TAXPRO BUZZ

Sorry to be late in getting this post “up”.  I was hoping for more “stuff” to include.  If you have come across any BUZZ you want to share with fellow tax pros let me know.

+ Click here to learn how to “Register your opinion on the IRS decision to retiretwo e-Services products”.

+ William Perez provides “IRS Update for July 26, 2013”, which lists “pages or files residing on IRS.gov that are new or updated from July 19 to July 25, 2013”.

William will be posting such an update every Friday.

+ The IRS’s mandatory RTRP program may be dead (hopefully for good), but the PTIN program continues.  ACCOUNTING TODAY reports “IRS Sends Warning Letters to Preparers With Old PTINs”.

 

The following statement still applies -

“As of Jan. 1, 2011, anyone who, for compensation, prepares or helps prepare all or substantially all of any federal return or claim for refund must have a valid PTIN and use that PTIN as the identifying number on returns, the IRS noted. All PTINs must be renewed annually.”

And -

“The IRS also said it is continuing efforts to identify paid preparers entering no identifying number on returns that they prepared.”

+ An email from NATP introduced me to the product described below.  Perhaps it is something you should consider purchasing.  I have not ordered or seen this book but am considering a purchase to supplement the many forms, schedules and worksheets I have developed for external and internal use in my 1040 practice (click here). 

FYI - there is a special discounted price of $75.00 for NATP members.  If you are not already a member, email me at rdftaxpro@yahoo.com (with “NATP Membership” in the subject line) to receive membership information. 

“NATP Tax Store - Audit Proof the Tax Office - #3298

It’s becoming harder and harder to protect ourselves from ourselves. Tax professionals are under the IRS microscope and are being audited. Thousands of offices are being targeted each year.

In this manual, you will find the forms and instructions you need to audit proof your office. In addition to the paper forms, you will also receive a flash drive with over 35 forms including many PDF fill-in forms.

Price - $89. To place your order go to the Tax Store or give us a call at 800.558.3402.”

RDF

THE NEW JERSEY ELECTRONIC FILING MANDATE

This post is for NJ tax pros.  I will outline my NJ-1040 submission practice – and ask that you let me know if you think I am following the law.

Under the NJ “Electronic Filing Mandate” preparers that reasonably expect to prepare 11 or more individual gross income tax resident returns (including those filed for trusts and estates) during the tax year must use electronic methods to file those returns for which an electronic filing option is available.

I do not use flawed and expensive tax preparation software to prepare my federal and state 1040s – and at this point in my career I never will.  Therefore the only electronic filing option available to me for NJ returns is NJWebFile.

Because of the many, in my opinion unnecessary, restrictions and limitations to the NJWebFile system I cannot submit all of my NJ-1040s using this method – even if I wanted to.  For these returns, and in my case, there is no electronic filing option available.  I do not, in my opinion, need a client-signed OPT-OUT form for those returns I cannot submit electronically because NJWebFile will not allow me to do so.

Whenever possible I submit my NJ-1040s “electronically” via NJWebFile, unless the client specifically “opts out” of electronic filing.  In such a case I get a signed OPT-OUT form from the client.

It is beneficial for a client whose NJ-1040 requests a refund to submit their return via NJWebFile because doing this allows their refund to be directly deposited to their bank account.  Despite the fact that direct deposit would save the state money, NJ does not allow direct deposit for refunds requested on returns that are not, or cannot be, submitted electronically.

So what do you think?

FYI, New York State specifically exempts me from the NY electronic filing mandate because I do not use flawed and expensive tax preparation software.  They still, however, extort $100 from me each year for the “privilege” of preparing a little over 20 NY state income tax returns.

RDF  

RAMBLINGS ON TAX PRACTICE

In looking back at my 40+ years in the business, if I were to start all over again I think I would limit my practice to 1040s.  Period.  No 1065s.  No 1120s.  No 1041s.  Just 1040s.

I would probably have to, as I have done, also provide year-round bookkeeping and accounting services for additional income.  But I would not accept any clients that collected and remitted state and local sales tax, or any other kind of tax, and I would limit my involvement to keeping the books and preparing payroll and payroll tax returns and reports, but I would not prepare the corporate income tax returns.

If possible I think I would also try to avoid bookkeeping, accounting, and payroll.

Why?  To limit my need to keep up-to-date to 1040 issues only, and to limit my exposure to agita and liability for FUs. 

