Archive for the ‘Taxable Talk’ Category

A Housekeeping Message

Sunday, November 20th, 2016

We will soon be changing hosting companies. If you subscribe to this blog you may need to resubscribe once this occurs. The changeover should happen in the next couple of weeks.


Sunday, July 31st, 2016

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 9th.

Everything’s Back Up

Saturday, July 23rd, 2016

We’ve completed our move into our new larger office. While the telephone and Internet were quickly moved and are working just fine, the fax line didn’t make it. It has finally made it’s way to our new office so we can now receive faxes.

We’re Moving

Sunday, July 17th, 2016

Clayton Financial and Tax’s offices are moving this week. It is likely that phone and Internet will be down on Wednesday (July 20th) and Thursday (July 21st) during the move. Our new address is:

Clayton Financial and Tax
1919 S Jones Blvd, Suite G
Las Vegas, NV 89146-1299

While I’m hopeful that the phone and Internet come back up quickly, I’ve learned these things always run into unforeseen difficulties.

The 2016 Tax Season

Monday, April 25th, 2016

It actually went fairly smooth this year. Some thoughts (in no particular order):

1. The IRS help lines for tax professionals were well staffed. Hold times were way, way down from prior years (especially last year). The average hold time for me was about ten minutes. In the 2015 tax season, hold times were above one hour.

2. Deadlines matter. We set a fairly early deadline this year (March 16th). While we did get to returns received after that (we got to returns through March 30th), some clients were not happy with the deadline. That’s reality: There are only so many hours in the day. We told you back in January what our deadline was.

3. K-1s are coming later and later. Many of my clients had to extend this year because a K-1 from a partnership is missing. I’m definitely seeing more business entities filing extensions, and that leads to more individuals filing extensions.

4. While tax software may be somewhat flawed, it’s essential for any tax professional. A tax return still must always pass the smell test, but it would be impossible for most tax professionals to complete complex returns without it.

5. Next year could be very interesting for my practice because of the FBAR deadline. For 2015 FBARs filed in 2016, the deadline is June 30th. The law will change next year and the deadline will be April 15th. Will this deadline be literally April 15th no matter what day of the week that falls on or will it match tax deadlines? Will FINCEN accept the federal tax extension or will it require its own extension to be filed? I’ll have more on this issue in a post that’s coming tomorrow.

6. Federal refunds appear to be fairly smooth this year. None of my clients have noted any issues with those. The same cannot be said for state tax refunds, though. Many states are drastically slowing refunds and/or requiring additional information prior to the refund being issued.

I cannot complain overall, though. Of course, now that Tax Season is over comes my paperwork season: shredding and invoicing. And more than six hours of sleep each night.

Bozo Tax Tip #10: Email Your Social Security Number!

Friday, April 1st, 2016

It’s time for our annual rundown of Bozo Tax Tips, strategies that you really, really, really shouldn’t try. But somewhere, somehow, someone will try these. Don’t say I didn’t warn you!

This is a repeat for the third year in a row, but it’s one that bears repeating. Unfortunately, the problem of identity theft has burgeoned, and the IRS’s response is pitiful. Indeed, this year the IRS decided that identity theft victims should get hit a second time! Let’s hear it for the IRS’s wonderful view of “service!”

Seriously, use common sense! Would you post your social security number on a billboard? That’s what you’re doing when you email your social security number.

We use a web portal for secure loading and unloading of documents and secure communications to our clients. As I tell my clients, email is fast but it’s not secure. It’s fine to email your tax professional things that are not confidential. That said, social security numbers and most income information is quite confidential. Don’t send those through email unless you want to be an identity theft victim or want others to know how much money you make!

If I send an email to my mother, it might go in a straight line to her. It also might go via Anaheim, Azusa, and Cucamonga. At any one of these stops it could be intercepted and looked at by someone else. Would you post your social security number on a billboard in your community? If you wouldn’t, and I assume none of you would, why would you ever email anything with your social security number?

A friend told me, “Well, I’m not emailing my social, I’m just attaching my W-2 to the email.” An attachment is just as likely to be read as an email. Just say no to emailing your social security number.

