Lee B

The ATX Blog also had a recent posting saying that they will stop accepting 1040 efiles 1 or 2 days before the IRS cutoff.

For some reason, this hit my funny bone this morning

Alabama State TurboTax Software Intuit is helping taxpayers in Alabama after errors were uncovered in its state income tax software that led some taxpayers to inadvertently overpay or underpay their taxes. The company is working with Alabama’s Department of Revenue on an outreach effort after errors were found in Intuit’s TurboTax Alabama state tax software. The company said the errors mostly occurred in uncommon tax situations and have now been fixed. Intuit is helping Alabama taxpayers amend and resubmit their state tax returns so they can claim an additional refund or pay any balance that may be due. “Each year, Intuit helps millions of taxpayers and tax professionals successfully file complete and accurate tax returns,” said Intuit vice president Bob Meighan in a statement Wednesday. “Any error is important to us and our customers can rest assured that we’ll work diligently to resolve it. Intuit takes responsibility for the accuracy of our tax products. As part of our continuous quality assurance process, when we discover an error we take the necessary and appropriate steps to resolve it. We stand behind our Accuracy Guarantee and will reimburse TurboTax customers for penalties or interest.

I had a somewhat similar situation with a client several years ago. In my case, the tenant was unable to obtain financing and ended up forfeiting the the deposit plus the payments above and beyond the monthly lease payment.

The IRS has announced that this changeover has been delayed due to unspecified problems for an unknown period of time. After all how can you know the unknowable ?

I received this email today. I nominate it for the least likely email scam to succeed. After all who would respond to this unless you too live in Jigawa. "Good Day I hope this message meet you well. I came Across your email on web engine, i am former Governor of Jigawa State and have held several political post in Nigeria I have a Business Investment proposal that will interest you, kindly confirm if is safe to send the details of my proposal here. Contact me via E-mail: [email protected] As soon i receive your email confirmation/reply i will provide you with more details. Thanks. Sule Sani Lamido FORMER Governor of Jigawa State Federal Republic Of Nigeria"

IRS Picks Private Debt Collection Contractors The Internal Revenue Service has chosen four private debt collection agencies to help collect unpaid tax debts as the IRS gears up to resurrect the controversial program. The four agencies are CBE Group of Cedar Falls, Iowa, Conserve of Fairport, N.Y., Performant of Livermore, Calif., and Pioneer of Horseheads, N.Y. The IRS is required to revive the private debt collection program this year because of a provision in a highway funding bill that Congress passed last December. The program is expected to start up again next spring.

The almost identical thread I going on the official ATX Board, has vanished. ATX never responded to my post, except to delete it ! Same Old Stuff !

According to the ATX Blog, there was scheduled maintenance on 917 & 9/18 ending at 3 PM on 9/18, which is several days before i originally transmitted this Efile.

Finally, this morning the reject came back. I was able to fix the reject and transmit again. Although I would like to know, why the EFC had limited functionality for several days ???

Several days ago, I efiled a 2014 Form 1040. Yesterday & today, when I try to retrieve acks I get the following message, "Limited connection to EFC, you may transmit efiles, but will not receive any acks at this time." I checked the return status in the Efile Center which is "EFC Reject". When I use the synchronize acks utility, I receive the same message ! Problem is without the Reject showing in the program I can not fix the reject. In fact I don't even know why the return was rejected at the EFC ????