My ideal practice – for me personally – would be preparing 1040s from February to April, and writing, relaxing, and “wandering” for the rest of the year.  Hopefully the writing would provide additional income so there would be no need to take up bookkeeping, accounting, and payroll.  Other tax preparers could substitute teaching CPE for writing, or do both.  As for me, I am not a confident or experienced public speaker - so I would limit my activity to writing, which I enjoy and am good at.

Actually I enjoy bookkeeping and payroll, and always have.  But I do acknowledge the potential for agita and liability.    

Today I do not accept any more new 1040 clients, and do not accept any non-1040 clients.  But I do have some existing business clients that I really cannot “drop” due to long-time, and often personal, relationships.  So I still do prepare quarterly sales tax returns and 1120s.  I have been able to lose preparation of multiple 1120s for a business client due to a merger.  I will continue to do the year-round bookkeeping and payroll for a couple of more years, but have handed off the 1120 preparation.

When I say limit my practice to 1040s I mean just that.  One of the problems of business clients is that they come to me to prepare various non-tax related government forms, reports, and questionnaires – like business census forms and municipal rental real estate reports.  These forms all usually have a financial aspect – and I do not object to providing specific financial information available to me – but they also involve other information about which I have no personal knowledge and no interest to learn about.

This happens with 1040 clients, too.  I am often given census forms, student loan applications, property tax reimbursement applications, loan applications, utility discount applications, and the list goes on.  However I specifically state to clients in writing that I do not, and will not, prepare these forms, reports and applications.  The most I can do, I tell clients, is provide specific financial information from the completed tax return needed to answer specific questions.     

 

Here is what I tell my clients (in writing) -

"I prepare income tax returns.  I do not prepare mortgage or loan applications, census forms, college financial aid applications, prescription drug or utility discount program applications, Property Tax Reimbursement applications, or any other such forms.  Please do not ask me to fill out these forms!  I have no special experience, knowledge or expertise with any of these forms - I do not know any more about them than you do.  The most I can do is provide you with any needed income information from your tax return."

 

All these non-tax forms, for both business and individual clients, are truly a PITA.  I have no knowledge or expertise in preparing these forms and applications.  And I do not want any knowledge or expertise in preparing these forms and applications.  In the past when I have given in and filled out such forms I have merely read the instructions and followed them as best I could – the same as the client could do himself/herself.  But most of all – I just do not want to be bothered with these forms.

There are preparers out there who do solicit such forms, especially college financial aid applications, as a post-tax season sideline source of income, and do acquire knowledge and expertise in these forms.  That is fine.  It is just not for me.

So preparers who are just starting out in “the business” – maybe you want to think about limiting your business to 1040 preparation. 

What do my fellow experienced tax pros think?

PS – thanks for allowing me to “ramble”.

RDF

TAXPRO BUZZ

+ Kathryn M. Morgan, EA offers a “Step-by-Step Guide to Preparing a Return for a Disabled Veteran” at PARKER PUBLISHING.

+ CPA Robert Gard covers “Nine Factors That Determine Whether an Activity Is a Hobby” at the AICPA’s THE TAX ADVISOR.

+ “Tax Pros: Still Trying to Figure Out Which Social Network is Right for You?”  INTAXICATION (Tax Buzz with a Twist) provides an “infographic” that “provides some great metrics on each of the social networking sites along with some thoughts on best use and drawbacks of each”.

I am a “twit”, but you will never catch me on Spacebook or My Face.  If I want to share pictures with friends and family I will send them an email.  And if I want to provide information on my business to solicit clients I will create a website for my practice.

I would be interested in hearing from tax pros about what you can do on Spacebook or My Face that you cannot do just as well on your business website.

+ EAs Jason Dinesen (DINESEN TAX TIMES) and Russ Fox (TAXABLE TALK) both discuss the “Patient-Centered Outcomes Trust Fund Fee” nonsense – and explain why it is truly the most ridiculous tax ever (and there have been a lot of ridiculous taxes over the years) and an exercise in bureaucratic futility.

+ Here is a webinar you may be interested in “attending” – “What the New Healthcare Law Means for Your Small Business”.  I learned of it via a “tweet” from @ManasaSogNadig.

RDF

TAXPRO BUZZ

You are welcome to submit posts and other online resources for inclusion in future installments.  Email me at rdftaxpro@yahoo.com with “TAXPRO BUZZ” in the “subject line”.

+ PARKER PUBLISHING gives us a primer on “Tax Research Methodology”.   

+ Wonder “Where RTRPs Stand After Loving”?  ACCOUNTING TODAY addresses the question.  It does a good job of outlining the story so far – and where the fakawi.

