Archive for the ‘Taxable Talk’ Category

Nominations Due for 2015 Tax Offender of the Year

Monday, November 30th, 2015

With just about one month left in 2015, it’s time for a reminder to submit nominations for the 2015 Tax Offender of the Year. To be considered for the Tax Offender of the Year award, the individual (or organization) must do more than cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions. Here are the past lucky recipients:

2014: Mauricio Warner
2013: U.S. Department of Justice
2012: Steven Martinez
2011: United States Congress
2010: Tony and Micaela Dutson
2009: Mark Anderson
2008: Robert Beale
2007: Gene Haas
2005: Sharon Lee Caulder

That Was the Year that Was

Sunday, October 18th, 2015

Last November I wrote about “The Horrible, No Good, Very Bad Upcoming Tax Season.” This definitely wasn’t the best tax season but it also wasn’t the worst (but it was close to the bottom). The four issues that I identified as problems were tax extenders, the IRS budget, the Affordable Care Act (aka ObamaCare), and the IRS Property/Capitalization regulations.

Tax extenders were passed late, but there weren’t any surprises. Thus, the impact to the 2015 Tax Season was minimal.

The same can’t be true for the IRS budget cuts. This probably impacted me more than any of the other issues I faced. Calling the IRS was almost a joke. The “Practitioner Priority Service” hold times were so bad that I’d hate to think of what they were for regular numbers. Unfortunately, I see no improvement possible with the IRS budget until the IRS scandal is resolved. That’s not going to happen until we have a new President, so we have probably two more years of misery in dealing with the IRS.

(The Obama Administration promised to be the most transparent in history. Its record is one of obfuscation and deceit, not of being open and honest.)

For the most part ObamaCare did not impact many of my clients. Of course, for 2014 tax returns a client could self-certify they had health insurance. Coming for 2015 returns will be IRS Forms 1095-B and 1095-C. Almost everyone will need to provide tax professionals with a health insurance form.

The property regulations almost had a huge impact. A literal reading of the regulations was that everyone impacted needed to file a Form 3115. The IRS realized that they didn’t have the personnel to handle the incoming tsunami of paperwork and, at the last moment, issued procedures that basically mitigated the impact of the new regulations.

While I’ll post about the upcoming season in another month, it looks like deja vu all over again. Once more, tax extenders haven’t passed, we have another year of impacts of ObamaCare, and the IRS budget constraints will continue. Unfortunately, this year I’m not taking a vacation to New Zealand and Australia in December. In any case, tax professional will likely be grouchy next tax season, too.

Speaking: Ethics in the Digital World

Monday, August 10th, 2015

I’ll be back in my old stomping grounds of Orange County next Tuesday; I’ll be speaking to the Orange County Chapter of the California Society of Enrolled Agents on “Ethics in the Digital World.” I’ll be noting all the bad things that can happen and methods of avoiding trouble. Hopefully it will be a presentation that will keep Mr. Murphy away from you. You can register at the OCEA’s website.


Saturday, July 25th, 2015

It’s time for my annual vacation. If something earth-shattering in the tax world happens while I’m relaxing, I’ll take time out to post on it. Otherwise, enjoy the fine bloggers listed in the blogroll on the right.

I’ll be back on Tuesday, August 4th.

Of Deadlines and Taxes

Tuesday, April 21st, 2015

As I look back at April 15th I can draw some conclusions. First, thank goodness the IRS relented on the property regulations. There is no way tax professionals would have been able to prepare all of the required Change in Accounting Methods.

Second, this was the year of the impossible to reach IRS. I saw a statistic today that only 38.5% of callers received customer service from the IRS phone lines. That was true for tax professionals, too: I could not get through via the Practitioner Priority Service during the last three weeks of Tax Season. My usual trick, calling at 6:55pm PDT (right before they close), did not work.

Third, I don’t know what our deadlines will be for next year (that is, 2015 returns filed in 2016) but they will be earlier. I don’t know if I’ll go to March 1st, but it will be earlier than March 24th. I suspect it will be March 15th. We did get to every return where paperwork reached us by our deadline (March 24th), but we felt very pressured this year.

Fourth, I’m not happy with certain aspects of our tax software. Unlike Robert Flach who thinks that tax software is flawed and shouldn’t be used, I look at it as a tool that helps me do my job. However, this year some parts of it hindered my job and that’s not acceptable. Every three years I evaluate new software and this year is that year. I’ll absolutely be looking at other products for next year.

This definitely wasn’t the worst Tax Season I’ve gone through, but it was far from the best. For taxpayers, this likely was one of the worst. Unfortunately, I don’t see any improvements on the horizon. The light I see is the oncoming train not the end of the tunnel.

Annual Blog Hiatus

Monday, March 16th, 2015

It’s been a busy Tax Season already, and it shows no signs of letting up. That means it’s time for my annual blog hiatus. You needn’t worry if you’re waiting for my annual Bozo Tax Tips; they’ve already been written and will begin appearing on Tuesday, March 31st. If anything truly momentous in the world of tax happens, I’ll interrupt my hiatus and post on it; otherwise, I’ll be back on April 21st.

