Monday, September 27, 2021


Once again, the issue of tax preparer regulation is in the news.  There has recently been talk of giving the IRS the authority to regulate all preparers via proposed economic and budget legislation and of a revival of the Registered Tax Return Preparer (RTRP) program that was done away with by the US Tax Court in January of 2013.

The Internal Revenue Service already regulates preparers, those permitted to “practice” before the IRS, like CPAs, attorneys and Enrolled Agents, and “unenrolled” preparers, via Circular 230.  

I do not oppose requiring PTIN-holders to complete a minimum number of CPE hours in federal income taxation to maintain their PTIN.  In fact, I support this.  It is vital that every sincere and competent paid Form 1040 tax preparer take CPE in income taxation each year to keep up-to-date on tax law changes.  I have taken on average at least 16 hours of CPE in federal income taxation each year consistently for decades. 

I do oppose requiring all paid tax preparers to take a government-administered competency test, either one time or annually, to maintain their PTIN and continue to be allowed to prepare tax returns.  I would only support a one-time initial competency test if there was a grandfathering exemption for tax preparers who have been consistently preparing 1040s for at least 5 years.  After 50 tax seasons of preparing 1040s without incident I have no intention of taking a test now to prove I know what I have been doing for all these years..

I do support voluntary Form 1040 competency designations that recognize and identify the competence of unenrolled 1040 preparers.  Such a program would benefit the tax preparation industry, the taxpayer public, and the federal government. 

Currently any Tom, Dick or Harriet can hang out a shingle as a “tax preparer,” regardless of education or ability.  And, thanks to tax preparation software, any Tom, Dick or Harriet, with absolutely no training, experience or knowledge, can simply purchase a tax preparation software package and try to pass themselves off as a “tax professional”.  The taxpayer public does need a way to determine the relative competence of a potential tax preparer.

I would support the Internal Revenue Service establishing an RTRP designation as part of a voluntary two-tiered certification program that includes the current Enrolled Agent designation.

A voluntary Form 1040 competency designation would allow qualified “unenrolled” preparers the acknowledgement they deserve based on their knowledge and experience. Allowing CPAs and attorneys who prepare tax returns to become an RTRP under the new voluntary program would provide these professionals with a credential in 1040 preparation, and therefore provide recognition of their competence and currency in preparing individual income tax returns.  The CPA designation alone does not indicate the holder has any competence or currency in 1040 preparation.

A preparer, including CPAs and attorneys, would first apply for and be granted the RTRP designation by way of a test that is limited to Form 1040 preparation.  Minimum annual CPE in federal tax topics would be required once the RTRP designation was granted.  

After a year, an RTRP could elect to take a second test, with emphasis on taxpayer representation issues and other advanced topics, to become an ETRP (Enrolled Tax Return Preparer), a new title for the current Enrolled Agent (EA), and be permitted to “practice” before the IRS.  CPAs and attorneys who become RTRPs would have no need to go on to become an ETRP, as they are already permitted to practice before the IRS.

What I strongly believe should be done is to create a national board consisting of representatives of all current tax return industry membership organizations to issue and maintain a universally accepted independent voluntary professional designation – CTRP for Certified Tax Return Preparer - based on testing and maintained by required annual continuing professional education in federal taxation.

In the case of all other professions, like CPAs, attorneys, architects and medical doctors, the maintenance of the professional certification designation is done by an independent industry-based organization such as the American Institute of CPAs, the American Bar Association, the American Institute of Architects, and the American Medical Association.  The new 1040 credential would be administered by the National Institute of Certified Tax Return Preparers.

The Institute would be an independent, nonprofit organization established solely for the purpose of issuing, maintaining and promoting the CTRP designation. Its governing board would consist of a representative (perhaps the executive director or board president) of the National Association of Tax Professionals, the National Society of Tax Professionals, the National Society of Accountants, the AICPA, the American Bar Association, and any other appropriate tax-related membership organization, and at least two independent “previously unenrolled” practicing tax professionals.

In order to be designated as a CTRP, a candidate must possess a valid PTIN and pass a competency test on federal 1040 tax law. A “grandfathering exemption” from this test would be allowed for:

• Tax professionals who have been consistently preparing federal income tax returns on at least a half-time basis (during the traditional tax filing season) for at least five full years and who have successfully completed a total of 48 hours of continuing professional education in federal taxation in the three-year period (36 months) prior to applying for the designation.

