“If you are sitting on unclaimed paychecks, as an employer you are
legally bound by state law to return any uncashed paychecks to the state where
the person last worked. You can be fined or penalized if you don't return the
check, even if the person can't be found.”
So pass this info along to your
And this is another reason to
advise your clients to do an “Unclaimed Property” search.
“2011 had been predicted to be a quiet year in federal tax news – as it
landed between major tax legislation in 2010 and expected tax reform in 2012 –
but the year brought many signifi cant tax developments from the Obama
Administration, Congress, the Treasury Department, the IRS, and the courts.”
“The IRS announced on its website that it will not be accepting new
applications for preparer tax identification numbers (PTINs) from 5 p.m. EST
Friday, Dec. 23, until approximately 6 a.m. EST on Monday, Jan. 9. The IRS PTIN
system will be available for renewals during that time.”
+ The New York Department of
Taxation and Finance has released the Personal Income Tax: Withholding Rates
for 2012.Click here.
+ For those of you who are
interested you can click here to download the 600+ page “Back in Black” report
from Oklahoma Republican Tom Coburn.
Merry Christmas to all – except
the idiots in Congress!
I freely admit that my mind tends to wander during the required 2 hour “ethics”
sermon we must sit through at least once each year during continuing education
sessions, I do listen in on the discussion every now and then.Hearing all the rules and requirements
enacted in the name of privacy and security it is obvious that regulation has
gone overboard.Much of what the
instructor discusses is, to be perfectly honest, totally ridiculous.
I was talking to a friend, who was also a client, in a public place and another
client, let’s call him George, who my friend coincidently also knows, happened
along, saying hello to us in passing.If
my friend asked me, “How do you know George,” I would normally think nothing of
replying, “I have been doing his taxes for years”.
by doing so, I am told, I would be seriously violating “privacy” rules!
I am not allowed to discuss the details of George’s Form 1040, or any other
financial or personal information I was told in confidence in the course of
preparing his return, with my friend.But not being able to simply mention that he is also a client is pure
while it is not my responsibility as a tax preparer to personally verify every
single on a client’s 1040, the IRS basically wants me to do so when it comes to
the Earned Income Credit.A tax preparer
can be substantially penalized for not going through extra hoops when it comes
to this credit – even if the credit itself turns out to be legitimate and the
amount claimed correct.
I wrote in an earlier post in a series on my obligations as a tax preparer -
“Although I am not obligated or required to
personally verify all numbers entered on the 1040 (or 1040A), I am required to
do what is called ‘due diligence’ when it comes to information provided by the
client. What this means is that I must –
• evaluate information
received from clients,
• apply a consistency and
reasonableness standard to the information, and
• ask additional
questions if the information appears incorrect, inconsistent or incomplete.
Obviously, if a client
says or indicates something that does not make sense, or does not seem
reasonable, I must ask questions.
But if what a client
tells me, or indicates on a worksheet, appears to me to be reasonable
considering the individual facts and circumstances than I do not need to go any
When it comes to the
Earned Income Credit I am required to be a bit more ‘due’ in my ‘diligence’. As
a side comment, I do not think it is fair for the IRS to require tax preparers
to determine if an individual is eligible for federal welfare (which, after
all, is what the EIC is).”
am a tax preparer – not a Social Worker!The Earned Income Credit has no place being in the Tax Code in the first
I had not been doing this for 40 years now without incident, and I was
considering a career as a paid preparer, I seriously think I would be scared
away from the profession by all of this.
am in a very unique situation.I do not
accept, or want, any new 1040 clients – period.I am actually looking to “thin the herd”.
certainly believe that you can teach an old dog new tricks – but some new
tricks come with too much agita that they are not worth learning.It is easier for me to say, “I will never
have a client that this would apply to”, or, “If this applies to a client I
will just send him/her elsewhere” then to put up with the added agita.
have been times during the last few years when I have seriously considered
retiring in December of 2013, so I would not have to put up with all the new
aggravation, including the new paid preparer regulation regime (which I do, for
the most part, support).42 years would
be a good run.And waiting till the end
of 2013 would give me time to look into more opportunities for income from
writing on taxes and other topics, so I would still be able to eat.
what about my 300+ clients?It would be
very easy to say good-bye to some – but a great many have relied on me for so
many years that it would be difficult to tell them I could no longer prepare
their returns.Hey, if I won the lottery
it would be one thing.But not to
voluntarily just walk away.
I guess I will hang in there until the idiots in Congress or the IRS go too
far.Maybe, as I hope and pray, the
current Tax Code will be totally shredded and a more simpler one written in the
next two years.
one point during the first day of the recent NATP year-end tax update workshops
someone asked – “What would happen under a flat tax?”
response an audience member called out, “We would all be out of business!”
This is not true!I
have said it before and I will say it again – a simpler tax return will not in any
way hurt my business.Nor should it
substantially affect your tax practices.
would make more money, have fewer expenses, and experience much less agita, if
I spent 12 hours each day of the tax season doing nothing but 1040As!
main reason most of my clients use a paid tax preparer, regardless of the
complexity of their returns, is for convenience.They just don’t want to be bothered keeping
up with tax law and preparing the return themselves.
let’s face it – regardless of who is in the White House we will never have a
true, pure “flat tax”.We will never see
the ridiculous, but frequently proposed, “post card tax return”.There will always be some “tax expenditures”
in the Code – even if, hopefully, only a very few.Even my tax reform proposals include some.
even with a pure flat tax you still need to determine “income”.There will always be a need for some form of Schedules
C, D, E and F, and therefore there will always be a need for a paid tax preparer.
am curious to hear what my fellow tax pros think.
