kcjenkins

AICPA Suggests Tax Reforms to Paul Ryan Washington, D.C. (January 13, 2015) By Michael Cohn The American Institute of CPAs has sent a letter recommending various tax reform priorities to the new chairman of the tax-writing House Ways and Means Committee, Rep. Paul Ryan, R-Wis. The letter, which Troy Lewis, chair of the AICPA’s Tax Executive Committee, sent to the former vice presidential candidate Monday, along with several other congressional leaders and officials at the Treasury Department and the Internal Revenue Service, provides comments on the Tax Reform Act of 2014, a draft proposal developed in the previous congressional term by former Ways and Means Committee Chairman Dave Camp, R-Mich. The areas on which the Institute commented represent issues that the AICPA said are important to its members, based on how well they meet the AICPA’s 10 principles of good tax policy. The AICPA’s recommendations included a simplified income tax rate structure without any surtaxes or phase-outs for taxable income. “The use of phase-outs— in order to increase the effective tax rate— has contributed to the complexity and opaqueness of the present tax law and this proposal,” Lewis wrote. “Phase-outs also unfairly create marginal rates in excess of the statutory rate. We are concerned that provisions to limit or eliminate the use of certain deductions and exclusions in the application of the top tax bracket will exacerbate these flaws. We urge Congress to use tax reform as an opportunity to develop the best definition of taxable income by creating a simple, transparent, possibly higher tax rate schedule that does not include hidden additional taxes and is applied consistently across all rate brackets. We also propose, as part of comprehensive tax reform, the complete removal of all phase-outs as these limitations serve as additional complexities for taxpayer compliance.” The AICPA said it also opposes a provision in the tax reform proposal to offer the tax preference on retirement plan contributions to only those taxpayers in the new 25 percent tax bracket. “By placing a 25 percent cap on the deductibility of retirement plan contributions, the newly created 10 percent surtax on retirement contributions made to employees in the 35 percent tax bracket effectively taxes these higher income employees twice—once when contributions are made to the plan, and then again when the money is distributed upon retirement (or in the case of Roth individual retirement accounts), taxed when earned).” The AICPA noted that for small businesses owners, this provision could prove to be especially troubling. If the business were subject to the 10 percent surtax, it could decide to eliminate its workplace retirement plan, and this procedure would have “an undesirable trickle-down effect onto their employees, who would no longer have a workplace retirement plan, resulting in a significant reduction in the retirement savings of lower and middle class employees, who need to increase their retirement savings.” The AICPA also provided recommendations on a host of other areas, including simplification of education incentives, charitable contributions, self-employment earnings and business tax reforms. The Institute said it plans to submit further comments on additional issues in the future.

And just in case you need a laugh, I offer you this:

http://www.irs.gov/pub/irs-pdf/p963.pdf

Judy, post your mailing address, and I bet you'd get LOTS of chocolate! Heck, I'll send some right away.

Really? They could not even get their grammar right?

That should take care of it. I just don't want David, or anyone else either, attacked for posting something that is publicly available online. Even if it was public by mistake, that mistake was not David's it was Drake's. Peace, Judy and Jack. Lion, I like Moscato d'Asti with dark Chocolate myself ! I'm not waiting for a birthday either !

David, I want to apologize for the way Judy and Jack jumped on you. Please know that I realize that you were just trying to be helpful, As you know, while this board started back in 2007 when CCH killed their Community board on April 10. Since then, they restarted theirs, but we kept ours! Over the years, some of our members have changed to other software but stayed here for the 'community'. Judy now uses Drake, some use Pro-series, etc. ​I see no problem with you linking to a publicly available form. My guess is that Drake made it available as a way to impress preparers that might see it as a reason to consider buying their product. A simple marketing decision. ​Thanks for the input, and please do not let this thread turn you off this board, I for one am happy to see you here. I think Judy needs some chocolate !

I thought about you two when I saw that, Tom! I think husband-wife tax preparers are wonderful, personally, but it's also true that it can stressful! And it goes without saying that it goes both ways!

