Tax Preparation Fees on the rise:

According to a survey reported in accounting today, the average fee to prepare taxes is going up this year:


Tax practitioners will be charging more this year for tax preparation, according to an annual survey by the National Society of Accountants.

Taxpayers can expect to pay an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, the survey found, compared to the $246 reported in last year’s survey.
The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year.

The IRS says it takes an average of four hours just to complete and submit a Form 1040,” says NSA executive vice president John Ams. “Add at least another hour if you also have to complete a state return. You have to ask, ‘How much is your time worth?’”



Read more by clicking on this link.

Is a Christmas party for my employees fully deductible?

Christmas parties are 100% tax deductible, straight down to the food & decorations, so party on!


According to the IRS there is no limitation in the amount of entertainment for Christmas Parties.

Expenses for recreational, social, or similar activities (including facilities) primarily for the benefit of employees (other than employees who are officers, shareholders or other owners, or highly compensated employees).  

Therefore an employee Christmas party is fully deductible.

TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.

                            

New Client Manual Online

Thank you.

Just like Indiana Jones and the Last Crusade you have chosen...wisely.

I would like to take this opportunity to review with you our services, what to expect from us, what we expect from you, how we are paid for our services, and other important information that you need.

 

First A Word About Your Tax Guys.

• We have been in the tax preparation business for more than 30 years.  Yes we have been doing this stuff for a long time.  And that is good for you.  We have experience.  We have really know what we are doing.  And we do it very efficiently.  The IRS can be by design a very frightening organization. We call it institutional power by design.  We believe the reason that people hire us is that we can not only help you save taxes, but more importantly our experience helps you when things go bad.  We call it the safe warm feeling knowing that someone is looking over your shoulder making sure things are done right. Having someone to call when you get that brown envelope from the IRS is very important to our clients.  This is a very good thing for you.

• We are licensed by the Internal Revenue Service.  That means that we can represent you in all facets of dealing with the IRS.  If you have a problem, we have your back.  This license also allows us to deal with state and local taxing entities.  

• We deal with all sorts of clients.  We have a very diverse client base.  That means that we can draw on their collective experiences to help pass on to you the things that make businesses successful and warn you about things that don’t work.

• We prepare lots of income taxes.  And because we are very efficient, we can pass the savings on to you.  You can count on us to prepare your taxes accurately, efficiently, and stand behind the work we do.

Our guarantee.  

• ASSISTANCE: We are available year-round to answer any tax questions you may have.

• ACCURACY: Thorough employee training and double-checking of every return safeguards the accuracy of your return. However, if we make an error, we will correct our error, and reimburse you for any actual penalties and interest you incur.

• SATISFACTION: Your satisfaction is guaranteed. We will explain how your tax return was prepared and assist you in IRS matters. Your satisfaction is our number one goal.

• FEES:  You will know the fee to prepare your return before we prepare the return.  All you have to do is ask

Payroll Service

Several years ago the Internal Revenue Service and the Illinois Department of Revenue have mandated that with just a few exceptions, all payroll related payments must be paid electronically.  We have spent significant time upgrading our payroll system to meet these requirements.

We wanted to make sure that the information is available to you on a 24 hour basis.  We made sure that the systems met all of the new requirements.  We also made sure that the system is relatively simple to use.  We believe that the paycycle systems meets those needs.  In addition, paycycle will download your payroll information directly into your own Quickbooks accounting system.   

For the last four years we have been using the paycycle online payroll system.  You can access your companies’ information any time at the web site managepayroll.com.  The system requires you to have a username and a password.  At the time we created your company we assigned you a username and a temporary password.  The first time you access the system you sign on to the system you will be prompted to create a permanent password.  Although we have access to your information, we do not have access to your password.  If at anytime you lose or forgot your password, please call our office.  We will reset the password.

Emails we have emails.

