JohnH

My problem was a little more sticky. I did try "automatic" as well and got the same reaction. This had been going on for several weeks and I had just never gotten around to working through the problem. I compounded the issue by not having updated the password in so long that the sytenm locked me out on my first try to get in. So Patricia had to send me an email that I replied to - I think I accepted responsibility for the entire US Debt and all the failures of the past & current administrations before I could regain access. Once that was over, then she coudl actually work on the problem with me. All in all, it didn't take so long though. As I said, she was very friendly, profesisonal, & patient.

Just passing along a little info for what its worth. For some reason, MAX had simply stopped processing updates on my computer for no apparent reason. I'd click on the "updates" icon, then choose "manual", and get an hourglass for about 5 min but nothing would happen. No opportunity to select form updates and no program updates. So I called Customer Service and got to speak with Patricia. It turns out I needed to log onto MYATX Customer Support, but it had ben so long since I'd last done this that my password had expired, etc. So Patricia patiently walked me through the steps to get signed back on and stayed on the phone line to be sure I got my access updated. She then explained that I needed to download the "Program Updates" directly from the web site and let the program fix itself, which it did. All in all, the entire call took about 10-15 minutes, with most of that being my fault due to my not having kept my password active. So I just thought I'd describe this very positive Customer Service interaction and to give Patricia a high five for a job well done.

Yes, that would be my uncle Will Wildman from Kennesaw. We collaborate on innovative technology products. I keep one just like it in my desk drawer, right beside my abacus. (One never knows when the power's going out right when you need a calculator)

I got a couple of 941's with Schedule B's out on Jun 30 so I can move on to other clients after the holiday is over. Had no problems at all - I just dropped them in the mail box and off they went. :)

I'm not surprised it takes them six months to file a claim for refund. As I said, I've never had any expectation that the government would be efficient at anything. The most efficient government agency by far is the military. I served 4 years in that agency, so all my life I've been well aware of what passes for efficiency in government.

-> high performance standards from government <- I don't think I've ever had that sort of expectation under any circumstances, regardless of the political climate or which jersey those in charge happen to be wearing.

Yes, I did slip up and use the dreaded "e" word, didn't I? I'll try not to make THAT mistake again. I think the ID number issue may resolve itself for the most part. Smart vendors are going to anticipate being inundated with W-9 forms (or whatever similar form IRS produces). So I'm guessing almost everyone will begin listing their Federal ID number and Form 1099 address right on their invoices or statements - that would be the sensible thing to do. Just a little box with all the relevant info in some sort of standard format is all that will probably be needed. As for the additional paperwork and clients who keep their own books, there's no question we will have to educate them about the new requirements. They are simply going to have to do a better job of keeping track of their purchases. They won't like it, but we don't either. They manage to keep this info on their employees, so they will have to be more diligent about it with their vendors or else pay us to clean up their mess. Maybe it will be an opportunity to add part-time help during Jan to handle this part of the load along with all the other stuff that comes rushing at us in Jan - more projects over which to spread the cost. Or maybe there will be service-bureau type business which will spring up and who will specialize in compiling this info and producing the 1099 forms for us (or directly for our clients, perhaps cutting us out of the loop). Developing a large data base with most of the info already entered would be a good starting point, with maybe a surcharge for obtaining the info from small companies not already in the data base. I smell a business opportunity here.

I'm not saying it's necessarily a good thing or that it will always be easy, but there will be ways to deal with it. You probably wouldn't need to set up a separate account for each vendor, but sub-accounts might be needed, depending upon the accounting software. In QuickBooks, it's fairly easy to flag 1099 vendors already - just flip a switch in the vendor setup. Other software probably has similar capabilities. And I suspect all accounting software vendors will refine these options & reporting capabilities between now and 2012. The main thing you need is a means of sortg & reporting by vendor. And of course there's always the old Excel/Access option. Any accounting software that will alllow you to export to a csv file or directly to Excel has given you all the tools you need. Just export the info, sort by vendor, and subtotal. After that, do a few tweaks for duplicates or the same company entered as different names (ABC Corp vs ABC Co, for example), and then you'll be ready to run the 1099's, I'll bet someone will come up with an Access option to do just that, if there isn't one already. Or maybe there are better alternatives already available for those who don't use Quickbooks & ATX. Currently I just export the raw QuickBooks data for 1099 vendors directly to ATX and then work from there to refine the reporting before printing the paper forms. And we haven't even touched on electronic filing of the 1099's.