Bankers often make unreasonable requests. Best to either ignore, or politely inform the banker that you are not able to provide as you are not involved in your client's business. Short and simple.

Come on, isn't it a little early to be being so sensitive? Personally, I think it was a valuable discussion, no matter why he posted it. I have no doubt in my mind that someone will learn a valuable lesson from reading it. Only thing he did wrong was the final post. If he'd just posted "Great answer, thank you so much for the cites." no one would have gotten their knickers in a knot, as my mother used to say.

You are correct Jack. [No surprise there.] But we also know that now and then you run into an idiot at the IRS, or maybe they are just having a bad day, so they try to get rid of you fast by demanding something they do not really need. I know I have. So while she's there signing one, it's so easy to have her sign two, just in case. I once had an agent ask me for a POA for the client's LLC, even tho it was a disregarded entity. I will always believe he was just running late and wanted an excuse to put off the appointment but put the blame on me.

You could even cover all bases, by getting one of each signed, start by filing the one with the return name, but if an issue comes up over it, you are ready to whip out the one with the new name, with no delay.

How to make 11 days feel like 5?

IRS Made Errors on 24% of EITC Payments Washington, D.C. (January 7, 2015) By Michael Cohn Even though the Internal Revenue Service has reported an overall decline in the improper payment rate for the Earned Income Tax Credit since fiscal year 2003, the amount of payments made in error has increased from $10.5 billion in fiscal year 2003 to $14.5 billion in fiscal year 2013, according to a new government report. The IRS’s fiscal year 2013 EITC improper payment report to the Treasury Inspector General for Tax Administration estimates that in fiscal year 2013, EITC claims totaled approximately $60 billion, while 24 percent of the EITC payments were paid in error, according to a report released Wednesday by TIGTA. An earlier TIGTA report last month had reported on the IRS’s high error rate and improper payment amounts for the EITC, along with the Additional Child Tax Credit (see IRS Urged to Crack Down on Improper EITC and ACTC Payments). Using IRS data, TIGTA estimated that the potential ACTC improper payment rate for fiscal year 2013 was between 25.2 percent and 30.5 percent, with potential ACTC improper payments totaling between $5.9 billion and $7.1 billion. The new report focused on the IRS’s compliance with Executive Order 13520, Reducing Improper Payments and Eliminating Waste in Federal Programs, which requires TIGTA to assess the IRS’s compliance with the order on an annual basis. Executive Order 13520 aimed to increase federal agencies’ accountability for reducing improper payments while continuing to ensure that their programs serve and provide access to their intended beneficiaries. In the new report, TIGTA acknowledged that the IRS has taken steps to ensure access and participation by eligible individuals. The IRS estimates that the participation rate for individuals who are eligible to receive the EITC was nearly 80 percent for tax year 2010. However, TIGTA pointed out that the IRS is not in compliance with certain requirements of Executive Order 13520 for fiscal year 2013. For example, the IRS has not established annual improper payment reduction targets as required. Nonetheless, the IRS is making some progress related to its inability to comply with this requirement, TIGTA acknowledged. For instance, the IRS has received approval from the Office of Management and Budget to establish and report supplemental measures in lieu of annual reduction targets. While the IRS is currently not in compliance with the quarterly reporting requirement for high-dollar improper EITC payments (that is, payments totaling more than $5,000) for fiscal year 2013, according to TIGTA, new revisions to the quarterly reporting requirements make it unlikely that the IRS would be required to report any quarterly high-dollar payments for fiscal years 2014 and beyond. TIGTA made no recommendations in the report. In response to the report, IRS CFO Robin Canady wrote, “The Earned Income Tax Credit (EITC) is the Treasury Department's only high risk program and poses numerous challenges with respect to improper payments and reporting.” Canady also reiterated some of the IRS’s objections to the report last month on the EITC and the ACTC: “As we reported in our response to your performance audit on the Additional Child Tax Credit (ACTC), the IRS disagrees with your assertion that our risk assessments do not accurately reflect the risk associated with the ACTC payments and TIGTA's potential outcome measure estimates.” A provision in a report attached to the $1.1 trillion spending bill passed by Congress last month aims to stem the tide of improper payments of refundable tax credits such as the EITC by requiring taxpayers who use consumer tax prep software to self-prepare their tax returns to undergo the same kinds of questions that professional tax preparers are required to answer for their clients’ returns (see Congress Requires Self-Preparers and Consumer Tax Software to Check for Improper Tax Credits).

