Archive for the ‘Taxable Talk’ Category

The Flu Strikes

Thursday, June 15th, 2023

On Monday, I went home around 1pm.  I felt awful.  When I got home I discovered why: I had a fever of 100.  It peaked at 103, but I’m still in triple digit land.  Worse, I appear to be a generous soul: I gave it to everyone in our office.  Thus, our office is closed until someone recovers.  (And yes, everyone in our office got flu shots this past winter.)  Given the flu normally is a one to two week illness, it’s likely to be sometime next week.

Bozo Tax Tip #5: Publicize Your Tax Crimes on Social Media!

Monday, April 10th, 2023

Social media is really, really big these days. You can follow me on Twitter. I may even update my Facebook page one of these days. Of course, I’m not a tax criminal, and my posts hopefully add knowledge for others.

Of course, where you and I won’t go the Bozo contingent is quite happy to do so. Take, for instance, Rashia Wilson. Ms. Wilson posted a wonderful picture on her Facebook page:

Rashia Wilson (Image Credit: Tampa Police Department)

In the same post, she bragged:

“I’m Rashia, the queen of IRS tax fraud,” Wilson said May 22 on her Facebook page, according to investigators. “I’m a millionaire for the record. So if you think that indicting me will be easy, it won’t. I promise you. I won’t do no time, dumb b——.”

She’s doing 21 years at ClubFed. Oops…

A helpful hint to the Bozo tax community: Law enforcement does read social media. Indeed, the IRS will do a search of you on the Internet prior to a field examination (audit). So if you decide to go on the dark side of life, don’t brag about it online. A better course would be not to go on that dark side to begin with, but that rarely occurs to the Bozo community.

No Vacancy

Monday, January 30th, 2023

If you are searching for a tax professional and have yet to find one, you really, really need to get that into high gear.  As of today, we’re telling anyone inquiring that you will be put on a waiting list.  Based on talks I’ve had with other tax professionals, few have space for many (if any) additional clients.

There are two main reasons this has occurred.  First, the average age of tax professionals is in the 50s.  Many tax professionals retired when the pandemic hit.  Tax and accounting are not glamorous fields, and not enough individuals are getting into this profession.

Additionally, each year it takes longer and longer to prepare a tax return.  This isn’t just the Tax Code getting more complex; it’s also the regulations that tax professionals must comply with.  Let me give two examples.  Every time we efile a return to the IRS we are required to note the Submission Identification Number (SID) generated by the IRS on either the signature document, or we can note it separately with the signature document.  We print this as a pdf from each return and save it in our paperless system with each return.  This takes about 90 seconds–not a big deal.  But if you multiply this by 1000 returns, that’s 1500 minutes or 25 hours of work–more than three days I’m paying someone for “make-work.”  The SIDs are always maintained in the software we use, but the IRS regulation is very specific on what tax professionals must do so there is no choice.

Another regulation we deal with are the required interviews for the Earned Income Credit (EIC), Child Tax Credit/Additional Child Tax Credit, American Opportunity Tax Credit, and Head of Household status.  We don’t have many clients who take the EIC, but we have plenty of clients who have children and qualify for these other credits.  We’re required to do a brief interview where we talk to the client and note the client’s responses.  Most of these interviews take less than five minutes–for the CTC, the average is around three minutes.  With about 600 of these interviews, that equates to 1800 minutes (30 hours).  Who pays for this?  Anyone who hires a tax professional does.

Those were just two of the many regulations we have to deal with.  Then we get into the Tax Code, and dealing with Congress’s “simplifications.”  Maybe some session of Congress will see the Tax Code simplified, but I have my doubts.

What does this all mean?  First, the number of returns a tax professional can prepare decreases each year.  It should be the other way; after all, if I’m experienced I can work faster, right?  But it’s not: complexity and regulations just eat into the time.  Second, I value my employees and I don’t want them to burn out.  We (a) moved our deadlines earlier for the 2023 Tax Season and (b) are making sure that our staff gets one day off per week even in the height of Tax Season.  Third, while I want to hire an additional tax professional, I have been unable to find quality candidates.  Meanwhile, demand for tax professionals in our specialty areas is increasing.

