper, “I have always said I would rather vote for Homer Simpson for President than Donald Trump.”

Why do people support this dangerous buffoon?

(1) People say he is a savvy businessman whose successful business practices will be an asset in running the country.

Trump is not a savvy businessman.  He is not a self-made billionaire who created a company from scratch and grew it to financial success via astute management, like Bill Gates or Michael Bloomberg.  He inherited tens of millions of dollars from his father and invested in real estate in New York.  Duh.

What do we know of his business practices?  He consistently screws his shareholders, employees, lenders, and sub-contractors. 

ü He speaks proudly of using bankruptcy laws to walk away from bad businesses relatively unscathed, while others bear the cost of his incompetence.

ü In the early 2000’s a long-time friend and client purchased a condo in a Trump building in NYC.  The lawyer for the bank representing the seller told my client that he did not trust Trump because he had reneged and screwed the bank multiple times in the past.  He went on to explain that Trump always shorted his sub-contractors by 5 to 10% and didn't care if they sued him.  Ultimately they would settle with him, taking a 5%+ haircut, and Trump always came out ahead.

ü And in the 1990s Trump tried to use “eminent domain” in Atlantic City to evict an elderly widow from her home so he could tear it down and put up a parking lot for one of his casino properties.  Thankfully he was unsuccessful.

A true savvy businessman would want to be a “king-maker”, but never the actual “king”.

(2) People say he speaks his mind and is not worried about being “politically correct”.

Trump does not speak his mind.  He says whatever he thinks his audience wants to hear to get the publicity he craves, whether or not he actually believes what he is saying.  If he actually believes half the nonsense he spews then he is more dangerous than I first thought.

Trump is certainly politically incorrect.  He is also ethically incorrect, morally incorrect, and truthfully incorrect.  I do not believe he has made one completely truthful statement during the entire campaign.

I could go on and on listing reasons why Donald Trump must not be our next President.  But I think the reasons I have provided so far are more than enough.

The title of this post makes reference to the “Just Say No to Drugs” campaign.  Choosing to say “yes” to drugs is a dangerous choice, with potentially disastrous consequences.  Choosing to say “yes” to Donald Trump as President is also a very dangerous choice, with definite disastrous consequences for the country and the world!

I am reminded of the famous lines from Broadway’s FIDDLER ON THE ROOF –

Townsperson:  Rabbi, is there a blessing for Donald Trump?

Rabbi:  Yes, my son.  May God bless and keep Donald Trump . . . far away from the White House!


Tuesday, April 19, 2016


Thank God it’s over!

Before I head off to the Jersey shore to recuperate here is some BUZZ from the last days of the filing season.  Hopefully another BUZZ this Friday.

* Duh!  H&R Block Objects to Report Claiming Tax Prep Chains Target Low-Income Workers”.  So ACCOUNTING TODAY tells us.  Of course Henry and Richard are complaining.  But, in my opinion, the report is truly calling a spade a shovel.

The report, from the Progressive Policy Institute, a liberal think tank, found that workers eligible for the EITC continue to spend fees averaging around $400 at national tax preparation chains such as Block and Liberty Tax Service.”

The item from Michael Cohn goes on to say –

In a recent survey of storefront operations in Baltimore and Washington, D.C., the researchers found that those eligible for the EITC, who are typically low-income workers with children, would spend between 13 and 22 percent of their refund this year at local tax preparation outlets. In Baltimore, where the average EITC refund is $2,335, the cost to file ranged from $309 at H&R Block to $509 at Liberty Tax Service. In Washington, D.C., where the average EITC refund is $2,351, the cost to file ranged from $315 at H&R Block to $485 at Liberty Tax Service.”

Charging such prices for EITC returns is certainly unconscionable.  I have always told you that Henry and Richard ain’t cheap!

Of course first off - the Earned Income Credit, refundable credit and a huge federal welfare program, does not belong in the Tax Code in the first place.

And second – nobody, especially low-income taxpayers, should use Henry and Richard or any others of their ilk to have their tax returns prepared.