If you’re not Internet savvy, hand the documents to your tax professional or use the postal service, FedEx, or UPS to deliver the documents, or fax the documents. (If you fax, make sure your tax professional has a secure fax machine.) If you like using the Internet to submit your tax documents, make sure your tax professional offers you a secure means to do so. It might be called a web portal, a file transfer service, or perhaps something else. The name isn’t as important as the concept.

Unfortunately, the IRS’s ability to handle identity theft is, according to the National Taxpayer Advocate, poor. So don’t add to the problem–communicate in a secure fashion to your tax professional.

Annual Blog Hiatus

Monday, March 7th, 2016

It’s time for my annual blog hiatus. There will be occasional posts regarding deadlines (the corporate tax deadline is in one week–Tuesday, March 15th) and my annual Bozo Tax Tips will appear beginning on April 1st (no foolin’). If anything truly momentous in the world of tax happens I’ll interrupt my hiatus and post on it; otherwise, I’ll be back no later than April 25th.

Phishers Target Tax Professionals

Thursday, February 11th, 2016

I received the following email today:

From: [redacted] []
Sent: Thu 2/11/2016 3:06 PM
To: undisclosed-recipients:


I and my Family are looking for a very Qualified CPA in your area. Please let us know if you can be available to help us with our tax preparation, both company and individual..Please download to view my previous 1040 tax return and W-2 before we discuss about your payment.I will be waiting to read from you on on when to make an appointment with you.Please view my Doc’s for me and my family to know how I can prepare my self to become one of your client.

I await your email.



Email: [redacted]

There are a few hints that this is a phishing attempt. First, the writing (grammar, capitalization, etc.) is atrocious. Second, this is clearly a mass email (the recipients names aren’t disclosed). Third, the person is willing to send his tax documents–presumably containing his social security number and other items that should never be emailed by email. Fourth, the sender’s name (which I redacted) doesn’t match the email address. Fifth, the name of the sender doesn’t match his supposed email address (an ‘s’ was added at the end).

Most importantly, my anti-malware program stripped out the attachments. Yes, that 1040 and W-2 were malware.

Tax professionals, be wary. There are phishing emails supposedly from the IRS targeting tax professionals. Now, we have supposed new clients emailing tax professionals. My mantra, if it sounds too good to be true it probably is, holds for tax professionals, too. Do not click on links that you do not know for certain are valid. Consider installing anti-malware programs (the professional version of Malware Bytes will scan incoming emails for malware; there are other programs that do this, too). I use Malware Bytes and am happy with it.

I think I would have caught this email with or without Malware Bytes (it really is a poorly written email), but as they said on Hill Street Blues, “Let’s be careful out there!”

Efiling Opens, But…

Tuesday, January 19th, 2016

…It’s likely you can’t file yet.

Today the IRS sent out a “QuickAlert for Tax Professionals.” They stated, “Authorized IRS e-file Providers must not submit electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G, and 1099-R from the taxpayers.” Additionally, most brokerage 1099s are not distributed until mid-February. Those of us who have interests in partnerships or S-Corporations may not receive that paperwork for months.

Tax professionals need all the paperwork: It’s far better to extend than amend. That means we’re in hurry up and wait mode; for many taxpayers it will be weeks to months before we can file.

Wasting Away in HPVille

Monday, January 11th, 2016

Today was the day my new computer was to have been encrypted. But some things aren’t meant to be:

So what happened? When my IT person started the encryption process using HP software, my computer decided to take a siesta — the operating system crashed. When he called HP support, he discovered that the problem was known, impacting a “minority” of computers. My IT person had tested the encryption on a test computer but all worked well.

Little did we know that the HP encyrption software fails on that “minority” of computers. Well, at worst it’s a failure rate of 50%: it failed on mine and worked on his.

I lost half a day, but no data. A key lesson I had learned years ago (and that my IT person had learned) is to have backups. We made three backups prior to the process, and they were useful in getting me back up and running.

So I’m back on my old computer while my IT person will get my new computer up and running…again. We’re going to use different encryption software—software that does not destroy the operating system.

Right now you could not pay me to buy a product manufactured by Hewlett-Packard. I’m that annoyed with them.