jainen

>>Taxpayers At Risk If With More Than One Job, Receive Social Security<< There is nothing new about this, and attaching Obama's name to it is simply political rhetoric. Tax withholding tables are applied by each employer. Always have been. Taxpayers with more than one paycheck or pension income have always had to adjust withholding or make estimated payments. Other presidents have reduced withholding, but this time the credit is REAL and will not have to be repaid. Muckraking financial columnists are lying when they say otherwise.

>>years ago before the latest lending debacle<< Although my earlier post encouraged the letter, subject to substantial disclaimers, I must respond that times have changed. First of all, there have already been court cases in which a lender has recovered damages after relying on an accountant's representation of credit-worthiness. Recently the IRS has suggested that it may be unethical for a tax preparer to contact the lender directly, even with the client's written permission. So nowadays the best we can do is provide a statement only to the client, who can forward it as desired. Although reasonable projections should not be a problem, they should be narrowly based on what the accountant has actual knowledge of. If all you have is whatever the client himself has told you, include that key fact. Ask your E&O insurance agent for sample letters.

>>they have to rely on individuals to report and pay the tax with their tax returns<< Well, I can't speak for your state, but here in California we are all completely honest about that. In fact, we always try to support the local businesses anyway unless some necessary product is not available. That's why California doesn't need to join the Streamlined Project at http://www.streamlinedsalestax.org/

>>I don't think using Company funds is even worth considering as a risk at all, but it just seems to me that expressing that as an "official" opinion is not within the scope of my "job description."<< I don't understand your objection. Presumably such an unequivocal opinion is based on your personal knowledge of the strength of the company. Will a $10000 expense leave him without adequate reserves, or compromise his cash flow? That's all the loan officer is asking, and it is an obvious and reasonable question. If the scope of your "job description" doesn't cover this, draft a new engagement letter. I mean, this is what you do for a living, isn't it? And your client very much wants you to, right? Are you going to tell your client he can never be a homeowner because YOU don't feel qualified to be doing this job? Of course, any assertion you make must be limited by your actual knowledge. You only keep the records, so apparently you would have to say your conclusions are based on unverified data provided by your client. But nobody is asking you to underwrite the loan. Just do the stuff you have already been doing for years.

>>you just need to explain the circumstances<< Mediation is NOT about circumstances. It is about compromise. Every state has at-will employment, which means you can fire an employee without any cause at all. You just can't discriminate against the few protected classes such as race and gender. So, sure, you can win the court case--but the legal fees will cost you $50,000. That's fair, but not realistic. Mediation is the blackmail where you only get stuck for $10,000. That's unfair, but realistic. Next time, keep your employees fully gruntled.

>>States are trying hard to find some way to tax sales shipped into their state.<< I don't see what's so hard about that. California doesn't tax SALES in other states, even if the item is shipped into California. However, items used by a consumer within the state are subject to a USE tax.

>>no merit to the claim<< That attitude will not serve your interests at all. It proves that you do NOT "understand how these things can go really bad." Merit is totally irrelevant in mediation, so be prepared to make MAJOR concessions, whatever it takes to keep this out of court. Talk to your lawyer. Talk to your accountant. Talk to your pastor.

>>You have a cousin who bears a strong resemblance to Chewbacca.<< I don't think that's fair. She only looks that way from behind.

>>basis of inherited investments and 401k is their value on the day of inheritance?<< Technically the correct answer is yes, but that is very misleading. "Inherited" can mean a variety of things. If the asset was already jointly owned the basis adjustment might only apply to the decedent's share. Community property has special rules, and anything goes if the heirs decide to mix & match. Basis works somewhat differently in a 401(k)--withdrawals, including earnings after date of death, are considered to be income in respect of the decedent.

>>basic questions that I should ask about his organization<< The first question is what sort of organization it is. Charity? Church? Fraternal? Something else? Then poke around the IRS website for a half hour or so with your printer on. Start here -- http://www.irs.gov/charities/article/0,,id=136200,00.html

>>separate rules will be established for on-line sales and collection based on the seller's resident state<< Some states are getting together with uniform collection procedures, but they are generally based on local law of the buyer rather than the seller. Seller-based plans would just result in on-line sellers all moving to Oregon, which has no sales tax. Not only would it be a loss of revenue for the other states, but it would give Oregon retailers an unfair price advantage over local stores. No local legislator is going to vote for that. At least in California, use tax is due on everything that comes in, whether or not it was already subject to sales tax at the point of purchase. Supposedly there is some way to get credit for other state taxes, but nobody knows how to do that.

>>the simple fact is 9/11 did happen<< I certainly wouldn't call that a simple fact. It's just about the most complex thing in my lifetime. But one thing we can say for sure--it simply didn't have anything to do with Iraq. We could never control international terrorism if we continued to think of it as one great conspiracy. "The terrorists" are not THE enemy. Terrorism is a TACTIC used by a lot of very different enemies, and thank God we finally have a Commander in Chief who understands that.