You will receive emails from our office on a regular basis.  They include a variety of subjects including pending payroll periods, taxes due advisories, confirmation that a payment has been made, and whether the forms filed have been accepted/transmitted by the various government agencies. We send these emails to you to make sure that you are informed about what is happening, specifically we are going to debit your business checking account to pay your various tax liabilities.  Some clients are take charge.  They use the system to calculate and write their companies’ payroll checks.  Some clients use the system to pay their own personal tax liability.  Some clients have learned to ignore the emails.  In all cases we have your back. It is our office’s responsibility to make sure that your taxes are paid on a timely basis. Each month we will send you via snail mail a written confirmation of when, and how much taxes will be debited from your checking account.  In addition we write a monthly client newsletter geared toward the issues that small business owners face on a daily basis.  Our focus is on saving taxes, marketing and increasing cash flow.

Paying for our service.

Your checking account will be debited on a monthly basis for our agreed upon fee.  The debit will occur generally between the 5th and 10th of each month.  We will mail you an advice of the debit prior to that date.

Important stuff.

It is your responsibility to forward to us any notices or tax returns you receive immediately.  It is important to remember that the tax filing and paying systems is not a perfect one.  As the demands for more tax forms to be filed with the IRS, the system continues to show some cracks. Usually we can respond and remedy the situation.  It is not unusual for an occasional notice to be received by our clients. In other words, even if you are diligent in filing and paying your taxes, you will receive a notice. Occasionally the notice will require additional work, beyond the scope of our engagement. If this is the case, we will discuss with you what appears to be the best solution to solve the problem, as well as, our fee to continue solving the problem.    

Recordkeeping and your business.

I have to tell you how amazed I was to find people starting to organize last years’ figures, some that were incurred more than 19 months ago.  I don’t think I can remember what I spent last week let alone more than a whole year and an half ago.  In the old days we built our business on bookkeeping....an era before desktop computers and the internet.  Nowadays the computer has revolutionized your small business recordkeeping.  Here are three options you can try to make things a little easier.  Don’t struggle.  Don’t miss out valuable deductions.  Make record keeping part of your daily routine.

1.  Go online. Free advertiser supported online accounting software is available.  Probably the most popular software online is Wave.  Here is a link to there website http://waveaccounting.com/.  It is easy. Fairly comprehensive. Working with your tax guy is easy, too. Just invite us as a Guest Collaborator and we can both see your data, securely, in real time.  Perhaps the best part is the automatic download your bank account into your accounting records limiting the amount of data input you have to do. Advantages? It is free.  It is intuitive.  No need to change the way you are doing business today.  We like wave accounting so much we became a Wave accounting pro advisor.

2.  Consider a stand alone accounting software.  We recommend the Quickbooks clone Avanquest Bookkeeper.  This program offers more bang for the bucks than the 800 pound elephant Quickbooks.  It is $39.95.  What do you get for your money?  A fully functioning accounting software that includes credit card processing for no additional charge.  

3.  The ubiquitous Quickbooks.  It is expensive.  Requires yearly updates.  Currently the payroll update alone is $400.00.  And it seems that you are constantly bombarded with additional add-ons to buy.  However, the accounting community has embraced it as the defacto standard that our client’s are using to keep track of their records. We work every day with Quickbooks.

I know that there are other methods and systems.  I have always taken the position that what works for you works for me.  However, I suggest that you give the Wave accounting folks a try first and help you not miss all those deductions next year.

We all know that car and truck expenses for trips on behalf of your trade or business are a deductible business expense.  Let’s explore the crazy tax world of correctly deducting your vehicle expenses. This discussion is courtesy of our Tax Coach software system.

Your first step involves calculating your Business Use Percentage (BUP) for your vehicle. The IRS divides mileage into three categories: 1) business; 2) commuting; and 3) personal. Ordinary commuting and personal trips are nondeductible. Trips from home to your first business stop and trips from your last business stop to home are personal. (Daily trips to the bank, post office, and similar stops where you perform no service don’t qualify.)