• Tax professionals who have been licensed or certified to prepare income tax returns under a required state program that includes a competency test.

• Individuals who have successfully completed a certificate or certification program in federal income taxation offered by an accredited educational institution or a qualified membership organization that includes testing, like the tax programs of Accreditation Council for Accountancy and Taxation (ACAT).

CTRPs would need to renew their designation every three years by submitting proof of completion of a total of 48 hours of CPE in federal taxation during the three-year period, with at least eight hours each year. The 48 hours must include three hours of “tax updates” per year (a total of nine hours) and one hour of “ethics updates” during the three-year period.

Qualified CPE providers would include accredited educational institutions and organizations/companies accepted by the National Registry of CPE Sponsors. The NICTRP would not need to separately approve CPE providers.

CPAs and attorneys would be welcome to apply for voluntary certification under the National Institute of CTRPs as a way to acknowledge and identify their knowledge of and currency in 1040 preparation.

With the institution of such a voluntary certification program taxpayers will be able to identify true “tax professionals” from among the choices they are faced with.  More accurate and competent returns will be prepared. And competent, experienced and ethical “previously unenrolled” tax preparers will finally receive the recognition and respect that they deserve. Everyone benefits.  

So, fellow tax pros, what do you think? 


Friday, September 24, 2021


Kelly Phillips Erb, the internet’s TAXGIRL, recently posted “What You Need to Know About the Current Federal Tax Proposals” at her BLOOMBERG.COM blog.

It is very important to note that, as the title of her post indicates, these are “proposals” and NOT current tax law. 

KPE lists the major proposals for individual taxpayers –

“* The top individual income tax rate would revert to 39.6% for single filers making above $400,000, head of household filers above $425,000, and joint filers reporting more than $450,000. Without any Congressional action, that would still happen in 2025 (because of an earlier reconciliation).

* The top capital gains tax rate for those same high-income taxpayers would increase from 20% to 25% for all sales and transactions closing after September 13, 2021.

* The temporary expansion of the child tax credit—and advanced payments—would be extended through 2025. Additionally, changes to the Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit (CDCTC) would become permanent.

* There would be a 3% surtax on modified adjusted gross income over $5 million for single individuals, heads of household, married couples filing jointly, and surviving spouses. The surtax would kick in at $2.5 million for married couples filing separately.

* A $10 million limit would apply to Individual Retirement Accounts (IRAs) contributions—allowing for no further contributions for married couples with taxable income over $450,000 or singles with taxable income over $400,000. The $10 million threshold would also accelerate required minimum distributions for those accounts.

* The proposal would also disallow the so-called “back-door” Roth IRAs by eliminating conversions for IRAs and 401(k) plans for single filers making over $400,000, head of household filers above $425,000, and for joint filers reporting more than $450,000.

* The proposal would also modify the wash sale rules to include commodities, currencies, and digital assets.”      

In addition –

The top corporate tax rate would increase to 26.5% from 21% for corporate income above $5 million. (The 2017 law cut the rate for large corporations from 35% to 21%.) The tax rate drops to 18% for small businesses with income less than $400,000 and would remain 21% for all other businesses.”

Here are my thoughts on these proposals.

* I completely reject the Democratic Party tax policy of taxing the rich simply because they can afford it.  I am against punishing success and entrepreneurship.  I oppose the increased top tax rate, increased capital gains tax rate, and income-based surtaxes and surcharges.

The way to make sure the “wealthy” pay the proper tax is to eliminate all the special-interest tax deductions, credits, exclusions, and loopholes.

* I oppose the enhancements to the various “welfare” tax credits.  The one and only purpose of the US Tax Code is to raise the money necessary to fund the government.  It should NOT be used to distribute government welfare and other benefits, for “social engineering”, or to redistribute wealth.

I am not saying the government shouldn’t provide financial assistance to the working poor and college students, provide encouragements for purchasing health insurance, making energy-saving purchases and improvements and other ‘worthy’ actions.  What I am saying is that such assistance and encouragements should not be distributed via the Form 1040.

In addition, these tax credit changes add excessive complexity to an already complex Tax Code - and refundable credits encourage and result in excessive tax fraud

* I oppose limitations on investment in IRA accounts.  Savings and investment must be encouraged.

* As for the changes to the corporate tax rate, I am glad the rate is lowered for “small business corporations”.  The GOP Tax Act change to a flat 21% tax rate resulted in a significant tax increase for many smaller corporations. 

