jainen

>>Doesn't he know the state is already bankrupt? << No, he doesn't know that, and neither do you. You must be thinking of how it was under the other political party, which drove the state tens of billions of dollars into the red.. Now California has a BALANCED budget, the result of two years of fine leadership marked by massive spending cuts against modest tax increases approved in advance by the general population. Governor Brown is working internationally managing one of the five largest economies in the world.

>>it was a major reason for Nixon being told by his own party that he must resign<< The way I remember Nixon, his own staff provided incontrovertible evidence that he had personally assisted a criminal conspiracy to commit felonies (official tape recordings from the Oval Office).. The only non-profit involved was the Committee to Re-elect the President. But yes, IRS targeting non-profits was important news in the Bush administration and this is important news now. It's on the front page of the Wall Street Journal, for crying out loud--how much coverage do you want?

>>It stopped when the election was over.<< No, it stopped early last year when the administration found out about it. You think political bosses ordered workers to do this? Which workers? I'll bet most of that level of auditor were hired in the last 4 to 12 years, that is, by the Republicans. So what? They're not political, just good civil service always looking for good shortcuts to good stats. And "keywords" is universally pushed on them at all the corporate seminars, as one of the goodest shortcuts of them all. This only concerns one inexperienced unit (created for the task) pulling 300 applications for one type of entity. Apparently the vast majority were selected for legitimate reasons. Back in the days when I used to be sarcastic, I would have said one side (hard to say which side) is throwing this out as a red herring to distract us from the real problems.

>>If there was nothing wrong... << Certainly it was wrong and deserves an apology. It was wrong because incompetent managers failed to recognize the problem. They have to turn in numbers, and it's a lot faster to say, "This one sounds like it," than to actually analyze the application (like who's paying for it). That doesn't mean elected officials or their appointees are trying to destroy political opponents.

>>"Level the playing field" -- balderdash.<< Don't worry, Catherine. This one is doomed to be declared unconstitutional. Liberals and conservatives will agree. I don't know which is which, but one side will say Congress can't butt in to state taxation. The other side will say only Congress can tax inter-state commerce.

>>if the same thing had happened during a GOP administration, with the target being liberal groups, the story would be HEADLINE NEWS throughout the media.<< IF? Was there so little media coverage that you already forgot the IRS targeted liberal churches following the 2004 election? I see nothing sinister in any of this. Like most government agencies, IRS has small-minded line workers and incompetent managers. The assignment was to examine 300 tax-exempt applications for political activity. Seems to me that is an important thing to do. Except in the way it was done 25% were chosen because they had suggestive names like "Tea Party" or "Patriot." That's just lazy bureaucrats who don't pay attention to high-level policy (or even the law)..

>>What info are they looking for?<< The problem is that an accountant or secretary might file the EIN application for an entity. IRS wants to know who the real owner is.

>>Republic of California<< John Fremont, a local hero in Bulldog Tom's hometown of Hollister, helped set up the Bear Republic in 1846. It never actually had a functional government, but we still honor it in our state flag. The first time I ever saw a distant galaxy was at the observatory on Fremont Peak!

>>What would be the advantage of using the deminimus rules vs. sec. 179 expensing for small business owners?<< There are several temporary regulations for Sections 168 and 263. Originally they were effective for 2012, but were so confusing that IRS made the first two years optional. They are still confusing, but it's a step towards simplifying the expensing of small capital costs. I doubt they will have much impact on the small business taxpayers served by members of this forum, at least for now. De minimus here means 1/10 of 1% of revenues, which is only $100 for $100,000 of gross receipts. As you note, it requires substantial accounting changes and documentation that may be too burdensome for small businesses.

>>not talking about contributing just the right to use them, but her entire interest<< Sorry, I just saw "three fixed weeks." Well, if she wants more than $5000 she needs to attach a qualified appraisal to the return, so that should settle the matter.

>>if there is no market for selling them, the FMV is 0 and there will be no deduction<< I agree with your conclusion, but not your reasoning. It's not the value, but the fact that she continues to own the property. According to Pub 526, "A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible."

>>What value would that be to the IRS to close it?<< IRS does NOT want to close the business while there remain reasonable prospects for collection. Only when there are no prospects for further collection (such as the entity no longer exists), will IRS consider an offer for whatever it can get. Max suggested closing if "client would be better off." You still haven't told us where the $100,000 would come from to fund the offer. If it's from normal business operations the IRS can take it anyway without writing off the balance, so that is generally not what IRS would consider a good offer. But even then you still have a chance to convince them. The argument might go something like this. The full $500,000 would crush the company, even if it tried to pay over five years. But a fresh start would immediately free up credit, so the company could acquire new trucks which would make it viable for many years of taxable profits. Of course for that the company needs a legitimate bookkeeper, an updated rate schedule, and other significant changes you could tell IRS about. In my opinion, the IRS will not be as emotional as some of the posts in this thread. The trust fund debt is already being handled, so IRS won't get into any moral questions. I mentioned it in response to your comment about jobs, because I felt it was a bit disingenuous to say one wants to help workers from whom one has stolen. Mostly IRS will only care about the fiscal issue, but they also might think the taxpayers lack credibility.

