bertrans

..and a bright and beautiful welcome to the wonders of form 1099-K.  Prost! 

I would agree here ---- but my overall belief is that our society is going on a downward trend because --- everybody wants to be nice to the "perps" and not (put in your own words -- scare, hinder, debase, embarrass, etc.) the actual people doing the "WRONG". That is why we have "country club prisons, etc. --- so the people who only take life savings, etc. from families (and ruin them - almost as much as taking actual life) do NOT get thrown into those places who have the "REAL (/s)" bad people who robed a store, did drugs, etc..         If you do wrong, then -- do the time --- wherever it might be.

 

Ever notice that as actual punishment lessens -- people tend to do more bad things?

 

    AGAIN --- personal responsibility --- regardless.      rant // put on time out///

Fully agreed. You just provided me with a delicious mental image of what Bernie Madoff would be experiencing in the general population of prison...Sigh.

What is this first time penalty abatement I keep reading about?

The so-called First Time Abate is a procedural matter in the Internal Revenue Manual (IRM); it does not exist in the Internal Revenue Code (aka, The Law).  Further, even in the IRM, it does not apply to any penalties asserted by Exam (the whole 6662 series.) 

Because Americans have become addicted to having Uncle Sam save money for them, then they spend the money at Christmas or early January, and expect to get their refunds in a few days to pay the bills they have racked up. We hear it all the time... "I need that money to pay.. ________ .(fill in the blank with most anything you can imagine)

Financial and budget responsibility is non-existent in 85% (I may be generous there) of the American public.

Until those two issues go away, Congress will not do the things necessary to reduce the ease of which fraudsters can steal money. Refunds should be delayed until at least May 1, to allow matching and checking. However, the vast majority of Americans would never stand for it. Hence US taxpayers lose Millions each year.

At some point in the last 25 years, somehow, the federal tax return ceased, largely, being perceived as a vehicle for remitting taxes, and became viewed and understood as a vehicle for the mysterious delivery of money to filers. 

IN practice yes, they rarely assess when its a refund but they can assess on the amount of tax whether paid or not.

 

I would file with what I have then amend.

He may still be liable for Estimated Tax penalty.

I can remember the day when the IRS could answer some very difficult questions.  Once I called and asked how to write off an investment in a worthless oil well.  The person who answered the phone explained exactly how to do it.  My client thought I was a genius when I took care of the write-off on his tax return.

It really was like that, once upon a time, long, long ago. Sic transit gloria fisci.

I am not sure I agree with that.  When I was an auditor, the mission was to apply the law and let the chips fall where they may.  So those things required to be disregarded were.  Our mission was not to play let's make a deal.  For that matter, that is not tax courts mission either.  As I understand it, your best bet on  non-evidentiary information would be in appeals.  Their mission is, or at least used to be, close the case...so let's make a deal was the the gam

I must assume that you, as a former auditor (for the Service, I suppose), realise that my entire point dealt with how to present a case to the Appeals Officer - who determines if a case may reasonably be referred to Tax Court(the number of cases that actually make it from Appeals to the Court is minimal); I also must assume that you are familiar with the fact that Appeals is the only 'part' of the IRS that has not merely the permission but the authority and requirement to consider - Oh, so delightful phrase! - 'the hazards of litigation.'  Please. By the way, despite my various assumptions, please be assured that it is not my intention to make an a** out of you or me. Live long and prosper.

When I was an auditor we were told that no precedential value meant exactly that.  If something was brought up in that venue, disregard it.  If the taxpayer/tax pro wants to argue that way, let it go to appeals or beyond.

You are partly corect; whilst a summary Tax Court ruling cannot, by statute, have precedential value (anymore than a Private Letter Ruling issued by the Office of Chief Counsel to TP 'A' can have precedential value for TPs 'B','C'.....n), nevertheless, such a summary decision may be incorporated into the plaintiff's argument as a whole to show that the position in question is not primafacially dismissable and, thus, worthy of being judged on its particular merits.

i always thought i understood this but now i am doubting myself.

 

my client married someone in 2013.     he owes back taxes from roughly 5 years ago.

 

2013 was the first year they filed joint return

 

i included an injured spouse form with the return.

 

she still has not received her refund and she claims to me that during a phone call she had with the IRS .... they informed her that she should not have filed injured spouse form with her return..... that she had to complete an innocent spouse return and submitt to the irs.

