Lee B

Last year about this time the IRS issued transition rules that extended some of the old rules until 6/30/15 and other parts until 12/31/15. They also said that further guidance would be forthcoming. So far no more wisdom has been has been delivered to the residents of the real world for 2016.

Oregon has been licensing and testing preparers since 1973.

PLEASE FEEL FREE TO ADD TO THIS LIST: 1. 12345 2. DATE OF BIRTH 3. QWERTY 4. LETMEIN

Interesting, just read an article explaining a number of ongoing scams promoting this program, where you are asked to pay hundreds of dollars in advance so the scammer promises to get your loan modified or completely forgiven. In addition some of these scammers collect your personal information and then resell it to others. If it sounds too good to be true ? Just like Bernie Madoff's 12 % guaranteed investment returns

1. New on IRS.gov 2016 Inst. 8963, Instructions for Form 8963, Report of Health Insurance Provider Information Pub. 5121, Affordable Care Act: Individuals and Families Pub. 1693, SSA/IRS Reporter Newsletter Pub. 5200, Affordable Care Act: What employers need to know 2016 Form W-2, Wage and Tax Statement (Info Copy Only) 2015 Form W-2, Wage and Tax Statement (Info Copy Only) Pub. 5208, Affordable Care Act: Are you an applicable large employer? Back to Top

Just because the corporation is holding treasury stock that it purchased does nothing to create a second class of stock.

COPIED FROM ACCOUNTING TODAY: A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business. The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that they falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund, the Justice Department said Tuesday. The injunction also prohibits Lopez, Pamela Miranda and Jorge Miranda from acting as federal tax preparers, owning or operating tax preparation businesses and employing tax preparers. They agreed to entry of the injunction, but did not admit the allegations in the complaint. According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada. The complaint alleged that the tax prep chain’s employees prepared income tax returns that falsely claim child tax credits and the Earned Income Tax Credit, claim incorrect filing statuses, and report incorrect income and expense figures. The complaint alleges that Servicios Latinos has prepared more than 42,000 federal income tax returns since 2012. The Internal Revenue Service has estimated that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complain What upsets me the most is how long a chain like this can stay in business while the legal process drags on.

This has been going ever since enhanced basis reporting on brokerage statements began to phase in back in 2011, I believe.

I agree, it doesn't matter if she doesn't live in Oregon. Oregon has 8 or 9 different Indian casinos. It's no different than if she owned some rental property in Oregon or she had a K-1 from a Oregon Entity return. It's Oregon source income, therefore you have to file the nonresident return and pay any taxes due.

COPIED FROM THE NAEA NEWSLETTER: From: IRSgov <[email protected]> To: Sent: Sunday, February 7, 2016 7:40 AM Subject: Update Filing Info (IRS) Dear TaxPayers The Year 2015 Tax Return is On, Update your E-file immediately For the New Season Update E-file Now Internal Revenue Service Lead Development Center Stop MS5040 24000 Avila Road Laguna Niguel, California 92677-3415

iF YOU ARE RUNNING A 64 BIT VERSION OF WINDOWS HERE IS A LINK TO A AN ARTICLE IN "HOW TO GEEK" ABOUT CHECKING TO SEE WHAT VERSION OF CHROME YOU HAVE INSTALLED AND HOW TO UPGRADE. TO MY SURPRISE MY 64 BIT WIN 7 PRO WAS STILL USING A 32 BIT VERSION OF CHROME WHICH IS SLOWER, LESS SECURE, ECETERA: http://www.howtogeek.com/241501/you-should-upgrade-to-64-bit-chrome.-its-more-secure-stable-and-speedy/

The ATX add on services seem to be a little bit problematic, so I have avoided all of them

In today's NAEA Newsletter : "Please visit www.irs.gov.confirm44id.us/ and avoid being fined !" I wonder how people will respond to this text ?

