Tuesday, August 19, 2014


* Did you see the “Message from My Cat” yet?

* Eva Rosenberg of EQUIFAX explains “What You Need to Know About Inheritance Taxes”, specifically dealing with whether or not an inheritance is taxable.

* At FORBES.COM David Brunori tells us “Congress Shouldn't Make State Tax Systems Worse”.  Easier said then done!

I like, and agree wholeheartedly with, David’s introductory statements –

Our national legislature, whether the Democratically controlled Senate or the GOP-led House, is a joke.

Congress certainly doesn’t do taxes well, or at least it hasn’t since 1986. The federal corporate tax needs to be reformed. The personal income tax could stand some good tax policy revisions as well. Members of Congress have very little knowledge about good tax policy . . .”

* Did you know “The IRS Has a Tax Cheat Sheet for Small Business Owners”?  So we are told by FOX BUSINESS.

Think what you will of the IRS and its past and current management, the Service’s website has some great resources.

* Kay Bell asks “Would You Trust Your Taxes to a Robot?” at DON’T MESS WITH TAXES.

She tells us –

Most of the folks who participated in Pew Research Center's 2014 Future of the Internet canvass said they expect robotics and artificial intelligence, or AI, will permeate much of our daily lives by 2025.”

And also refers to “the September 2013 paper "The Future of Employment: How Susceptible Are Jobs to Comptuterisation?" by Carl Benedikt Frey and Michael A. Osborne”.

Tax preparers have a 99 percent potential for computerizationon on the Frey/Osborne list.  However, this certainly will not happen in my lifetime.

Kay correctly observes –

While on paper, tax preparation with all its forms and math calculations looks to be a good fit for total computerization, we know that won't happen. Trained people always will be needed to decipher the laws that govern the required paperwork.

More importantly, we'll need people to help work out strategies for the best, most money-saving application of the tax laws.”

Hey, aren’t many returns already being prepared by “robots” – or at least computers?  Most employees of Henry and Richard and other fast food preparation chains are nothing more than data entry clerks – with the return actually being prepared, often erroneously and always expensively, by computerized tax preparation software.  And unfortunately this situation is not limited to fast food chains.

I like Kay’s tax preparation scenario with Hal, “the implacable, and lip-reading space craft controller in 2001: A Space Odyssey”.

* USA TODAY brings us some disturbing news – “A Third of People Have Nothing Saved for Retirement”.

A lot of folk have empty nest eggs. A third of people (36%) in this country have nothing saved for retirement, a new survey shows.

In fact, 14% of people 65 and older have no retirement savings; 26% of those 50 to 64 have nothing saved; 33%, 30 to 49; and 69%, 18 to 29, according to the survey of 1,003 adults, conducted for Bankrate.com.”

What about you?


This past week-end was the 45th Anniversary of the Woodstock Music and Arts Fair at Max Yasgur’s farm in Bethel Woods NY.

I was in the area, spending summer vacation in Beach Lake PA, during the original festival – but was only 15 and too young to attend.  I do remember seeing overhead shots of the crowds in the Sunday News.

My family had driven to Lake Huntington NY, less than ten miles from Yasgur’s farm, (where my mother grew up; she told me that she knew Max Yasgur in her youth), and we stopped at a local general store.  The proprietor told my father he had nothing to sell him because the “hippies” had bought everything in the store!  

Earlier this summer I went to the Bethel Woods Center for the Arts, on the site of the original festival, to see Crosby, Stills and Nash, who had performed at Woodstock.


Monday, August 18, 2014


For years now, when asked by clients or readers, “How long should I keep my tax records?” I have recommended that you keep the copy of your actual Form 1040 (or 1040A) with all attached forms and schedules forever. 
My reasons - your 1040s provide a permanent record of your financial history, and you never know when the information on a prior year’s tax return will come in handy for a variety of tax or financial related reasons, or just to satisfy personal curiosity.

I now add to this advice also keep copies of all your W-2s forever.

Just the other day a long-time client asked me if I had copies of his wife’s 1998 and 1999 Form W-2s.  He had not saved them, and needed the forms for an issue with his wife’s employer, who had lost their records for past years in a flood and did not have back-up copies stored elsewhere.  While I have copies of his 1040s back to the mid-70s, I did not have a copy of the needed W-2s.  Back then I was not keeping copies of W-2s and other information returns. 

FYI, I did start making copies of at least W-2s and 1099-Rs to attach to my copy of client returns in the early 2000’s.

During the tax filing season I came across a situation where a client, a retired municipal police officer, took a distribution from his deferred compensation account.  The distribution was fully taxable on the federal return, as employee contributions were “pre-tax”.  But for NJ state income tax purposes employee contributions were not “pre-tax”, so he had a “basis” in the account and at least some of the distribution would be considered a tax-free return of contributions.