Step 1 would be to encourage clients to use credit cards as much as possible. One incentive for them to do so will be that their accounting fees will increase dramatically if they do business by check with a large number of vendors to whom you will have to send 1099 forms. Step 2 is up to the client -> Once you've clearly spelled it out for the client, then it's up to them to make a rational decision. If they prefer to continue doing business by check and are willing to pay you for the work, what should that matter? I'll have to add that I have a client who issues about 175-200 Form 1099-misc each year to certain sub-contractor vendors. I find that project to be just as profitable (or more so) than many of my regular payroll clients.

A very good place to start is the Vanguard web site. They offer a wealth of information for free, and you'd do well to absorb everything John Bogle has ever written on investing and retirement planning. Personally, I think there's a pretty good case to be made for waiting as long as possible before withdrawing qualified money in order to get the maximum benefit of tax free accumulation. After all, that's why you initially put it there. The main exceptions to that general rule would be: 1) your retirement income leaves you in the lower part of the 15 per cent Fed bracket - it might be worthwhile to use Roth conversions and/or regular withdrawals to lock in the tax liability at the 15per cent rate, even if the money is simply moved laterally into the same type of investment. I think it's safe to assume that tax rates are going up in the future. Of course, the interplay with state income taxes can also have a huge impact on this analysis. 2) your income producing assets are likely to push you into a higher tax bracket when you begin RMD 's. Certainly a nice problem to have, and it might alter your current withdrawal plans if that's a potential problem. There are hundreds of other possibilities, but I can guarantee that if you develop an instinct for looking at investing in the way John Bogle views it, you 'll find that there isn't much out there to trump his reliable advice. You'll also insulate yourself from 90 percent of the half-baked schemes that many so-called "investment advisors" try to push on their clients. As an aside, one of the best pieces of advice I ever ran across was a suggestion to put yourself on a "retirement budget" well before you actually retire. So about 3 years before my wife retired from her state employment, we calculated her net benefit and used a savings withdrawal to reduce her take home pay down to that figure. We became accustomed to that smaller check so there was no shock to the budget when she actually retired. Of course the saving accumulation ended when she retired, but we had some extra nest egg socked away. We had been very conservative in our estimates, so she actually got a small raise in her monthly benefit when she retired. I still work full time and will probably continue to do accounting and tax work until I lose my balance, but we will probably do some sort of similar transition if or when I ever give it up.

Based on the info you provided, he probably does not qualify for an OIC. Howver, he should file the return without payment or with a token payment in order to be sure he doesn't put it off until the last minute and risk a late-filing penalty. When the bill comes in the mail, he can call IRS and set up a payment plan for about $160 per month. this can be done in about fifteen minutes if he owes no other taxes and is current on his filings. The combined interest and FTP penalty will work out to about a 14 per cent APR, and if he can borrow the money at a lower rate he should do that instead. However, you said his credit is shot so this may be his only option right now. At this rate it will take him about 5 years to pay off the tax debt, but at least he has some certainty and he doesn't have to worry about the IRS knocking at his door or serving a levy on his earnings. During the repayment period, if he gets some extra money or decides he can pay more than the minimum, IRS will gladly accept the extra and he will benefit by paying a little less interest. The mistake most people make when setting up a payment arrangement is in not taking the maximum repayment term. It's smarter to spread it out over the longest possible period in order to keep the payment as low as possible and thus to avoid the risk of default. They can always accelerate payment if circumstances permit.

Every time I complain about anything concerning printing, I keep getting told to e-fling the return and give the client a CD with the return printed on it. That's supposed to make all printing problems evaporate for eternity. :)

I always thought ATX should offer a "shoebox entry" page for Schedule A, similar to one offered in Ultra Tax. It's a single page with about 4 entry lies for each major category on Schedule A. For clients with fairly straightforward itemized deduction situations, it's quick & easy to pop the entries in on the single page and move on to other parts of the return. I suggested it to ATX at one point, but I was told I could build my own. After having a couple of customized worksheets trashed by program updates, I stopped trying to do anything custom that involved calculations.

