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Also, bear in mind that the preparer should advise the client of "Reasonable Compensation". Failure to do so could result in a $5000 penalty for each year involved.

My state's normal release date for the new W 4 is is usually the third week of January. There are other states that don't release their new withholding tables until late January. It's been that way for years.

No it just stops late payment penalties.

Does full late payment stop late filing penalty?

This is a few years old, so there may be some changes, but it does a good job of explaining preparer penalties. https://www.thetaxadviser.com/issues/2017/feb/preparer-penalties-sec-6694-6695.html When you prepare and sign a return you are stating that it is true and correct. If there is reasonable doubt, I wouldn't sign. If client can not provide financial statements that make sense, I will tell them: 1. Where I have issues for them to try to fix them or 2. That they need to hire a qualified bookkeeper or 3. They need to provide me with all documents to create accurate statements, or 4. Go somewhere else If they don't take any compensation and come to me after year end, I may or may not prepare one return based on that with a clear understanding that they immediately start taking compensation. If they appear to have a genuine interest in doing so, I'll likely prepare the return. If they want to argue with me, I'll decline the engagement. Same thing if they take what I believe is substantially lower than reasonable compensation. Remember that clients talk with other business owners. If they see that they can push you around to doing things the way they want rather than what you know to be an accurate return, they will tell others. Do you want your business built on a client list like that? I've walked away from quite a bit of fees over the years if the potential clients didn't live up to my expectations. I've also left jobs where I was the internal accountant and pressured by owners to provide misleading financials for bank or tax purposes. One of the main reasons I started my own firm was so that I am the one making the decisions that effect my integrity.

As I've often said - if they were competent, they'd be far more dangerous than they already are!

I have clients for whom Form 8938 is required, and that is a tax issue. I wanted it very clear in the engagement letter that the requirements are different, and that they are on their own for the FBAR. I don't want a case of someone not filing, then blaming me for not being clear enough. If it's in the eng ltr, they were told clearly *and* accepted it.

Have him pay the balance due now. Stops further penalties and interest from being added to the balance.

I'm working on a case where filing past year(s) by mail is required. This is due to a missing EIN for the firm on form 8919. yes, everything under the sun was tried to get the EIN so we ended up with the word "UNKNOWN" which prevents the return from efiling. I've told the client to wait until we know the IRS has received the return(s) and then use the direct pay to pay the balance due. Would it be better to have him pay what is due now for the remaining years? By this discussion, it sounds like a better idea to do so.

I attended a webinar from the NAEA regarding S-Corp officers and reasonable compensation. I have had a good understanding of this for a number of years but the part that caught my attention the most was the onset of preparer penalties that was discussed. I don't think we need a huge discussion on how to determine the amount of S-Corp officers compensation if he/she provides some type of services, including administrative, should be, or whether the S-Corp officer is taking a distribution or salary. I'm well aware the IRS can and will recharacterize a distribution as wages. Recently, I've worked with a number of S-Corp owners/officers that do not pay themselves a wage and indeed provide services to the S-Corp, and have had the reasonable compensation discussion. I currently have two S-Corps that cannot provide sufficient books or accounting records. One has receipts in excess of the 250K and is required to complete Sch L and M-1, M-2. This officer does not take a salary either. My position on this is for this client to seek other help and break the engagement. During the webinar I mentioned above, there was discussion where an IRS auditor pulled one S-Corp return from a CPA but later pulled an additional 25 returns. 20 of those returns, the officer did not take any reasonable compensation. The IRS recharacterized the distributions as wages and penalized the preparer (CPA) 100,000 for negligence, reckless disregard and assisting clients in evading taxes. The CPA/preparer provided copies of letters to the IRS explaining to his clients they must take a reasonable wage or the IRS will recharacterize it. The IRS said the letters proved the preparer knew. My questions are: 1. If you take on a new S-Corp client and he/she is taking distributions only, do you or should we attempt to get the client to allow us to recharacterize the distribution before preparing the return. I realize all of the penalties for late payroll filings; etc, will be explained. If the client refuses, do you or should we send him packing?? 2. I've tried, but not extensively, to find out what our responsibilities are in this situation.

