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What are you all going to do when a client comes in and says they heard this on the news and they are not going to pay the penalty? We discussed it at my office (OK, wife and I discussed) and we decided that the law is still the law and until the penalty tax is removed from the tax code, we are going to file the return according to the tax code. If they want to walk to a big box that is up to them. I hate losing clients, but this crap just doesn't feel right to me. I just can't stomach the whole mess this thing has become. Tom Newark, CA

I thought about that, but it's just too simple a return. Wages, $1 interest, social security, capital loss carry-forward but no brokerage transactions or dividends. That's it. It's close to a 1040A and I'd gag trying to tell her she owed me $375 for that return.

Sounds like the Garrison Kiellor story about the time Ole visited the big city for the first time. A panhandler walked up to him and asked "How about giving me a dollar for a sandwich?" Ole replied, "Well OK, but first I need to see the sandwich."

I received quite a bit of information on this topic during the week including observations by CHECKPOINT. At this point, it sounds like IRS will accept and process refunds if box is left blank. However, taxpayer might later receive a letter inquiring whether they had HCC. At that point IRS might attempt collection. It was noted that IRS will have limited tools to collect other than offset of refunds. IRS has also stated no knew regs will be issued until the new Treas. Sec. takes over. My position is to keep the client informed and involved in the decision to check the box or not. Written communication will be kept on file. I need to cover my tail, but at the same time client has the right to be informed of the situation and possible outcomes. My advice will be to hold off on filing for another 30 days and see what happens.

Dead scorpion in client's "box o' crap" paperwork. Ewwww! Emptied it outside in case there were any live ones lurking in there.

Sounds like a good candidate for a hug.

I had a client that was convinced by a broker to refinance their home and to invest the money, they lost $30k like in seconds.

Those annuity sales reps must get big commissions on those damn things.

I had a client who was advised to take her money out of an IRA and buy an annuity. I told her "Don't do it.

I feel the same way. The worst one I ever saw was about 20 years ago when a young lady brought me a cardboard box crammed full of papers & junk. Her husband, a young farmer, had died of cancer the year before and she was the sole heir to his enormous life insurance policy . She had already lost lots of it (in ridiculous investments) and had a lawyer do her taxes the previous year. She asked my price and while I felt sorry for her, the size of that box was daunting. So anyway, I said "Ma'am, I hate to tell you this, but I'd have to charge you at least $500" (which was a huge price around here at the time). And she replied "Whew! That's a relief. That lawyer charged me $3,800 last year." So I got a new customer and she got a good deal. (There was a funny sequel to this, but...some other time).

I just lost one that is going to the tax preparer associated with the broker (relation) that talked her into cashing out her annuity that he had sold her to the tune of just short of $1,000,000. She was crying when she called me over the taxes that she has to pay and said that her recently deceased husband would be turning in his grave over the money that he had worked so hard for. I have been furious and sad over the treatment of her, but it's a relative and I can't say a word.

Abby, your client has an SEC case against that broker. His first step is to contact the brokerage's compliance department. They do not want complaints lodged against them! Usually they try to deny everything (investor signed something that indicated his risk tolerance was X), but tell him to keep pursuing it. He is elderly, did not understand, these investments were not appropriate for someone his age, etc. If some were advisable only for long-term investors, that's a case right there. This person should not be in anything risky or long-term. Several of my clients had the same nasty broker and lost mega bucks. Some of their investments were things I never heard of so I called a trusted broker who explained that these instruments were meant to be held for at least 5 years and that if he had frequently bought and soon sold them in his own clients' accounts he would have a message to see the compliance dept on his desk in the morning. Some of these clients were made whole by the brokerage firm. One sweet old man who lost over $200k was asked by the broker not to report him "or I'll lose my job." But he promised to get the money back. How? By making the riskiest investments in the world? I have kept a careful watch on brokerage statements that still show him as the advisor and haven't noticed any hankey pankey lately. Sometimes they just need to know someone is watching.

Catherine, You need one of these........

Elderly client had half a million in a savings account. Someone talked him into investing in 2015. 2015 was a down year so he sold everything after losing 80k. BUT the investments that the Wall St. broker put him in paid 55k in dividends. He didn't need the income! So he lost money overall but still has to pay a lot of tax. And he'll never live long enough to deduct that 80k at 3k per year. Somehow, we never got the 1099, so we just got an IRS notice... with a substantial understatement penalty. He'd be miles ahead if that money was still in his savings account. TGIF!

Longtime client has a disabled son, so she was advised to set up a trust for him. She asked me if the legal fee she paid to set up the trust in 2014 is deductible. She did not ask me in 2014. She paid another $3,500 in fees in 2016 because it was not done properly in 2014 when she had paid $6,000. I asked her, "What is in the trust?" She has no investments. The only asset she had was her house which she sold in 2016. Her income is a government pension and Social Security. She told me she has a life insurance policy for $400,000 that is for the disabled son. She gave the not disabled son $200,000 from the sale of her house for him to buy a house. So she has about $10,000 in cash remaining. For this she paid $9,500 in legal fees!

