Lee B

FYI: From the very start the PTIN application processing and renewal process was contracted out to a subcontractor.

It's a Federal Holiday. All Federal Employees get the day off except for safety reasons like prison guards, Air Traffic Controllers etc.

Alert Subject: Extended Maintenance Window for the Modernized e-File (MeF) Production and ATS Environments The MeF Sunday maintenance build window is being extended on Sunday, October 5, 2014. The system will be unavailable from 1:00 a.m. until 10:00 a.m., Eastern. The build will deploy critical system updates. This extended window impacts the MeF Production and ATS Environments. Thank you in advance for refraining from accessing the MeF Production and ATS Systems during this period. Posted by Stephanie Bradford at 5:53 PM Labels: ATX, Efile

FROM ATX : Re: 2014 tax program from Stephanie B Director of Customer Care The 2014 software will be available the last week of November. The CS rep may have been referring to version 13.7 update, which we will post after Oct 17th- to activate the client organizers. Within the last 24-hours, you may have received an email with the product activation code for the soon to be released ATX™ 2014 software. You don’t need to do anything at this time. We’ll be sending you instructions for activating the 2014 software by the last week of November. At that time we’ll again provide you the software activation code for the 2014 tax preparation software

IRS Announcement: Issue Number: 2014-40 7. Modernized e-File (MEF) Production Power Outage for Columbus Day IRS will conduct its annual Columbus Day Power Outage beginning Saturday, Oct. 11 at 3:00 p.m. and ending on Tuesday, Oct. 14 at 5:00 a.m. The MeF Systems will not be available during this time. Important Note: States that schedule retrieval of their state submissions may have to change their schedule in order to retrieve submissions in time to validate returns and submit acknowledgements by 2:30 p.m. on Oct. 11. Anything not retrieved through MeF by 3:00 p.m. cannot be accessed again until MeF re-opens for Production on Tuesday, Oct. 14

Question: Would this deduction also include any state estate taxes ?

From The Journal of Accountancy Under the safe harbor, local lodging expenses will be treated as an ordinary and necessary business expense if: The lodging is necessary for the employee to participate fully in or be available for a bona fide business expense if: The lodging is necessary for the employee to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function; The lodging does not exceed five calendar days and does not occur more than once each calendar quarter; The employer requires the employee to remain at the activity or function overnight; and The lodging is not extravagant or lavish and does not provide a significant element of personal pleasure. In response to a comment, the final regulations clarify that expenses that do not qualify for the Regs. Sec. 1.162-32(b ) safe harbor may nevertheless be deductible under the facts-and-circumstances test. Taxpayers may apply the new rules to any tax year that is still open