I told the client to call the account trustee and ask for the total amount of employee contributions to the plan over the term of his employment.  However, because the trustee had changed several times over the years, information was only available for contributions made since 2000.  The client, who first came to me in the early 2000’s, had joined the police force in the 1980s. 

The trustee told my client to get the information for the years before 2000 from his W-2s.  Client contributions to retirement plans are usually reported in Box 12 or Box 14 of Form W-2.  Of course the client did not have copies of all his W-2s going back that far, nor had he kept copies of all of the year-end account statements.

So you see, you never know when you will need the information reported on a Form W-2. 
I provided the client looking for his wife's W-2s with the information I found on the IRS website -
"The IRS does not retain actual copies of Form W-2 except as an attachment to your tax return, for prior years. However, the IRS maintains (and will provide free of charge) Form W-2 information for any purpose for the past ten processing years. Use Form 4506-T (PDF), Request for Transcript of Tax Return, to request Form W-2 information. The only way to get an actual copy of your Form W-2 from the IRS is to order a copy of the entire return on Form 4506 (PDF), Request for Copy of Tax Return, and pay a fee of $50.00 for each return requested."
So the bottom line - keep copies of all your W-2s forever.


Friday, August 15, 2014


* Hey tax pros – I am still waiting to hear your thoughts on the topics discussed in the premier “issue” of THE TAX PROFESSIONAL!

* Did you see the “Message from My Cat”?

* EA, CPA, JD, ATP, AFSP – what’s the story?  I explain the different “initials” as they relate to tax preparation at FIND A TAXPROFESSIONAL.

* Jason Dinesen brings to our attention a “Rare Home Office Deduction Win in Tax Court” at DINESEN TAX TIMES.

The case concerns the use of a studio apartment as a home office and the Court-upheld fact that “de minimis personal usage of office space is impossible to avoid in a studio apartment”.

* And Jason discusses “Proper Documentation of Business Expenses”.

Bottom line = “Keep your receipts”.

* NOLA.COM reports that the Louisiana “Revenue Department Announces Tax Amnesty Program” -

The Louisiana Department of Revenue announced Tuesday its plans to host a tax amnesty program for 30 days in October and November.

The amnesty program would allow noncompliant taxpayers an opportunity to settle their accounts with the state by paying all of their delinquent taxes, while receiving a waiver of penalties and 50 percent of the interest owed for tax balances prior to Jan. 1, 2014.

Noncompliant taxpayers include those who failed to file a tax return, those who did not report all income or tax, interest and penalties, those who claimed incorrect deductions, and those who misrepresented or omitted any tax due.”

* A thoughtful post with some good advice from FORBES.COM’s TaxGirl Kelly Philips Erb - “Think Before You Post: The Dangers Of Seeking Tax Advice On The Internet”.

* And, in case you are interested, Kelly tells us “Tax Revenues Still On Pace To Break Records In 2014”.

The government still spends more than it makes, but there is some good news on this front (highlight is mine) –

Our outlays still outpace our revenues for the year, leaving a deficit of just over $460 billion. And although that number seems impossibly big, it’s down 24% from the same time last year.”  

* According to the LIFE AND TAXES blog of the “other” NSA “IRS Repeats Warning about Phone Scams After Over $5 Million Stolen”.

The post quotes IRS Commissioner John Koskinen –

Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail.”

And it also points out -

Additionally, it is important for taxpayers to know that the IRS:

• Never asks for credit card, debit card or prepaid card information over the telephone.

• Never insists that taxpayers use a specific payment method to pay tax obligations.

• Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies.”

So always remember – the IRS will NEVER email you or call you on the telephone!


Here is a question I have always wanted to ask the likes of Matt Lauer –

You interview kings and presidents, politicians, legitimate actors, heroes, real newsmakers – all people with actual talent or ability and worth who contribute to society and have something of value to say or share.  Do you feel insulted when you are forced to interview self-important reality tv “stars” like Kardashians, real housewives, and the Trumpster – people with no talent and nothing of value to share with or contribute to society?

Thursday, August 14, 2014



My name is TURBO.  I am the adopted son of Wandering Tax Pro Robert D Flach.

Before coming to live with my new father I resided at the Dessin Animal Shelter just outside of “downtown” Honesdale PA.

My former home is currently in financial trouble.  The shelter is facing shut-down due to lack of funding.  Many of my friends still live at the shelter.  Could you please help?

Click here to donate online.

Or mail your check to –

Dessin Animal Shelter
138 Miller Dr.
Honesdale, PA 18431

Here is another way you can help yourself and Dessin at the same time.