There's an insane tax preparer in my county who advised a retired lady turned 'artist' to start an S corp and rent a space so she'd look like a real business and be able to deduct huge losses. She sells about $500 of paintings each year. Fortunately she came to me before she did put any assets into the S corp, but she's still paying rent on that lease. I explained to her that buying deductions is a losing game and a hobby is still a hobby even if you put it in an S corp.

Ignore the 1099-K and report the actual income on the schedule C worksheet. 1099-K is not a 1099-Misc and should not be entered as such. You should be certain, however, that the total revenue you report is at least equal to what is shown on the 1099-K. The actual revenue is most likely more than what is on the 1099-K. The 1099-K shows only the income the driver received via credit card.

I think the only way to protect our clients from these people is if the client called us for an opinion on such an investment. Many clients do, but the older ones are just too trusting and fall for the slick sales pitch.

Yesterday a client came in and didn't have enough funds to pay the bill, but would in 5 days. So I took a check with the current date and made a note to deposit it on the day the funds will be available. Not a post dated check, and if it takes me awhile to get to the bank....

I agree with Tom and I'm not going to tell anyone not to pay that penalty based on a couple of newspaper articles without seeing an official pronouncement from the IRS. All the change means so far is that the return won't reject. For now I'm going by the page below that the IRS updated on Wed 2/15 that was posted here in another topic: https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals For those that don't click links:

My hubby got all excited when a large Lord & Taylor box arrived for me, thinking a grateful client had sent a gift. I took one look at the return address and knew it was just a tardy client sending all her tax documents, plus every other piece of paper she had, for a couple of years. What a letdown.

I really detest it when shysters sweet-talk the elderly into doing *stupid* things with their money. Couple years ago a client got convinced that converting her IRA to a Roth IRA was the cat's meow. Oh, she and her husband got *slammed* with tax that year. But the shyster got his juicy commission so what does he care?

I know you just file another 1096 / 1099 for only the MISC forms that were missed in the original file, but not sure about the DIV correction and the penalties.

Crappy paper clip, how about receiving a TP envolope with a smell between musty, mildew or cat urine?

Another good one is when a sole proprietor starts up her craft business and decides she just HAS to be an LLC because, you know, every person in business, especially the craft industry, gets sued and loses their home, and apparently liability insurance is just not good enough. Lawyer charges her $1500 to fill in the blanks on the two pager with Department of Revenue. A couple months later, I meet her when she brings all her letters saying complete your applications for city business license. county business license, business taxes, etc. That's all he did. The two page fill in the blank. He did tell her she had no liability protection as a sole proprietor and cashed her personal check promptly.

From today's IRS enews: 3. ACA Silent Returns and the Current Tax Filing Season A recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden regarding the Affordable Care Act.‎ Consistent with that, the IRS has decided to make changes that will continue to allow electronic and paper 1040 returns to be accepted for processing in instances where a taxpayer doesn’t indicate their health insurance coverage status. However, legislative provisions of the ACA law are still in force until changed by Congress, and taxpayers remain required to follow the law and pay what they may owe‎. Keep up-to-date on the latest ACA news by visiting our ACA Information Center for Tax Professionals pag

My husband keeps telling me that. New client this year paid $750 last year to [big box store which shall remain nameless] when my fee for that same return is about $280. It only took me a half hour; I felt bad charging that much - until I saw the prior-year bill.

We all hate when this happens because we are not sales people, maybe we are not charging enough.

Well, you've all got better stories than me. Only one I can think of is my beauty shop operator client who clips all her papers together with hair clips. No, wait. I remember receiving a large box of all someone's papers -- it's probably been 25 years ago, but in the bottom was a half-eaten sandwich. Thankfully, it had mummified.

I have a client who used to bring me all her documents in one of those tins they use to sell Dutch butter cookies. *Everything* smelled like butter cookies - but there were no cookies! So I told her she had to start leaving some cookies in the tin - or bring stuff in a folder. Sure 'nuff - folder. Piffle. I was really hoping for the cookies. In fact, maybe I'll have a piece of shortbread now.

If I had a pizza restaurant bookkeeping client, I would require more than smells! You bring something that smells like pizza, and it had better be followed by the real thing!

I have a feeling they would send a wet noodle thru the mail, maybe one to us and one to the taxpayer, and say, "Hit yourself with this, we're not refunding a tax that you owed and paid. Sorry that your neighbor got out of it. Don't be hatin."

Offer to let her pay you in installments or else when she gets her refund. What do you have to lose? Your time is already invested. Set aside ego & emotion and focus on the business aspect. It's a one-off event, do the only thing left to try and turn it into a profitable one.

Smart move.