Travel between temporary business stops is deductible. So, for example, if you leave home, make six business stops, meet a prospect for dinner, then drive home, your mileage between your first stop and the restaurant is deductible. However, if you have a regular business stop (one that you make at least 8 to 10 times in a six-month period) that you expect to last less than a year, you can count those as business miles, too. If home is your principal place of business, then all business trips are deductible.

Once you’ve calculated your BUP, you have two ways to calculate your deduction:

1. The mileage allowance is 56.5 cents/mile (2013) plus parking, tolls, and your BUP of interest on your car loan and state and local personal property tax on the vehicle. The allowance for charitable use of the vehicle is capped at just 14 cents/mile, and for medical and moving use, 24 cents/mile.

1. With “actual expenses,” deduct your BUP of all expenses:
• Depreciation and interest (purchased vehicles)
• Lease payments (leased vehicles)
• Insurance
• Gasoline, oil, and car washes
• Tires, maintenance, repairs
• Licenses, tags, and personal property tax
• Parking and tolls

Don’t assume that easier record keeping justifies settling for the “one size fits all” allowance. It’s the same for every vehicle, no matter how big or expensive. And the wrong choice can cost you thousands. The American Automobile Association ("AAA") estimates that in 2010 actual costs per mile exceed the IRS flat rate in almost all categories of vehicles and driving habits, at a gasoline cost of $2.88/gallon remember those days.

If you own rather than lease your car, you can switch from the allowance to actual expenses. You'll have to use straight-line, rather than accelerated depreciation. You can’t go the other direction, switching from actual expenses to the allowance, if you’ve claimed any first-year expensing or accelerated depreciation.

The IRS approves four methods to track business miles. All of them require “adequate records or other sufficient evidence” to support business use. This means logging mileage at least weekly and keeping receipts for all expenses over $75.

1. “Brute Force.” Record every business mile for the year. Divide by the year’s total miles to calculate BUP. (If you use more than one car for business, this is the method you have to use.)
2. “90 days.” Record business miles for a “typical” 90-day period. Calculate BUP for that period, and use it for the entire year.
3. “First Week.” Record business miles for the first week of each month. Calculate BUP and use it for the entire year.
4. “Simplified.” Record starting and ending mileage for a 90-day period. Record personal and commuting miles for that period, and assume all the rest are for business. Calculate BUP and use it for the entire year.

Clear as mud.  We advocate a third system that seems to work for most clients.  Actual expenses with a clear policy that states that personal use of the vehicle is not allowed with the exception of commuting to and from your place of business.  You will have to pay taxes on the “implied income” derived for the commuting portion of the vehicle. This system only works if you have another vehicle for personal use.

Owning a small business is similar to juggling.  It just seems that we are always trying to keep five balls in the air at the same time, doing our best to keep one from falling. We are here to help. We encourage to take advantage of 30 plus years of experience working with small businesses just like you.  When a problem becomes unsolvable, call us.  Chances are we have had experience dealing with something that may seem too big to conquer right now.

No matter what the problems is, we continue to offer to you unlimited free telephone assistance, no matter what your client service level is, 52 weeks a year.  No calling customer service call centers.  No extra charge meters. No need to worry.  A trained experienced professional is ready, willing, and able to offer assistance and answer your questions. We demonstrate and deliver value to our clients every day.

The exiciting world of tax liens, and a charitable deduction you don't need a receipt for. Our new podcast is up and going.

Click on this link to listen to our latest tax partners insider podcast. 

Death and Taxes and Zombies

More information from out Tax Coach folks.  They sent this advertising email about their services on November 8, 2013.  It is worth reading

Law reviews are scholarly journals focusing on legal issues, usually edited by students at a particular school. America's law schools currently crank out hundreds of different reviews, which means there aren't a lot of topics that haven't already been covered. (Chief Justice John Roberts once said "Pick up a copy of any law review that you see, and the first article is likely to be, you know, the influence of Immanuel Kant on evidentiary approaches in 18th Century Bulgaria, or something.”) But the Iowa Law Review has just published a new article on a crucial tax topic — and it's especially appropriate to discuss this week after Halloween. We're referring, of course, to Arizona State professor Adam Chodorow's groundbreaking new work, Death and Taxes and Zombies.