FROM ACCOUNTING TODAY September 25, 2014 By Jeff Stimpson The federal government has filed eight civil injunction suits in Florida to shutter 192 “Loan Buy Sell Tax Services” Tax Services locations and bar Walner G. Gachette, founder of Orlando-based LBS, seven LBS franchisees and three LBS managers from owning, operating or franchising a tax prep business and preparing returns for others. The seven franchisees and three managers sued are Douglas Mesadieu, Jean R. Demesmin, Kerny Pierre-Louis, Demetrius Scott, Jason Stinson, Wilfrid Antoine, Jacqueline Nunez, Tonya Chambers, Jehoakim Victor and Lauri Rodriguez. According to government documents, in 2013 LBS operated at least 239 stores (192 owned by the defendants) in Florida, North Carolina, South Carolina, Georgia, Texas, Tennessee, Alabama and Mississippi, and prepared more than 55,000 federal income tax returns last year. The complaints add that this year some of the defendants’ LBS stores began doing business as Milestone Tax Services, Tax Giant, AWA Tax, Tax Master Xpress, BPTS Tax Services and Nation Tax Services. The suits allege that the defendants target primarily low-income clients with deceptive and misleading ads, prepared and filed fraudulent returns to inflate refunds and profit through “unconscionable and exorbitant fees.” One case highlighted in the complaints suggests that potential clients can receive a refund of more than $3,000 “per child.” According to the complaints, the defendants directed LBS preparers to, among other activities: Falsely claim or increase the EITC; Claim improper filing status; Fabricate businesses and related business income and expenses; Fabricate Schedule A deductions, particularly for unreimbursed employee business expenses; and, Charge deceptive and unconscionable fees. Among the many examples cited in the eight complaints was the case of a client in Tampa, Fla., who was allegedly waiting at a bus station when an LBS employee approached him and offered to drive him to an LBS store to have his return prepared. According to the complaint, despite knowing that the client did not have a car, LBS reported on the return that the client drove his personal vehicle 30,256 miles for business purposes, resulting in a bogus $17,589 unreimbursed employee business expense claimed on the return. On another occasion, an LBS preparer allegedly approached another client at a flea market and told her that she had to file a return, showed her a badge and said that he was a police officer and “would not do anything that was wrong.” That preparer allegedly prepared the return and falsely claimed that the client had more than $10,000 in income to qualify for an EITC and subsequent falsely inflated refund. In other cited cases: LBS prepared a return for a $250,000 lottery winner in Houston that allegedly claimed several phony deductions to offset that income, including $30,141 in charitable contributions and $10,279 in unreimbursed employee business expenses, resulting in a bogus claim for a refund of $8,247. On the return of one Jacksonville, Fla., client, LBS allegedly falsely reported that the client had a mechanic business, though the customer did not work in 2012 and was in fact denied Social Security disability benefits the following year based on the false income and a proclaimed ability to work. The IRS reportedly estimates that LBS activities cost the government tens of millions of dollars for the 2012 tax year alone.

NEW YORK (AP) — The parent companies of the Supervalu and Albertsons supermarkets say they have uncovered another breach of their computer networks, potentially compromising data from consumers. The companies say that in late August or early September, malicious software was installed on networks that process credit and debit card transactions at some of their stores. Albertsons says the malware may have captured data including account numbers, card expiration dates and the names of cardholders. Supervalu says it believes most of its stores were not affected. Supervalu supplies information technology services for Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores. It sold those stores to Cerberus Capital Management in 2013. The companies disclosed a data breach in August, and they say the two incidents are separate.

There have been numerous posts about users running ATX back to 2001 on Win 7

The payroll abatements for my clients have all been situations where they made their deposits several days to 10 days late long before the IRS would have issued a letter.

The one that I am familiar with relates to payroll tax deposits.

This the email response that I received from ATX: "No, itemized lists are not included in an efile. If you want this information to be included in an e-file, use a blank statement which you can find by adding a Elections/Statements form. Locate the Blank Statements tab at the bottom, and enter the information here. " If you need further assistance, please contact our customer support department at 1-800-638-8291. Thanks for using our products! Tabitha Ervin Customer Service Level 4 Representative So i will go ahead and use a blank statement.

