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(Snipped quote actually from Pacun) I don't audit but I *always* look over new clients' prior-year returns. How else do you find state tax owed and paid for the current Sch a, capital loss carryforward amounts, sometimes charity carryforward amounts, and other items? If I see something egregious - or even if the return I do looks vastly different from the prior year's results, I look more deeply. If only to reassure myself that I have not done a stupid!

I have all my dated certificates (some just as pdf's) so if there is any question later I can prove CPE credits. So I'm not going to worry about the IRS systems. We were warned at some seminar or other that it was going to be a case of playing catch-up for them.

I don't audit my new clients, but try to review their open year tax returns as part of my service to them. It gives me a better understanding of their situation and sometimes end up amending for a refund, most commonly in business returns. Omitted expenses are one example. If you put three year's of schedule C's side by side you can quickly see patterns and obvious omissions. Several years ago I amended a return for a rancher from Idaho who sold out and bought a smaller place nearby. The CPA in Idaho incorrectly calculated a multi asset 1031. He also failed to take section 179 in the year the client was in a high tax bracket due to the sale of his ranch. My guess was the CPA did not know that 1245 gains count as business income for the section 179 limits. He also overlooked the fact the client had omitted some obvious expenses on his quick books and their were miles of fence on the new property to write off. The 1040X netted a refund of $20,000 plus. Client had no problem paying me to "audit" his return.

This has been an ongoing thing since I believe October. IRS is "updating" service. NO CE's have been accepted by them from CE vendors - not just specific ones, but all it appears. It is just a matter of waiting as from information --- even if sent in by ourselves, records will not be updated soon. Leaves one to wonder if this will affect programs such as ASFP (supposedly needing completed by year end) or any other IRS requirements. Sorry not to know m ore but it has been, nothing new.

they have a new provider of the website service for posting CE hours and getting CE numbers for classes. Website went down September 19th and we have been waiting for the new provider to get their website up and running. it was originally supposed to be 1 week and as you see we are going into month 3. I am in charge of my State association of posting all hours to the website for IRS. We have such a back log. IRS has given us two dates of when it will back up. Now they just say we will email you when it available.

A colleague just posted "I was able to renew the AFSC as part of the PTIN renewal. Incidentally, the CE system just reopened, so credits should appear soon."

many of my clients got this letter but the website https://idcfars.bls.gov cited in the letter does not work. We tried for 4 hours then we called and we were told to download the paper copy of the form and fax it to them. We would have done this way to start with but the body of the letter says "To reduce costs and save tax dollars this survey had been moved online". They should have tested the website access before they did the mass mailing.

The election to report accrued interest must be made on a timely filed return (including extensions). You cannot go back and amend the decedent's return for this. You will have to amend the estate return. Hopefully the estate made enough distributions not to have to pay income tax. With this amount of interest alone, you are looking at the 39.6 bracket. If it's not too late, perhaps the bonds themselves can be distributed to the beneficiaries. They will have to pay tax on the accrued interest, which they will have to do anyway if the estate has been distributed, but at least they won't have to go back and amend their own returns. Going forward they will just have to pay tax on the interest accrued each year, but that's not your problem unless they are also your clients. I am working on one right now where bonds are still earning a guaranteed minimum of 4 percent. The beneficiaries would be foolish not to want the bonds instead of cash--where can you get risk-free returns like that today? Fortunately in this case I can declare the interest on the deceased's 2016 return, where it will be mostly negated by medical expenses.

The CURES act negated the $100 day penalty: Small firms that reimburse workers for health insurance get relief. They will not be subject to the $100-a-day-per-employee excise tax if they do it through a qualified small-employer health reimbursement arrangement. There are lots of hoops to jump through, and only small firms qualify… It also extends, through the end of 2016, IRS relief that expired on June 30, 2015. Here is a copy of the Cures act: HR_34 Cures Act 2016 121616.pdf

Lion I do agree with your statement regarding informing the client of the errors and consequences of amending or not amending. While we may not be required to amend a return we didn't prepare, we should at all costs advise the client of their responsibility to file an accurate tax return. The client it ultimately responsible for every line on the tax return. I do this out of respect for my clients as well as my circular 230 responsibility and do document to CYA at all times. I have never acquired another practice so I may be talking out of line here. But... I would assume that the transaction would have a required notification to the current clients of the transfer of their private and personal information to another. It would be interesting to know whether that would be in the form of a request that would allow the client to decline and seek other services. All of our private information is either sold by banks through mortgage buy outs and other transactions. Do we get a choice then??? Just my 2 cents worth.