CONGRATULATIONS, JACK !!!

True. Note also that it does not apply to CPAs, EAs, or Attorneys, although we all know that some of them are also crooks. The fact is, they already have enough power to regulate, just by controlling the EFINS and PTINS.

Way to go !!! The abuse of the S Corp to avoid SE tax on earnings for personal services is one that needs to be clamped down on hard. The fact that some of the worst abusers have been Senators and Representatives should infuriate every honest taxpayer!

Some good comments on the article, both pro and con. And the one I tend to agree with most:

Washington, D.C. (January 8, 2015) By Michael Cohn Two Democrats on the Senate Finance Committee have introduced legislation to regulate paid tax preparers in response to the federal court decision that found the Internal Revenue Service had exceeded its statutory authority in regulating preparers. Senate Finance Committee ranking member Ron Wyden, D-Ore., and Senator Ben Cardin, D-Md., unveiled legislation Thursday that provides the Treasury Department and the IRS explicit authority to regulate paid tax return preparers. Wyden chaired the committee until control of the Senate changed after last November’s elections. With nearly half of all Americans turning to others to prepare their tax filings each year, the bill would require preparers to demonstrate competency in preparing tax returns, claims for refunds and related documents. “It’s bad enough that taxpayers have to navigate their way through an overly complex tax code, but worse that many also unknowingly rely on fraudulent or incompetent tax preparers to help with their returns,” Wyden said in a statement. “This bill helps protect hard working taxpayers by ensuring that tax preparers are held to clear and enforceable standards.” The legislation was introduced in response to the decision in the case of Loving v. IRS. Judge James E. Boasberg of the U.S. District Court for the District of Columbia ruled in 2013 that the IRS had exceeded its statutory authority in imposing mandatory testing and continuing education of independent tax preparers as part of its Registered Tax Return Preparer Preparer regime. A federal appeals court upheld the decision last year. In response, the IRS has introduced a voluntary program for continuing education and testing of preparers known as the Annual Filing Season program. The legislation introduced by Wyden and Cardin aims to give the IRS the statutory authority that the courts said it lacked. The IRS had argued that it had the authority under an 1884 law that was originally intended to apply to federal regulation of compensation claims for dead horses killed during the Civil War, but the judges disagreed. The court decision invalidated the IRS’s RTRP program, which aimed to regulate unenrolled preparers who are not already regulated under the Treasury’s Circular 230 rules. Those rules still apply to tax practitioners such as CPAs, Enrolled Agents and attorneys who are authorized to represent clients before the IRS. “Our tax code is complicated,” said Cardin. “To protect taxpayers from incompetent or unscrupulous preparers, the IRS needs adequate tools to ensure that preparers are qualified and held accountable. I’m pleased to join in support of this legislation, which restores meaningful and much-needed standards and oversight in the paid preparer industry.”

He may, however, owe a penalty for under withholding, unless he makes a timely estimated payment to cover the distributions..

I think you are right. When I started, in the 70s, you got your forms and pubs free from the IRS, used carbon paper to make copies, and kept the rate tables handy at your side. A desk, chairs, a good desk lamp and calculator were all you needed besides tax knowledge!

That should never be the deciding factor. Clearly they had a reason for deciding to form the LLC, probably related to liability protection. Thus a bit higher filing cost should be a normal, and justified, business expense, just like insurance, utilities, etc.

Yes, different states sometimes have complications ordinary citizens never give a second thought to. The average person does not need a complex will, but with NO WILL you do have a will, one written by your state legislature, usually ages ago. And who gets to make decisions about your final details, if you have not got a will, might be very surprising to you.