>>if the Hud-1 is dated 11/06 I would say it does not qualify.<< On this forum I often take the more conservative position, but in this case I will argue FOR the taxpayer. The Settlement Statement is ONLY about costs, not deeds. The county looks at the deed itself, and deeds don't count until they have been delivered. It is normal for the settlement to be entirely in place BEFORE the actual transfer. Think about this. The papers, including the mortgage and deed, were all signed on Friday, the 6th. That's what we call settlement, so that's the date on the Settlement Statement. Next working day, the escrow officer did an updated title search to make sure nothing had changed. Only then would the bank fund the loan. And only after the escrow officer had the money in hand did the seller's escrow instructions allow release of the deed, which wasn't until Tuesday the 10th. So that's the date of conveyance, when the money was paid over and title was transferred by recording the deed. IRC Section 36 (this credit) defines purchase as "any acquisition." In my experience, nobody never acquires nothing until they fork over the cash.

>>I am wrong<< Assuming the taxpayer uses cash basis accounting, the taxpayer uses cash basis accounting. In fact, what the taxpayer did is sometimes recommended as a planning technique. But don't just look at the amount of the check--it includes non-deductible penalties.

>>it's only for some retirement plans<< No, hardship is never a factor to avoid taxation with any retirement plan. Never. >>her co-worker sold some stock and used hardship to avoid paying tax<< Yes, in terms of paying taxes hardship can sometimes be a factor for IRS collections. Sometimes.

>>I got a written release from both<< Smart. But not always good enough because even if you have "permission" to release information you still have a duty to only act in the client's best interest. And if that doesn't happen to also be in your OTHER client's best interest, which is likely, then your problem is that much larger BECAUSE of the release.

>>then submit all of the various filing schemes to both attorneys. I was accused of violating confidentiality<< A fair accusation, in my opinion. Did you have a written release of information to show the opposing attorney what was being reported on the separate return? That's how it goes down. Remember, it is common (to put it mildly) that lack of honest communication (to put it mildly) was a factor in the breakup (to put it mildly) of the marriage. And of course, they don't always put it mildly.

>>mothers of soldiers remind you what's happening<< In my experience, people's mothers are not the best source of reliable information.

>>now that they are divorced<< You can probably proceed if there does not appear to be any genuine conflict. But even with a release of information you are on rocky ethical ground when you need to decide who claims the kids or what qualifies as alimony. Generally you should pick one and refer the other elsewhere.

>>tell him to show you where mileage records are required<< Ummm, I wouldn't push too hard on that particular point, friends. As a matter of law, travel & transportation records ARE required, as are a few other items. But generally you can rely on the client's unverified statements unless they are incomplete or inconsistent. At least that's what Circular 230 says.

>>interesting thought-and a good one. if you do meet with the agent make sure you see the return he is auditing<< Oh, yeah, lots of great thoughts here. But how is Bonnie supposed to see that return? How come nobody else here seems to notice her deal-killer, "I can't even get a POA because he is gone and his wife is now living with a relative out of town." Well, Bonnie, I notice. And even though he is inexperienced, I'll bet the agent notices too. So don't worry about the fax. You can send it later. Nobody is going to do anything with it anyway. This is a dead deal.

>>the client doesn't want to have to pay me<< This is a dead deal. You simply can NOT do this because a) you don't have a clue what it is about, b ) the only issue seems to be what YOU have done, c) you don't have any record of what the client contact with the agent has already involved, d) the client does not trust you, e) the client has not authorized you, d) the spouse is not capable of ever authorizing you, e) the agent is inexperienced in his current job and in working in a large organization at all, f) the agent's request makes no sense whatsoever to any of the august minds on this board, and g/h) by definition you can't be a professional without getting paid and the agent has some screwy idea about that whole thing. Fax the depreciation worksheets to your client with a bill for a $1500 retainer, and spend the extra free time listening to good music.

>>I am tending to blame my client<< Although the auditor is apparently employing this technique effectively, blame is not really the issue. Find out what the true issue is and deal with that. Do not let the auditor anywhere near records other than those specifically identified as needed for the examination. Obviously your preparation would be very different if the audit is about the preparer rather than the taxpayer. You must ask this question directly. Then, just as you would not recommend the client represent himself, you should not represent yourself.

>>Suggestions for experienced users<< I have been asked to comment, although I was not planning to respond as I have little to contribute on this topic. I use Lacerte with its built-in document manager. I scan source documents into a single pdf file; each document is a separate page but not otherwise identified. It probably has many more features but I only use it at a very simple level. I return all client records and shred my own notes so I keep no paper file whatsoever.

>>They are not going to change their minds<< California, with an extremely broad spectrum of taxpayers, has had mandatory e-file for years. We all feared it, but the transition proved effortless. Even when servers overloaded and everyone missed the deadline, problems were trivial. Lion, ask your client whether they trust your data entry, or prefer to have a seasonal temp re-type those complicated returns. The debate is long over, E-file works beautifully these days, and the benefits are overwhelming. California has three ways an individual can opt out. The taxpayer can request it without giving any reason, the tax preparer can pay a small fine, or both can simply ignore the requirement.