Copied from CPA Practice Advisor: CPA Loses Business Car Deductions in Tax Court Case The IRS requires taxpayers to follow the recordkeeping rules for T&E (travel and entertainment) expenses to a “t.” Otherwise, deductions may be denied. This lesson was apparently lost on a CPA in a new Tax Court case. He wasn’t allowed to deduct most of his business car expenses based on calculations from the MapQuest website. Notably, the CPA failed to keep a contemporaneous diary or log of his business trips to prospective clients. He didn’t create the records until a couple of years later (Kilpatrick, TC Memo 2016-166, 8/29/16). On the Schedule C for his 2009 tax return, the CPA deducted $22,331 in automobile expenses. He claimed they were expenses of driving 40,601 miles for his CPA business. But the IRS only allowed a deduction of $398 in its notice of deficiency. At trial, the CPA changed his tune, claiming he drove 8,687 business miles in 2009. Because he used the standard mileage method (55 cents per mile in 2009, the deduction amounted to $4,778. Although the recordkeeping requirements under the standard mileage method aren’t as stringent as the rules for deducting actual expenses, the CPA still must substantiate the following: The amount of business mileage for each business use of the automobile; The total mileage (business and nonbusiness) of the automobile during the taxable year The date of each business use of the automobile; and The business purpose of each business use of the automobile. To substantiate these automobile expenses with adequate records, a taxpayer must provide (1) an account book, log, or similar record and (2) documentary evidence (i.e., receipts, paid bills, or similar evidence) which, in combination, are sufficient to establish the following elements: the amount of mileage for each business use, the total amount of mileage (business and nonbusiness) during the taxable year, the date of each business use and the business purpose of each business use. The account book, log, or similar record must be prepared or maintained in a “contemporaneous manner.” A record maintained on a weekly basis may suffice. The CPA testified that all 8,687 miles that he allegedly drove for business were to attract new clients. He did not provide to the Tax Court any contemporaneous records of his business travel for 2009. In lieu of records, the CPA furnished a copy of a 2009 calendar, prepared in December 2011, and printouts of directions generated by MapQuest, also prepared in December 2011. The MapQuest directions showed the distance between his residence and various towns to which he allegedly traveled for business. The CPA wrote a list of dates on each page of directions, apparently to signify that he took trips on those days to and from the particular location on that page of directions. These dates are the same as the dates circled on the calendar. Both the calendar and the MapQuest directions were prepared at least two years after the CPA allegedly used his car for business travel in 2009. Therefore, they do not constitute “adequate records” for this purpose. Furthermore, due to the large gap in time between the alleged dates of business travel and creation of the records, the Court concluded they are not sufficient to establish the amount of business mileage, the date of the use and the business purpose of the use. Make sure your clients follow the recordkeeping rules for T&E expenses to the letter. And then, unlike the CPA in this new case, practice what you preach. The rules for auto recordkeeping generally require a contemporaneous log of each trip (there are a limited number of special exceptions). In Sam D. Kilpatrick (T.C. Memo. 2016-166) the Court found the taxpayer used a calendar and MapQuest to prepare a log at least two years after the business use of the car. The Court held that neither the calendar nor the MapQuest directions were "made at or near the time of the" use of the car. In addition, the calendar did not contain other required information such as the places, business appointments or the business purpose of the travel. The Court only allowed the deduction for auto expenses allowed by the IRS. On a second issue the Court disallowed deductions for office furnishings. The Court found the taxpayer did not elect Section 179 expensing. Thus, any deduction could only be through a depreciation deduction. But the Court noted that the furnishings were antiques (determined from where they were purchased and by the photographs presented) and that they would not be adversely affected by the passage of time or the taxpayer's use of them. The Court held that under the current depreciation rules, as under prior law, no depreciation deduction should be allowed for antiques.

COPIED FROM CPA PRACTICE ADVISOR: Tax return preparers also are subject to a number of penalties that are adjusted for inflation. These 2017 projected penalty amounts are shown below. Projected amounts for other penalties are included in the full report. Scenario Penalty Per Violation Maximum Penalty Failure to Furnish Copy to Taxpayer $50 $25,500 Failure to Sign Return $50 $25,500 Failure to Furnish Identifying Number $50 $25,500 Failure to Retain Copy or List $50 $25,500 Failure to File Correct Information Returns $50 $25,500 Negotiation of Check $510 No limit

The big question is, If the assets weren't reported were they expensed back in 2011 ???

PTIN User Fee. The IRS issued final regulations relating to the imposition of certain user fees on tax return preparers (T.D. 9781; TAXDAY, 2016/08/10, I.1). The final regulations, which affect individuals who apply for or renew a PTIN, reduce the user fee from $50 to $33 .