FROM THE PROCEDURALLY TAXING BLOG september 26, 2014 by Keith Fogg In Briggs v. United States, 511 B.R. 707 (Bankr. N.D. Ga. 2014), Bankruptcy Judge Wendy Hagenau carefully examined the facts of the case and the applicable law in concluding that a Form 1040 filed after the IRS assessed taxes based on a substitute for return procedures met the requirements for filing a return. I previously blogged about the mess created by the litigation and legislation in this area. Judge Hagenau worked her way through existing precedent and arrived at a conclusion that offers hope to many taxpayers who fail to timely file their return and later seek relief through bankruptcy. The Briggs case presents a classic set of facts. The taxpayer did not file his 2002 return by the due date as extended. Eventually, the IRS calculated his liability using IRC 6020( procedures and sent him a statutory notice of deficiency. He did not petition the Tax Court within 90 days. The IRS assessed the tax (over $200,000) and began collection. He eventually filed a Form 1040 showing that his correct tax liability was $149,870 rather than the $226, 536 assessed. The IRS accepted the Form 1040 as a claim for abatement and abated his tax to the lower amount. The IRS partially collected the lower liability through levy and offset but he still owed a substantial liability for 2002 when he filed bankruptcy on March 23, 2013. The IRS made two arguments in support of its position that BC 523(a)(1)((i) excepts the 2002 taxes from discharge. First, it argued that the tax “debt” arose from the IRS assessment and not from the late filed Form 1040, making the debt one from which the debtor had an unfiled return at the time it arose. This argument represents later thinking by the Government than its original position on this issue and seeks to create a bright line test not available through the Beard test. Second it made its original argument slightly modified by the passage of BC 523(a)(*), that an untimely return filed after assessment does not qualify as a “return” under applicable non-bankruptcy law. The Court first addressed the “debt” argument and used bankruptcy definitions to reject it. My guess is that the IRS will appeal the case because it has had several successful outcomes with this argument and it represents a clear path to victory. Judge Hagenau, citing Rhodes v. United States (In re Rhodes), 498 B.R. 357 (Bankr. N.D. Ga. 2013), rejected this argument because the term “debt” in bankruptcy focuses “on the nature and source of debt . . . not on the mechanism to determine debt.” Under bankruptcy law the debt to the IRS arises at the end of the tax period and not when assessment occurs. The assessment or non-assessment of a tax does not “change the fact that the right to payment existed.” So, Judge Hagenau placed no importance on the assessment as creating the debt before the later filed return since the debt for bankruptcy purposes arose long before either of these events. Her interpretation makes the most sense given the bankruptcy definition of debt. The IRS will continue making this argument because of its ability to create a clear statement regarding discharge. The Court next addressed whether the late-filed Form 1040 qualifies as a return. This is the original issue on which the IRS won in In re Hindenlang, 164 F.3d 1029 (6th Cir. 1999), although now with the overlay of BC 523(a)(*) adopted in 2005. Remembering the peculiar facts of Hindenlang provides important background information. Like Briggs, Mr. Hindenlang did not timely file his return and the IRS made an assessment after using the substitute for return procedures and issuing a notice of deficiency from which he did not petition the Tax Court. Mr. Hindenlang’s subsequent Form 1040, however, merely mirrored the substitute for return prepared by the IRS. He did not report any more tax or, like Mr. Briggs, any less tax than the IRS determined from its examination. That unusual fact pattern must have influenced the 6th Circuit as it reviewed the Hindenlang case. The late filed Form 1040 submitted by Mr. Briggs reported a tax liability over $75,000 less than the amount assessed by the IRS using the substitute for return procedures. The IRS accepted his Form 1040 and abated the liability down to the amount shown on the form. Mr. Briggs’ form had meaning while Mr. Hindenlang’s form really added nothing to the situation. A Form 1040, such as the one Mr. Hindenlang filed, really does not seem like an honest attempt to file a return under the circumstances; however, a return like the one Mr. Briggs filed had meaning and the IRS abated his liability based on that meaning. Judge Hagenau drew from that fact. Before simply applying the facts in the Briggs case to the Beard test she analyzed BC 523(a)(*) to determine what new requirements the 2005 changes imposed, if any, since the Hindenlang decision started the inquiry regarding late filed returns. Judge Hagenau’s analysis of the requirements led to a discussion of the cases decided after 2005. A line of cases, led by McCoy v. Miss. State Tax Comm’n (In re McCoy), 666 F.3d 924 (5th Cir. 2012), interprets the 2005 amendment to encompass a timeliness element that makes any untimely filed Form 1040, even if only one day late, something other than a return for purposes of the discharge provisions. The IRS does not agree with this interpretation but the Court here looked at this line of cases before concluding – correctly in my opinion – that the term applicable non-bankruptcy law in BC 523(a)(*) “does not incorporate the timeliness requirements of the tax code.” Judge Hagenau explained that the interpretation in McCoy and its progeny does violence to the overall workings of the bankruptcy code. Judge Hagenau then turned at last to the Beard test, which requires that a document must meet four tests to be a return: (1) purport to be a return, (2) be executed under penalty of perjury, (3) contain sufficient data to allow calculation of tax, and (4) represent an honest and reasonable attempt to satisfy the requirements of tax law. In these cases the focus is almost always on the fourth test. Remember that Hindenlang’s Form 1040 really served no purpose except to seek to start the two year period for discharge. Here, the Court agreed with the minority view of cases lead by In re Colson that a return such as the one Mr. Brigg’s filed does meet the Beard test. Therefore, the Court determined that the remaining 2002 taxes were discharged. This issue bears careful watching. The IRS chose not to file a petition for cert when it lost Colson in 2006. If its new argument that the debt arose before the late filed return fails and it does not adopt the McCoy argument, it is left with the fact specific Beard argument. Without a bright line legal argument the IRS takes on a lot of administrative risks with this issue because it is not discharging taxes in these situations. It leaves these liabilities on its books and restarts collection action after bankruptcy. If it ultimately must concede this issue, fifteen years or more of post-discharge taxes will exist on its books that it must address. Similar to the situation that now exists in the post-Rand concession, the IRS will need to clean up its assessment records and with the discharge injunction hanging over its head the burden will clearly be on the IRS and cannot be pushed off to the taxpayer. The path it has taken on post-Hindenlang is a risky path and one that is difficult to administer. It tried to fix the problem in 2005 but got language that has proven inadequate. Keep an eye on this issue if you have clients with late filed returns who may need bankruptcy as a refuge