"The United States stands on the precipice of a financial disaster, and Congress has done nothing but bicker. Of course, I refer to the coming day when the undead walk the earth, feasting upon the living. A zombie apocalypse will create an urgent need for significant government revenues to protect the living, while at the same time rendering a large portion of the taxpaying public dead or undead. The government’s failure to anticipate or plan for this eventuality could cripple its ability to respond effectively, putting us all at risk. This essay fills a glaring gap in the academic literature by examining how the estate and income tax laws apply to the undead."

Don't laugh. This is 25 pages of lively prose, with 124 scholarly footnotes citing authoritative sources like Harry Potter and the Sorceror's Stone, the noted gourmand Hannibal Lecter, and even "Slimer" from Ghostbusters. Chodorow isn't afraid to ask the scary questions that the rest of us shy away from:

• At what point does a zombie become a "decedent" for estate tax purposes? Currently, the legal definition of "death" varies from state to state, with some basing it on heart function and others on brain function. This means that zombies may not actually be "dead" in some states. Does someone who dies stay legally dead after being reanimated as a zombie?

Could it ever make sense to die for tax reasons, then come back when income or assets will be taxed at a lower rate? If so, would the IRS attack those deaths as sham arrangements?

Does someone remain married for tax purposes if they or their spouse become zombified?

What about vampires? They're typically wealthy and sophisticated, which makes estate planning a must. And they live for centuries, which makes tax-deferred vehicles like IRAs and cash-value life insurance even more valuable.

Finally, what about ghosts? Do phantoms owe tax on phantom income? As you can see, there's a lot more to taxes and zombies than meets the eye. Chodorow urges Congress to create tax laws for them now, before members become zombies themselves. Fortunately, the secret to navigating taxes in a land of walking dead is the same as navigating taxes now — it's planning. And speaking of acting now, before it turns too late, 2013 is quickly coming to an end. December 31 may not bring a zombie apocalypse, but it will drive a stake in the heart of some of your best planning strategies. So call us for the plan you need, before it's really too late!

11-01-13 Client Newsletter

“Use your good judgment in all situations. There will be no additional rules.” (Nordstrom Inc. Rule number one in their employee handbook)

The economy seems to be as shaky as the Obamacare rollout last month.  It seemed like a good idea. A newsletter about cutting expenses. What started out with noble intentions ended up with very mixed results.  In fact you maybe could say we failed in our original goal to produce any major results.

Your tax guys have taken a good hard look at what we can do save expenses around the office. Frankly we have always operated lean and mean and passed on the savings to you. We want to share with you just a few of our experiences.

We knew that there were a few expenses we couldn’t change.  Things like rent, taxes, and utilities. Although the argument can be made that even these expenses are not fixed. We have made sure we have the new energy saving light bulbs, we turn off everything before we close the office and decided to make sure we made a conscious effort to turn down or up the thermostat at night.

Our first look was at telephone expenses. Our land line telephone provider had merged and acquired and merged again over the years.  Our telephone expenses had increased by more than 50 percent in the last few years.  With five lines our telephone bill had grown and frankly we really didn’t want to change to the Voice Over Internet Protocol (VOIP) system that seems to the rage.  VOIP service, we believe, despite the hype continues to be unreliable.  Fax machines have problems apparently with VOIP.  And more importantly it is apparently difficult and possibly impossible to be listed in the telephone yellow pages.  Windstream, our current provider, really didn’t seem to want to help us.  When asked if they had any suggestions on how to reduce our costs, they told us that we have their best available plan.  Apparently the landline telephone business is going the way of the dinosaur.  There really isn’t much competition anymore.  We considered Comcast as an alternative to our fax line, a savings of approximately $5.00 per month plus taxes. They promised they don’t have the issues that are inherent with VOIP telephone systems.  The one thing that we did decide to do is change our toll free number.  The savings and features of the new toll free systems truly outperform our current system.  And they are cheaper too. So the results in looking at our telephone expense were mixed at best.