The IRS has erroneously turned tax preparers into Social Workers with excessive due diligence requirements for tax pros preparing returns with an EITC claim.  This is not our job!  The IRS should provide free tax clinics throughout the US where taxpayers, or usually tax non-payers, who qualify for the Earned Income Credit can go to have their returns prepared free of charge by especially trained IRS personnel.

* On April 15th I came across recently introduced federal legislation that, for the most part, I could support.  The item that brought it to my attention was “Senator Warren Introduces Bill to Simplify Tax Filing”.

Here is the story (the highlights are mine) –

United States Senator Elizabeth Warren (D-Mass.) today introduced the Tax Filing Simplification Act of 2016 to simplify and decrease the costs of the tax filing process for millions of American taxpayers. 

The legislation introduced today would direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government, if they choose to do so, and would prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services.

I have been calling for the IRS to allow taxpayers to submit their federal tax returns directly to the IRS for free via the IRS website – similar to the NJWebFile system available to NJ state filers.

Since I do not, and never will, use flawed and expensive tax preparation software to prepare returns I cannot electronically file client returns.  If there were “a free, online tax preparation and filing service that {I} can use to prepare and file . . . taxes directly with the federal government” I would not need flawed and expensive software to be able to electronically file returns.

I am not against electronic filing – I sympathize with the government’s reason for wanting it – I am against being forced to waste money on commercial software to be able to do so.

I do, however, have some issues with the legislation provision that will allow “eligible taxpayers with simple tax situations to choose a new return-free option, which provides a pre-pared tax return with income tax liability or refund amount already calculated”.  I will explain why if anyone asks.

* Jason Dinesen continued to post valuable information during the tax filing season.  In “Taxation of Incentives Received from a Bank” he deals with a topic that I became familiar with very early in my career while still an “apprentice” tax preparer.

* Jason also began a new blog series on “Basics of Taxes” with “Part 1: Who Has to File”.

* We finish the Dinesen trifecta with the answer to the question “Does My Partnership Need a New EIN if it Becomes an LLC?”.

* I agree with Christopher Koopman, who says at THE HILL “Licensing Tax Preparers Won't Help Consumers”.

I do, however, believe that a voluntary independent, industry-based credential for tax preparers, like a “Certified Tax Return Preparer”, would help consumers, as I first suggested back in 2013 (click here for my editorial).

In the piece Christopher identifies the real problem with tax compliance –

The issue is larger, and more systemic, than simply trying to ensure that only the most honest dealers prepare tax returns. It's important to start by asking why so many individuals turn to others to fill out their forms in the first place. That answer is simple: The tax code as it stands today is a mammoth, complex mess. Littered with loopholes, exemptions, credits and other various programs, the increasing complexity in the code only creates confusion over how to comply.”

The best way to reduce tax fraud is to rewrite the Tax Code.

* Prof Paul Caron reported “NYU Hosts 7th Annual Tax Movie Night” at TAX PROF.  I would have liked to have been able to attend. 

In my experience I have rarely seen the IRS or an income tax issue portrayed correctly in television episodes, movies, or plays.

Many, many years ago my mentor and I had said our tax season experiences would make a good workplace sitcom – but felt most people would find the episodes based on our reality unbelievable.   

* Do you frequently complain about the poor job being done by the IRS?  Here is your chance to do something about it.  In “Think You Can Improve IRS Service? Here's Your Chance” at FORBES.COM Kelly Phillips Erb tells us –

The TAP is federal advisory committee that listens to taxpayers, identifies major taxpayer concerns, and makes recommendations for improving IRS services. TAP reports annually to the Secretary of the Treasury, the IRS Commissioner, and the National Taxpayer Advocate.

TAP is looking for volunteers to serve a three-year term starting in December 2016. There are 55 vacancies in total. TAP is specifically looking for volunteers to serve in the following states: Alaska, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Iowa, Idaho, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Mississippi, Montana, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Utah, Wisconsin, West Virginia and Wyoming.”

* Were you following Russ Fox’s series on “Bozo Tax Tips” at TAXABLE TALK?  Click here for a recap.


I was apparently very efficient this tax filing season – ending with less than half the number of GD extensions than I had last year!  More on “the tax season that was” in my annual review to be posted next week.


Monday, April 18, 2016





1040s NO MORE.


Today I honor the memory of Maurice "Moe" Barry -