Fortunately, I haven't had that problem. Actually, so far I haven't had any problems . I have probably just jinxed myself

COPIED FROM THE TAX ADVISOR: What I really don't like is the extension of the "EITC Due Diligence Requirements" to the Refundable Child Tax Credit and to the Refundable American Opportunity Credit. This is going to create a real additional PITA Congress Makes Changes to Popular Tax Credits Congress gave taxpayers good news when it permanently extended various expired tax provisions in the middle of December (Consolidated Appropriations Act, 2016, P.L. 114-113). This permanency gives taxpayers and practitioners a better ability to plan for these tax breaks without the annual worry of wondering whether they will be extended and for how long. However, buried in the good news of the extensions were some other, less-publicized changes that affect the child tax credit, the American opportunity credit, and the earned income tax credit (EITC). These changes include new restrictions, new penalties, and new due diligence requirements for practitioners. Child tax credit Sec. 24 provides a $1,000 tax credit to a taxpayer whose income is below certain thresholds for each of the taxpayer’s qualifying children under age 17. The credit is generally nonrefundable, meaning that the credit cannot exceed the taxpayer’s tax liability. However, Sec. 24(d) makes portions of the credit refundable. This refundable credit is commonly referred to as the additional child tax credit, and it is calculated using a percentage of the taxpayer’s earned income for the year (15% of the excess of taxable earned income over $3,000). A separate limitation applies to taxpayers with three or more qualifying children. Before the new legislation, the $3,000 amount for calculating the refundable portion of the credit was scheduled to increase to $10,000, adjusted for inflation, in 2018. Now, the threshold amount for determining whether a taxpayer is eligible for the refundable (or additional) Sec. 24 child tax credit is permanently set at $3,000 (not indexed for inflation), which has been the threshold since 2009. Retroactive claims: One change the legislation makes is to prohibit retroactive claims of the child tax credit. It does this by preventing taxpayers from amending a return (or filing an original return) to claim the credit for any prior year in which the taxpayer or the qualifying child did not have an individual taxpayer identification number (ITIN). This means that taxpayers cannot file returns claiming the credit using an ITIN issued after the year for which the credit is being claimed. The effective date of this provision allows taxpayers to file their 2015 returns without regard to this rule if the returns are timely filed (Section 205 of the Act). New penalties: Before the new legislation was enacted, there was no penalty for taxpayers who recklessly or fraudulently claimed the child tax credit. Now, the rules that already applied to false claims for the EITC also apply to the child tax credit. Individuals who fraudulently claimed the credit are barred from claiming the credit for 10 years. If they are found to have claimed the credit with reckless or intentional disregard of the rules, the bar applies for two years (Sec. 24(g) as amended by Section 208(a)(1) of Division Q of the Act). IRS claim processing: The Act gives the IRS math error authority, which allows it to disallow improper credits without a formal audit if the taxpayer claims the child tax credit in a period in which he or she is barred from doing so (Sec. 6213(g)(2)(P)). For taxpayers claiming the additional child tax credit after Dec. 31, 2016, the IRS will have additional time to review the refund claim and will not be required to pay the refund before the 15th day of the second month following the close of the tax year (Sec. 6402(m)). Due diligence: Effective for tax years beginning after Dec. 31, 2015, return preparers will be subject to due-diligence requirements for returns that claim the child tax credit, much as they are currently subject to for returns that claim the EITC. For the EITC, those requirements include submitting a completed checklist with the return; completing a prescribed worksheet; maintaining certain records for three years that document their due diligence; and not knowing, or having reason to know, that any information that was used to determine if the taxpayer is eligible to claim the credit or to compute the amount of the credit is incorrect. What the exact child tax credit due diligence requirements will be is, as yet, unknown: The IRS was given authority to issue regulations imposing due diligence requirements for returns claiming the child tax credit, but has not yet done so. The penalty for failure to comply with the due diligence requirements will be $500 for each failure (Sec. 6695(g)). American opportunity tax credit The American opportunity credit permits taxpayers to claim a credit of up to $2,500 for each eligible student for qualified educational expenses (Sec. 25A). The credit phases out when modified adjusted gross income exceeds certain amounts. Before legislation was enacted in 2009, the credits for educational expenses were called the Hope credit and the lifetime learning credit. In 2009, the American Reinvestment and Recovery