What happens when supply decreases and demand increases?  Price goes up–significantly.  That’s the case for us and (as best as I can tell) the entire tax professional community.  If you need a tax professional, be aware of the issues we face and if you have a good one, treat him or her well.

Is Anyone Happy In Tax Professional Land?

Wednesday, October 19th, 2022

Except for our four international clients on second extension and our ten clients impacted by Hurricane Ian, the 2020-2022 Tax Season is over.  I expect that within one month, we will be off filing returns until February 2023 (well, there is our one September fiscal-year-end corporate client….)  We had quite a few issues this year, and I’ll expound on them at length in the next week or two.  For now, let me ask a question:

Among tax professionals, is anyone happy?

I saw lots of tax professionals leaving the profession over the past two to three years, and it didn’t make sense to me.  This is a good profession where we help our clients.  I enjoy the work (yes, someone has to).  But this past Tax Season was the first year I felt, at times, that I didn’t like what I was doing; I now understand why tax professionals are retiring.

This has major impacts to our clients.  The Law of Supply and Demand holds throughout the world (no matter what politicians say).  If Supply decreases, Price increases.  Even if inflation were 0% (and it’s not), prices would be increasing significantly.  Add in the huge inflation we’re seeing (example: paper prices at Costco have increased from $28.99/case to $35.99 $36.99/case since November 2021), and most tax professionals will be increasing prices dramatically for the 2023 Tax Season.

Did I mention Demand?  That’s increasing, too.  During the month of October (and today is October 19th, so there’s still another nine business days) we’ve received twenty inquiries for next year!  So that, too, will cause price increases.  Additionally, if you are seeking a tax professional to assist you with your 2022 tax returns now is the time to find him or her because January will likely be too late!

I’m going to have a lot more to say about this as I review our failings (and, unfortunately, there were plenty) and successes during the 2022 Tax Season.  I’ve written two parts of the series (Part 1 and Part 2 were posted earlier this year); Part 3 should be up by the end of next week with Part 4 following soon thereafter.

Let me go back to the question I asked and ask it of myself: Was I happy doing what I do this year?  Far less so than in the past.  This means changes are coming–perhaps dramatic changes.  I am going to be happy doing what I do or I won’t do it anymore: life is too short to do otherwise.

UPDATE: I just returned from Costco to buy paper (and a few other items), and the price has increased $1/case (to $36.99 from $35.99) from September.

We’re Under Attack!

Tuesday, April 26th, 2022

This afternoon, I was answering email and I accidentally clicked on Outlook’s “File Information.”  I happen to notice that the last login was from Buffalo, New York.  I’m just 3,000 miles away in Las Vegas, so I immediately sent a message to my IT person.  He both reassured me and made me worry–a lot.

No, no one from Buffalo had logged in.  However, someone was trying to log in, and per the IT logs someone was actively trying to break into our email server using a brute force technique from somewhere in Asia (spoofing various US cities).  I suspect they think that from the email server they can then get into our regular network (they can’t; they’re completely separate).  Still, my IT person wanted to immediately implement a couple of new security procedures for our email and I gave my go-ahead.  I’m not going to detail them (sorry, hackers), but they should make it far, far more difficult to even try to break-in.

The reason I bring this up is that tax professionals are targets.  We have a ton of wonderful information that hackers want (lots and lots of personal information), and I’d prefer not to have to use my cyber insurance.  If your IT person/department is not periodically checking your logs to see if you’re being targeted, you need to rectify that immediately.  I didn’t know that hackers were targeting email servers, but they are.  So be vigilant tax professionals: We’re under attack.

Bozo Tax Tip #2: Anger Your Tax Professional!

Thursday, April 14th, 2022

If you are a tax professional living in Las Vegas, and you’re interested in working for me for the 2023 Tax Season (2022 tax returns filed in 2023)–or you are in Las Vegas and you’re interested in becoming a tax professional–we may have an opening for you.  So why am I starting a post in regards to Bozo Tax Tips with my possibly expanding my staff for 2023?

The reason is the “Great Resignation.”  The tax professional community skews older in age: I saw a statistic that the average age of a tax professional is in the mid-50s.  Finding good tax professionals is not easy (indeed, hiring in any profession isn’t easy), and I’m blessed to have the staff that I do.

