Tax Extenders Signed Into Law

December 21st, 2014

President Obama signed legislation that extended for one year the “Tax Extenders.” Tax Extenders include items such as the deduction for sales tax, mortgage/cancellation of debt tax relief, “bonus” depreciation, and many others. As the legislation didn’t have much in the way of surprises and it was signed into law in December, it’s likely tax season will begin either on time or just a week or so late.

That said, it’s not going to be a pleasant tax season for tax professionals, the IRS, or the taxpaying public. The IRS is anticipating answering just 50% of the phone calls it receives. On the bright side, since many of the answers given on the IRS help line are wrong this might have a positive component.

Additionally, this year features the first year of ObamaCare tax forms and the new property/capitalization/repair regulations.

These are such pleasant thoughts to think about on the last day of my vacation….

Vacation

December 5th, 2014

It’s time for my annual winter vacation. I will not be posting until I return. While I’m away, enjoy the fine bloggers listed in the blogroll on the right.

I’ll be back on Tuesday, December 23rd.

Speaking of Efficiency

December 5th, 2014

I do know how we can improve the Tax Code: Force Congresscritters to do their own taxes. I have an instructive vignette on why this is the case.

A friend of mine was hired by a major tax software company to be in customer support. He has had to learn about the Tax Code so he can answer questions. Currently, he’s taking training courses. He had this to say recently:

If you say anything about Basis, At-Risk, or Passive Limitations, I’m going to have to cut you. One of the biggest things I’m learning at [Software Company] is our tax code is ****ed and needs serious fixing.

Imagine what would happen if every Congresscritter did their own tax returns by hand. The Tax Code would unanimously be shrunk four hours later. My friend probably didn’t give the Tax Code much thought until he took his new job. I’m certain he agrees with me that using it as a “Swiss Army Knife” makes no sense.

Unfortunately, there’s no chance of meaningful reform with the current President. His goals appear to be to make things worse rather than better. It will be at least 2017 before meaningful tax reform will be on the table.

A Rare Piece of Efficiency from the IRS

December 2nd, 2014

We have to take our victories in dealing with the IRS where we find them. As an Enrolled Agent, every three years I have to renew my license. I go online, check various boxes, note the continuing education I’ve taken, pay a fee, and months later I receive my Enrollment Card in the mail. Indeed, three years ago it took three tries for my card to make it to me (possibly because of my move).

On November 4th I completed my renewal application. In yesterday’s mail I received my new Enrollment Card (postmarked on November 28th). Kudos to the IRS in getting this done efficiently.

Now, if they could only make the Practitioner Priority Service hold times be under an hour….

Mundane Tax Fraud Downs Friend of Cicero Town President

December 1st, 2014

George Hunter will likely be going to ClubFed. He pleaded guilty today to two counts of tax evasion. Mr. Hunter’s company received $1.8 million in two years from Cicero…without a contract. Mr. Hunter is friends with Larry Dominick, the Ton President of Cicero. Cicero is a suburb of Chicago. The Chicago Sun-Times article notes that Mr. Hunter has refused to cooperate with federal prosecutors.

As for the tax evasion, it’s pretty mundane. Mr. Hunter paid his employees in cash and told his employees not to report their income to the IRS. He didn’t, and not paying payroll taxes is a major issue with the IRS. He also failed to file a 2008 tax return when he allegedly made $655,000. Mr. Hunter originally said the charges were brought because he refused to cooperate with authorities. No matter, the charges apparently were true. He’ll be sentenced in March.

Corruption in Chicago? Who would’ve thunk it!

A Ship Over Troubled Waters Sinks Leeds’ Cellino For Now

December 1st, 2014

From the Sport (not Sports) page of the Telegraph and the BBC we find that Leeds beat league-leading Derby two to nil in football (or soccer for us colonials). Derby manager Steve McClaren was quoted by the BBC: “It’s just one of them days, a bad day at the office. We were below our best and when you’re not at your best, you can be beaten.” However, the real news was what happened away from the pitch.

Massimo Cellino owns Leeds United. Unfortunately, he’s also been found guilty of evading import taxes on a boat in Italy. The Football League ordered Mr. Cellino to resign because he was convicted of “…an offence involving a ‘Dishonest Act’….” Mr. Cellino vows an appeal.

In any case, his ouster will likely be very short-term. He can resume his ownership on March 18th; at that point his conviction will be “deemed spent.”

As God as my Witness, I Thought Turkeys Could Fly

November 26th, 2014

Have a Happy Thanksgiving everyone:

One Ringy Dingy, Two Ringy Dingies…

November 25th, 2014

…2400 Ringy Dingies. Yes, I was on hold for two hours today on the IRS Practitioner Priority Service before my call was picked up. It’s November–not a high time for calling the IRS–but add the combination of the IRS Centralized Authorization File Unit taking well over the promised five days to input a faxed Power of Attorney or Tax Information Authorization, lots of notices being issued by the IRS that require a response, and ridiculous hold times are the norm.

Oh, yes, I was told the expected wait time was 30 to 60 minutes. Sigh….

Would the Proprietors of “I Married an Idiot” Commit Tax Fraud?

November 20th, 2014

Sometimes you can’t make this stuff up.

Perhaps you missed the website imarriedanidiot.com. The website is down, but thanks to the Internet Archive it will continue to be accessible. I’ll leave it to the reader to peruse the web site.

I saw a brief story on Mark Garcia and Patricia McQuarry in the Pioneer Press. It seems that they not only thought they married an idiot, they committed an idiotic form of tax fraud.

The couple, who are married and were the proprietors of the aforementioned web site, decided to claim to have received “…hundreds of thousands of dollars in 1099-OID income and that the entire amount had been withheld and paid over to the IRS on their behalf.” The couple even put down real bank tax identification numbers on their phony paperwork. Unfortunately, the IRS didn’t detect the fraud until after the fact. Yet it was certain that sooner or later the IRS would find the fraud given that the IRS document matching system wouldn’t match their phony paperwork to real 1099s.

One good fraud deserves another, so the couple then bought real estate and transferred it into a trust titled “POKE-A-BOTTOM.” (No, I didn’t make that up.) Then they were facing foreclosure, so they sent fake tax returns and frivolous documents to their bank. (In all seriousness, lying on a loan document can be a federal felony.) “The documents included fake tax forms and a “Bonded Promissory Note” for $10,000,000, along with instructions that the financial institution should use the document to pay off their $266,000 mortgage and keep the remaining funds.” Somehow the bank decided that wasn’t a good idea. I imagine that the RV and gold coins purchased by the couple with some of the proceeds will be used to pay back the United States Treasury.

The couple will have plenty of time to think of non-idiotic behaviors they can do in the future. There wasn’t anything idiotic about their sentencing for one count each of Conspiracy to Defraud the United States and two counts each of False Claims Against the United States: Mark Garcia received 30 months at ClubFed; his wife, Patricia McQuarry, received 40 months.

IRS Clarifies Electronic Signature Requirements

November 18th, 2014

The IRS released a new version of Publication 1345 today (html version only is available for now). Included in it is the following:

Note: An electronic signature via remote transaction does not include handwritten signatures on Forms 8878 or 8879 sent to the ERO by hand delivery, U.S. mail, private delivery service, fax, email or an Internet website.

Thus, if a client signs a signature document in ink, hands it to me, mails it to me, faxes it to me, or uploads it to me via our web portal (or even if he emails it to me), it’s not an electronic signature and I don’t have to check id, etc. (So, mom, I don’t need to see your ID.)

Additionally, the IRS will accept Form 3115 as a pdf attachment to an electronically filed return. This is one less bad thing with the new property repair/capitalization regulations.