There has been a lot of good BUZZ lately – which calls for another special Wednesday edition. I may possibly make the BUZZ a twice-weekly event from now on.
* Oi vey! WebCPA reports that “IRS Overlooks Hundreds of Big Overdue Accounts”!
According to the item (highlight is mine), “A new report from the Treasury Inspector General of Tax Administration found that as of Dec. 22, 2007, there were 2,454 individual taxpayers in the IRS’s potentially collectible inventory each owing over $1 million in taxes, interest and penalties. The IRS was actively pursuing 2,006 of the delinquent taxpayers for collection, but TIGTA identified 448 accounts totaling approximately $1.2 billion that were in a queue awaiting field assignment or had been shelved.”
* It seems that TIGTA has been busy. Kay Bell tells us about a TIGTA report titled "An Appropriate Methodology Has Been Developed for Conducting the National Research Program Study to Measure the Voluntary Compliance of Individual Income Taxpayers." In her post “Tax Audits from Hell for Eternity” at DON’T MESS WITH TAXES.
Apparently, according to TIGTA, these “audits from hell”, aka National Research Program (NRP) audits, “are doing their job” and we should “expect these random audits of individual income tax returns to continue indefinitely”.
These audits are random in nature and a version of the real audit from hell from 1980s - the Taxpayer Compliance Measurement Program (TCMP) – in which every single line on a return chosen had to be verified. For example, if claiming Married Filing Joint you had to show the IRS a copy of your marriage certificate.
While I did not have any personal dealings with a TCMP audit, one of my clients was chosen for review under NRP. As I described in an earlier post on the subject - “the IRS couldn’t have made a better choice if they had asked me which of my clients I would want to be selected. They chose a client whose entire life is well documented via computer and hard copy back-up. We didn’t even go to the audit. I prepared a huge mailing of copies of all the requested documentation and mailed it to the auditor. Needless to say there was ‘no change’. I think the volume of my mailing intimidated the auditor. In gathering the information for the review we discovered a $25.00 error which I disclosed in my cover letter – but this was not indicated in the final audit report.”
* And before we leave DON’T MESS WITH TAXES, Kay points out that the “Stimulus Rebate Confusion Continues”, expanding on an item that I mentioned in last Wednesday’s special BUZZ (which Kay credits in her post).
Kay echoes my sentiments when she tells us, “I hate these gimmicky tax breaks”, referring to tax rebates. She goes on to say, quite correctly, “Politicians -- and yes, I use that word pointedly -- make most of these changes primarily for political gain, not because it's good tax policy. And the electorate encourages them, by clamoring for such immediate money-back options.”
Her bottom line is worth repeating again and again -
“Instead, federal lawmakers should get serious about making real, constructive and permanent changes to our tax system, like, for example, eliminating the alternative minimum tax. This parallel tax system has been tripping up more taxpayers every year for, uh, forever it seems, but every year, Congress can only seem to manage a temporary fix.
Sure, writing good tax policy is not an easy job, but it's not an impossible one either. And that's what Congress should be doing instead of crafting legislation that's designed simply to get them perpetually reelected.”
* Now that Bruce, the taxguy, is back to a regular schedule of blogging we can look forward to his weekly BUZZ-like “Passing the Week” post.
As for Bruce’s calling a fellow tax blogger a “Pompous Arrogant Ass” – I certainly concur! I have used much stronger language in my descriptions, although not in print, considering the nasty and derogatory tone the PAA’s responses to my posts and comments on a certain subject took. It turned from a civil discussion (at least on my part) to a personal attack on me. My thanks to Bruce for attempting to come “to my rescue”.
While Bruce and I read pretty much the same tax blogs, he does a bit more “wandering” among the Personal Finance blogosphere, and his Sunday recap always takes me to good tax and financial entries from non-tax bloggers. This past Sunday it took me to “Taxes Must Go Up Eventually” by Kevin at NO DEBT PLAN, a sad commentary on what we have to look forward to.