Accounting Firms Rank As Most Profitable Profession The Most Profitable Industries in 2016 Which industries are the most lucrative? The answer depends on how it’s measured, but based on pre-tax net profit margin, the top money-makers include specialty service providers in accounting, law, health care and real estate, according to the latest ranking from Sageworks, a financial information company. Privately held accounting-related companies (accounting, tax preparation, bookkeeping and payroll service companies) are the most profitable, with net profit amounting to 18.3 percent of sales, on average, based on a financial-statement analysis for the 12 months ended June 30. Legal services firms and real-estate leasing companies are tied for second and third in profitability, with average net profit margins of 17.4 percent. These industries often make the cut for Sageworks’ annual ranking. “Some businesses tend to have healthier bottom lines by the very nature of the industries that they operate in,” said Sageworks analyst James Noe. He noted that many of the most profitable industries sell services rather than products, so their operations don’t require raw materials or other up-front costs that would wind up in the middle of their income statements and eat into the bottom line. “They don’t sell or produce finished goods,” he said. “They don’t make the tractors to sell to farmers or they don’t buy groceries to sell to consumers. In other words, you don’t need plastic to provide an audit for a company; it’s just mostly human capital that’s being utilized, and that lends to a high margin generally.” Among privately held companies across all industries, the average net profit margin for the 12 months ended June 30 was 7.7 percent. Through its cooperative data model, Sageworks collects and aggregates financial statements for private companies from accounting firms, banks and credit unions. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance. Five health-related industries made Sageworks’ top 15 list of most profitable industries in 2016: outpatient care centers, physicians, dentists, medical labs and a category of other health practitioners that includes chiropractors, optometrists, physical/speech/occupational therapists and non-physician mental health services providers. Noe said that several industries tied to medical care and professional services have made Sageworks’ list of most profitable industries in recent years. Contributing factors could include more demand for health care from the aging baby boomer population and the fact that these specialized services require workers with advanced educational degrees who are able to garner higher fees. “There are two ways to have a high profit margin,” he said. “You either have a heavy top line, or revenue, so you’ll still have a healthy bottom line despite whatever expenses you incur, or you just don’t have a lot of expenses in the middle of the income statement.” Privately held companies offering tutoring, sports camps, driving lessons and a host of other instructional or educational services also made the list this year, with a net profit margin of 10.5 percent.

Yes, I filed the 2015 1095s for a client of mine with over 50 employees back in May. Be aware that 1095s for 2016 will be due on January 31st, just like W - 2 s.

Your client has obviously become the unwelcome recipient of the infamous "enhanced electronic screening", a black hole from which some tax returns are never seen again

i received this email today. It get's my vote for "Most Obvious Email Scam "! I wonder how many recipients would actually respond to this ??? Supposedly almost 80 % of all world wide email are scams or scam related. "Hello You have been compensated mightily for sending money yet transaction not completed, reply "YES" details. Security Team"

TAX HUMOR Tax Quotes I'm proud to be paying taxes in the United States. The only thing is, I could be just as proud for half the money. - Arthur Godfrey The trouble with the profession of tax collecting is that 90% of its members give the rest a bad name. - anonymous Day in and day out, your tax accountant can make or lose you more money than any single person in your life, with the possible exception of your kids. - Harvey Mackay What's the difference between a tax auditor and a rottweiler? A rottweiler eventually lets go. - anonymous What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin. -- Mark Twain People who complain about paying their income tax can be divided into two types: men and women. - anonymous If Patrick Henry thought that taxation without representation was bad, he should see how bad it is with representation.- Farmer's Almanac For every tax problem there is a solution which is straightforward, uncomplicated-and wrong. - anonymous The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers, with the smallest possible amount of hissing. - Jean-Baptiste Colbert Why does a slight tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents? - Peg Bracken The Taxpayer's prayer: Oh Mighty Internal Revenue Service, who turneth the labor of man to ashes, we thank thee for the multitude of thy forms which thou hast set before us and for the infinite confusion of thy commandments, which mulitplyth the fortunes of lawyer and accountant alike. - Russell Baker I owe the government $3,400 in taxes. So I sent them two hammers and a toilet seat. - Michael McShane Unquestionably, there is progress. The average American now pays out twice as much in taxes as he formerly got in wages. - Henry Louis Mencken (1880-1956) How can you tell when a tax auditor is trying to trap you into a confession? Answer: When his lips are moving. - anonymous The hardest thing in the world to understand is the income tax. -Albert Einstein The Government that robs Peter to pay Paul can always depend upon the support of Paul. -George Bernard Shaw Copied from the OSEA Newsletter