We never thought about it till this year, but the cost of processing your customer credit cards have changed significantly over the years. We first started accepting credit cards for tax preparation, maybe 25 years ago.  We remember using the old plates and paper receipts method at one time.  Credit card processing fees are somewhat a hidden cost. The payment processing industry is extremely complex and merchants like us seldom have time to fully gain an understanding of the numerous service offerings, let alone ways to process cards effectively.  

We shared a recent merchant statement with Jon Graves, a long time client and partner in our trusted advisor credit card processing program for our clients.  Jon has worked with us in the past and he suggests that because of the changing nature of the business, most merchants would warrant to look at their credit card processing costs. In fact a recent industry study found that 85% of all merchants could be paying less. In our case we discovered that, in fact, we were paying more for our credit card processing and made a switch.  We anticipate a savings of over $500.00 during the tax filing season.  You can have the same results.

One client offered this insight:

Processing credit card transactions is expensive and the discount rate can vary widely. The lowest rate I was offered after Tax Partners took a look at things was a whole lot lower than the rate I had been paying. It’s worth looking around. But looking around isn’t easy. Comparison shopping, by which I mean following the sales process to the point where the final pricing and terms are revealed, is almost impossible. I suspect you may have come to the same conclusion that I arrived at: this market is stacked against the little guy.

Thus the need for what we call our trusted advisor credit card processing program.  At no cost, we will analyze your merchant account statements and show you where you can save. We will work directly with you, providing a no charge...free… side by side competitive analysis of your credit card processing fees with our trusted advisor credit card processing program.  We have helped clients significantly reduce unnecessary credit card processing fees. We will save you money or we will assure you that your current program rates are extremely competitive.  Either way, We Guarantee Good News!  

To get started we strongly encourage you to call our office.  So you, just like us, can save money on your credit card processing with a reliable, customer oriented, credit card processing system. Just call, email or fax your merchant statement to our office.  We will do the rest.  

 

Three additional ideas that we decided to turn into practices:

• We decided to stop buying in bulk.  No, that’s not a misprint. Often, us small business owners buy things like office supplies in bulk because it seems less expensive to buy that way. For instance, if you buy a thousand pens, your cost per pen will be less than if you bought them one at a time. But you have to ask yourself: Will you ever really use a thousand pens? More likely, you’d either lose them or find that most of them dry out before you get around to using them. As a small business owner, you could greatly reduce their expenses by buying only what you need today – not what you think you’ll need tomorrow.

• Don’t Waste Time. As a small business owner, you put in a lot of hours, but time is still a limited resource. Wasting time can cut into your sales and hurt your bottom line. As a general rule, anything that you can implement to save time will also save you money in the long run. If you don’t feel you manage your time wisely, look into some effective time management techniques and stop procrastination at all costs. This is probably the biggest lesson that I’ve learned in my time as a small business owner.

• Always Ask for a Discount.  They don’t advertise it, but many top retailers will discount their items for small business owners. You just have to take the initiative to ask. You won’t necessarily get a discount on a $2 pack of pens, but if you’re outfitting your office with new equipment or other big-ticket items, you’d be surprised at the number of times you’ll get a better deal for mentioning that you own a small business. You may even have success asking for a wholesale rate. But even if you only get a small discount, you’re still saving money.

In conclusion I don’t think we saved as much money as we thought we could.  We tried, with good intentions but sometimes the deck is stacked against you.

