SaraEA

Yesterday I got FOUR emails from different people I never heard looking for "representation" work. Yea, right. In the past I have received emails from people I never heard of wanting me to do their returns and attaching their previous year returns, out of the clear blue sky. Yea, right. When I renew my PTIN this year I am definitely opting out of sharing. I take very few new clients anyway. All the IRS listing does is give crooks my contact info. Deb, don't beat yourself up over this. The crooks are really good at what they do, to wit a careful person like you was fooled into entering their den. Good thing you caught it so quickly. Getting into address books is a goal for some of them. I can't count the number of invitations I've gotten from actual clients from their Linked In accounts. Like I really belong in their contractors group or IT group or artist group. I'm with Jack...no drop boxes or cloud retrieval. (One exception: Banks sometimes give me docs this way but always call first with a one-time password.)

Totally agree. There will be a lot more to this than FACTA reporting, e.g., foreign payroll taxes for employees. I have a couple of clients with foreign business income, but both have an accountant in the other country handle the accounting, compliance, and tax returns. All I get is the final return with the income and foreign taxes paid so it's not too bad. Well, then there's the bank statements and currency conversions. If you are not comfortable bow out gracefully. I would turn this one away too.

Everyone who has used eservices in the past year is getting the letter. A colleague and I both got ours today. The code in the letter is only if you have to call to register (i.e., didn't pass the authentication online). You will need your last tax return, a credit card or mortgage loan account number in your name, and a cell phone in your name. They will text a security code that you will use to complete your registration. What a pain. The ID thieves sure have made it tough on us (not to mention all the taxpayers they messed up). Hopefully our pain will thwart at least some of them and be worth it in the end.

In my experience, only the final series of notices (the serious ones) are mailed to both spouses, usually certified. These are the Statutory Notice of Deficiency, Intent to Levy, etc. By the time taxpayers get these, they have usually successfully ignored the previous 10 notices.

Exactly right Lion.

Client with EITC and SCH C? First, just with the due diligence requirements and risk involved, you should definitely be charging more than $200 (way more if the SCH C has more than a few lines). We fired all of our clients in this situation with the exception of a few we know well and know their businesses are legitimate. We referred then to HRB, where preparers are better trained in due diligence and what records to keep than we are. We take few new clients and none with EITC, SCH C or not. This year due diligence expands to ACTC and AOC. Again, we know our clients so will likely trust those with these credits. We haven't discussed yet whether to raise their fees.

Why did Block charge $1 for a 1065???? Aren't they the ones who charge $400 for a one W2, EITC return? Must have been a promotion. I pity the preparer. Block pays its employees on commission, so that poor tax pro likely ended up paying Block for the time spent on the return. Definitely tell this client your real price and let him decide what he wants to do. I had a new client this year who always did her own complex return on TurboTax. I charged her $1,000 (15 PTPs, among other interesting items), and she paid without a complaint. We'll see if she returns next year.

Don't you have any clients who "don't do computers"? Some elderly ones to be sure, but I even have a bunch of younger ones you would rather not (although they are whizzes on their cell phones). And how do you handle the ones who call throughout the year because they need a copy of their return for the bank, attorney, whatever? We give all our clients a hard copy, and it amazes me how many of them can't find it. (Or are too lazy to look for it. Easier to call the accountant.) With a PDF copy or thumbdrive, they'll actually have to work for it. I can hear the calls now, can't find it, can't print, can you please just send a copy. When I worked for Block years ago, we charged $20 for a prior year copy. We never printed it until they showed up in the office because it was amazing how many looked under the car seat and found it when we mentioned the fee.

Taxpayers will never trust congress on this one. Everyone fears that a VAT or national sales tax would end up being "in addition to" instead of "in place of" income taxes. And the world is a smaller place now so there will be ways around it. When Brits arrive in the US on holiday, they bring empty suitcases so they can buy Nikes at $200 instead of $300 and a zillion other things for half price.