The first time every day that I use ATX.

Or perhaps it's theft loss.

After some trial and error, I linked an itemized list to the $ amount box on Line 11 of Schedule A and entered the two individuals payee info on the itemized list. Everything flowed OK and the program accepted it. Haven't created the efile yet. Film at 11.

I am finishing up a 1040 return where my clients purchased a home in 2013 from 2 individuals, not married, via a contract. The payments are made 50/50 to the two individuals who also live in two different states. The ATX worksheet only gives you room to enter one name, address & SSN. What is the best way to handle this?

Yes, I have also had Coffee Roasters, a Bottled Water Service and Engineering Firm also qualify.

Yes, Construction of real property and substantial renovation of real property both qualify for the DPAD. You have segregate the qualifying and nonqualifying gross receipts and then you can allocate COGS, direct costs and indirect costs using one of the specified allocation methods to arrive at QPAI.

From US News.com By Trent Hamm Sept. 23, 2014 | 9:03 a.m. EDT One of the biggest benefits of the Internet is the huge amount of information we all have available at our fingertips. Yet the biggest challenge for many of us is making sense of all that information. There are many opportunities for learning, but the information is often spread out in various places and not presented in an organized way that makes learning easy. Thankfully, several organizations – both nonprofits and businesses – have jumped into this niche and have developed online courses that draw upon this vast wealth of available knowledge. These eight free websites allow you to take educational courses in the comfort of your home, expanding your knowledge and understanding of the world at your convenience. Coursera is one of the leading providers of MOOCs – massive open online courses. Coursera offers a wide selection of college courses on a variety of subjects and includes lectures taught by university professors, discussion forums and quizzes. Some Coursera courses provide certificates of completion to recognize that you passed the class. If you enjoy learning in a structured classroom-style environment and want to do this at home, Coursera is a great place to start. [search: Find the Best 529 College Savings Plan for You.] Duolingo is a tool for learning new languages such as Spanish, French, Italian and German and provides a lesson-based structure in which you gradually learn new words and grammar. The site integrates visual, audio and written learning, so you become comfortable with the new language as a whole. Using Duolingo feels like playing a game, but after completing the full track of a language, you’ll be able to carry on a basic conversation. Khan Academy is an organized series of mini lectures and interactive problems on a variety of topics including mathematics, history, science and more. The lectures are short and share a handful of information at a time, but build on each other as you progress. If you like the idea of learning about a topic in short bursts, Khan Academy is the right resource for you. iTunes U provides integrated video and audio learning right inside the iTunes program many people use to manage their music and audio devices. The tool offers online courses with full lectures, the ability to take notes on those lectures and assignments to continue learning outside of the lecture environment. iTunes U does the best job of integrating free online learning with the iPad and iPhone, so if you’re a user of those devices, take a look at what iTunes U has to offer. MIT OpenCourseWare is a treasure trove of course material from the Massachusetts Institute of Technology; it provides lectures, lecture notes, homework assignments, sample tests and many other materials from the actual courses at MIT. MIT OpenCourseWare stands out from the pack if you’re looking to learn more about science, computer and engineering topics, as MIT is a leading university for those subjects. [Read: How to Go Back to College for Free.] EdX is similar in presentation to Coursera in that it offers full online courses with teachers, discussion boards, quizzes, and so on, but it