 

i dont believe that what the IRS told her is correct....... or am i the one missing the boat here

As other commenters have noted, the 'advice' given by the IRS fellow was plainly and simply wrong and bespeaks someone who wouldn't know the difference between a bowl of jelly and apoisonous  jelly fish. The provisions of innocent spouse necessarily presuppose the existence of a marriage; therefore, whatever the spouse may have done prior to the marriage is moot. Now, as to injured spouse: although this shouldn't happen, nevertheless, if A marries B in 2013 (jointly), and A has liabilities that precede the marriage, the IRS computer is programmed to offset any refund from spouse B (after marriage) to spouse A's liabilities: spouse B should indeed file an 8379 with the original joint return (as a pre-emptive matter) - AND THE IRS MUST RESTORE THE OFFSET.  PS: I don't use caps often - but the galloping ignorance on the part of the IRS person simply frosts my drawers. Yes, as someone here observed, it is getting worse, much worse.

I have a client that claimed an EIC on their return, and received a letter from the IRS disallowing the credit.

 

The client has 2 schedule C's, retirement income, social security and interest income, the schedule C's show a net loss of $75.

 

ATX calculated the EIC based on the gross income of the schedule C's, and came up with an EIC.

 

The IRS states that they have no earned income and disallowed the EIC.

 

They have a disabled child which allows the EIC.

 

Is the IRS correct?

 

Thank you for any responses.

 

If a person is a statutory employee, his compensation is reported on a W-2 (with the statutory employee indicator checked.) He must use Schedule C, and report the bottom line on 1040, line 7; HOWEVER, he must use his Schedule C gross receipts to compute EIC (provided the ceiling is not exceeded, etc.) Is that what happened?

 

What has been happening at the IRS of late is horrific.  I'm not even thinking about which political party or official is to blame.  Recent events have far worse consequences than whatever these jerks did for whatever ends. They will get their just punishment (hopefully).  Restoring the IRS's position as a fair and impartial administrator of the tax code will take much longer to accomplish, if it ever happens.

 

Until the recent past, the IRS has done a remarkable job of operating within the law (Title XXVI).   They had to set an example so that taxpayers themselves would follow the law under our "voluntary" tax system.  They did things like send out timely 30-day notices, 90-day letters, respond to correspondence in a timely fashion (or ask for more time), followed the statute to the letter before they issued levies or liens.  I went to graduate school with a number of IRS agents and was amazed at how well versed in the law they were.  They knew exactly what they could do, couldn't do, and where they had a little wiggle room.  The would cite Code sections off the top of their heads, which showed me they had a lot of training in that area.

 

The professionalism of IRS employees, their adherence to law and overall efficiency in administering the tax code encouraged Congress to give them more and more responsibilities.  Remember price controls (was it during the Nixon years?).  Administration went to the IRS because their employees were tempered to operating by the law, in all its minute details, not only trained but trainable in new laws.  Social policies like housing credits, education credits, energy credits, and now a chunk of health care were dumped on the tax collector because their employees could handle anything.  If the agency moved at the speed of a rock going uphill like so many other federal agencies, Congress would never be able to make tax changes on December 30 and expect tax collection to proceed as usual during the filing season. They only did it because of all agencies, the IRS could manage it (and did, every time).

 

Of course everyone hates the "tax man," so the IRS had to operate in a way that was beyond reproach.  They did so for most of their history.  Now to find out that they are corruptible and corrupted will damage all the goodwill they have worked for so long to create among taxpayers and Congress.  And of course lawmakers have "punished" the agency by cutting their budget (real cuts, not just cuts in the rate of growth), so it is now public that there are less auditors and the chances of being audited are slimmer than ever.  So fewer auditors will collect less money, fewer people will be compliant so even less will be collected, and our national debt will continue to soar.  What business would cut its accounts receivable department, especially one that yields such a huge return on investment?

 

I have often defended the IRS to my clients.  I have great respect for the agents I know who take their positions of authority seriously and work hard to administer the laws fairly.  I can never take their side again.  The whole thing makes me sick.

 Believe me or not, I actually wept in reading your last paragraph. I can only ask you and others like you to continue to believe that the Service is fighting the good (and ever more fifficult) fight - despite its occasional thundershowers of inanity. The Service, I submit, began to change for the worse, whe its leadership began to adapt the bells and whistles, without the substance, of the private sector: complete with back-slapping, glad-handing and happy horse-s**t masters-of-the-universe talk. It was and remains a fad. A big fad - but a fad. And as such, doomed to evanesce.