10 = 2500 ?

Wednesday, February 25th, 2015

Of course ten doesn’t equal 2,500. However, in the brave new world of the United States Postal Service it does. On Monday, I mailed a Tax Organizer to a client here in Las Vegas; she’s about ten miles from where I am. I also mailed a completed tax return to a client in South Carolina. Both will be received today.

About one year ago the Postal Service noted their plans of slowing down first class mail delivery as a tool to save money. These have apparently now gone into full effect. Anything that isn’t a parcel (or Priority Mail) is being slowed down by one day. Mail that in the past would take one day to go from Summerlin to Henderson (two areas of Las Vegas) now takes two days. My Priority Mail package to Columbia, South Carolina takes the same two days.

This is just something to realize when you mail a letter (to your tax professional or anyone else); it may take a bit longer to get where it’s going. However, when you mail something to the IRS or a state tax agency, it’s the date of postmark that counts so while the slowdown will impact when your payment posts it does not impact the timeliness of the payment.


Monday, February 9th, 2015

Today is the tenth anniversary of this blog. My very first post stated,

After reading Hugh Hewitt’s Blog, starting a blog for Clayton Financial and Tax became a necessity, not a project for “tomorrow” (whenever that is). There are already some excellent blogs covering taxes (see the blogroll on the right–if yours isn’t included, email me a link and I’ll add it on), but only the Leonard Letter looks at taxes from a California perspective. My goal is to focus on taxes and how they impact what we, as citizens and taxpayers, get to keep in our pockets.

Inevitably, this means that I have to look at the politics behind taxes. An example is a proposal currently in front of the city council of Los Angeles which would increase the sales tax from 8.25% to 8.75% (the proposal failed to make it on the ballot by one vote). If this proposal were to pass, then business would increase in nearby cities (e.g. Burbank) because prices would be less expensive than in North Hollywood (part of the City of Los Angeles). That’s a positive for Burbank, but a negative for Los Angeles. Additionally, if prices increase in Los Angeles (they would), then sales will decrease.

I’ll also be looking at humorous tax events. Tax cheats, tax evaders, and humorous taxes are all fair game. And if I get wind of a politician saying things like Linda Stubbs of Middleton, Ohio, you will hear about it.

Some things have changed: I’ve moved from the perfumed landscape of Orange County, California to the desert wastes of Las Vegas, Nevada. Clayton Financial and Tax has changed: From a one-person business there are now three of us. We have a second office in Bethesda, Maryland. Other things haven’t changed: The focus of this blog remains looking at taxes that impact our clients. That puts the focus on small business owners, professional gamblers, real estate owners, and others. I also try to write in a humorous way; taxes, after all, is about as a dry a subject as there is. (For anyone who has trouble sleeping, just pick up a volume of the Tax Code and start reading. You’ll be out like a light before you know it!) That’s why I write about bozo tax offenders.

I’m aiming to make the second ten years of this blog as fun to write as the first ten.

We’re Moving (Blog Hosting)

Thursday, February 5th, 2015

On Friday night we’ll be changing hosting companies for this blog. It can take up to 48 hours for this to cascade through the tubes of the Internet name servers of the Internet (though it usually takes about ten minutes). All should be fine by Sunday evening.

The Form 3115 Conundrum

Monday, January 26th, 2015

[Accounting Today readers: Here’s a link to Fail, Caesar.]

Form 3115 is the form used to request an accounting method change. For example, if your business is changing from cash to accrual, this form is filed. Many such changes are automatic; you just notify the IRS, file the paperwork, and life moves on. Of course, even the simple is complex: Form 3115 gets filed twice: once with your tax return, and once to either Ogden, Utah or to Washington, DC.

This year there’s a conundrum faced by tax professionals: Do we need to file a Form 3115 for every taxpayer who has equipment, depreciation, rental property, inventory, etc.? And no one seems to know the answer.

The cause of the problem is the new repair/capitalization/property regulations. These new regulations are effective for the 2014 tax year, and specify how certain things are supposed to be done. Why is this a big issue? Because Form 3115 is complex: The IRS estimates it will take 24 work hours to complete one form for one client.

It’s a certainty that companies that manufacture or have inventory will need to file Form 3115 with their returns. But what about someone with a side business? A couple who rents out their old home? There is a 12-page thread on TaxProTalk on this subject and I don’t think anyone there has a good handle on this.

Let’s take a real world example: John and Mary Smith. The Smiths own one residential rental property here in Las Vegas. The property has been depreciated for the last five years. In 2013, they put in a new garage door and are depreciating it. Their tax return is otherwise quite blase: they have wage income, a home mortgage, property tax, and some minor investment income.

I still don’t have a good answer for this. I’d love to hear from other tax professionals on this issue.