Edsel

Who are we working for? ...when we run into situations such as above where additional research into dubious information is necessary to make sure the IRS gets what they think is "their" money? The above "split" of capital gains/losses is potentially one of those situations. Husband/wife have separate brokerage accounts, as well as one joint account, and the last 20 years is peppered with a mixture of capital gains and losses. The husband dies, and you have to tell the wife as follows: Preparer: "You need to provide me with brokerage statements for the last 20 years." Client: "Why do I need this to do my taxes for the current year?" Preparer: "The IRS needs to know whether you are going to be claiming excess capital losses in the future which drop out because of your husbands death." Client: "So what is the final effect? Will I owe any more money?" Preparer: "Probably. It is definite you won't owe less. And the extra 4 hours research will cost you another $300 in my fee." Client: "So you want to charge me another $300 to explore the possibility of me owing more money? How will the IRS know the difference?" Preparer: "They won't. In fact, they don't have a clue. Only by my due diligence and subsequent disclosure will they know you owe more money, if in fact you do." Client: "Y'know Edsel, I don't think I would have to put up with this if I took my taxes somewhere else. Who are you working for anyway, for me or for the IRS?? I don't think I want to dig out 20 years worth of statements and pay you an extra $300 for the honor of knowing I "might" owe some more taxes." Preparer: "Well Hortense, it is a matter of whether you want to be totally honest or not. As a preparer bound by due diligence requirements of Pub 1230, I am obligated to dig further to find absolute truth." Client: "Sorry, I don't know Pub 1230 from the Irish Pub down the street. I'm not a crook - I'm paying everything I know, and everything you know before you charge me another $300. I'm going to Shifty-Eyed Sam across town." In spite of all desires for compunction and the desire of the IRS to make auditors out of us, we do have to live in the real world whether it coincides with the loftiest ideals or not. Christmas colors provided at no extra cost...

Surprised to find out the capital loss attaches to the party creating it, and only half attaches to jointly owned property. This means if we do our jobs the way the IRS wants us to, we have to continually track the source of these losses forever, or at least until one of the parties is deceased. And if there are multiple losses, some created by husband, others created by wife, and others created jointly, then we have a train wreck. Imagine having to use "FIFO" on the losses, and eliminate first those that occurred earliest. What if some of these multiple losses were available to offset capital gains during the period, but the gains were attributable to only one party? The train wreck now becomes a total derailment. And of course, if we walk into a situation like this with a new client, I'm sure the client is going to have this tracked before we take them on, right? Without respect to the identity of losses, I had hoped to find there might be a way to pass on to the beneficiaries. Looks like there is not. Thanks to everyone for your interest in this topic and your contributions.

Lion, I think I've been down this road before with another client. I believe if the original loss was filed on a joint return, the loss is available to the wife if husband passes first. The capital loss goes with the party creating it in the event of divorce or separation. I could be wrong...

A retired couple has a large LT capital loss. The husband inherited land in 2006 valued as of the date of his mother's death. Then came the real estate crash of 2008-2009. Property was sold in 2011 at a loss of $130,000. This couple does not invest in anything and does not function in any sense to create capital gains. Now in their 70s, they can only take $3000 a year. With $115,000 of the loss remaining, they will not live long enough to realize the tax benefit. It is my understanding that if they both died tomorrow, the $115,000 tax loss evaporates and is lost forever - no benefit to anyone (please advise if this is not correct). Question: Is there any action this couple can take to salvage this large tax loss or pass on to beneficiaries?

How is the LLC reporting? A Partnership? A Ccorp? An Scorp? I don't know that changes Judy's answer, but might keep a corporation active if a lease is considered.

I heard from the Liason Officer in Nashville yesterday. She said that the IRS has decided to stop furnishing e-mail addresses of PTIN registrants. You know, the CD they will sell to anyone for $25 showing all PTIN preparers, phone numbers and addresses. As of next year, e-mail addresses will not be furnished. She said since it was electronic-borne, it raised the possibility of identity theft and they decided to discontinue it. I've been getting at least a dozen every day from people wanting to host for CE credits, other tax-related commerce, etc. I'm sure some phony ones are included with the flurry.