As to the question why must taxes go up eventually? - “Because no one in Congress is going to brave enough to cut spending in such a dramatic fashion to fix our problem. We’re spending more than we earn. We won’t spend less. There’s only one other side of the equation: earn more. How do governments earn more? Higher taxes.”
* Speaking of Bruce, he starts the week-off at taxguy with a discussion of “Home-Office Deductions”, with some input from yours truly.
* TAXGIRL Kelly Phillips Erb gives us the word that fat naked idiot “Richard Hatch Wants to Leave the Country”, apparently to appear on the 10th Anniversary edition of SURVIVOR, the piece of excrement that launched the so-called “reality show” genre. The cafone is currently under house arrest for tax evasion. Don’t you remember, he forgot to claim the $1 Million prize he won on tv on his tax return!
Actually it is alright with me if he leaves the country - as long as he promises never to come back! And, as Kay Bell tweets, “only if he's prohibited by court order from ever being nekkid again ... for any reason!”
However, as it turns out, according to a subsequent news item, “A federal judge in Rhode Island says 'Survivor' winner Richard Hatch cannot leave home confinement early to star in a 10th anniversary edition of the reality show in Samoa.”
* According to an article titled, “IRS Seeking To Tax Your Hobby” at Forbes.com “the Internal Revenue Service has issued a new manual to help its agents ferret out taxpayers improperly writing off the costs of hobbies”. You can click here to check out this new audit technique guide.
A 2007 report - by guess who, yes TIGTA again – “suggested that improper hobby loss claims cost the feds billions of dollars a year in tax revenues."
As I mentioned in earlier posts, the IRS will be paying special attention to Schedule C losses, and categorizing an activity as a “hobby” instead of a “business” changes the rules and greatly reduces any tax benefit.
The article provides some good advice, including –
“Keeping good records and operating in a businesslike manner can go a long way toward convincing agents the pursuit is a vocation rather than an avocation. For instance, the IRS manual tells agents to ask during a face-to-face interview if there is an existing written business plan for the activity, suggesting taxpayers would be well advised to develop one at the outset. Agents also are instructed to ask if the activity has its own bank account--something taxpayers would do well to set up before the IRS begins asking for records.”
* The IRS has issued a “draft” version of the 2009 Form 1040A. Click here to download. It has also issued the “draft” version of Form 5405 – First-Time Homebuyer Credit and Repayment of the Credit. Click here to download.
* Among the many surprises that taxpayers who make the mistake of going to H+R Block to have their taxes prepared face is the fact that, as I have pointed out many times in the past, Henry and Richard ain’t cheap! What would you expect? H+R spends millions on advertising each tax season, and it needs millions of dollars for legal fees and the settlement payments of the many, many lawsuits for deceptive advertising and other unethical business practices, most of which result from their usurious Refund Anticipation Loan offerings.
The Asbury Park Press brings us an AP story that identifies another reason why Henry and Richard charge such high fees - “H&R Block CEO gets $5.3M in 2009 Compensation”. Gott in Himmel!
According to the article H&R Block Inc. CEO Russell Smyth “received $712,500 in salary, a bonus of $783,750 tied to his agreement to join the company, and stock and options valued at almost $3.5 million on the day they were granted. He also received $289,978 in other compensation, which included a $200,000 relocation payment and $45,079 in legal expenses tied to negotiating his employment agreement.”
* Attention NJ residents – “P.L 2009 c. 69 provides that New Jersey Lottery winnings from prizes exceeding $10,000 are taxable for New Jersey Gross Income Tax purposes.” This is new for winnings in calendar year 2009. Previously, NJ residents were not taxed on any NJ Lottery winnings.
Click here to download “New Jersey Lottery Questions and Answers” from the NJ Division of Taxation.
* Now that the United States government has a substantial ownership stake in the new GM it can truly be said that, “What’s good for General Motors is good for the USA!” Showing my age again, I expect.