tends to focus on (and excel at) courses in math, the sciences and engineering. Much like Coursera, it has arrangements with a number of universities – from Harvard to the University of Hong Kong – to provide material. If you like the idea of a highly structured course environment and are looking for science, math, and engineering courses, take a serious look at EdX. Codecademy is a brilliant tool for learning the basics of computer programming. Codecademy teaches you how to write the code necessary to develop interactive websites using the most useful languages – HTML, CSS, JavaScript, jQuery, Python, Ruby, and PHP – and does it within the browser using interactive tools. If you’ve ever wanted to learn how to code, Codecademy is a wonderful place to start. Livemocha, like Duolingo, is a tool for learning foreign languages, but rather than offering interactive lessons, Livemocha pairs you up with speakers of other languages so you can teach each other your native language. When you invest time in teaching someone your language by having conversations and walking them through their grammatical challenges, someone else will invest that time in you. If the idea of conversing with native speakers in order to learn a new language sounds compelling, Livemocha is perfect for your needs . [Read: 9 Free Ways to Learn Something New Every Day.] These eight resources provide only a sample of the opportunities for free online learning available to anyone with a Web browser and an Internet connection. The only thing you need to succeed is a curious mind and a willingness to learn .

I believe this clarifies a recent thread about this topic: From the Journal of Accountancy: Dispositions of property get automatic accounting method change procedures September 19, 2014 The IRS on Thursday issued Rev. Proc. 2014-54, providing procedures for taxpayers to obtain automatic consent to accounting method changes involving dispositions of tangible depreciable property. The guidance outlines how taxpayers may obtain the IRS’s automatic consent to change to certain methods provided in recently finalized regulations (T.D. 9689, issued Aug. 14). The methods are provided under Regs. Sec. 1.168(i)-1 (general asset accounts); Regs. Sec. 1.168(i)-7 (accounting for modified accelerated cost recovery system (MACRS) property); and Regs. Sec. 1.168(i)-8 (dispositions of MACRS property). The revenue procedure issued Thursday revises procedures in the appendix of Rev. Proc. 2011-14 (which prescribes automatic consent procedures generally and for a wide range of specific methods), as the appendix was modified earlier this year by Rev. Proc. 2014-17. Specifically, it: Removes appendix Section 6.19 (lessor improvements abandoned at termination of lease) as obsolete; Provides that Section 6.29, regarding disposition of a building or structural component, does not apply to any demolition of a structure to which Sec. 280B (denying deductibility of demolition costs, losses, and amounts chargeable to capital account) and associated regulations apply; Allows changes regarding general asset accounts and partial dispositions of tangible depreciable assets, to be made under Regs. Secs. 1.168(i)-1 and 1.168(i)-8; Allows a late partial disposition election under Regs. Sec. 1.168(i)-8 to be treated as a change in method of accounting for a limited period; Provides additional changes from one permissible method of accounting for MACRS property to another; and Clarifies that appendix Section 10.11 (tangible property) does not apply to amounts paid or incurred for certain materials and supplies a taxpayer has elected to capitalize and depreciate. Rev. Proc. 2014-54 also adds new automatic changes to Rev. Proc. 2011-14 (as appendix Sections 6.38 through 6.40) for: Disposition of a building or structural component; Dispositions of tangible depreciable assets other than a building or its structural components; and Dispositions of tangible depreciable assets in a general asset account. Rev. Proc. 2014-54 is effective Sept. 18, 2014, with transitional rules for taxpayers with a previously filed Form 3115, Application for Change in Accounting Method, under Rev. Proc. 97-27 or 2014-17. —Paul Bonner ([email protected]) is a JofA senior editor