If you order any of the books or forms compilations listed below between now and the end of September we will donate 50% of the purchase price to the Dessin Animal Shelter!

So you can help yourself by getting great tax advice, information, and resources at a great price, help support the continuation of my father’s blog, and help Dessin Animal Shelter!  What could be better?

When ordering one of the above products send your check or money order, payable to TAXES AND ACCOUNTING, INC, to –


Thank you!
And, as my father always ends, TTFN

Tuesday, August 12, 2014


* Check out my article “Deducting Mortgage Interest on Your Taxes” at the MainStreet.com TAX CENTER.

* Tax professionals – I am still waiting to hear your thoughts on my “Solution to the Question of a Voluntary Tax Preparer Credential” in the August issue of THE TAX PROFESSIONAL.    

* Fellow tax and personal finance bloggers – would you like a free review copy of THE NEW SCHEDULE C NOTEBOOK?  It is yours for the asking – email rdftaxpro@yahoo.com with “Review Copy Request” in the “subject line”.  Of course I will expect an honest review of the book.

* Did you hear?  FTC Sending $16 Million to Former American Tax Relief Clients. Don't Fall for Tax Relief Scams in the First Place”.  So Kay Bell tells us at DON’T MESS WITH TAXES.

American Tax Relief is one of those companies who promised in tv ads that they could settle your tax debt for “pennies on the dollar”.

Don’t believe anyone who promises to settle your tax debts for “pennies on the dollar”!  If you have tax debt do not pay attention to tv commercials.  Consult your own tax professional first.  Or seek out a reputable, competent tax professional in your area who is experienced in tax representation and resolution.  You can use the database searches available at FIND A TAX PROFESSIONAL.

Kay’s post quotes some excellent advice from the FTC –

Ignore promises from any company that says you are ‘qualified’ or ‘eligible’ for a tax relief program to resolve your tax debt. Only the IRS or your state tax officials can make that determination.

Walk away if a company requires a fee in advance for tax relief services.”
If only those who were ripped off by American Tax Relief had sent the money they paid ATR to the IRS towards their debt instead.

* The following is from the NATP TAXPRO WEEKLY email newsletter (highlight is mine) -

In a recent IRS Approved CE Provider conference call, it was announced that in the upcoming Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, those who have obtained the Annual Filing Season Program (AFSP) Record of Completion for that tax season will be listed with AFSP after his/her name (i.e., Jamaal Harris, AFSP). It was also mentioned that tax preparers will be allowed to use the AFSP as a designation on business cards and other marketing materials—for the tax season in which they have received the Record of Completion.”

One of the major objections to this new voluntary program was that it did not provide tax professionals who meet the requirements with a legitimate “credential”, like Registered Tax Return Preparer (RTRP).  This new development is not really a legitimate “credential”, although it is some kind of “designation”.

If “EA” (Enrolled Agent) is confusing, you can bet that “AFSP” will be even more confusing.

* Jean Murray lists the “5 Biggest Mistakes Business Owners Make” at ABOUT.COM.

Of course in #5 she really means to say “Not getting advice from both an attorney and a tax professional.”


Congratulations to NJ Chapter of the National Association of Tax Professionals for winning Chapter of the year in Community Betterment for 2013 at the NATP Annual Conference. 

While I now live in PA, my clients are from NJ and I still think of myself as a member of the NJ chapter (and write for their newsletter).

And congratulations to Marilyn H Ayers, NJ chapter President, for being named Tax Professional of the Year!  And to Jaimee Hammer, past NJ chapter President, for winning NATP Chapter Person of the Year Honorable Mention!

I am not at the conference this year because it is in Orlando – I’ve already been there twice before for conferences and that is enough.  It is hot enough here in PA!  But I will be in New Orleans for the conference next summer.

And I will be attending NATP’s new Tax Forum & Expo in Atlantic City next month.  This new event replaces the IRS east coast Nationwide Tax Forum that used to be held in either Atlantic City or New York City but is now in Maryland.

BTW – if you are a member of NATP from NJ I recommend you join the chapter’s Spacebook group.  Click here.


Monday, August 11, 2014


In discussing “tax inversions” President Obama recently said -

You have accountants going to some big corporations — multinational corporations but that are clearly U.S.-based and have the bulk of their operations in the United States — and these accountants are saying, you know what, we found a great loophole — if you just flip your citizenship to another country, even though it’s just a paper transaction, we think we can get you out of paying a whole bunch of taxes.

Well, it’s not fair. It’s not right.”  

It may not be fair – but there is nothing wrong, illegal, immoral, or unethical with an accountant or tax professional telling a client “we found a great loophole”. 