From February 1st through the date this post is being written (March 10th), I have been averaging over two inquiries a day into using our services.  Indeed, my next available appointments are in May!  From talks with my friends in the business, they’re seeing the same things: not enough staff, and demand through the roof.

This equates to a seller’s market.  We increased our rates (for 2021 returns prepared in 2022) by 10%, and I’ve already concluded I didn’t raise them enough.  The law of supply and demand holds in every industry: if supply decreases and demand increases, prices go up.  Yes, you’re going to pay more.

So let’s get back to the title of this post: angering your tax professional.  Those who have met me know my salt and pepper hair is now mostly salt.  I enjoy what I do, but I do not enjoy (and have never enjoyed) dealing with misanthropes.  Given the high demand, your tax professional almost certainly feels the same way.  Every year, tax professionals send letters to clients who are about to become former clients because they’re either no longer a fit for them or the tax professional cannot make a profit from them (because they require too much time or will not pay what the tax professional believes to be a fair price).  I’ve sent these in the past, but I never enjoy doing that.  I’m vowing to send some at year-end unless conditions radically change.

The average tax professional is very stressed out.  Dealing with the IRS has been a disaster for the last few years.  The pandemic hasn’t helped in any way.  Congress (and the IRS) have added new regulations and forms (e.g. Schedules K-2/K-3) that add tremendous busy work with little gain.  My Office Manager recently saw me blow up (and I rarely do that).  I have marked a client that he is getting a “Dear Former Valued Client” at year-end because of what he put me through.  (I’d like to send one to Congress, too, but I can’t do that.)

So do not anger your tax professional…unless you want to find a new one.

Why Has Posting Been Light?

Thursday, March 17th, 2022

A friend asked me why I’ve posted so little this year.  The answer is simple: the real world intruded.  Family issues have definitely impacted my time, and the workload of my business has increased dramatically.  My clients deserve me spending time on what they pay me for–and I’m doing my best to do that.

And we’ve now hit the time of year where the blog goes on hiatus.  I have written the Bozo Tax Tips for this year; they’ll start appearing on Monday, April 4th.

Martin Veneroso, E.A.

Tuesday, August 24th, 2021

Clayton Financial and Tax isn’t the largest tax firm, but one thing I’ve insisted on is that all preparers be credentialed (either Enrolled Agents or CPAs).  The reason is that it shows a dedication to the profession, and a willingness to continue learning.  While it would be nice if Congress were to enact a nice, simple Tax Code, what we have today is something out of Tom Lehrer (“It’s so simple, so simple, that only a child can do it!”).

Something I mention from time to time is that if you are young and are looking for a career with (unfortunately) plenty of growth opportunities, becoming an Enrolled Agent is something to consider.  I strongly suspect that income tax returns will be around in the time of my great, great grandchildren, and as long as we have a Congress I expect tax returns to continue to get more and more complex.

Martin Veneroso is our newest employee.  He was notified in early August that he had passed the final part of the Special Enrollment Examination (the three-part test that one must pass to become an Enrolled Agent).  This past weekend he received his enrollment card in the mail (so at least one part of the IRS is able to process paperwork timely!), so Martin becomes the third E.A. on our staff.  Congratulations, Martin, and welcome to being a licensed tax professional.


Gambling With an Edge Podcast

Monday, November 30th, 2020

I was this week’s guest on the Gambling With an Edge podcast where we talk about taxes (with an emphasis on gambling). You can download the podcast here; it’s also available on iTunes and all the other usual podcast locations.

We spoke about changes in the tax law, self-employment tax for professional gamblers, self-dealing vis-a-vis IRAs, 529 plans, and offshore (foreign) corporations among other issues. I also gave a non-tax recommendation on my favorite Thai restaurant here in Las Vegas.

Bozo Takes a Year Off

Wednesday, March 18th, 2020

Every year I’ve posted my Bozo Tax Tips. I will not be posting them for the 2020 Tax Season. There are too many serious issues going on, and I think it’s best to focus on the serious issues tax filers face.

You can still search for the past Bozo Tax Tips if you need some levity. And enjoy this picture (among other topics):

Rashia Wilson (Image Credit: Tampa Police Department)

For those wondering Ms. Wilson said the cops wouldn’t get her. She’s enjoying 20 years at ClubFed.