I hope he didn't hear this from his mechanic or hairstylist. After all, most clients recognize their superior knowledge of tax matters and it's really difficult to dissuade the client after they get info from those trusted sources.

I got the call reminding me to renew by May 27 as well. It came in on my voice mail at 9:30 pm on Monday the 31st. (Maybe they were just planning ahead & getting in their calls for 2011)

This has been a fascinating thread, mainly to hear the various perspectives concerning the payment of penalties & interest when the preparer makes a mistake. I'm not ready to criticize anyone's approach, yet I've seen some things I would consider depending upon the circumstances and other things I would never consider under any circumstances. One thing I've taken away from this is a personal resolution to re-think what is and is not in the engagement letter, since it's clear that this is where the conversation with the client (and the liability) begins.

Sorry for being flippant - but as you know, one gets jaded after a few years of this sort of thing. From the additional info you've posted, it sounds like there may be some sort of bureaucratic hiccup here. Maybe you can use that to your client's advantage to gain some extra time to respond.

What are the odds he did receive a CP2000 and ignored it, hoping the problem would go away? I'd choose something between 99% and 100%. (Unless there has been a recent change of address.)

Good question. Tim Geithner told him he could efile through Turbo Tax and save himself a bundle in filing fees and taxes. Plus, no penalties if you make a "mistake". Seems like he's a trustworthy source of info,.

At some point you have to put an end to things and decide how much time you're going to invest in a $60 dispute. There are cases in which I've refused to pay interest, other cases in which I've paid part of the interest and some in which I've paid it all. (plus penalties if I coudln't get them abated) You have to use your judgement rather than rely upon (or hide behind) some sort of inflexible policy. In this case I'd probably send her a check for the $60, plus enough additional interest to get her through 60-90 days, and tell her that after that she'll be on her own. That should give her enough time to get the money together, but if not then she will just have to work out her problems with IRS from that point forward. They are pretty easy to work with, so you could fill out the 9465 and enclose it with the check.

I wouldn't want my tax return prepared by someone who relied upon an input sheet for anything beyond using it as a reminder or checklist. If they need the input screen to tell them how to actually prepare the return, they need to stick to short forms and very simple returns.

Ken: That is very good news. Thanks for posting and thanks for being willing to give your time in this effort.

For what it's worth, the $1,600 that turned into $6,000 isn't as bad as it first appears. The FTF penalty maxes out at 25%, so the effective interest rate represented by this penalty actually DECREASES when averaged over a long period of time. Even when you add in the ongoing FTP penalties and interest, and I'll bet you his actual cost of borrowing the $1,600 from the government will work out to an equivalent of about 15 - 17% APR if you run the math. I consider the penalty to be no different that interest for an individual, since interest on consumer debt is not deductible anyhow. So both penalties and interest can be lumped together as simply a cost of borrowing money. Certainly not wise to borrow money at those rates, but it's cheaper than standard credit card rates and he didn't even have to fill out an application. The unauthorized borrowing also didn't show up anywhere on his credit reports (at least not until the liens are filed, if any). I've used this line of reasoning in the past to help a delinquent taxpayer understand what really happened. Sometimes it helps them to realize that the situation is less dire than it first appears and makes it easier for them to stomach repaying the money. Doesn't make it a wise thing to do, but it makes the point that the government isn't horribly mistreating them either. Nobody would expect the bank to loan them $1,600 for 5-8 years with no payment of principal or interest on the note and then not expect to pay accumulated interest when the balloon payment came due.

Happy anniversary Eric & Brandy. I remember when my wife and I celebrated our 5th anniversary. That was 35 years ago, but still a milestone at the time. (Every anniversary is special)

If the distribution took place in 2009, it will show on the taxpayer's 2009 tax return. If it takes place in 2010, it will show on the taxpayer's 2010 tax return. All of this is irrespective of the year showing on the corporation's tax return, although the return for the FY ending 3/31/10 would be the 2009 return. The year of a FY tax return is normally the year in which the FY began.