Everything you want to know about protesting your real estate taxes Real Estate Taxes

Introducing a new colleague, attorney Jim Chipman. Jim has spent over 20 years in the real estate taxation field.  He was executive director and legal counsel for the State of Illinois Property Tax Appeal Board for 12 years where he was responsible for the administration of the board's multi-million dollar budget and the management of its staff. Jim also held the position of Assistant General Counsel to the Illinois Department of Revenue where he advised the department on a variety of issues.  I have known Jim and his wife Stephanie for more than 25 years.  Jim is of counsel of the law firm Rubin and Norris a Chicago based firm concentrating in property tax assessment appeals.  Jim will be based in Springfield.  In addition to helping clients reduce their property tax bills, he will assist and advise me with IRS and Illinois Department of Revenue representation of our clients.  Adding Jim to the roster means that we can help clients navigate the full IRS examination, assessment, appeals, and tax court system.  This strengthens our practice significantly.  

We have added a podcast interview we recorded with Jim that talks about how the property tax appeals system works.  We explore what he can do for you.  And most importantly how you can hire him on a contingent basis.  That means you don’t have to pay him unless there is a reduction in your real estate taxes.  You can find a link to our podcast at our blog and at our website 1taxes.com.

Earlier this year, Congressional haggling delayed the start of tax season. Alot of tax preparers called it ‘we survived 2013.”  Preparers faced an unprecedented reduced tax season with filing delays and the inability to file tax returns.  Now, the Internal Revenue Service says the recent government shutdown means the 2014 season will also start late with the delay estimated to be from one to two weeks.

Despite the IRS delay we anticipate receiving our tax preparation software around Thanksgiving.  That means that we can do live data projections of your 2013 income tax liability in December.  If you think you may have issues for this year, December is a very good time to so.

Obamacare help from a pro.  I have enclosed a letter I received last month from brother-in-law, J. Burt. Despite the relationship, J is a real pro when it comes to health care.  He is a designated Certified Patient Protection and Affordable Care Act Professional.  His offer is simple, if you need live local resources, answers to the new healthcare law, he is here to help at no charge.  His phone number is 800-399-1222.

It is up and going.  Much better content and recording sound.  We have added colleague Alice Foss to help with things. Our podcasts from your tax guy are now online.  We have linked to them from our blog and from our website 1taxes.com.  

Congrats to Sue and Pat Patkus, owners of Sportsman’s Lounge, for making the best of Springfield in the latest Illinois Times.  They won the best pork tenderloin in town category. And it is.

November 12, 2013 Tax Partner Insider or as we like to call it you can't fix stupid.

Click this link to listen our latest Podcast.  Alice and Don are ranting, wondering were the Yellow Pages went, and teasing about last minute tax savings moves.


Click this link to listen to the podcast.

#Windfall

Our  Tax Coach folks are having a sale.  They author emails for accountants to send to their clients.  Here is a sample email they sent us as part of their marketing campaign.

Psychologists agree that the ability to concentrate is key to achieving our goals. But today's high-tech world is full of distractions, from thousands of cable TV channels to millions of internet sites, with smart phones constantly within reach. Some experts say our attention span is actually shrinking. So should it be any surprise that Americans have fallen in love with Twitter, the online social networking and "microblogging" site that lets users send and read "tweets" limited to no more than 140 characters?

Twitter attracted confusion (and no small amount of scorn) when it debuted in 2006 — co-founder Jack Dorsey admitted that the service is "a short burst of inconsequential information." But there are now more than 200 million "monthly active users" posting more than 500 million tweets per day. Singer Katy Perry currently has the most followers, at 46.8 million. She's trailed by Justin Bieber (46.7 million), Lady Gaga (40.4 million), and Barack Obama (39.5 million). Twitter's ubiquitous "hashtag," the pound sign (#) that denotes keywords, appears everywhere, including at the Oscars, the Super Bowl, and the floor of the U.S. Senate.

Twitter still doesn't make any money. But that didn't stop them from going public last week. On Thursday, Twitter issued 70 million shares at $26 each. The price nearly doubled in early trading before closing at $41.65 on Friday. And it made a lot of people rich. Co-founders Evan Williams and Jack Dorsey are billionaires. CEO Dick Costello, whose 2012 cash salary was just $200,000, is worth $300 million. All told, about 1,600 investors and employees became millionaires last week. (If you planned on buying a house or a Porsche in Silicon Valley, plan on standing in line and paying more!)