According to the speaker at a OSCPA seminar that I went to in January , the ongoing status of the 1099 Misc requirements with respect to landlords is unclear due to the way the various rules & regulations are tangled up. Basically he said that at first glance it appeared that the requirements were removed, but that a closer reading left real doubt. His said that he was having all of his landlord clients file 1099 Misc until such time as the situation became clearer.

From Accounting Today's Tax Fraud Blotter: Miami: Claude Arthur Verbal II, formerly of Raleigh, N.C., has been sentenced to 135 months in prison for tax fraud, health care fraud and money laundering in two separate cases. Verbal was also ordered to serve three years of supervised release following his prison term, to pay restitution of $4,078,584 to the IRS and $2,382,378 to the North Carolina Department of Health and Human Services. On April 9, Verbal pleaded guilty to one count of conspiracy to defraud the U.S., one count of aiding and assisting the preparation of false returns, one count of health care fraud and one count of money laundering. Verbal was the owner of Nothing But Taxes, a prep franchise with 10 branches throughout North Carolina from 2005 to at least 2012. He personally prepared false returns for clients of NBT and taught and encouraged his employees to do so as well. Verbal and NBT employees frequently offered clients a dramatically larger refund if the client agreed to make a cash payment to their preparer. These payments were over and above the flat fee that NBT charged every client whether or not the return was falsified. The most common falsifications at NBT involved dependents, Schedule C businesses, tip income, EITCs and education credits. Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and Social Security numbers of individuals to use as false dependents on other clients’ returns. In November 2010, one of Verbal’s employees informed a U.S. probation officer of the fraudulent practices at NBT. The probation officer informed Verbal of this fraud and he denied knowledge of it, then took steps to keep the practice open and distance himself from the fraud. According to court documents, Verbal also owned Infinite Wellness Concepts, a Medicaid behavioral health provider contracted to provide group therapy, intensive in-home services and enhanced mental health and substance abuse services. Authorities claimed Verbal acquired at least $1 million in fraudulently obtained funds from the Medicaid program. Verbal used the schemes’ take to buy luxury cars, homes and jewelry. The money-laundering charge relates to the purchase of a $52,000 diamond ring with proceeds of health care fraud.

In July 2014, a three-judge panel from the D.C. Circuit Court ruled that people in the 36 states that use the federal health insurance exchange as part of the Affordable Care Act are ineligible for subsidized insurance. HuffPost's Ryan Grim and Jeffrey Young have more on that earlier decision here. Written by The Associated Press: The same July day the D.C. Circuit Court panel ruled on Halbig, a Virginia federal appeals panel ruled the opposite way on an identical case. The plaintiffs in the D.C. case requested the Supreme Court to take on the case in August. According to the Wall Street Journal's Brent Kendall, oral arguments will be heard in December 2014. The federal appeals court in Washington threw out a ruling Thursday that called into question the subsidies that help millions of low- and middle-income people afford their premiums under the president's health care law. The U.S. Circuit Court of Appeals for the District of Columbia granted an Obama administration request to have its full complement of judges re-hear a challenge to regulations that allow health insurance tax credits under the Affordable Care Act for consumers in all 50 states.