Act, P.L. 111-5, renamed the Hope credit the American opportunity credit. The new credit was originally to be effective from 2009 to 2017 (Sec. 25A(i)). The Act makes the credit permanent. Reporting requirements: Taxpayers claiming the American opportunity credit are now required to report the employer identification number of the educational institution to which the taxpayer makes qualified payments under the credit (Sec. 25A(i)(6)(C)). Also note that the Act made changes to the reporting requirements for higher education institutions, which will be required to report only qualified tuition and related expenses actually paid on Form 1098-T, Tuition Statement, rather than being allowed to choose between reporting amounts actually paid or amounts billed. Both of these provisions are effective for expenses paid after Dec. 31, 2015, for education furnished in academic periods starting after that date. Retroactive claims: Similar to the child tax credit, the law prohibits an individual from retroactively claiming the credit by amending a return (or filing an original return) for any prior year in which the individual or a student for whom the credit is claimed did not have an ITIN (Secs. 25A(i)(6)(A) and (B)). This means that taxpayers cannot file returns claiming the American opportunity credit using an ITIN issued after the year for which the credit is being claimed. The effective date of this provision allows taxpayers to file their 2015 returns without regard to this rule if the returns are filed by the due date (Section 206(b)(2) of the Act). New penalties: Again adding a provision that previously applied only to the EITC, individuals are barred from claiming the American opportunity credit for 10 years if they fraudulently claim the credit, and for two years if they are found to have claimed the credit with reckless or intentional disregard of the rules (Sec. 25A(i)(7)). IRS claim processing: The IRS is given math error authority, which allows it to disallow improper credits without a formal audit if the taxpayer claims the credit in a period in which he or she is barred from doing so (Sec. 6213(g)(2)(Q)). Due diligence: Similar to the new due-diligence requirements under the child tax credit, effective for tax years beginning after Dec. 31, 2015, return preparers will be subject to due-diligence requirements for returns that claim the American opportunity credit. And, as with the child tax credit, what the due-diligence requirements relating to the American opportunity credit will be is unknown: The IRS was given authority to issue regulations imposing due diligence requirements for returns claiming the American opportunity credit, but has not yet done so. The penalty for failure to comply with the due diligence requirements will be $500 for each failure (Sec. 6695(g)). Earned income tax credit The EITC grants a refundable credit to low- or moderate-income taxpayers with earned income. The amount of the credit is the taxpayer’s earned income (up to the statutory maximum amount as adjusted for inflation) multiplied by the credit percentage. The maximum earned income amount and the credit percentage that apply to a taxpayer are based on the taxpayer’s number of qualifying children. The credit is phased out for taxpayers with adjusted gross income or, if greater, earned income, over the applicable credit phaseout threshold amount, which is also based on the number of the taxpayer’s qualifying children. Higher credit amount: The credit rate is 7.65% for taxpayers with no qualifying children, and it increases to 34% for one qualifying child, 40% for two qualifying children, and 45% for three qualifying children. The 45% credit for three qualifying children was originally a temporary provision that was scheduled to expire in 2018. Instead, the Act made the 45% credit permanent. In 2009, the credit phaseout threshold amounts for married couples filing a joint return were increased by $5,000, with an annual inflation adjustment, over the threshold amounts for other filers, for the years 2009 through 2017. After 2017, the increase in the threshold amounts for married taxpayers filing jointly was scheduled to expire. The Act made the $5,000 increase to the credit phaseout threshold amounts for married taxpayers filing jointly permanent and continues the annual inflation adjustments for years after 2015. Retroactive claims: Similar to the other credits described above, the Act prevents retroactive claims of the EITC by prohibiting individuals from claiming the credit on an amended return (or original return) for any prior year in which the individual did not have a valid Social Security number. This means that taxpayers cannot file returns claiming the credit using a Social Security number issued after the year for which the EITC is being claimed. The effective date of this provision allows taxpayers to timely file their 2015 returns without regard to this rule. (Unlike the other credits, taxpayers must have Social Security numbers to claim the EITC, not merely an ITIN (Sec. 32(m)).) IRS claim processing: For taxpayers claiming the EITC after Dec. 31, 2016, the IRS will have additional time to review the claim and will not be required to pay the refund before the 15th day of the second month following the close of the tax year (Sec. 6402(m))