Sara, I would make the same recommendations to my clients irrespective of whether the tax law is changed. Even if not changed, it still increases deductions for the current year, since individuals are on a cash basis. As noted, however, make sure this strategy is not negated by the AMT.

I don't work out of an office (except home office) or have employees, but my wife helps me with appointments, printing, mailing, etc. My recommendation (whether others agree or not) is to let the client make the contact. Even rogues like myself consider being professional to the extent that doctors and lawyers don't call customers to initiate contact. Then why should we? They have to call, and my wife makes the appointment. If they are successful in reaching me, they always ask one of their classic "simple" questions, which turns out to be "I sold half my land on a like-kind exchange and installment sale, and the rest of the land has been placed in a generation-skipping trust"... This assures that the appointment is made quickly and such topics are reserved for the appointment. If they find me at home and insist on speaking with me, they go on the clock. Also, I don't make appointments by e-mail. I use e-mail extensively but not for making appointments because responses can drag out for 3-4 days and in the meantime someone else may be competing for the same date. If an appointment is not kept by the client, he automatically has to wait 3 weeks. No exceptions unless it is my fault or circumstances known to be extenuating. If this causes an extension to be filed, then so be it. If they do not keep the second appointment, they are fired. ETax, it sounds like you are trying to reach out to your customers and are not appreciated for it. I believe if you let them make the appointment you won't have the problems you're describing. I am not draconian as it seems above, because they've become used to it. I retain 95% of my clientele every year, and rarely lose anyone unless death, divorce, moving, etc.

Last week at a seminar, it was revealed that the "new" 1098-T now has a box showing amount PAID. However, it still shows the amount BILLED. Go figure. These folks at colleges and universities are supposed to be super smart...

Very frustrating and similar to a couple issues I have been dragging on since April. I started a thread below proposing that long overdue issues be reported as estimated tax prepayments for the following year. Received lots of response that you might want to read, including an idea from Max about Form 3911 if the refund has been approved. I decided against the strategy, because it amounts to improper reporting. I have pretty well confirmed that the people at the IRS are shoving refunds aside and processing paperwork where there is a balance due. And since they are not accountable for anything, there's nothing to stop that practice. One possible strategy is to dry up their withholding or stop paying estimated tax until things are straightened out. There might be a slight underpayment penalty for this, but in most cases, the clients will be willing to incur this. As long as the taxpayer and not the government is left holding the bag, the situation for these long overdue refunds will not get better. If you direct your client to "dry up" the money flow to the govt, please caution to not be in an unfavorable due position when the refund comes, and react accordingly.

Have you had a "courtesy" disconnect while on the phone with IRS? Have you figured out what is so courteous about it? One person I asked said "After you've been on the phone for 3 hours, the IRS doesn't want you to have to endure any more misery, so to be courteous they simply cut you off."

I use TAS software (Tax Accounting Systems). It is distributed by "Busiforms" in Chattanooga, TN. Great little piece of software for $75 which also does the entire family of 1099s. I am otherwise devoted to Drake, but have found out that using their write-up companion only adds time and repercussions to other things that are available.

Sara thank you for your suggestion. The liaison in Nashville is Susan Gainous, and she is terrific. And I have communicated with her, and she will not get involved in individual cases, but has expressed interest in addressing systemic problems. If I could make a case for someone not doing their job becoming evidence for a systemic problem I would certainly do so. Jack from somewhere in Ohio compared my situation to a hopeless crusade of cleaning up all the defalcations of IRS employees. His was good advice, but I will reveal that my subject course of action did work on two different occasions with the Alabama Dept of Revenue. All of you have made good comments and have been helpful. My conclusion is that claiming unresolved issues as a prepayment toward successor year estimated taxes is really an intentional item of misreporting and a rather blatant violation of Cir 230.