Custodial parents have a right to revoke a previously signed 8332. Perhaps the mother did so. As far as the IRS is concerned she can claim the child. If your client wants to fight her refusal to sign, he will have to take her back to court. If he can't even afford to pay you, I'm sure he can't afford to do that. Speaking of payment, " The client cannot pay what I've billed to date and I will adjust." WHY????? You are now doing MORE work for him. If his attorney won't go back to court for free, why should his tax pro do extra work for free? I would charge for the work you've done after filing--it's not your fault this happened. If he can't pay you in full, ask for a payment plan or at least get an assurance that he'll pay when he is able. He sounds like a long-time client so you have to decide if he'll eventually come across. And don't be so quick to take his side. You say "he'll get skunked again" and just believe that the signature is hers. Just maybe it isn't, and she told the IRS she never signed. Maybe he badmouths the mom in front of his daughter, is late in child support, maybe he doesn't show up for his days with the child and habitually disappoints her. Face it, you don't have all the facts and don't know both sides of the story. Just charge your fee and help him as best you can with what is truly a legal matter. I have a client whose ex claimed their child even when it wasn't his year. She was afraid to fight it because he refused to visit his son if he couldn't claim him. This year she was awarded full custody and the jerk still claimed the kid. She fought this one and received her full refund. Bet he won't try that again.

Some of these comments make me wonder if never/rarely giving clients face time contributes to the commoditization of tax prep (" the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers." Wikipedia). Drop your tax docs off, get a phone call that returns are done, come in, sign, pay, do it again next year. Kind of like dropping off your dry cleaning. I admit that I have many clients whom I've never met. Yet with many of them we have multiple phone conversations and emails throughout the year so I feel that I know them. (Kind of like online dating?) I do make a point of calling every client when his/her return is done to discuss the results and perhaps offer some insight into what to expect next year. Now I wonder if that's enough. Just maybe the fact that clients don't have a personal connection to their preparer drives them to DIY software? Maybe we should do more to engage them personally, even if it takes away precious work time? I work hard on every single return (treat every one like it's your only one), and do my best to find every tax break, and now I wonder if that gets through. Thoughts?

There's money in 1040s because there are more of them. Start getting into 1065s and 1120s, and not so many preparers do them so you can charge more. I do plenty of 1040s, but the big bucks come from 1041s. Many clients come to me with estates and trusts because their regular person doesn't do them. Tax law is so complex that I think eventually we will all have to find a niche. No one can possibly know all this stuff. (I refer out foreigners with US income unless they are here are the most basic visas; don't want to make a mistake with those. I'm sure the people who do them charge A LOT.) You'll end up doing your 500 1040 returns and the pro at foreign taxes will end up doing 100 returns and I'll end up doing 25 1041s and we'll all make the same income. You will need to have a strict appointment schedule to fit in those clients. I won't. Your life will be much more relaxed after tax season; mine won't. I'm amazed by those of you who have clients walk in anytime to drop things off and chat, or pick up returns and chat. What pleasant days you must have. Our practice is just too big for that.

Why is this so complicated? The father did NOT pay the loan but instead gave the cash to the son, who did pay the loan. Son gets to deduct the interest. Now, since they are both legally obligated, and if the interest is say $5k, I don't see a problem with Dad making half the payments and son making the other half (with Dad's money). In that case, they could both deduct $2500. That might be a tactic for next year. I have always had a complaint about the limits on the student loan interest deduction. For single filers it starts to phase out at $65k AGI, double that for MFJ. These are the people who make too much to get grants so rely on loans. Make less and you can get Pell grants; make more and you can presumably afford the cost of college. But make $65k and you can't get grants and can't deduct all your loan interest either. Just another one of those items congress passed to make it look like they were helping voters out with college costs but wrote rules denying those people the benefits. (Exactly like the credit for the elderly--how many of those has anyone actually done?) And don't get me started about why it seems no one actually saves for their kids' education. The student loan situation is crippling our young, they can't move out of Mom's basement or start a family, total student loan debt is larger than credit card debt, blah blah. Easier to complain about the high cost of education and loans than to put away even a modest amount every month when children are young to ease the burden when the time comes.