What does that all mean for our friends at the IRS? It means a #windfall, that's what!

• Twitter has granted non-executive employees over 92 million "restricted stock units" which will essentially convert to stock over the next several years. Employees will owe regular income tax of up to 39.6% plus Medicare tax of up to 3.8% on the value of those shares. They'll owe an average of $420,000 each in federal tax!

Uncle Sam won't be the only taxman with his hand out. The state of California can conservatively expect to collect another $300 million or more. (California is no stranger to big IPOs — Golden State officials calculated they would collect $2.5 billion over four years from Facebook's debut.)

Not everyone is quite so happy. Two years ago, the city of San Francisco waived part of its payroll tax to keep Twitter headquartered downtown. City officials predicted the waiver would cost them $22 million over six years. Last week's windfall could mean leaving another $34 million on the table. Of course, the City by the Bay still collects millions more than if Twitter had bugged out for the suburbs.

Who's not paying a dime in tax? That would be Twitter itself. Of course, that's because they haven't made a dime in profit. In fact, Twitter has over $100 million in "net operating loss carryforwards" it can use to offset tax on future profits.

Twitter's investors and employees have some big tax planning challenges ahead. They're going to need more than just 140 characters to take advantage of all the legal strategies available to pay less. It works the same for you, even if you're not America's newest billionaire. If you want to #keepwhatyoumake, you need a plan. So call us now before December 31, when you can still do something about it!

You get what you pay for

Surprise.  IRS prep sites have some real accuracy problems.  IRS sent some undercover agents to check out the IRS' volunter program. 

From Accounting Today:

Of the 39 tax returns prepared for auditors during the 2013 filing season, 20 of them (or 51 percent) were prepared correctly, while 19 (or 49 percent) were prepared incorrectly. That represents a two-percentage-point increase over the 49 percent accuracy rate for the same number of returns in the 2012 filing season. The 19 incorrect tax returns resulted from incorrect application of the tax law, insufficient requests for information during the intake and interview process, or lack of adherence to quality review requirements.

“Ensuring that tax returns are accurately prepared by volunteers remains a challenge for the IRS,” said TIGTA Inspector General J. Russell George in a statement.  “When volunteers use established interview and quality review processes, the accuracy of the tax returns they prepare improves.”


Frankly we have seen and amended returns prepared by the volunteer IRS Program.  The quality of work and the amount of the refunds/taxes paid are not in line for what we would do.  In other words our fee would be more than compensated by the reduce tax liability.


Read more by clicking on this link

The exciting world of property tax appeals with attorney Jim Chipman podcast

We visit with attorney and long time friend Jim Chipman from the firm Rubin and Norris to talk about the exciting world of property tax appeals.  Spend approximately 20 minutes leaning the processing for reducing your property tax and then hire Jim.  His firm works on a contingent basis.  That means no retainer upfront.


Click on this link to listen to the podcast the exciting world of property tax appeals.

October 1, 2013 Client Newsletter

First a little positive waves from three of my favorite small business gurus..  

   

"Motion beats meditation." --Gary Halbert

                       

“Sometimes good enough is good enough.” --Dan Kennedy

“What if someone said to you that you should set up your business as if it were meant to be a prototype for 5000 more just like it? Not almost like it, but just like it. Perfect replicas, Clones. In other words, pretend you are setting up a business which you intend to franchise. It doesn't matter if you ever really mean to franchise your business or not. The point is that you should set up your business as if you were going to do so. Why? Because the advantages are so enormous and the risk of failure is so vastly reduced that it would be foolish not to embrace a winning formula. Let's call this winning formula, The Franchise Prototype.”--Michael Gerber

In August I attended the IRS Nationwide Tax Forum.  Many of the tax preparers in attendance were wearing a t-shirt with the message “I survived 2013”.  Why?  I don’t have to tell you that 2013 proved to be one of the most challenging tax seasons ever.  Delayed form availability.  Delayed processing of returns. The IRS did not start accepting tax returns that had depreciation until March.  Loss refunds.  Inquiries about earned income credit causing heartache for clients really needing their refunds.  I guess it was their not so subtle way way to send a message to the IRS powers to be, that despite it all we tax preparers made it.  I don’t think the message got through.  But I sure got a lot more gray hairs as a result.   