Thanks to everyone who has responded. There are mixed reviews, and some of the responses I predicted from the start. I would like to clear up a few items at this point to explain more of a couple situations still ongoing. (I've had this same problem 4-5 times since the IRS had their budget cut). Max' suggestion of a 3911 is quite appropriate, except for the fact that the matter is not yet out of the audit division. The 3911 would work if the refund had been approved. So long as the situation remains unresolved, the 3911 would not tell us anything. One of the problems was my fault which I had to correct with an amended return. Otherwise all the suggestions that I not prostrate myself on behalf of my clients for some situation I did not create is null. The opportunity to talk to a supervisor is not available. I can't even speak with the party charged with the responsibility of getting it done. The telephone staff is there to make sure you can't really talk with anyone with real responsibility. Judy's reply is the most "textbook" and probably the most wise for most people. John H and others believe claiming such matters as estimated taxes only befuddles the situation and makes it worse. I believe it would shed so much light on the logjam that something would be done, especially if the IRS were left holding the bag.. I believe the IRS would also be in a position to penalize me for a "clear and intentional violation of Circ. 230" if they were willing to dismiss their own embarrassment for sitting on a situation until it became rancid. I sincerely appreciate this discussion. "Edsel"

Max, I believe everything (except my suggestion) has been tried. We can start with the usual POA and Practitioner Priority Service. Add the prescribed waiting periods (such as 16 weeks for amended returns), and then promises from telephone personnel that the matter would be closed by xx/xx/xxxx and then when it doesn't happen, yet another promise that it would be rectified by xx/xx/xxxx. Invitations to invoke the TAS are met with "We only take hardship cases", and appeals to congressmen result in nice letters but no action. I even had a telephone worker tell me "this person is clearly NOT doing his job, but there is nothing I can do about it." If you can think of anything else that has a chance of removing the roadblocks, I would appreciate hearing it. My suggestion to claim unresolved amounts as estimated tax prepayments is certainly the very last thing on my list. I myself don't like the idea, but I am not going to sit idly by and let my clients do without while nothing shows any promise of happening.

If there are other moderators, I invite them to read my post and agree or disagree whether it was politically motivated. There was certainly no "guise" to hide political comments. The IRS and congressional oversight are a part of what we have to deal with and statements I made about IRS and congress are statements of fact, and I would challenge anyone to impart any partisan politics from them. Being politically neutral myself, I have tried to respect the policy of invoking politics into discussion. Judy, I can appreciate the desire to keep the board from fomenting politics, but I believe you have over-reacted. I seem to be the target for removing language thought to be political, and was clearly guilty once. If this is what I'm dealing with, I don't need to be here.

Already some very good comments, and more are welcome. cbslee, I would agree with the plight of the IRS, except that when congress cut the IRS staff, it only applied to the audit division. Actually a few MORE people were added to the collection division at the same time. The obvious intent was to cut the IRS but not revenue, and they knew it would work. I can't believe that in the finality of the decision, the IRS commissioner at the time was complicit after presenting the effect of it to congress. I also believe some IRS employees are using this as an excuse - and from my limited observation are pushing aside work that involves taxpayer refunds in favor of work that raises money. As stated before, all of us know the raises and promotions go to the IRS employees with a track record of collecting revenue. The institutional collapse may be eminent, and if that is what restores the IRS to functionality, I would welcome it. But as long as revenue is not impacted, I can't imagine congress would care. Already there are a few employers around here (not many) that are ignoring garnishment and levies from the collection division, instead trusting whatever tale their employees are telling them. If this were to happen on a massive level, something would be done.

If you haven't already judged me from previous posts, this one may convince you that I am a very stubborn cynic. I wish I weren't, but sometimes you have to force ugly issues. There are people in the IRS who are simply not doing their job. Yes, I know congress cut their budget in 2013, and they claim they don't have resources to timely complete their work, but that also provides them with an excuse. We as preparers cannot force the agents in the audit division to do their job, nor can the telephone staff. The Taxpayer Advocate is slower than ever, but is not even available except in "hardship" cases. I have had customers contact their congressman, but they receive a nice letter thanking them for their inquiry and with assurance that "all treatment will be assured to be fair" and nothing else happens. I have noticed that they seem to be much faster if they are making determinations where taxpayers owe money. I don't think it is a coincidence because we all know that agents are rewarded with raises and promotions for collecting more money. But I have 2-3 people who have refunds held up for close to a year. My solution? Report the strangled refund in the following year as "estimated taxes paid." If the IRS pays, then VOILA!! the problem is solved, and the IRS is the party holding the empty bag, and you had better believe they will suddenly find time to clean up the mess. If the IRS catches it before processing a payment, then they have further necessary attention drawn to the situation and will clean up the mess. I am asking for opinions, and I am expecting some of you to express absolute horror at this bold strategy. I expect to be warned by some of you that I would be subject to penalties and borderline fraud. That's OK, I still want to hear your opinion. Especially, if you have an alternate strategy to get them to work on a more timely basis, I want to hear from you as well. But I can't think of anything that hasn't been tried. Be advised that I am not trying to cheat the government. I simply don't think the govt should be the beneficiary of a tawdry action by congress, as the reduction would certainly not have happened if their revenue was in jeopardy. Thank you for reading this far...