I have your attention I just want to mention something else that we learned
during the first session -
is apparently the last year that NATP will be offering the TAXPRO Symposium
package in its current format.Beginning
next year the package will be three days only – the first day will cover the
topic of “Representation”, and days two and three will be the normal “and “ offerings.Personally I have no interest in
Representation, so it will be only two days of workshops for me in the winter
of 2012.I will be attending the Annual
Conference in Baltimore in July – so I will accumulate many. many more than the
newly required 15 hours of CPE.
recently attended three of the four days of NATP’s annual TAXPRO Symposium in
Atlantic City (see my TWTP posts).
it had nothing to do with the topic of discussion, during the first session we
were told that many current Enrolled Agents, although exempt from the
competency test component of the new tax preparer regulation regime, will be
taking the test.Our symposium instructor
is one such EA.
Why?Because they want to be able to acquire the
reason is the continued public confusion with the Enrolled Agent designation.Our instructor gave an example -
taxpayer looking to engage a paid preparer asks why he should choose her.She explains, “Because I am an EA.”The next question is, “What is an EA”, to
which she answers, “An Enrolled Agent.”The prospective client then says, “Oh, so you work for the IRS.”
the taxpayer shopping for a preparer asks a previously unenrolled tax pro the
same initial question.The answer given
is, “Because I am an RTRP.”When asked
what an RTRP is the answer comes back, “A Registered Tax Return Preparer.”Who do you think the taxpayer will select.
question I ask is whether an EA, upon passing the test, will be granted the
RTRP designation by the IRS.
prominent veteran tax professional, an Enrolled Agent, told me -
“CPAs, Attorneys and EAs can become RTRPs but
they must test and pass and meet other qualifications.I want the initials to first, preserve what
the EA credential means and second to get the advertising that RTRPs will
get.I believe with 400,000 RTRPs of the
future with only 50,000 EAs that RTRPs will be the designation for return
sounds like a good idea.I believe that
CPAs and attorneys should also be allowed to have the credentials RTRP to identify
their tax knowledge and currency – but not by voluntarily taking the test.CPAs and attorneys who want to prepare 1040s
should be required to take the test and maintain the CPE in federal
are a different issue.They have already
passed a much more comprehensive test and must maintain more CPE in federal
taxation than RTRPs.I can see that EAs
who have voluntarily taken the test to be granted the RTRP designation, and now
“advertise” as Jane Q Taxpayer, EA, RTRP, could hurt the credibility of the “plain”
the IRS should automatically issue all EAs (but NOT CPAs or attorneys) the additional
designation of RTRP because they have, in effect, already qualified by means of
the EA Exam and maintain at least the minimum 15 hours of annual CPE in federal
taxation.Or the EA designation could be
changed to ERTRP (Enrolled Registered Tax Return Preparer), or ETRP (Enrolled
Tax Return Preparer).
do my EA readers think?
we were on the subject, the instructor also told us that Prometric, the outside
firm hired by the IRS to conduct the competency tests, is an extremely
intimidating proctor.We were told to
equate Prometric with the TSA.
will be metal detectors and pat downs, we will not be able to take anything
into the test with us, if we have to leave the room to use the jake during the
test we will be personally escorted to and from by a Prometric employee.While it was mentioned that the test would be
somewhat “open book” there will be no print copy of Publication 17 to be found
in the test room – one must search an online version of the Pub.
is just one more reason why I will wait until the spring of 2013 to sit for the
test.Maybe the testing will cause the
IRS enough agita by then they will rethink their position on grandfathering.
Just thought I’d let you know
that I received my PTIN confirmation from the IRS in the mail – stating, “We’ve accepted your 2012 renewal for your
Preparer Tax Identification Number (PTIN).”So I guess I am good for another year.
“If you receive an audit notice from the IRS, you will need to produce
the relevant documentary proof to validate the deductions being audited.
BizMile Tracker is your answer. This online program is the best mileage
log assist I have seen.”
In case you are skeptical Bruce
points out Bruce’s motivation in writing the post –
“This post is unsolicited and I will not or have not been compensated in
any way for any information I have shared here. I use this product and I
believe in this product.”
FYI – I am off to Atlantic City
for the annual year-end tax update workshops offered by NATP.This year I will also be taking the
association’s Taxpro Symposium classes in Social Security and Railroad
Retirement Benefits and Beneficiary Reporting.
Below is information on a new education offering from the
National Association of Tax Professionals.
If you are not already a member of NATP you should be!To receive membership information email me at
(with NATP Membership Info in the “subject line”).
“You've mastered the basics. You're ready for a challenge.
NATP's Tax Intermediate Training is exactly what you need! We're offering a
package of intermediate level self-study courses to help you expand your
knowledge of services you offer your clients. Plus, you can earn up to 40 CPE
credits* while you learn.
This self-study course is intended for tax professionals who've
mastered preparing 1040 tax returns and are looking to expand their knowledge
to include other areas of taxation including: businesses, estates, gifts &
trusts and more advanced individual tax issues. NATP has bundled the key
courses and is offering them to you at hundreds of dollars less than it would
cost to take them individually.
All materials are available electronically, including textbooks
which can be printed at your convenience if you choose. The following modules
are included in this special program (click on the modules below for
descriptions, objectives and CPE information):