+ TAXPRO TODAY deals with the issue of “Charging for Off-Season Work”.

+ TAX MAVEN Diane Gilabert lists “10 Section 1031 Exchange Facts You Need to Know”.

It’s been decades since I did a return with a Section 1031 exchange.  Hopefully I will never have to do one again before I retire.

+ And Diana also discusses “Material Participation: Are You Talking to Your Clients?” –

“Taxpayers are losing material participation cases at an astonishing pace. The IRS is emboldened by these wins, and is aggressively auditing material participation claims.”

Diana’s blog is apparently written for tax professionals.  You may want to “subscribe”.  When you do you will receive a free “white paper” on “10 Common Errors Tax Practitioners Can Avoid”.

+ Jason Dinesen reminds us “Have an HRA? Make Sure to Pay Your “Patient-Centered Outcomes Trust Fund Fee”.    

If you, like me, reacted to the title with a “WTF?” check out the post.  FYI – it has to do with “Obamacare”.

+ And speaking of “Obamacare”, TAX MAMA Eva Rosenberg provides “A Tax Guide to Obamacare: What taxpayers and tax professionals need to know about the health law”.

RDF

WHAT DO YOU THINK?

While doing research for a book I recently came across “The History of Enrolled Agents(E.A.)” from Robert Normandie EA & Associates.  Included at the end of the piece, which discusses the evolution of today’s Enrolled Agent designation, is “an interesting note concerning the E.A. exam”.  RN and Associates tell us (are mine) -

“The exam was originally written by American Society of CPA's.  It has become a controversy into itself. The controversy is its failure rate. Many critics think that the test was stacked so that very few would pass it regardless of their background. They are quick to point out that most CPA's would fail the test, lacking the necessary tax knowledge. When you look at the logic behind that, it may make sense. Eliminate the completion from the beginning. Some critics go as far to say they think there was collusion between the IRS and the CPA. IRS Agents, after a period of time in service are exempt from taking the test. Again the competition is eliminated. Regardless of whom you believe, the IRS is committed to make change, to make it more fair for all who take it.”

I am not a conspiracy theorist, and I do not buy the IRS working in cahoots with the AICPA.

But did the AICPA, on its own, write the Special Enrollment Examination so that it would be too difficult, and seriously limit the number of eventual Enrolled Agents, true qualified and recognized 1040 experts, to be available to compete with CPAs for tax preparation business – an area that in the opinion of the AICPA, “the public already believes CPAs to own" (click here and read the 4th "starred" item).  It certainly would not surprise me if the AICPA did.

 

And I would also certainly not surprise me if the AICPA was behind the various state laws that “prohibit Enrolled Agents from using their credential when representing taxpayers or advertising for potential clients”, which the recently introduced “Enrolled Agents Credential Act” (HR 2313) hopes to do away with. (see “Bill Would Let EAs Promote Themselves Everywhere").

Can anyone confirm that the AICPA did indeed write the SEE?

RDF

TAXPRO BUZZ RETURNS!

I will attempt to bring back TAXPRO BUZZ on a weekly basis.  Let’s see how long I can keep it up.

You are welcome to submit posts and other online resources for inclusion in future installments.  Email me at rdftaxpro@yahoo.com with “TAXPRO BUZZ” in the “subject line”.

+ NJ tax preparers should read my post “The DFBs!” at THE WANDERING TAX PRO.  This post concerns late refunds for manually, but timely, filed NJ-1040s.

The post ends with the question -

“Have any of the NJ tax pros reading this also experienced excessive delays in the issuance of client paper refund checks?”

+ CCH has published a new Tax Briefing titled “Supreme Court Strikes Down DOMA” that examines the impact of the DOMA ruling.

+ And PARKER PUBLISHING provides tax pros with a “Complimentary Client Letter: The Tax Implications of DOMA”.

+ BLOOMBERG.COM reports that “Health-Law Employer Mandate Delayed by U.S. Until 2015”.

 

+ speaking OF "Obamacare", The firm of Drucker and Scacetti, author of the TAX WARRIER CHRONICLES blog, has created two “quick reference charts” for the provisions of the Patient Protection and Affordable Care Act.  One for businesses and one for individuals.

+ CPA Jim Buttonow gives us a good primer on “Using the First-Time Penalty Abatement Waiver” at AICPA’s THE TAX ADVISOR.

+ TAX MAVEN Diane Gilabert answers the question “I Found An Error – What is My Professional Responsbility?”  

RDF