As has been noted by others, more information is needed. How long has the client been living in the States? Did he receive any sort of immigrant-visa? Form 8843 is normally used to exempt people from 'counting the days', i.e., becoming de facto resident aliens. If your client is a non-resident alien, he must report only those parts of foreign income that are US-sourced - he must pro-rate. As for his US income, the situation depends: there is a whole category called 'income non-effectively connected with a US trade or business' - e.g., stocks, bonds, insurance premiums, gambling, etc. Such income, whilst not reported like wages, interest,on the return as such, etc., is, nevertheless, subject to a special tax, which is based either on the target country's tax treaty with the US, or, absent a treaty, it is a flat 30% - no ifs, ands or buts. And remember: if a non-resident wants to leave the US, he has to secure the still quaintly named 'sailing permit', from the IRS district office, certifying that he has no US tax liabilities.

In other words, this sort of thing is not exactly easy.And then there's the whole issue of dual status (which has nothing to do with dual citizenship). We want to help - but we need info.

I'm glad for the good news, but have to smile at that group name. Only a government agency would ever name a group the "Human Capital Officer Workforce Relations’ Automated Labor and Employee Relations Tracking System". Wonder what the nickname is?

​HCOWRALERTS is an interesting acronym.

Maybe it's just me,but does there not seem to be something vaguely 'disquieting' about many of our recent acronyms and initialisms? Something...I don't know exactly what...but somehow it puts me in mind of central Europe in the 'thirties... E.g.,consider our Department of Homeland Security and the monstrosity of the newest department listed above with this jawbusting classic from the...old days: Reichssicherheitsdiensthauptamt = Main Office for the Security Service of the Reich. Just wondering.

To paraphrase Churchill on the subject of Russia, the IRS audit procedure is a mystery , wrapped in an enigma. As the procedure has become and continues to become more and more a function of computer algorithms, transparency is rendered a disatnt and nostalgic memory. So far as can be determined, the only 'Person' Who knows what the cutoff for a DIF audit is, is God, i.e., a complex of computer routines and sub-routines, and He is not talking, except to mainframe computers. There is then an entire series of computer algorithms ('filters'), each of which is focussed on ONE particular audit issue: yes, the raw returns, during submission processing, are 'run' through...one of the filters; if it is selected for that filter, it bypasses the other filters and is examined only for that one issue; if it is not, it proceeds to the next filter, and so on into cyber night. The Service, you must see, is striving to streamline. Now, let it be understood, that, at the level of a Field audit, the examining officer(i.e., the Agent) has the authority to open up any issue which he deems to have sufficient audit potential...but he doesn't have to, and his superiors tend to express reservations on such enthusiasm - they have to answer to THEIR superiors, etc. All of which means, alas, that as to the likelihood of an audit, flip a coin. NOTE: exception - compliance audits:

I ran out of space to complete my thought. Compliance Audits: Ravenous beasts from Hades, equal-opportunity destroyers, no mercy, no quarter.

To paraphrase Churchill on the subject of Russia, the IRS audit procedure is a mystery , wrapped in an enigma. As the procedure has become and continues to become more and more a function of computer algorithms, transparency is rendered a disatnt and nostalgic memory. So far as can be determined, the only 'Person' Who knows what the cutoff for a DIF audit is, is God, i.e., a complex of computer routines and sub-routines, and He is not talking, except to mainframe computers. There is then an entire series of computer algorithms ('filters'), each of which is focussed on ONE particular audit issue: yes, the raw returns, during submission processing, are 'run' through...one of the filters; if it is selected for that filter, it bypasses the other filters and is examined only for that one issue; if it is not, it proceeds to the next filter, and so on into cyber night. The Service, you must see, is striving to streamline. Now, let it be understood, that, at the level of a Field audit, the examining officer(i.e., the Agent) has the authority to open up any issue which he deems to have sufficient audit potential...but he doesn't have to, and his superiors tend to express reservations on such enthusiasm - they have to answer to THEIR superiors, etc. All of which means, alas, that as to the likelihood of an audit, flip a coin. NOTE: exception - compliance audits:

Form 8862 is required when the IRS has had them repay EIC in the past. Tread carefully!!! They are not telling you everything.