The Robo-Accountants Are Coming Brian Peccarelli A recent story in The New York Times story sent shivers throughout the alleyways of downtown Manhattan with its bold headline, “The Robots Are Coming for Wall Street.” Conjuring images of Arnold Schwarzenegger, armed with scientific calculator and a mandate to snuff out armies of analysts, the story painted a picture of a not-so-distant future in which half of Wall Street loses their jobs to automation software. Further evidence suggests that the phenomenon is unfolding beyond Wall Street, affecting the broad professional services sector. The Boston Consulting Group predicts that by 2025, up to one quarter of jobs will be replaced by either smart software or robots. A separate study from Oxford University suggests that 35% of existing jobs in the United Kingdom are at risk of automation in the next 20 years. Among the top 10% of jobs most likely to be automated: insurance underwriters, tax preparers, loan officers, credit analysts, and accounting professionals. Does that mean we’ll all be getting our tax advice — or, for that matter, financial and legal advice — from robots while we look for new jobs? In some ways, it’s already happening. Robo-advisers have become a fixture in the financial services space, and automated tax preparation apps have been the subject of a tax season advertising blitz. While some of this transformation has already begun, the future of robo-enabled professional services is not quite as dystopian as the rebellion scene from Terminator or as stark as the research consultants have projected. Instead, we expect to see the industry evolve significantly as it increasingly marries powerful technology with the human element to create a hybrid — a cyborg if you will. This new breed of professional will be powered by big data and enhanced productivity tools. Consider, for example, the impact of new artificial intelligence innovation on the current job market. Last year, approximately 4.4 million IT jobs were created to support the types of big data and data science initiatives that power artificial intelligence development, generating 1.9 million jobs in the U.S. alone. It is projected that every big data related role in the United States will generate employment for 3 additional people outside of the IT function. That means over the next four years, 6 million jobs in the United States will be generated by these kinds of initiatives. Clearly, this type of evolution will have a major impact on the day-to-day lives of professional services workers, upending many traditional ways of doing business, while making way for new ones to flourish. But, ultimately, the process will drive further growth across a wide variety of industries. Based on our work leveraging technology to help accounting professionals gain better insights, we see automation playing the biggest role in helping professional services in the areas of connectivity and information filtering and analysis, ultimately allowing accounting professionals to become more proactive rather than reactive in managing client relationships. Some of the basic building blocks are already in place today. For example, in accounting, advanced document processing and secure document transfer portals now make it possible for accounting firm clients to directly upload all of their information through a secure file transfer. At the base level, this could sound scary. With many of the customer touch-points being automated, how can individuals and firms differentiate themselves and add unique value? The answer is by inventing new, better touch points. The fact is, for every new technological advance that makes it easier for machines to handle mundane administrative tasks, a thousand new complex issues are cropping up for customers that they don’t quite know how to deal with. Consider data from eBay which finds that more than 90% of U.S. businesses selling their wares using ebay.com are trading internationally. On average these businesses sell to 30 different countries. It didn’t used to be this way. Mom and pop businesses rarely sold outside of their own zip code just 15 years ago. Now, they need to contend with a tangled web of international trade and tax laws, government regulations, and compliance needs. These are precisely the kinds of areas that great human accounting professionals are ideally suited to address. What that means is accounting professionals will be spending less time combing through spreadsheets and more time cultivating the kinds of valuable insights that will help their customers anticipate hurdles and alter course before those hurdles become real problems. They will also have to nurture a decidedly different skill set that will prioritize trust, creativity, communication, and interpretive insight over mathematical acumen, mastery of tax law, or old-fashioned bookkeeping proficiency. Workers and the workplace will need to evolve to address the growing demand for training and constant retraining on new technology solutions and we will need to become extremely proficient in the soft skills, nurturing relationships with clients, co-workers, and partners to expand our influence. Most of all, though, the major evolution for professional services firms and workers will be a laser focus on summoning the ghost in the machine — that insightful story that’s hidden among the data — and translating that insight into actionable information for clients. These kinds of insights are the keys to building trust, which is an attribute that’s sorely lacking in a purely robotic relationship.

Not sure we have the whole story here, but shouldn't the rent be considered an owner's withdrawal of capital and the expenses be deducted on Schedule C.

