Our Taxing Times

CP2000 - email

There is someone sending potentially dangerous emails out under an URL and Subject that looks as it was sent by the IRS. They even mention the infamous IRS CP2000 notice. These are fake, they did not come from the IRS. The IRS does not send out these notices by email.

For all the info on these scams, please check the IRS website.

Free Tax Return Copies

I usually ignore all the press release in my in box. Most are from competitors and I won't publicize their programs and products on my website or blog. But this one could help the taxpayer who is doing their own return. I have long lamented the problems I face with people who don't keep a copy of the return they prepared. Hopefully, this will be a good incentive to keep a copy of your return.

Office Depot is once again offering customers free copies of their 2009 tax returns, up to 25 single-sided pages, from now through April 15, 2010. Customers will be able to participate in this special offer by visiting the copy and print center in any one of the more than 1,100 Office Depot retail store locations nationwide.

Women's Fair 2010

You've got to take promotional opportunities when the come your way, even if it's tax season.

I will have a booth at both the Ark City and Winfield KSOK Women's Fairs again this year.

Ark City is Tuesday March 23rd at the Wright Room in the Brown Center at Cowley College. Doors open at 5:30pm and it will wind up at 8pm. You can visit with local businesses, see a style show, enjoy food and drink and possibly win one of over 25 door prizes (must be present to win.)

Winfield's is the following Tuesday, the 30th, at 700 Gary St (Baden Square). The same times and activities but with some different vendors.

Please come by and say Hello!. As always, I'll have some giveaways and you can sign up for my door prize.

Preparer Registration - The Details

Earlier this year, the IRS released their plans for tax return preparer registration and testing. Some tentative details are starting to emerge. The IRS is, of course, saying all details are subject to change.

Phase 1

Online registration will open in September of 2010. All return preparers will be required to obtain a PTIN (preparer tax identification number). If you have a PTIN, you will still have to register but it looks like you will keep the same number. Everyone preparing tax returns for a fee will be required to register and pay a fee including EAs, CPAs and lawyers.

By January 1, 20111 all paid preparers must be registered and using a PTIN. The continuing education requirement of 15 hours a year will begin then.

Phase 2

Competency testing will begin April 1, 2011. Also at this time, CPE tracking, renewal capability and tax compliance checks will also begin. Unenrolled preparers will have 3 years to pass a competency test. They may take it an unlimited number of times in the first three years. Existing preparers may get a PTIN then take the test but new preparers must pass the test first to get the PTIN.

Tax Compliance

During the first 3 years, all paid preparers will be subject to tax compliancy checks. After the phase in period, the check will be done before the PTIN is issued or renewed.

Still Coming

There will be a public database of registered preparers but no launch date has been set. Nor has the IRS released any info about any public education campaign to get the word out to preparers and the public about the changes. The amounts of the fees have yet to be set.

It's Not the Preparer's Fault!

Yeah, tax professionals make mistakes. That's why you want to pick a good preparer and still check your return and ask questions. But if you're consistently ending up with a balance due on your return, may be you should take the preparer's suggestions and up your withholding or increase your estimates. Just a suggestion.

Part of this job is letting clients vent about their taxes. But there is a point where is stops being simple venting and becomes a pity party. A preparer can make suggestions on how you can get better results next year but they can't change the rules. Yes, taxable social security and AMT have issues but no preparer can legally do something about them. That's Congress's job. Taxes stink...yeah we get it. But you still have to pay them and all the whining in the world won't change that. You have a choice to pre-pay now or pay later. It's up to you. But if you aren't willing to take control of your taxes, please don't use your preparer as a whipping post to make yourself feel better.

IRS Expands Efforts to Assist Financially Challenged Taxpayers

The IRS is expanding a program it started a year ago to help taxpayers who are caught in the current economic mess.

• More flexibility in the Offer in Compromise program. IRS employers can now consider current and potential income in calculating the offer instead of just the past income.
• More Saturday Open Houses where taxpayers can meet face to face with IRS employees to resolve issues.
• A new special section on irs.gov outlining resources for struggling taxpayers.
• Coordinating with states to help the unemployed meet their tax liabilities.

The IRS will be continuing other programs and full info can be found in the IRS press release.

Look It Up!

I am dumbfounded. I was on a tax forum I follow and saw a tax question posted. It was a basic question that illustrates why testing of tax preparers is so important. The question the poster was asking was; “How much is the per diem for a truck driver?” Do I know the current rate off the top of my head? No, that is what I have reference books for. But I do know that there is a special rate and what is needed to qualify. I know there are a couple of ways for it to be reported, depending on the employment status of the taxpayer. The problem is that the post gave me the distant impression that the preparer didn’t know much about the situation beyond that the client wanted to use “per diem.” This scares me and raises two issues I want to address. The first is the basic problem of narrowness of tax knowledge and the other is research.

When I started preparing taxes in 1988, I worked for the local H&R Block franchisee. I got the job because I took the HRB basic tax class. At that time, the class was 20 three hour sessions and I put in at least that much time preparing for the next class. The class covered not just W-2s and investment income but farms, rentals and businesses. I learned how to handle itemized deductions and casualty losses. In short, 70% of the returns I currently prepare would be covered by that class. The most important part of preparation, I also learned in that class, that I would have to do research. I learned to use a Pub 17 and look up questions when I came across something new. I could ask the boss questions but if I hadn’t done the research first, I would be sent to look it up. Today, I am surrounded by reference materials that I grab to verify my memory or research a question. I have found clients don’t mind being told that I want to check something for sure.

Too many new preparers are not as well trained now. They are starting with a few accounting courses with tax sections or one college class covering the theory of taxation. The HRB class doesn’t cover as much as it once did and the other chains tend to focus more on using their software than tax information. Add in people who think they can do a client’s return because they can do their own, and you have too many people getting into a business they barely know the basics of. That in itself doesn’t have to be a problem if the preparer understands their limitations and is willing to research and study to increase their knowledge base. But first they have to understand their limits and this is why I think that testing is a great idea. Testing can show the preparer their strengths and weaknesses. I think there will be many preparers who will get a surprise when they don’t score as well as they thought they would. Once they know their limits, maybe they will take the continuing education requirements more seriously and research questions new to them.

Until then, prepares need to take the time to research new tax issues. It might sound like a basic question, after all the client seems to know about it. But it’s the preparer’s job to preparer an accurate return and not the return the client has in their head.