>>no need for a loan at this time<< Sorry about "jobs in a small community," but that's not really a factor here. Anyway, I'd guess they would not be pleased to learn the company stole their Social Security contributions and is now asking the government for a half million handout. For changes, start by hiring a new bookkeeper, one that is competent or at least honest. Restructuring rates is essential. Presumably the contract company doesn't want to lose a reliable carrier, so maybe its CPA can help them come up with something. Even a truck or a loan--that's the kind of thing the IRS is looking for in an OIC. Another approach would be to ask the ten employees for help, perhaps with some equity sharing. Real changes, not we-can't or we-already-did or we-don't-need or there-is-no-purpose. As for the attorney, I would guess he realized that these clients need a payment arrangement but were not willing to pay for the bankruptcy version. Attorneys sometimes avoid OIC because, as you see, it is an enormous amount of work with little chance of success. Especially since the clients continue to be unreasonable.

>>$2500/month but the last 3 months they only had $500 a month extra to put aside - so they are not making much money anymore<< You are confusing cash flow with profit. In raising these questions, I don't imply that there are no good answers. Just that you need to develop good answers. The key is what Max said about "collection potential." IRS can simply take everything you have. So it's no good only offering what they can get anyway. You have to come up with assets that are otherwise beyond their reach, such as a 3rd party loan. If you can't do that, you have to convince them to exclude certain assets, such as those which produce income--but in that case you have to at least give the IRS the income! There is room to negotiate, but only in good faith. Saying you'd rather buy a new truck than pay your taxes just doesn't cut it. Have you talked with the clients about a payment plan? Great solution, easy to start and maintain. IRS will suspend enforcement for years. Even if you get an OIC or payment plan, it won't succeed with the old business model. You need genuine, specific changes in accounting procedures. If you keep talking about paying all cash, IRS will never take you seriously.

>>we redid the OIC with the taxes paid and the estimated payments<< I still don't understand. On what line of Form 433-B (financial statement) are you deducting federal income taxes? Frankly I don't know what to think about the "escrow account." Presumably the current vehicles already have a depreciation deduction, so how are you explaining the plan to cancel back taxes by saving for future capital expenditures? A non-fiscal issue is how this grossly non-compliant company can promise to meet all filing and payment obligations in the future. They weren't even current when they submitted the offer! I think you need to address that in a very substantial way.

>>Where does it get mailed (there was no address on the Letter, just the phone number)?<< Follow the Instructions for Form 1040X, page 5. By the way, I think that is an odd letter to have received. 1687C usually means they don't know who the refund belongs to, not what it is for. And no return address, really?

>>Filed 1997 and up, compliant and paid with all since 2011<< I'm sorry, I don't understand your situation. Where is the $100K you are offering, and what does "too much earnings" mean? The officers as well as the corporation are all long-term non-filers? They want to reserve tens of thousands of dollars for future expansion? As you saw from the 40K rejection, the IRS expects Offer in Compromise to be a net-worth transaction. I recommend you make the scenario a whole lot clearer.

>>the whole thing hinges on "full time student" and whether that means all year<< The Instructions for Form 8615 refer you to Pub 929, which says (in the Glossary), "A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student." There is additional information about what qualifies as a school, but this is the same definition we use for education credits, dependency, etc. Full time means 12 semester units (or whatever else the school says), and enrollment includes days before and after the actual attendance dates.

Less than 24 hours later, we were looking at >>... when those weapons fall in the hands of terrorists<< _________ That was fun!

>>if we begin asking healthcare-related questions, we might find ourselves coming under the HIPAA regulations<< We have always asked about and documented medical issues for disability, qualified expenses on Schedule A and Form 8889, etc. HIPAA rules are for "covered entities" such as health care providers and plans. I'm not worried, because the only health care I provide is Kleenex.

>>U.S no longer will charge for delivery Thanks, Mas! That's helpful news and I appreciate you pointing it out.

>>Does anyone think that the IRS will give credit for the payment as of the 15th<< According to this FAQ, http://www.irs.gov/uac/Pay-Taxes-by-Electronic-Funds-Withdrawal, "After the return due date, the effective date for EFW payments is the date the return or form is successfully transmitted." Further down it says not to call for at least 7 to 10 days. Once again, IRS admits its limitations and is fair and reasonable.

>>The statement started “ased on materiality..." which we know means that, at this point, the UNDERPAYMENT rate is too low to affect the results.<< That is NOT what it means! Under Generally Accepted Accounting Principles (GAAP), "materiality" isn't usually quantitative, at least not in the sense of a ratio. It is instead a subjective professional judgement about whether the information would or would not affect a user's decision. GAAP even has special standards for government accounting, in which political and other non-economic opinions look to the nature of the item rather than its size. For example, some people don't care if taxpayers claim less than they could, and it doesn't matter how much less. Apparently IRS disagrees--although they have tightened up enforcement, they have also done a lot of outreach to encourage EITC. There's an important policy difference if you think EITC is reaching the wrong people or not reaching the right people. So the auditors are not saying there is little underpayment. They are saying they don't care about underpayment. This report is only about over-payment, that is, reaching the wrong people. They don't want to look at other facts that don't support their conclusion.

>>I was hopng that the refundable portion of the AOC would mitigate that<< I don't understand the prejudice against EITC as a refundable credit for low-income workers, compared to enthusiasm for the AOC as a refundable credit for higher income taxpayers who choose to not work.

>>it is reasonable to omit [Earned Income Tax Credit] underpayments when computing the Fiscal Year 2012 improper payment rate<< Let's not talk about facts that don't support our political viewpoint.