Mr. Pencil

Nuthin' to worry about--IRS has it under control!

You mistyped where you am.

Several members have conflated yours truly with a mercurial gorilla who left the forum in a snit around the time I coincidentally started posting. In reviewing old threads, I am flattered to be compared with such a brilliant code master, but I am shocked and offended at the personal slurs and insults that marked his tenure. The Internet is anonymous, and we can't assume that any of us are who we say we are.

Sounds odd, but I'd guess it's legit. You are entitled to due process, so the time line was probably set by your own action in filing for Appeal. If she can take another look informally, what have you got to lose? I don't understand what she could want that you didn't already provide, but on the other hand, Appeals might not be very appealing if they think you rushed to them without a good faith effort at negotiation.

This discussion started last summer when the Wall Street Journal noticed that the Centers for Medicare and Medicaid Services published opt-out statistics for the first time. (Yes, another example of how this is the most transparent administration ever.) Although it will take a few years to get real perspective, it's pretty interesting stuff. 1.5% dropped out of Medicare last year while only 1% joined anew. The popular line is that Medicare doesn't pay enough (i.e, doctors want more money). It doesn't seem to me that such low stats support that explanation. Seniors on Medicare constitute too big a market share to ignore. Besides, more than 20% of doctors aren't enrolled in Medicare anyway. So obviously there are other career paths. Maybe consultants to the drug and equipment corporations. Maybe employees in HMOs or hospitals. The total number of doctors seems to be rising slowly, but like other industries health care is replacing personal service with technology. There are lots of changes and experiments in the field, and that's going to continue with or without Obamacare. Here's the link. See what else there is to speculate about. http://online.wsj.com/news/articles/SB10001424127887323971204578626151017241898 And here's some other numbers I used for this post. Note that 1/4 of doctors are retirement aged. http://if I can't call her back by Monday, she will have to move the file to appeals

Year after year, the one thing I use most is the dependency worksheet (page 30). Its value did not diminish with the Qualifying Child rules. Pub 17 is not the only place to find tax tables but it is as convenient as any. Other sections I turn to almost every year include the definition of alimony and the energy credit details. Anything else a client doubts can usually be quickly settled with Pub 17--casualty loss and 401(k) hardship withdrawal at least every couple of years. Sometimes I tell a client to just get the whole thing to read about business expenses, or Pubs 535 and 463. Actually, now that the Internet is so fast and easy I prefer the individual pubs, which sometimes have more detail about how to apply the rules. (Almost as often I read the instructions for forms.) Obviously all this is in the public domain so any other tax guide covers it. (Except that I know of nothing better than Pub 15 Circular E for clients with employees.) The great advantage of the official text is the amazingly understandable language it offers. I use it with colleagues as well as clients. But unless I already know exactly where to look, I usually start with Quickfinder 1040 or Small Business. These are essential in two ways. First, they give a little perspective on which rules are more common and important. And they give citations so you know whether you're dealing with the code itself or some ruling of narrower interpretation. One more thing--even if you never use it yourself, make sure you have a dog-eared copy of Pub 17 to casually drop out of your briefcase any time you meet with an auditor. For some reason, they really like that book!

I support that for everyone else of course, but for my own clients what's the benefit? If the notice is right, why not do nothing and wait for an assessment that can be simply paid? IRS at http://www.irs.gov/Individuals/Understanding-your-CP2057-Notice says "You don't have to amend your return when the information is wrong. Instead, contact whoever reported the wrong information and ask them to correct it." But suppose they refuse? What legal rights does a taxpayer have regarding a CP2057?

Do you also tell them it was the Republicans whose anti-family policies took away the exemptions, when they controlled Congress and the White House in 2004-2005?

Actually, while Medicaid's recovery policy is weak, it's still more than Medicare's which doesn't exist at all. You are incorrect to say that Medicare "is paid for through payroll taxes and retirees' premiums for all parts except A." Part A (hospital benefits) is paid from current payroll taxes regardless of how much retirees may have paid themselves. Part B (medical benefits) does charge a monthly premium, but by far the greatest share is paid from the general fund. Millionaires have full entitlement to the subsidy. So do you have a big problem when those people think they have no obligation to pay you back when they are able?

What are ACA payments? Unlike single-payer Medicare, ACA only regulates coverage. The private companies continue to negotiate their own prices. But yes, the least competitive companies will have to get up or get out. Nothing new about that.

No, at least not directly. You have apparently built your practice with clients who care mostly about money, rather than the quality of your work. Since they don't understand or care how you get the job done, they will blame you for everything. Some day one will blame you big time, and that's when the home office will be a problem. It is hard to present a shoe-string operation as a professional engagement with reasonable quality control such as peer review. Read SaraEA's response in the thread Taxpayer Accuracy Penalties as a Result of Audit. See what she says is "the only purpose" for some of her work? I fear your clients are not likely to be motivated that way.

I take back what I wrote this morning. I think you need to very directly address the issue of protecting yourself.

Personally I don't think it is very convincing. First of all, I never like passive voice. "You give me" would be better syntax than "I am given by you." But at least that sentence is informative. The last one sounds like you are trying to protect yourself. Well, of course that's true, but it doesn't make for the best public relations. Why not say that IRS has published new guidelines to ensure the client's return will be accurate and defensible? Tell your clients that they will get more for the money.

Sounds reasonable. Even wise. If it turns out the vendor is subject to tax, the client would be personally liable for it. I haven't faced the situation yet, but I'm sure it will come around. I may just tell the client that if they want to play IRS games about moving American jobs to foreign countries, go get an international lawyer.

