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

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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.


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#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.


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