I do not necessarily oppose the increase in the top corporate tax rate.  However, I do believe corporations should be allowed a “dividends paid” deduction – subtracting dividends issued to shareholders from corporate net taxable income.  This would do away with the double-taxation of corporate profits, and encourage corporations to pay out dividends to reduce tax liability instead of trying to be “creative” a la Enron.  In addition to allowing for this deduction on corporate returns I would repeal the lower capital gains tax rates for individuals on qualified dividends (while keeping the lower rates for long-term capital gains) – as there would no longer be a reason for this.

So – I have given you my thoughts on the proposals.  What are your thoughts?


Thursday, September 23, 2021



* At the interestingly named TAX BUZZ blog Spencer Wilson, EA provides a lesson in “The Tax Benefits of Health Savings Accounts”.

* The IRS announces “New mailing address for some Western states as Fresno, California, paper tax return processing center closes”.   

* Check out my latest commentary at ACCOUNTING TODAY – “The SALT limitation from a different perspective”. 

What do you think?

* And also check out this week’s ramblings at BOBSERVATIONS.

* Also at ACCOUNTING TODAY, Julio Gonzalez discusses “The tax troubles of travelling entertainers”.

*  Continuing a bad practice that doesn’t work that well – Kay Bell reports “3 collection agencies awarded new IRS tax debt contracts”.

Private collection agencies have absolutely no concern about the legitimacy of the debt they try to collect - they only get paid if they collect.  Unlike the IRS, they have no interest in verifying the validity of alleged outstanding debt.  And I do believe studies have shown they are not really that effective in collecting debt.


Tuesday, September 14, 2021



Finally – a substantive BUZZ!

* Jeff Stimpson reports that “Many tax pros are undercharging clients: NATP” at ACCOUNTING TODAY.

I know I am, and have been for decades.

* Speaking of the National Association of Tax Professionals (NATP) fee survey - it once again proves that the most expensive option for choosing a tax professional to prepare your individual Form 1040 is the CPA.  The average fee for preparing a basic Form 1040 charged by a CPA is 15.7% higher than the fee charged by an Enrolled Agent (EA), who is more qualified and trained in tax preparation than a CPA, and a CPA charges 43.4% more than an “unenrolled” preparer (no initials).

No surprise here.

And remember, just because a person has the initials CPA after his or her name does not necessarily mean that he or she is knowledgeable, trained or experienced in preparing 1040s.

FYI, the average cost of preparing a basic Form 1040 (Schedules 1-3 only) in the northeast (where I am from) for 2021 was $136.00.  The average cost of a Form 1040 with Schedules 1-3 and a Schedule A was $187.00.  These numbers are for the federal return only and do not include the fee for preparing the state return.

* Some good advice from Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES – “Moving? Let the IRS know.”

* There is a new format for BOBSERVATIONS.  Click here to check it out.

*  TaxGirl Kelly Phillips Erb deals with the question “How Long Do You Need to Keep Your Tax Records?” at her BLOOMBERG.COM blog.

I have always told my clients and readers that you should keep the paper copy of your Form 1040, or 1040A, plus all supporting Schedules and Forms, and copies of all your Form W-2s, forever.  This provides a permanent record of your financial history.  You never know when the information on a prior year’s tax return or W-2 will come in handy for a variety of tax or financial related reasons, or just to satisfy personal curiosity. 

* The NJ Division of Taxation’s website identifies “NJ Tax Relief for Hurricane Ida Victims” (highlight is mine) -

Taxpayers affected by Hurricane Ida now have until January 3, 2022, to file their New Jersey tax returns and submit payments for any return and/or payment, including estimated payments, which have either an original or extended due date between August 26, 2021, and before January 3, 2022. This means that individuals who had a valid extension to file their 2020 returns, due to run out on October 15, will now have until January 3, 2022, to file.”

* A timely “Weekly Tax Tip” from JS TAX CORPORATION – “Reminder: Third Quarter Estimated Taxes Due”.

* Another item that comes as no surprise to me.  Michael Cohn reports “$16B in EITC payments in 2020 may have been improper” at ACCOUNGING TODAY.

A new report, released Thursday by the Treasury Inspector General for Tax Administration, said the IRS estimated that 23.5% ($16 billion) of EITC payments were issued improperly in fiscal year 2020.”

