Our Taxing Times

Too Many Addresses

The IRS has too many address. I realize that they can't have everything going through one place. That is just too much for any one to handle. And I understand the logic of sending the return to one place and the money to another. My problem is when you receive a notice.
I just saw a notice that had Holtsville, NY in the letterhead. On the top of the second page, Cincinnati Service Center was printed. Since I did not have the return envelope for this letter, I called the IRS to find which service center was handling the notice for that client and was told to mail it to the Ogden, UT service center. Help!!.
Simple Idea: Put the return address on the first page.

Scams

The IRS is seriously going after tax scams and their promoters. While most are targeted at people with lots of money, a few are going after the middle imcomers. My favorite is setting up a business for the office in home deduction. There are a few people who are making lots of money telling the public how to "tax shelter" their money. It goes to the old adage:

If it looks to good to be true, it probably is!

For more information on tax scams, I have two web sites. The first is the IRS scam pages and the second is Quatloos, the Cyper Museum of Scams and Frauds

Licensing Tax Preparers

It looks like income tax preparers and refund loan providers will soon have to register with the IRS in order to sign as a paid preparer or to offer RAL's.

Last year, the House of Representatives passed HR 1528 and yesterday (May 19th) the Senate added their version, S 882, on as an amendment and passed it. I am sure there are some details to work out in conference, and the President will need sign it, but look for some panicked tax professionals. The proposed law would require a basic exam and annual updates along with a background check to get a registration number. To get more information, The Thomas Web Site will let you search under either number. (I am sorry I can't give you the exact URL, but it times out.) The registration info is under Subtitle B section 141.

Is this a good thing. Yes! In 48 states, CA and OR have state licensing, anyone can call themselves a tax preparer and charge to fill out returns. This legislation was triggered by the number of car dealerships, pawn shops, and loan companies offering to prepare returns for customers who will use their service (buy a car, borrow against the refund). In order to maximize the refund, some preparers have ignore the tax code and prepared fraudulent returns. This and the problems that have plagued the Refund loan program are the reasons for this law. The IRS is create a public awareness campaign explaining the new requirements. There are also some stiff penalties for working without a license. This could be interesting!

There is a lot more to this law and I will be talking about it here.

Taxpayer input.

The IRS is looking for taxpayer input on our tax system. They are trying to identify problems with the system that make it harder for taxpayers to get their forms filed. For more information, the IRS has released this press release.

Congress Update

There has been a small flurry of activity in Congress that pertains to taxes. Since this is an election year, Congress will be taking a longer summer break so some of these bill may not get finished soon.
The House is working to extend the most recent tax breaks for a few extra years. They have passed and sent to the Senate bills that extend the AMT relief and the marriage penalty relief. They have before them a bill that will extend the increase in the 10% tax bracket for a few more years. We all knew this was coming. Passing the bill looks good to the voters. By not making them permanent, Congress has given themselves a way out when the deficit soars.
The Senate has put on their calendar a bill that will reform tax administration. The house passed it last year but the Finance Committee add several things including the licensing of tax preparers. If the full Senate, pass the bill the two houses will have to work out a compromise.
It could be an interesting few months.

A new look!

If you have been here before you will notice the new and more dramatic look. This is to tie in with the re-design of my web site McIntire Income Tax Center. Now that the basics are done, I will go to work expanding the information that is available there. Please keep checking back.

E-Mail Scam.

The IRS is warning that a scam is being targeted at taxpayers. According to the National Association of Tax Professionals:

Official-looking e-mails are being sent to taxpayers asking for personal financial information. The IRS is reminding taxpayers and a tax professionals that they do not contact taxpayers using e-mail, only on official IRS stationery. If your clients receive an e-mail that looks like it came from the IRS, tell them to delete it. If they mistakenly replied to the e-mail, they must contact the Treasury Inspector General at 800.336.4484 or the IRS at 800.829.1040.

Nothing is on the IRS web site yet. Once something is posted, I will post a link.

Plan for next year's taxes.

If you didn't like the way your taxes came out, there is a easy way to change the bottom line. You can change your W-4 at work. Changing your W-4 will instruct your employer to with hold more or less for taxes. This is not going to change your tax but it may mean not writing a check on April 15th. And let's face it, a smaller paycheck can be easier to live with than writing a big check.
Ask your employer or tax professional for a W-4. You might want to find out how you're currently set up. A few quick notes, you can claim single even if you are married. Also, the fewer the number of exemptions you claim the more money that is withheld. Finally, you can ask to have a set additional amount withheld from each check. You can use the attached worksheet but it is designed to get you to a break even stage. It can be confusing and create real problems if you are a part of a two income couple or you have two jobs at the same time. Need help, call your tax pro.
A little planning now can make your life nicer next spring.

It's Back!

The staple of election year rhetoric is back: the Flat Tax. In theory it sounds good, tax every one at the same rate. Your tax return could be done on a postcard and we can get rid of the big meanny, the IRS. Yeah, right! We will see what proposals come forth and keep track of what happens when the election is over.
The questions to consider are: what deductions will be allowed, what rate will it take to keep the revenues the same, how are they going to handle business taxes, and what income will be taxed. My big question is how long will a flat tax last once we have it. In 1986, The Tax Reform Act of 1986 cleaned up the tax code. Now look at it.