The Deputy Commissioner for operations of the ten IRS campus Wage and Division offices, David Alito, spoke about what is really going on, the meat and potato issues of the real grunt work we have to deal with every day.  Frankly he was candid and forthcoming.  From my notes of his presentation:

1. Correspondence audits are going up and up.  IRS will be focusing more on sending you a letter requiring documentation of expenses claimed on your return.  They will open Schedule C, Profit or Loss forms to the growing list of returns qualifying for correspondence audits. Small businesses continue to be the target of examinations.  And the number of examinations are going to increase since the IRS has now targeted Schedule C filers.  Traditionally IRS has required an office visit, sitting down belly to belly with an examiner, for a Schedule C filer.  With this new approach, the goal is to attack in their minds the largest tax gap….IRS’ way of saying the taxpayers that do not report their correct taxable income...in a more efficient manner and allow more audits with less personnel.
2. The sequester and budget cuts have hurt the IRS from processing virtually any inquiry in any definition of some efficient manner.  The IRS is working at full capacity. Expect at least 90 day delays in responding to your inquiry.  It cannot handle the current workload.  Mr. Alito passed on tips on how to get correspondence handled in a more efficient manner including how to avoid the dreaded I don’t know where it goes pile.
3. The IRS processes 2.5 billion documents and a 140 million tax returns a year.  Under the Affordable Care Act the IRS, is required to process an additional 125 tax forms mandated by the legislation, 42 provisions that will add or amend tax law, and eight provisions will require the IRS to build new processes that do not currently exist within the current system of tax administration.  Oh by the way the, the indoor tanning excise tax, one of the first taxes mandated by the law, the tax receipts are much less than anticipated.  Especially considering that businesses covered by the law are not collecting and/or filing tax returns.  Indoor tanning excise tax receipts are not even close to what was predicted. The IRS has done by its own admission a poor job in communicating to taxpayers information about the Affordable Tax Act.  It has no way of determining which businesses should be filing tax returns.  Apparently there are many tanning beds out there in places you wouldn’t figure would have a tanning bed.  Expect yet another crackdown.  This time looking for tanning bed operator scofflaws.     
4. Because the IRS cannot keep up with the current demands of the system, especially correspondence examinations, audit reconsideration is now pretty much a rubber stamp, when it the past it sometimes we felt it is easier for a camel to go through the eye of a needle than to get the IRS to reconsider a correspondence examination. So there it is. The IRS is bending to pressure to close the tax gap, so it is going to increase the number of correspondence audits, yet it doesn’t have the resources to handle the current workload.  We call that normal. Can we say SNAFU.
5. IRS is currently testing something they call virtual audits in Florida.  You no longer have to visit the IRS.  Everything is handled 21st century style via teleconferencing.  Although it is still in the testing phase, the prediction is that this virtual audit will soon become the norm.  Examiners will be spending less time in the field and more time in the office becoming more efficient by handling more cases than before.

In summary, I always seem to enjoy getting out of the office and listening to the current focus at the IRS Nationwide Tax Forums. Kibitzing with fellow tax geeks.  You can’t help but get a little pessimistic about things. The impression I got from both fellow preparers and IRS staffers is the upcoming Affordable Care Act has put an increased burden on a government agency that touches virtually every American, that has had their budget repeatedly cut, and frankly lacks the resources and personnel to administer the law.  Tax collections from enforcement actions are down by $9 billion for a second year in a row.  And the future is rather gray.  

It is up and going.  Rough and amateurish.  Learning more each day.  A few test podcasts from your tax guy are now online.  We have linked to them from our blog.