TTFN
* Oi vey! WebCPA reports that “IRS Overlooks Hundreds of Big Overdue Accounts”!
According to the item (highlight is mine), “A new report from the Treasury Inspector General of Tax Administration found that as of Dec. 22, 2007, there were 2,454 individual taxpayers in the IRS’s potentially collectible inventory each owing over $1 million in taxes, interest and penalties. The IRS was actively pursuing 2,006 of the delinquent taxpayers for collection, but TIGTA identified 448 accounts totaling approximately $1.2 billion that were in a queue awaiting field assignment or had been shelved.”
* It seems that TIGTA has been busy. Kay Bell tells us about a TIGTA report titled "An Appropriate Methodology Has Been Developed for Conducting the National Research Program Study to Measure the Voluntary Compliance of Individual Income Taxpayers." In her post “Tax Audits from Hell for Eternity” at DON’T MESS WITH TAXES.
Apparently, according to TIGTA, these “audits from hell”, aka National Research Program (NRP) audits, “are doing their job” and we should “expect these random audits of individual income tax returns to continue indefinitely”.
These audits are random in nature and a version of the real audit from hell from 1980s - the Taxpayer Compliance Measurement Program (TCMP) – in which every single line on a return chosen had to be verified. For example, if claiming Married Filing Joint you had to show the IRS a copy of your marriage certificate.
While I did not have any personal dealings with a TCMP audit, one of my clients was chosen for review under NRP. As I described in an earlier post on the subject - “the IRS couldn’t have made a better choice if they had asked me which of my clients I would want to be selected. They chose a client whose entire life is well documented via computer and hard copy back-up. We didn’t even go to the audit. I prepared a huge mailing of copies of all the requested documentation and mailed it to the auditor. Needless to say there was ‘no change’. I think the volume of my mailing intimidated the auditor. In gathering the information for the review we discovered a $25.00 error which I disclosed in my cover letter – but this was not indicated in the final audit report.”
* And before we leave DON’T MESS WITH TAXES, Kay points out that the “Stimulus Rebate Confusion Continues”, expanding on an item that I mentioned in last Wednesday’s special BUZZ (which Kay credits in her post).
Kay echoes my sentiments when she tells us, “I hate these gimmicky tax breaks”, referring to tax rebates. She goes on to say, quite correctly, “Politicians -- and yes, I use that word pointedly -- make most of these changes primarily for political gain, not because it's good tax policy. And the electorate encourages them, by clamoring for such immediate money-back options.”
Her bottom line is worth repeating again and again -
“Instead, federal lawmakers should get serious about making real, constructive and permanent changes to our tax system, like, for example, eliminating the alternative minimum tax. This parallel tax system has been tripping up more taxpayers every year for, uh, forever it seems, but every year, Congress can only seem to manage a temporary fix.
Sure, writing good tax policy is not an easy job, but it's not an impossible one either. And that's what Congress should be doing instead of crafting legislation that's designed simply to get them perpetually reelected.”
* Now that Bruce, the taxguy, is back to a regular schedule of blogging we can look forward to his weekly BUZZ-like “Passing the Week” post.
As for Bruce’s calling a fellow tax blogger a “Pompous Arrogant Ass” – I certainly concur! I have used much stronger language in my descriptions, although not in print, considering the nasty and derogatory tone the PAA’s responses to my posts and comments on a certain subject took. It turned from a civil discussion (at least on my part) to a personal attack on me. My thanks to Bruce for attempting to come “to my rescue”.
While Bruce and I read pretty much the same tax blogs, he does a bit more “wandering” among the Personal Finance blogosphere, and his Sunday recap always takes me to good tax and financial entries from non-tax bloggers. This past Sunday it took me to “Taxes Must Go Up Eventually” by Kevin at NO DEBT PLAN, a sad commentary on what we have to look forward to.