I wanted to stretch the imagination without insulting.... Not all y'all know me very well. I have fun with the folks I like... For example, my chosen moniker, Edsel, was named for one of the most colossal marketing failures of the 20th century...

As desperate as states are for revenue, why have they not subpoened records from EBay? Of course, EBay is not liable for the taxes, but on nearly every transaction, someone would be liable. I suspect some of my customers may be buying/selling on EBay and other online devices, and not reporting their income. If the states raided EBay for sales tax revenue that would open up all transactions to the light of day.

Illigitimas, that's a great question. You're from somewhere Illinois and I would think the fee structure would be tremendously different in Carbondale versus Cook County. Payroll is my least favorite service, and if you have a client who won't do what he's told, there's no fee high enough. There will be ugly letters and penalties from the IRS and state, and we will be getting the blame for them. I will attempt to answer the question as what is appropriate for Manchester TN, which would even cheaper the Carbondale because we have no SIT. $35 per payroll, plus $1.50 for every active employee. Then $35 for each payroll tax report, meaning one per quarter for SUTA and 941, and ever how many there would be for your state withheld SIT. End of year $35 for each W-3, plus $2.00 for every W-2. And this is on the cheap side. This is a representative answer from my part of the country, as I don't put my actual rates on a public forum or over the phone.

Most people are afraid of the risk associated with bitcoins, because there is nothing of substance to anchor their value. I am one of those who are thus afraid. Supporters admit there is nothing to back up the value, but add that the major currencies of the world have nothing to back up their value either, including the U S Dollar. With no publishing of the money supply by the Federal Reserve, the Dollar (including the deficit) is nothing but "funny money." It is going to be tough to catch up with the founders and progenitors of the bitcoin, but I believe the government will eventually do so. If the bitcoin becomes too much of a threat to the U S Dollar, they will fall into the same persecutory status as counterfeiters.

I have detected absolutely nothing in the original post which puts its arms around business mileage. It is difficult for me to get my clients on board with the idea of "bottoms-up" calculation of mileage, as well as use of the mileage rate. Too many times the client doesn't think in terms of "bottoms-up" addition of specific trips and associated mileage. They love to present me with "I drove 25,000 miles and I think about 75% was for business." If they can't present a decent bottoms up number of miles to deduct, I won't deduct anything. To be honest, I'm not as meticulous with details per trip as the IRS dictates, but I do insist on addition of specific trip mileage, and allow multiple trips if the evidence warrants. The struggle with the std mileage rate fails to appease clients who think huge expenditures justify whopping deductions. Usually, I don't follow the siren song to taking actual expenses. I explain that when they buy something else and the usage falls below 50% there is massive recoil of original cost. They try to tell me they are going to drive their $70,000 honkin' new truck forever. Truth of the matter is a very expensive truck is more of a showcase than business use. Their "real" business vehicle is usually an older pickup truck or maybe even a car, but they still try to make me believe the $70,000 truck is driven to jobsites where it will run over roofing nails and bang its underside on construction ruts. I may have been born at night, but not last night. Me and Rita B.

My feeling is if the employer initially filed their W-2s with Social Security, then they would have to issue an amended W-2c with the first column showing zeroes. That is simply to match the 941-X, and new W-3c. If you have no impact on the employer, then the normal Abby is correct. Let them clean up their own mess. File 8919 and be done with it. I believe the statute of limitations is expired for 2013, unless IRS is bugging him. If this is his original return, it won't matter - the three year clock doesn't start until the return is filed. But if he has a refund, I doubt they will send it.