I too prefer drop offs, but in-person appts have advantages too. A big one is that the return gets DONE and doesn't sit there in the ever-growing stack. And sometimes you pick up things that don't get captured by just paperwork, like changes in family circumstances or sale of a second home (they never thought to bring in the HUD). I was chatting with a client who was picking up his dropped-off return and he mentioned that his teacher wife was now part time and had no retirement plan anymore. I had never heard of a teacher without a juicy retirement plan. I marched him into my office and set up an IRA contribution, so instead of owing a lot he owed just a little, and the state turned from a balance due to a refund. Bad things about in-person appts is that if the return takes 15 minutes, it's hard to justify your big fat fee. Most of my returns are complex and the clients would never sit there for 2-4 hours (or 5 or 6 or more), nor would I want them to. I do a couple of in face appts a day, a few more than that on Saturday, and the rest of the time I work in peace. One of my colleagues does the opposite--schedules 12+ appts a day and spends late nights and Sunday on the complex stuff (or gives it to me, or gives me the thorny parts and he does the rest of the return). ETax, you have to train your clients better to keep and/or make appts. Our phone will start ringing right after the new year for appts, and by mid-Feb most of the schedule is filled. We do not set their appts nor do we call them to make one or remind them. Funny how your clientele is so different than ours in this regard. It must be what they're used to.

You answered your own question. He must have 330 full days in 12 consecutive months. July 1 2015 to June 30 2016 is 12 consecutive months.

" It must come from e-services now because there were some fake EFIN letters submitted and relied on in the past." And that, Bulldog Tom, is why we have to do verification this year. I was wrong in my earlier post when I thought out loud that the IRS was doing this to try and stay ahead of the crooks. Looks like they are just catching up with the latest tactics. And it looks like the IRS is right again when they are warning preparers that we are now the focus of criminals, that they are trying to steal our info and data. I'm sorry that the verification process isn't going smoothly for you, but we do have to realize it's in our own best interests to play along.

UltraTax required the EFIN IRS letter from us this year. When their request was ignored, they called more than once and said unless they had it very soon our efile capabilities would be delayed. We've been in business a long time and UT had the letter when we started with them a decade ago, but this update is supposedly a new IRS rule. I understand that people are angry about it, but it's got to be an attempt to stop fraudulent returns. The DIY software that the crooks favor is now sending all kinds of data tags along with each return filed. Perhaps this is one move the IRS is making to stay ahead of the jerks. Hmmmm, if they know they can't get away with filing 400 returns with their $80 TurboTax package, might as well buy a professional version and borrow some unsuspecting practitioner's EFIN. I know it's a colossal pain, but if it saves our tax dollars from going to criminals and spares some taxpayers from refund fraud, it's worth it.

My hunch is that this company won't pay anyone unless winning the lawsuit is a sure thing. (Defendant was drunk, ran a stop light, and slammed someone's car, in front of 100 witnesses.) Even then, they probably pay a small fraction of what the suit is for, and charge a huge amount for the loan. In the unlikely event the borrower does lose the case, the company has to write it off as an expense so they likely will issue a 1099 of some sort. Most likely a 1099C, because the borrower probably signs a contract pledging to repay the money, but maybe a 1099MISC. Is this type of business legal??? I know terminally ill people can sell their life insurance policies for part of the face value, but that trick is highly regulated. Looks like someone saw an opportunity here, had the capital, lawmakers never foresaw the possibility of doing this so never wrote regulations. Seems no different than payday loans, which ripped people off big time until policymakers woke up and wrote some laws.

Complete the 203B. The problem we all have with this scenario is that NY (and a few other states) demand that total wages be allocated to NY on the W2. (So if the client made $50k, $1k in NY, the state portion of the W2 will show $50k for NY, $49k for PA, making it look like he made $99k.) Only way out of this is to complete the B. On request, some employers will send a letter, based on expense reports, to break down the state income. Without that, you have to count the days. The reason the states do this is that they want to tax you at your highest marginal tax bracket. In my example, if you only made $1k in NY you wouldn't owe any tax. If you made $50k, however, you'd be in the, say, 8% bracket. They want to make sure that $1k is taxed at 8%.

I use UltraTax for tax prep. In the asset portion you can choose "mass disposition" or "mass out of service." Comes in handy when someone sells a rental or business property, or in this case the asset bases change. If ATX doesn't offer that option, you'll just have to take each asset out of service on the date of death (not the mid-year convention ones though) and enter two new assets for each one (one with 1/2 original basis and depreciation; the other with 1/2 DOD value). Good thing it's late November and there is time to do things like this.