TAX HUMOR No problem is so big, or so complicated that can't be run away from. Charles M. Schulz in his Peanuts cartoon Love, sex and the I.R.S are three things that will always be with us. America: Innocent until proven guilty. IRS: Guilty until you spend yourself into the poor house trying to prove your innocence. I don't know whether this is a joke or a lament. Twenty years ago I was discussing the then mind numbing complexity of the Code with a KPMG partner. He wondered how he would be able to justify to St. Peter a life spent wading through the Internal Revenue Code. Think of how much worse it would have been for Jacob Marley had he been forced to carry around a copy of the Code and the Regs for eternity. Courtesy of Pete Wilson, Washington, DC CPA The real taxpayer rights: You have the right to remain silent. Anything you say (or we say you said) can and will be used against you in a court of law. You have the right to do exactly what we say or you will receive a visit from a godfather bearing a horse's head without the rest of the horse. Harold Harmon 6-13-09 Durant Daily Democrat Tax rates are based, not on gross income earned, but on adjusted gross income, computed by factoring in decades of special interest lobbying that change on an annual basis (you know, "sudden rate hikes"). Tim Higgins Toledo Free Press 5-15-09 If a person is an economic being and figures out the odds, then there is a very high incentive to cheat. That is, of course, putting aside honor, duty and patriotism. -- Jerome Kurtz, former Commissioner, IRS Whomever said that truth never hurts never had to fill out a Form 1040. Income taxes are voluntary! (If you like prison food) Teri Sforza, Orange County Register 2-18-10 The Washington Post - IRS stands for Internal Revenue Service, but after a frightening report from the IRS inspector general on the inability of the tax collection agency to protect taxpayer data, IRS might stand for Information Relinquishing Service. 4-15-07 ( Note: Nine years alter the problem has grown larger thanks to an improvident series of IRS budget cuts by Congress.) Two accountants are in a bank when armed robbers burst in. While several of the robbers take the money from the tellers, others line the customers up against a wall and proceed to take their wallets, watches, and other valuables. In the midst of the chaos, accountant No. 1 jams something in accountant No. 2's hand. Without looking down, accountant No. 2 whispers, "What is this?" to which accountant number one replies, "It's that $50 I owe you." The most successful tax lawyer in town had never made a contribution to the Red Cross. The chairman of the Red Cross, Mr. Wilson, called on the lawyer, hoping to convince him to make a donation. "You made over $600,000 last year but you haven't given anything back to the community. How do you reconcile that?" The lawyer sighed, leaned forward and said, "If you only knew... My mother is terminally ill; her medical bills far exceed her income. My brother is a disabled veteran, blind and in a wheelchair. My sister is raising three children alone since her husband died in an auto accident." Mr. Wilson offered his sympathy, admitting he had no idea there were so many demands on the lawyer's profits. The tax lawyer nodded and said, "Exactly...Why should I give to the Red Cross when I don't even give to my own family!" A man finds a magic lantern and rubs it three times. At once, a genie appears and says, "Master of the lamp, I will grant you three wishes. But, for every wish you make, I must give your tax lawyer double". The man ponders for a moment, then makes his first wish. "Genie, I wish to have a million dollars". The genie responds, "Your wish has been granted and your tax lawyer has received 2 million dollars". The man thinks for another moment, then says, "Genie, I wish to have a 50 foot sailing yacht". The genie responds, "Your wish has been granted and your tax lawyer has received a 100 foot sailing yacht". At this point, the man is somewhat perturbed about his tax lawyer getting twice as much as he so he thinks long and hard. After some time the man says, "Genie, I wish to be beaten half to death". An old, somewhat poor widow is in her estate planning lawyer's office and while searching around in her purse for her bifocals, she manages to drop a $100 bill on the floor. It sits there, unnoticed. Later, after the widow has left, the lawyer gets up, notices the money, realizes its source, and is confronted with a dilemma: should he keep the money all for himself, or should he split it with his partner? Copied from the OSEA Newsletter

Some users who have upgraded to Win 10 with ATX already installed have had ATX files moved by the upgrade process. Thus the ATX software can't find some of the files it needs to run. You will have to call support and decide whether to go back to Win 8.1 or have support try to get ATX running on Win 10. The deciding factor will probably be whether you are having problems with any other programs or hardware due to the Win 10 upgrade.

First I installed Never 10, which disabled the exe program. Second I installed the GWX Control Panel. Despite that, my system keeps prompting me to install an optional update "KB3123862" which according to the MS website prepares your computer to upgraded to to Win 10. So now before I install any MS updates of any kind I go to the MS website to see what it does.