Copied from the OSCPA website: News - Medical Insurance Premium Reimbursement Arrangements Are Back in Play (For Small Employers) December 15, 2016 - Prior to closing for the year, Congress passed legislation that allows eligible small employers to reimburse employees through an HRA for qualified medical expenses, including medical insurance premiums. The legislation was signed into law on December 13, 2016, and is effective for plan years beginning on or after January 1, 2017. By Walter W. Miller, Shareholder at Schwab, Williamson & Wyatt PC * * Reprinted with permission. This article first appeared here on December 14, 2016. In the days before the Affordable Care Act (the “ACA”), an employer that did not offer a group medical insurance policy to its employees could instead adopt a health reimbursement arrangement (“HRA”). Through the HRA, the employer could reimburse employees on a tax-free basis for all or a portion of the cost of the premiums for an insurance policy purchased on the open market. The ACA disallowed this practice, effective as of January 1, 2014. Prior to closing up shop for the year, Congress passed the “21st Century Cures Act,” which consists of a myriad of health care measures. Among the provisions of the legislation is one that allows eligible small employers to reimburse employees through an HRA for qualified medical expenses, including medical insurance premiums. The reimbursements are excluded from the employee’s income, provided that the employee is covered under a medical insurance policy that provides minimum essential coverage (such as an individual insurance policy or a policy purchased on an Insurance Exchange). The legislation was signed into law on December 13, 2016, and is effective for plan years beginning on or after January 1, 2017. As a result of the legislation, small employers will be able to sponsor medical insurance premium reimbursement programs, just like in the old days. The key features of the new HRA rules are outlined below. An employer can establish the HRA for a year only if it: Had fewer than 50 full-time equivalent employees in the preceding year (i.e., it Is not an “applicable large employer” under the ACA for that year); and Does not offer a group health plan to any of its employees. The maximum amount that may be reimbursed during a year is $4,950 for an individual employee, and $10,000 in the case of an HRA that also provides for reimbursements for family members. The annual limit is prorated for an individual who is not covered for the entire year. The limit will be adjusted for inflation. The HRA could provide for the reimbursement of any type of a qualified medical expense. However, the law is designed to simply reimburse employees for the cost of their medical insurance premiums. Reimbursements must be made available on the same terms to all eligible employees. For this purpose, the following employees can be excluded: Employees who have not completed 90 days of service; Employees who have not attained age 25; Part-time and seasonal employees; and Union employees. Amounts reimbursed under the HRA will reduce dollar-by-dollar any premium tax credit otherwise available for an insurance policy purchased on the Insurance Exchange. A notice advising of the amount of the reimbursements available under the HRA, and other described information, must be provided to eligible employees prior to the beginning of each year. However, the first notice will not be required earlier than 90 days after the date of the enactment of the new law (which is March 13, 2017). The amount of the reimbursements made available to an employee under the HRA for a year will need to be reported on an employee’s W-2. The HRA is exempt from the COBRA continuation coverage rules, and from the ACA generally. The HRA will constitute an employee benefit plan for purposes of ERISA. Therefore, a plan document and summary plan description will be required. Small employers having cost restraints that restrict their ability to provide group medical insurance to their employees can now again through an HRA subsidize their employees for the premiums paid for the purchase of medical insurance on the open market. The reimbursements will be tax-free to the employees, and deductible by the employer. However, the tax-free treatment to an employee will need to be weighed against the offset of the premium tax credit that may be available

It seemed obvious to me that Naveen is talking about people who will be his clients. The question of "how do I deal with the clients" when they get letters presupposes that the clients are going to be bringing the letters to Naveen because he is their preparer now. I don't think he is just calling all these people before they come in to see him. He mentions that he can't "give back" the returns to the seemingly incompetent and now retired preparer. My take on this is that Naveen is asking for our advice about what to do when these folks come in for tax prep in a few weeks. Tell them about suspected errors or no? I do believe Naveen has a duty to discuss suspected errors, and sure, he may find out things are not as dire as he thinks.

If you look at prior year returns for a new client (I require them) you have a Circular 230 responsibility to inform your new client of errors and of the consequences of amending or not amending. You do not have to amend. The client does not have to file an amendment. (Depending on the errors &/or the potential client's attitude, I might or might not accept a new client who does not amend.) And, yes, you can charge for amendments. You do not have to audit (as an EA, I can NOT audit). You do have to notify if you know. Our standard is Know or Should Have Known.