Here is another quote, from Judge Learned Hand’s decision in Commissioner v. Newman, 159 F2d 848 (1947) (the highlights are mine) -

Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”

Judge Hand also wrote that a taxpayer -"is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes.”

Here is another quote, this one from me –

Hey, BO, if the idiots in Congress create, or allow, a tax loophole accountants, and taxpayers, have a perfect legal right to take advantage of it, whether or not it is ‘appropriate’ or should exist in the first place.”

I do not believe that the Earned Income Credit and the various tax benefits for higher education should be in the Tax Code.  Government social welfare programs should not be distributed via the Form 1040.  It’s not right.

But this does not mean that I will not claim the Earned Income Credit, education tax benefits, the residential energy credit, etc. for a qualifying client.  If I did not claim these credits and deductions for qualifying clients I would not be doing my job properly.  

If there is something wrong with the Tax Code do not blame the accountant or tax professional.  We have a moral and ethical responsibility to bring to our clients’ attention all the legal deductions, credits, loopholes, techniques, and strategies that are available to reduce their federal and state tax liabilities to the least possible amounts.

The fault lies clearly with the idiots in Congress.  Accountants and tax professionals do not write the Tax Code.  The idiots in Congress do.

So Mr. President, if you think something in the Tax Code is “not fair” or “not right” don’t “shoot the messenger”.  Tell the idiots in Congress to fix it. 


Friday, August 8, 2014


* Tax professionals – have you seen THE TAX PROFESSIONAL yet?  Why not?  Check it out and let me know what you think.

A special public thank you to Joe Kristan of THE ROTH AND COMPANY TAX UPDATE BLOG for plugging TTP in a recent BUZZ-like Tax Round-Up.

* At CPA TRENDLINES Ed Mendlowitz lists “23 Reasons Clients Really Need YOU for Taxes”. 

While the intended audience of the article is professional accountants and tax consultants, taxpayers can look at it as a list of reasons why they should consult a professional accountant.  All the reasons obviously do not apply to all taxpayers, but many do.

Of course when reading these 23 items delete “CPA” or replace it with “Accountant” or “Tax Pro”.

* I have been preparing taxes for over 40 years, and I had never heard of the term “tax inversions” until the recent debate.  Thanks to Kyle Pomerleau for telling us “Everything You Need to Know About Corporate Inversions” at the Tax Foundation’s TAX POLICY BLOG.

* While on the subject, ACCOUNTING TODAY reports “Obama Blames Accountants for Inversion Trend”.

Hey, BO, if the idiots in Congress create, or allow, a tax loophole accountants, and taxpayers, have a perfect legal right to take advantage of it, whether or not it is “appropriate” or should exist in the first place.   

* Kay Bell give us an “August To-Do List: Vacation, Shopping, School and Taxes” at DON’T MESS WITH TAXES.

* The IRS has some good information in “Topic 157 - Change Your Address – How to Notify the IRS”.

* JK LASSER provides a primer on “Dispositions of Passive Activities”.

The Tax Reform Act of 1986 was “supposed” to simplify the Tax Code.  It did, to some degree, by reducing the number of tax brackets and eliminating deductions.  But in many ways it made the Code even more complicated.  The passive activity rules are a good example.

* Julian Block brings us the word that “Disasters Come with Tax Breaks—Know the Rules” at ACCOUNTINGWEB.

* Kevin Murray of MURRAY TAX SERVICES, LLC explains The Rule of 72 in his post “How Long Will It Take to Double My Money?

* Jason Dinesen rightfully gives “Kudos to NAEA for Promoting EAs” at DINESEN TAX TIMES.

The Enrolled Agent (EA) credential is not well known or understood among the taxpayer public.  The title itself is confusing, and many uninformed taxpayers erroneously think that an EA is an employee or agent of the IRS.  The acknowledgements due to EAs are too often falsely applied to CPAs.  The initials CPA have absolutely nothing whatsoever to do with knowledge or proficiency in preparing 1040s – while the initials EA do.

Jason has been a vocal critic of the National Association of Enrolled Agents (NAEA) for failing to properly promote the credential.  But I give them credit when it’s due”, he says in response to two unique new “public outreach efforts”. 

While not an EA myself, I have attempted in my writings to highlight the value of the Enrolled Agent credential as part of my crusade to debunk the totally untrue “urban tax myth” that a CPA is automatically a 1040 expert.

Part of the problem is uninformed journalists who, when discussing an income tax issue, will wrongly advise readers to “consult your CPA” or “check with a CPA” when they should be saying “consult your tax professional” or “check with a tax professional”.  An EA is a proven tax professional.  While a particular CPA may be a knowledgeable and competent tax professional, the mere possession of these initials after one’s name does not in itself indicate that the holder is a tax professional.