I have become a big fan of direct pay, after several cases of "missed " postings or "un-identified " deposits. I am not a fan procrastinting payment. And, I also agree with postponing filing awaiting e-file. E-file more positive than "human" . YMM

I took a different approach. I am not including it in my engagement letter. I sent the BOI instructions to each of my affected clients and told them in the email that I could not prepare it and I was letting them know about their requirement as a courtesy. Not being argumentative, just asking. By putting it in your engagement letter, are you in a backhanded way telling your clients this is a tax issue? I did the above because I don't feel it is a tax issue and it is not my responsibility to even notify them of their requirement to comply. In the same way I don't tell my clients it is their responsibility to file their annual SOS report or their county property tax returns. Tom Longview, TX

But they do have to do at least enough to justify their budget! NY, trying to ding me (years ago) for submitting junk data to a test only forms person (via mail) for approval to print the form. The data was unusable, with invalid EIN and SSN, but they still sent me a bill - and I did not send to the normal forms adress. Tax agencies who change just text on their form to cause new approval processes. Tax agencies who cannot use simple programming commands like trim, remove, etc, and reject good data.

"Hey, we're the tax agency. We don't have to make sense!"

Rather than creating a 1036 (which has not been used for a few years), the IRS added a spreadsheet to the draft 2024 15T as an "early release" of the 2024 federal withholding formula. Works great for me, as the sooner I get those figures, the less "when will you have the 2024 calculations?" type of message! One state has new calcs, which depend on whether or not a new state W4 is used, but they have yet to publish the new W4

I am recommending payments NOW (whether via coupon-and-check, or Direct Pay), and e-file later.

In the same boat, but some owe. I'm giving clients a choice between mailing now or waiting until January to e-file. HOWEVER, I'm telling them to PAY NOW via IRS's DirectPay and the state's versions, so they have immediate confirmations of their payments. I'm open to better suggestions...

I am finishing 2022 income tax returns - do I mail them in now or wait until Jan 23rd or so when e-file reopens to file these? Which will take less time? What about 2020 and 2021's? Thank you, Darlene

I don't think this is correct You are correct, only LTC can be taken separately.

I don't think this is correct. In 2022, he was employed and eligible for a subsidized plan from his employer. Under 162(l)(2)(B), he cannot take the deduction for any health insurance ("Paragraph (1) shall not apply") - that would include the wife's medicare and supplemental. LTC is considered separately, so LTC is deductible if there is no eligibility for LTC from his employer. In 2023, he was not employed. A former employer is not an "employer of the taxpayer". Therefore all the unreimbursed health insurance and LTC would be deductible.

in years past, I had two versions to send out, depending on how much room I had (I don't want to go over one page) and if there are new tax laws to consider--one for clients with businesses and others, or one for retirees and one for others. This year I composed one letter to all clients--I don't bother to use what ATX has to offer. I sent this year's out in October and it is already obsolete because of the IRS decision to delay implementation of 1099-K changes and the extension of BOI to 90 days for new businesses.

We have the FinCen requirements on our annual document checklist, but for 2023 I'm putting it in the engagement letter, too. As soon as the draft comes out and I can edit it.

I agree with Bulldog. Appears 1023-EZ is effective.

Tom, I think I read it correctly. Read it again.

I think you are reading that incorrectly @Lee B. I think they were testing to see if the system worked properly for taxpayers filing for Tax Exempt status and they got an 80% success rate. I don't think they were trying to see if the IRS would catch 5 obviously bogus claims. If that was the case and 80% of the bogus claims for tax exempt status were being approved I would whole-heartedly agree with you. Tom Longview, TX