As to the question why must taxes go up eventually? - “Because no one in Congress is going to brave enough to cut spending in such a dramatic fashion to fix our problem. We’re spending more than we earn. We won’t spend less. There’s only one other side of the equation: earn more. How do governments earn more? Higher taxes.”
* Speaking of Bruce, he starts the week-off at taxguy with a discussion of “Home-Office Deductions”, with some input from yours truly.
* TAXGIRL Kelly Phillips Erb gives us the word that fat naked idiot “Richard Hatch Wants to Leave the Country”, apparently to appear on the 10th Anniversary edition of SURVIVOR, the piece of excrement that launched the so-called “reality show” genre. The cafone is currently under house arrest for tax evasion. Don’t you remember, he forgot to claim the $1 Million prize he won on tv on his tax return!
Actually it is alright with me if he leaves the country - as long as he promises never to come back! And, as Kay Bell tweets, “only if he's prohibited by court order from ever being nekkid again ... for any reason!”
However, as it turns out, according to a subsequent news item, “A federal judge in Rhode Island says 'Survivor' winner Richard Hatch cannot leave home confinement early to star in a 10th anniversary edition of the reality show in Samoa.”
* According to an article titled, “IRS Seeking To Tax Your Hobby” at Forbes.com “the Internal Revenue Service has issued a new manual to help its agents ferret out taxpayers improperly writing off the costs of hobbies”. You can click here to check out this new audit technique guide.
A 2007 report - by guess who, yes TIGTA again – “suggested that improper hobby loss claims cost the feds billions of dollars a year in tax revenues."
As I mentioned in earlier posts, the IRS will be paying special attention to Schedule C losses, and categorizing an activity as a “hobby” instead of a “business” changes the rules and greatly reduces any tax benefit.
The article provides some good advice, including –
“Keeping good records and operating in a businesslike manner can go a long way toward convincing agents the pursuit is a vocation rather than an avocation. For instance, the IRS manual tells agents to ask during a face-to-face interview if there is an existing written business plan for the activity, suggesting taxpayers would be well advised to develop one at the outset. Agents also are instructed to ask if the activity has its own bank account--something taxpayers would do well to set up before the IRS begins asking for records.”
* The IRS has issued a “draft” version of the 2009 Form 1040A. Click here to download. It has also issued the “draft” version of Form 5405 – First-Time Homebuyer Credit and Repayment of the Credit. Click here to download.
* Among the many surprises that taxpayers who make the mistake of going to H+R Block to have their taxes prepared face is the fact that, as I have pointed out many times in the past, Henry and Richard ain’t cheap! What would you expect? H+R spends millions on advertising each tax season, and it needs millions of dollars for legal fees and the settlement payments of the many, many lawsuits for deceptive advertising and other unethical business practices, most of which result from their usurious Refund Anticipation Loan offerings.
The Asbury Park Press brings us an AP story that identifies another reason why Henry and Richard charge such high fees - “H&R Block CEO gets $5.3M in 2009 Compensation”. Gott in Himmel!
According to the article H&R Block Inc. CEO Russell Smyth “received $712,500 in salary, a bonus of $783,750 tied to his agreement to join the company, and stock and options valued at almost $3.5 million on the day they were granted. He also received $289,978 in other compensation, which included a $200,000 relocation payment and $45,079 in legal expenses tied to negotiating his employment agreement.”
* Attention NJ residents – “P.L 2009 c. 69 provides that New Jersey Lottery winnings from prizes exceeding $10,000 are taxable for New Jersey Gross Income Tax purposes.” This is new for winnings in calendar year 2009. Previously, NJ residents were not taxed on any NJ Lottery winnings.
Click here to download “New Jersey Lottery Questions and Answers” from the NJ Division of Taxation.
* Now that the United States government has a substantial ownership stake in the new GM it can truly be said that, “What’s good for General Motors is good for the USA!” Showing my age again, I expect.
TTFN
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