Refundable tax credits are one of the biggest sources of tax fraud.  And the US Tax Code should not be used to distribute social welfare program benefits. 

* And also at ACCOUNTING TODAY another item from Jeff Stimpson.  The IRS reminds us that “COVID tests are eligible medical expenses” -

As giant retailers prepare to offer cheap at-home COVID-19 tests in the wake of President Biden’s new vaccine rules for employers, the Internal Revenue Service has sent a reminder that the cost of home testing for COVID-19 is an eligible medical expense.”

Of course, you must be able to itemize to claim it, and your total deductible medical expenses for the year must exceed 7½% of your AGI.


Saturday, September 11, 2021




A Port Authority officer for 16 years, Maurice "Moe" Barry, 48, was assigned to the PATH commuter train system. The resident of Rutherford, NJ, upon hearing the reports of the terrorist attacks, was one of the first on scene when he rushed from Jersey City to Lower Manhattan and then into the North Tower to help in the rescue efforts. As thousands fled the searing flames and smoke of the Towers, Officer Barry was attempting to reach trapped and frightened workers on the upper floors. The last time he was seen, he was on his way to the higher floors to get people out.
Moe had a history of heroism - he was involved in rescue efforts during an airplane crash at La Guardia airport; he once climbed a bridge to retrieve the body of a person electrocuted there; he was involved in the rescue effort during the 1993 bombing of the World Trade Center; and he rescued a woman from her home, by boat, during Hurricane Floyd. Moe was also a volunteer for the Rutherford Ambulance Corps.

Wednesday, September 8, 2021



* Here is “a tax planning opportunity you may not be aware of” from S. Joseph DiSalvo and Marie Madarasz at THE STREET - “Employer Stock in your401(k)? You May be Sitting on a Big Tax Break”.

* Jim Blankenship explains “How do I claim Social Security from my ex’s earnings?” at MARKETWATCH.COM.

* Michael Cohn tells us “IRS updates per diem rates for travel expenses for 2021-2022” at ACCOUNTING TODAY.

* Also at ACCOUNTING TODAY Jeff Stimpson discusses “Tax relief for disaster victims in California, Tennessee”.


Monday, September 6, 2021

Friday, September 3, 2021



* At the interestingly titled TAX BUZZ blog Gordon McNamee answers the question “Tax Avoidance vs. Tax Evasion - What's the Difference?

Denis Healey, former British Chancellor of the Exchequer, once correctly answered the question this way –

The difference between tax avoidance and tax evasion is the thickness of a prison wall”. 

* Kay Bell reports “IRS gives all Louisiana taxpayers Hurricane Ida tax relief” at DON’T MESS WITH TAXES -  

“ . . . the IRS announced that its offering tax relief to Ida victims. That includes pushing the Oct. 15 extended filing deadline (and other tax dates) to Jan. 3, 2022.

The tax relief applies to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance due to damages from Hurricane Ida. Right now, that's the entire state of Louisiana.

However, adds the IRS, taxpayers in Ida-impacted localities in neighboring states that FEMA ultimately designates as major disaster areas also will qualify for the same tax relief.

* The NSTP BLOG explains “Taxpayers Can Protect Themselves from Scammers by Knowing How the IRS Communicates” and identifies in detail the ways IRS contacts taxpayers.


Wednesday, September 1, 2021


As a general rule I oppose traditional Democratic tax policy – punishing ambition and success and excessively taxing the rich simply because they can afford it, and using the Tax Code for social engineering, to redistribute wealth and to distribute government social welfare benefits.
I do not necessarily oppose the government providing social welfare benefits where appropriate – just using the Tax Code to distribute these benefits
FYI - I also oppose unique industry-specific tax loopholes and "tax expenditures".  I believe the one and only function of the US Tax Code is to raise the money necessary to fund the government, fairly and equally.  Period.
That said, I vocally and aggressively oppose, denounce and disavow the current Republican Party and will actively campaign to oppose all Republican candidates at all levels who do not vocally and aggressively oppose, denounce and disavow Trump and his lies.  Not because I am a Democrat or a liberal – I have supported and voted for Republican, Democratic and Independent candidates at all levels in the past based on the candidates and the issues - but because I am intelligent, I have a conscience, and I am a patriot.
The biggest danger to the future of America today is Trump and his core cult of ignorant racists, and today’s Trump-embracing Republican Party who court and pander to these ignorant racists.