I did one of these this year for a couple who had 12 rentals. I did a "mass" out-of-service for most assets for the date of death. That way they got the partial-year accurate depreciation. I then re-entered them as "wife's original half" with her 1/2 basis and 1/2 depreciation and "inherited half" with the step-up basis for the deceased husband's portion. I left things like new carpets, appliances, etc. alone and depreciated them as usual, thus addressing Judy's concern about assets using the mid-year convention. These assets certainly did not appreciate in value by the time of death, and it would be ridiculous to try and separate them from the date of death appraisals (which certainly did not say "building worth x, but only worth y without a stove"). For major assets, however, she continued with her original basis and depreciation while his got rolled into the date of death value. Maybe a crude example will help: Building: Original cost $100,000, depreciation taken $80k. DOD value $150k Furnace: Original cost $20k, depreciation taken $5k Stove: Original cost $700, depreciation taken $200 Wife's original half: Building $50k, $40k depreciation; Furnace $10k, $2500 depreciation Inherited half: $75k (includes building and furnace, which is part of the building in the appraisal) Stove retains its cost and prior depreciation. I'm not sure this method is right, but I'm comforted to know that all items will eventually be depreciated. The only issue is the matter of timing. I don't think the IRS will argue about when the relatively few bucks of stove depreciation get counted.

I too have had problems with the IRS sending notice after notice and ignoring my repeat responses. Clients aren't happy. Just helped a client who got a notice that he owed a zillion because they had no record of the withholding on his W2. As Deb suggested, a 940/941 problem? (Thankfully we don't do his employer's payroll.) As for IRS not recording payments of tax due, I find they are usually pretty good about that. When clients claimed they made an ES payment but didn't, IRS is usually right. Same with those who forgot they made a payment and get surprise refunds. I do remember a few years ago when some bank that operated as an IRS lockbox got confused when checks arrived after the deadline, even though timely postmarked. Bank employees apparently shredded them, and IRS had to scramble to discover who paid how much when. Maybe this is a repeat of that lockbox problem. In defense of IRS employees, the ones I know are well-trained in the tax code and committed to taxpayer rights. What's happened to the agency in recent years is due to a combo of self-inflicted consequences and political darts. Think of what it must be like to work at the IRS right now. Morale has to be at its lowest point ever. Congress hates you, the public has always hated you, there are not enough people to do the work so your caseload is enormous (and you're always getting nasty letters from the boss to tell you reduce it), preseason training that used to take two weeks of live classes now is offered on video so you may not think you learned what you need to know. You all know how we feel around April 10 and Oct 10--not enough hours in the day to do the work, cranky clients at that time of year, can't possibly do work and answer all the calls that are coming in. The diminished IRS staff face that scenario every single day when they go to work right now. At least we can chill after deadlines and deal with the hanging chads once we've gotten some sleep and food. IRS folks leave work in the evening with 251 files on their desk and 14 phone messages, and when they arrive in the morning those numbers have likely grown. That and the nastiness about getting the IRS commissioner (their boss) to resign have to take their toll on competence. How many of us, usually detail-oriented and determined to get every number right, get to the point late in the season when we give up caring so much?

Jack, let's hope no one kills you. First things muggers usually take are wallets, jewelry and phones, now maybe lanyards. And Catherine has a TWENTY SEVEN page list of passwords? The internet as we know it has got to change.

I would file 2014 ASP. Those 2013 interest and penalties will continue to accrue, and the refund will at least stem the additions. I cannot begin to understand why people just ignore IRS notices. Do they really think that throwing them away, into a drawer, under the car seat, is going to make the mess go away? Had one client who hadn't filed for 6 years and probably threw away 60 IRS notices until the IRS levied his paycheck. Got him all caught up--too late to collect $8k in refunds but he did get $10k for the open years. Never opened the envelopes with the checks and had to have them reissued after they expired (after I contacted him when I got the IRS notices, which I did open). Guess he got so used to ignoring IRS mail he ignored the good stuff. Three years have passed, and every year I get a frantic phone call from him to file an extension please. He still hasn't filed for those three years. Guess I won't see any tax docs from him until the IRS levies his paycheck again.

Another way the 1099K messes up reporting is for places that offer cash back. I'm sure your restaurant client doesn't, but bars/strip joints often do (the guys need crisp bills to tip the..."performers"). Seems like that chef of yours got used to reporting one-eighth of his income every year and didn't realize that by accepting plastic he now has a "paper trail" to prove him wrong. I know a lot of wait staff who were pretty upset once plastic became the preferred form of paying tips.