According to Table 2-1 in Pub 519, personal services are sourced to where the services are performed. Therefore this would not be taxable as U.S. income, and doesn't require either a 1099 or withholding (assuming the worker is a nonresident alien).

I'm sure that's not what it means. Early decision is a different process, with only a limited enrollment for certain departments. It is probably irrelevant to regular process. But welcome to adulthood, what? Time to start on the back up plans!

Section 6662 is very hard to get around because one of the triggers is simply the dollar amount--a "substantial underpayment" is 10% of the total tax and more than $5000. There are several other ways to get caught, such as lousy records and misstating the value of assets, but your agent doesn't have to bother with that because of the amount. You have a right to request her workpapers. and can be open about it being to see how the penalty was calculated. It can be abated for reasonable cause. Reliance on a professional is a common excuse, but your agent has already warned you that it will backfire. The other best reasons are adequate disclosure and substantial authority, neither of which seems helpful for you. So you are probably limited to finding external events that prevented the taxpayer from complying. Death in the family, disaster loss, records sealed by a court--some significant third-party event that could not be foreseen or controlled. It should be something you can actually document. It is possible to request partial abatement if you can only show reasonable cause for some of the issues. Of course IRS has no statutory authority to abate the interest, but if you sweet talk the agent there is a small chance she will accept that as enough punishment. I believe that it helps to focus on the future. Document that the taxpayer has taken specific steps to make sure the problems will not happen again. You can also point to the past if the taxpayer has a good history of timely compliance.. After all, that is the basic reason for penalties. You can take a penalty to a supervisor, but your chances of success there are very small. Probably even worse in Appeals and Tax Court.

Do some research or get help. Any OIC is hard, but doubt as to liability is almost impossible because the taxpayer has already admitted the liability under penalty of perjury. It would be best to show that a new objective fact has occurred, other than just a different preparer has a different opinion. At least document that it WAS a preparer mistake, with proof that the taxpayer had provided all necessary information and that it was reasonable to rely on the preparer. Don't just say so. Prove it. IRS naturally hates non-filers, so address that issue directly with obvious honesty. It's okay to lay it on real thick, but no B.S. If you have a sob story, make sure all the dates and other facts are documented. Start with a single page summary, and put everything else in numbered exhibits. Go back to the beginning of each asset in question, documenting its acquisition and business use with a complete schedule of depreciation. Quote the code and regs; don't make the agent have to look them up. Make a substantial offer, not simply amount already paid. You don't need a financial statement, but include one anyway to show that the taxpayer is making a good faith offer of what he can reasonably afford. Tell the client up front that this will take you at least ten or fifteen hours, probably more. Collect an appropriate non-refundable retainer, and draft a solid engagement letter that states you do not guarantee results. He must maintain the installment payments as an ongoing show of good faith. Approval can take six months to a year. In fact, IRS has no requirement to even acknowledge the offer, though they probably will within a few months. . Let us know how it works out!

Oh, yeah, there's a few things. Nothing easy. Statute is tolled during periods when taxpayer is unable to attend to financial affairs because of a physical or mental disability. There's some legal cases about challenging the date the statute started running, mostly concerned with when a return was considered "filed." Does your client have any unusual circumstances to explain why he waits so long to manage his tax affairs? There's a whole nother category of statute of limitations for collection--after three years a tax can be discharged in bankruptcy. And of course there is Offer in Compromise, which can be based on doubt as to liability for any year.

According to the Instructions for Form 1040X, "Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later."

That's not too bad--for some people, it's their brains that never catch up! One of the great things about how Eric has set up this forum is that it's so easy to go back and edit a post. (Hopefully someone else hasn't already quoted it.) I often edit my posts a few minutes after I write something too personal or otherwise stupid. Snopes.com is not actually a "source." It's pretty smart, but still only commentary. I believe you that they have updated their commentary on this old birth certificate controversy.

Three years ago you were exactly half my age. Now you are 52%--so you are aging faster than me! Meanwhile, I really appreciate the work you have done on this forum. Great job!

Can we please scale back the assumptions in this thread? They do not make for good client service. Start with "the" attorney--we don't even know whether it was "her" attorney. If no kids, maybe they made their own amicable agreement and simply asked one attorney to get it through the court. Otherwise, what did the engagement letter say? Negotiating a settlement is one thing, but it gets expensive fast if you ask the lawyer to actually transfer title and clear credit accounts. Which might not even be possible at all. Maybe the lawyer advised selling the car, but the client agreed to keep it in exchange for other concessions. What does "husband was responsible for making the payments on the loan" in the original post mean? How exactly is that stated in the divorce decree? If he surrendered the collateral or compromised the debt, that might have been a legitimate out. All this is beyond the scope of our own engagement letter anyway. So let's focus on the tax issues. Like, the 1099-C. Was it even correct? Is there reasonable cause to abate penalties? Do we need an installment plan or other collections action?

Even more confusing. If your point is to encourage independent fact-checking, why state "they apparently have... a George Soros connection," with the parenthetical that you haven't bothered to fact-check that statement? Could you at least identify the source for what seems so apparent to you? I have not reviewed the court cases. I only read the two articles you yourself linked, to see if they actually supported what you said about them. Which they didn't. Now you say you knew all along that what you were posting was inaccurate as to facts. Some people might call that rumor-mongering. But I'm just confused.

I'm confused by your post. Your two links go to articles that explain the original conspiracy theory was reported by WorldNetDaily, which has since retracted its report saying, "Those cases, in fact, were a series of unrelated disputes pending before the Supreme Court." One of your links even spells out the topic of each case, showing that none involved Obama's eligibility for office. It then explains why the names of the President and Solicitor General appear on Supreme Court dockets that do not personally involve them. These are your own links, not mine, so I don't understand what point you are trying to make.