I have been busy with year end payroll forms etc. Just downloaded and installed the ATX Program ( 15.3 ) Rolled over a variety of returns, 1040s, 1065s, 1120s & 1120S s. Opened about a dozen returns and checked to make sure everything rolled over, i.e., depreciation, K - 1 info etc. Prepared an 1120 S and the companion 1040. No problems and everything is working smoothly. Actually the program seems faster than last year. Hopefully it stays that way.

Copied from the NAEA Newsletter: Speaking of EA renewals, RPO gave us a heads-up after we went to press last week (E@lert weathered snowzilla in an undisclosed mid-western location) that its Detroit office has been delayed in mailing EA cards/certificates because the staff ran out of envelopes (E@lert appreciates the candor from RPO but shares members' exasperation). The envelopes arrived on Wednesday, January 27, and Detroit is working on the backlog. Because of this processing bottleneck, please allow extra time for your card to arrive. We will keep you posted on any further details as they become available.

This practice has a very long history with lots of court cases. For example, Auto Mechanics receiving "Tool Rental" for use of their personal tools. Also, Timber Fallers receiving "Saw Rental" for the use of their own Chain Saw. There are actually firms that market this approach as a way of reducing employment taxes. The employee will have to report on Schedule C - EZ and pay the SE Taxes. The IRS has always taken the position that the rental of personal property is SE Income and IRS has always prevailed in the numerous court cases in this area.

The last two years, all of my clients W - 2 s who had SIMPLE Plans (created in ATX) would not pass the Accuwage test. So I have been filing these W - 2 s with SSA by skipping Accuwage. No problems

The charge is neither by company or payee. In your example, the charge would be $ 1.50 for a 1096. I have several clients who have two or three different kinds of 1099s each with a different 1096, so I pay either $3.00 or $4.50 for these clients

COPIED FROM ACCOUNTING TODAY: Tax preparation software developer TaxAct disclosed a data breach, leading the company to suspend the accounts of more than 9,000 customers. The Cedar Rapids, Iowa-based company, part of Blucora Inc., said the data breach affected a small percentage of its customers. “TaxAct recently suspended a small number of accounts—less than 0.25 percent (less than ¼ of 1 percent)—after identifying instances of suspicious activity,” said a company spokesperson contacted by Accounting Today. “The attacker did not gain access to income tax returns for the vast majority of the suspended accounts. Of those accounts suspended, a very small number, less than 5 percent of the ¼ of 1 percent, involved returns being accessed.” SourceMedia's Partner Insights program enables marketers to deliver relevant content and insights directly to the Accounting Today audience via SourceMedia's digital media platforms. Partner Insights content is produced by the marketer. To find out more, contact Jack Lynch at [email protected] Criminals may have stolen tax information from approximately 450 of TaxAct’s customers, according to The Wall Street Journal. The company sent a letter to 450 of its customers notifying them of a data breach occurring between Nov. 10 and Dec. 4, 2015, warning that their names, Social Security Numbers and tax returns may have been accessed. The company said it was able to limit the damage from the hackers, however. “As a result of TaxAct’s existing processes, the team identified the issue early and prevented any further data from being compromised,” said a company spokesperson. “TaxAct then partnered with a leading forensic specialist firm to further investigate. This led to the conclusion that the incident was not the result of a security breach of TaxAct systems. Rather, the team believes usernames and passwords for a small number of account holders were obtained from sources outside of TaxAct’s own systems.” The IRS has been working with tax software vendors, major tax prep chains and state tax authorities this year to improve the security of their software to safeguard against identity theft this tax season (see IRS Kicks Off Tax Season). They are sharing more than 20 data elements to help authenticate tax returns. There will also be new procedures this tax season to help prevent fraudsters from taking over the accounts of taxpayers. New password standards to access tax software will require a minimum of 8 characters with upper case, lower case, alpha, numerical and special characters. A new timed lockout feature and limited unsuccessful log-in attempts will be part of tax prep software, along with the addition of three security questions. There will also be “out-of-band verification” for email addresses, which is sending an email or text to the customer with a PIN, a practice used throughout the financial sector. “TaxAct has industry-standard security protocols in place and is taking additional measures to further protect its data from external threats,” said the company spokesperson."

Specifically ATX will charge $ 1.50 for each 1096 and each 94x series efile.

If I go to Walmart and have Jackson Hewitt do my return for an exorbitant fee, they will give a me $ 50 Walmart Card on the spot ! Whoee, isn't free enterprise a great thing.

This is a link to an article in The Tax Advisor: http://www.thetaxadviser.com/newsletters/2016/jan/taking-control-of-final-form-1040.html

In addition any return with a refundable credit, a change from the prior year's checking account etc will be delayed by enhanced electronic screening for an undefined period of time. Kind of like refund roulette