Thanks guys, the bank in mention is Canton something. I'll be sure to check the form entries real close. Catherine I may ask you some other questions if needed. Thanks again.

I too will follow the Code that is in effect when I prepare the return. "Normal IRS post-filing compliance" just means IRS letters that we will have to answer. When this mess is settled, I have to hope it will be retroactive and those who followed the law and paid the penalty will be refunded (if that's the outcome). The executive order that two regulations must be removed for every one implemented is creating a stir in the tax universe. Does this apply to the IRS? As we all know, IRS regs tend to be explanatory, showing how the code is to be applied in the real world. Remember last year when the ACA regs weren't released until March? Regardless of how many courses we took and how much studying we all did, it was still confusing until those regs came out. I know when I'm faced with a perplexing mess, I turn to the regs instead of the code because they are written in plain English and give great examples that often contain one that applies to my exact problem. A Treasury Secretary has finally been confirmed, so after he learns about the purpose of IRS regs hopefully he'll get the president to confirm that his order doesn't apply to the agency, or at least to the type of regs it typically issues.

When I see the previous year's bill, mine is never less than 50% of what they paid last year.

Re: the 179, you can't create a loss with it, and you don't take depreciation at all on an asset that is bought & sold in the same year. I think your client wouldn't take any depreciation against that which is abandoned.

On a brighter side, I have an older client whose tyvex envelope upon opening gives off a strong scent of Nina Ricci or maybe it's Chantilly (I worked in a drugstore during college so I know these things). Always makes me smile, I actually know it's hers before opening. But the smelly, stinky, stained documents with their last meal on them, I'm thinking of going to those nitrile gloves, except that hearing the snap of the glove upon putting it on gives me frightening flashbacks of the doctor's office.

I once had a client who delivered & maintained Porta-Johns for construction sites... Oh never mind...

Assuming the client was on the accrual basis of accounting for tax purpose, the income is recognized in the year that the liability is known to be overstated. No amended return is necessary. No messing with retained earnings permitted.

Every time I have used insolvency, the IRS has written back asking for a copy of the insolvency worksheet in the publication. So you might want to keep that handy.

It’s official—for 2016, the estate and gift tax exemption is $5.45 million per individual, up from $5.43 million in 2015. That means an individual can leave $5.45 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $10.9 million from federal estate and gift taxes. The annual gift exclusion remains the same at $14,000. The federal estate and gift tax exemptions rise with inflation, and the IRS announced the new numbers here. We cover the 2016 retirement plan contribution limits here and the new numbers for individual income tax provisions for 2016 here. The inflation bump up matters to wealthy folks who try to whittle down their estates to keep below the threshold, which was as low as $2 million in 2008, $1 million in 2003 and $675,000 in 2001. The estate and gift tax exemption amount was set at $5 million in 2011, indexed for inflation. The top federal estate tax rate is 40%. http://www.forbes.com/sites/ashleaebeling/2015/10/22/irs-announces-2016-estate-and-gift-tax-limits-the-10-9-million-tax-break/#836648899fa5

The smells are what bother me more, especially the papers from heavy smokers. That gross smell gets on my hands too. Years ago, the firm I worked for had a fish market as a client, and the smell on those papers was nauseating and probably the worst I've ever experienced.

I especially hate the plastic clips in cute shapes. This is no time for cute, people. And of course, I'm with you on the rusty ones. Be sure your Tetanus shots are up to date.

I have 100% success with the post-dated check thing. I don't deposit it until that date or after. I only have a couple and they are repeat clients. BTW, if you have any doubt about the check's validity, take it to THEIR bank after the day it is dated, and inquire whether it is good or not. I took a check one time at a yard sale, and suspiciously felt that it might not be good, went to the bank drive-in window on two occasions and asked if it was good -- it wasn't either time -- so I asked whether a specific time of the month might be better, and teller said "Try on the 1st." I was there johnny-on-the-spot and got my money! I think this would work only if the check is made to you, and not to a company -- but you never know.

Crank...is it worth the headache? If she balks at a $150 fee, how good of a client is she? I don't know what was entailed in her return, but $150 seems reasonable, certainly when you compare it to The Big Box Stores. Sure, you did the work and you SHOULD be paid. You DESERVE to be paid. With that said, if it were me, I'd seriously consider placing all her info in a box, hand it back to her and move on to your next client, who probably completely respects you and your abilities.

This is what I do for a number of clients, or if they don't write checks, I ask that they leave me a copy of their debit or credit card with approval to charge it on a certain day. We write out an agreement and they sign it. I have never had an issue and have been doing it this way for 20 years, but if you let them leave without some sort of payment, I chase them all year long and usually do not have them return until they think I have forgotten about it which of course never happens. When they do finally return I remind them of the past due and require payment in full for the past due and current due before I even begin, reminding them that they would not go to work and expect not to get paid would they?

If you decide to let her pay you when she gets her refund, I would ask for a post-dated check.