Friday, November 16, 2012


Another early BUZZ.

* Jason Dinesen gives his take on what I discussed in my THE TAX PROFESSIONAL post “Is There Any Real Value to the RTRP Competency Test?” in “No To Additional Preparer Testing, Yes To CPE Requirements” at DINESEN TAX TIMES.

“I’ve written before that I don’t think CPAs or attorneys should be required to take the RTRP exam to prepare tax returns. I stand by that belief, even though I am in the minority among people who aren’t a CPA or an attorney (I’m an enrolled agent).

But I do think CPAs and attorneys should be required to show continuing education in the tax field. Currently, the IRS doesn’t require this of CPAs and attorneys.”  

Jason and I both agree that the RTRP test does not have much value.  And we both agree that CPAs and attorneys who want to prepare 1040s for compensation should be required to take the same 15 hours per year in federal taxation as “previously unenrolled” RTRPs (actually 13 hours – since CPAs are already required to take 2 hours in ethics annually, I think).  We also agree that if a test is to be given there should be “grandfathering” for experienced preparers.

Where we part company concerns the CPA and attorney exemption from the test.  If a test is going to be required, it should be applied equally to all those who want to prepare 1040s for compensation.  CPAs and attorneys should not be exempt.  They should, however, be covered by any “grandfathering” provisions.

The bottom line (on which I believe we both agree) – do away with the test requirement and require all PTIN holders to take at least 15 hours of CPE in federal taxation annually.  

* Lori Montgomery of THE WASHINGTON POST warns that “AMT Could Keep 60 Million Taxpayers from Filing Returns till March, Delaying Refunds” –

Nearly half of U.S. taxpayers would be unable to file their 2012 returns — or receive their refunds — until at least late March if Congress fails to enact legislation by the end of this year to restrain the alternative minimum tax”.

The item quotes IRS Acting Commissioner Steven T. Miller’s recent letter to Sen. Orrin G. Hatch –

“The IRS would likely be able to open the 2013 tax filing season with minimal delays for most taxpayers {if Congress passes new legislation before the end of the year}.”

However, if there is no AMT patch enacted by the end of the year there would be serious repercussions for taxpayers.

Without an AMT patch, about 28 million taxpayers would be faced with a very large, unexpected tax liability for the current tax year {2012}.  In addition, in order to allow time for the IRS to make the programming changes necessary to conform our processing systems to reflect expiration of the AMT patch and the credit ordering rules, the IRS would, at minimum, need to instruct more than 60 million taxpayers that they may not file their tax returns or receive a refund until the IRS completes the necessary systems changes.

Because of the magnitude and complexity of the changes, it is entirely possible that these taxpayers would not be able to file until late March 2013, if not even later. Tens of millions of these taxpayers would unexpectedly have to pay additional income tax for 2012, leaving them with a balance due return or a much smaller refund than expected.”

The item ends with –

If the AMT is not patched, those hit with the tax could see an average increase of $3,700 in their 2012 tax bills, according to estimates by the nonpartisan Tax Policy Center.”

I expect you know what I would like to say here – but I promised!

* The recent issue of NATP’s “Taxpro Monthly” included an item titled “Taxpayer Denied the ‘Turbo Tax’ Defense”.

The item discussed Brenda F Bartlett v. Commissioner, TC Memo 2012-254 (the highlight is mine) -

The court sustained the IRS determination as to both the tax and penalty.  It stated that while it was apparent that a portion of the information entered by the taxpayer into the Turbo Tax program was incorrect, the error was not the result of software computations.  They reminded her that Turbo Tax is only as good as the information entered – in other words, garbage in, garbage out.”

Another one of many examples of the fact that no tax preparation software is a substitute for knowledge of the Tax Code, and no tax preparation software is a substitute for the services of a trained tax professional!

* TaxGirl Kelly Phillips Erb tells us that what happens in Vegas does not necessarily stay in Vegas in her post “Janeane Garofalo Finds Out She's Been Married... For 20 Years” at FORBES.COM. 

An interesting story with a potential tax consequence.

* Another effect of the inaction of Congress.  USA TODAY reports that “Stocks at 4-Month Lows as Fiscal Cliff Looms”.

Please do not panic.  Actually now is a good time to buy.  As the article points out –

Meanwhile, some stocks are getting reasonably priced, says Karl Mills of Jurika, Mills and Keifer. ‘Some really good companies are getting cheap,’ he says.”  

* The TAX RESOLUTION BLOG post “Your Tax Problem and the National Debate over Tax Increase” by Dean Alexander makes some very good points -

Now the President is going to try to raise taxes on what he claims to be ‘the rich’. I think he is misguided. The ones that the Obama guys call rich are a couple of engineers who happen to both work and each one makes over a hundred thousand dollars. Is this the nouveau rich that Obama calls rich? Hardly!!

And –

The nation does need both the increase of revenue and reduction of expenses. But raising revenue should not necessarily increase taxes. The reduction of expenses does not mean that we throw the poor under the bus.”

And –

The country needs fundamental original thinking that accommodates the few such as the elderly and the disabled that cannot fend for themselves and at the same time fanatically balances its income and expenses which we call the budget. In a family with children, you balance the budget but you feed your children and send them to the doctor. It is a matter of an honest dialogue and smart allocation of resources.”

It is hard to use the words “honest” and “smart” when it comes to Congress (sorry – I couldn’t resist).

* A good reminder from Arden Dale at THE WALL STREET JOURNAL – “For IRS, Charities Must Say More Than Thank You” –

When a charity receives a gift, it needs to say more than a simple thank you.

The Internal Revenue Service requires that a donor produce a record from the charity to show a gift over $250 had no strings attached. A thank you note can be a good enough record, as long as it includes the magic words: ‘No goods or services were received in exchange for the contribution’.

Without that phrase on paper, donors stand to lose their write-offs, and end up with penalties to boot.”  

Cover your arse - make sure any receipt or acknowledgement you receive from a charity to which you have contributed contains the magic words!


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