Form 8862 has one use: it is issued to a TP who, at some point in the past, had his return examined (audited) and the EIC was removed by deficiency procedures. TPs in that situation have to 'recertify' by filing that form for at least the next 2 years. Since the boyfriend got the 8862, HE is the one who got audited - and is staying mum. Look out.

They lie.

I have sadly come to the conclusion, after 24 inglorious years of dealing with taxpayers, that they lie, that they lie all the time, and that they even lie when telling the truth would be to their advantage.

Although the 6662 penalty is arithmetically 'mandatory', as has been observed it may be waived (before assessment) or abated (after assessment.) Your client can sign the report, and make sure to pay the tax and the interest: he is not required to pay this penalty before requesting that it be abated.Given your description of the agent, a request for a waiver would indeed be a fart into a headwind. He can, however, file a claim (form 843) and explain what the agent seems already to have admitted - at least orally: viz., insufficient knowledge of record-keeping, etc. This request does not have to go to Appeals; he can file with the Service Centre where he filed the original return.The request will be handled by someone other than the original agent. Good luck.

First, you can find the list of all nations that have a totalisation agreement with the US on irs.gov, as well as on any search engine.

Secondly, once your client receives the confirmatory certificate of payment from Spain, he(you) may file a 1040X, attaching a copy of the certificate. It is the sort of claim that is handled fairly straightforwardly.

Breast implants

Tax Court has problems with breast implants; the only case I can remember where thet were allowed involved an 'extreme' club which required extraordinarily large implants, which the court ruled could only have a business purpose.

Hi AppleFlag & welcome to the board. I do a ton of these returns in my practice. Oddly enough, you can pick and choose which years to amend based on whether it's advantageous to your clients or not. Don't forget to look at spousal health care benefits that may have been taxed in the past. One thing though; if you amend for any benefit of marriage (like removing imputed income from health insurance) you have to amend to married for all. In other words, you can't pick & choose within a year, amending to remove the health insurance income but not to MFJ or MFS.

What I do is enter the more complicated return, whoever will end up as 'taxpayer' on the joint return, hit 'amend' and then just add the spouse's income & deductions. You only need to file one amended return. I don't attach any of the originally filed copies, but do attach the forms & schedules that changed.

With the excvellent exception noted by Joan, the decision for a married couple to file jointly, in any given year, is an election, i.e., a choice.

Taxation BC.... King Decreed, people paid, King's henchmen collected.

Taxation 2013.... O'king Decrees, people pay, O'king's henchmen (IRS) collect.

Seems that some things never change!!

During the period of Roman rule, when they were faced with collecting taxes from all over the known world, the Romans deviced an extraordinarly devilish method: each year, the fiscal authorities would decree, with force of law, how much money in tax was owed to the Empire from each province. Let's say that Gaul (France) was assessed at 'X' sesterces; that was considered a contract, and bid for at auction by wealthy businesmen; the contract was awarded to the highest bidder (higher than 'X'); the winner was then authorised, with Roman military backup, to send collectors to France to 'collect' the 'X' + the excess he had paid for the bid + then the profit margin..... The final collected tax could be up to 10-fold the original assessment (and there were NO deductions).And we think we've got it bad!

I have had some attorneys strong arm the IRS to get those penalties removed but that is about only way I have seen it done.

I hope many of you agree with me when I say that the statement attributed to the IRS auditor, viz., that she could 'consider' abating the penalty if there were preparer penalties involved is an obliquely made and/or obliquely reported view that she may consider abatement if the TP can credibly demonstrate reliance on a 'competent' professional (You just gotta love that adjective!). What is your client's history in this regard? New preparer? Same preparer - same errors? Also, the 6662 penalty,subdivided into accuracy-related and substantial understatement, has both similar and different criteria. The central criterion of the Sub penalty is that the TP failed to provide, on the return, the information needed for the correct computation of tax; for the Accuracy, the central criterion is credible evidence that the TP wilfully, recklessly and/or NEGLIGENTLY ignored the applicable law. They are both open to relief on the basis of reasonable cause. Phew!

I think they are giving the taxpayer a chance to report without penalties and interest.

If the TP, in response to this notice, files a 1040X and there is a resulting balance due in tax, the computer will automatically generate applicable statutory penalties and interest; the only penalty that will be 'escaped' is the accuracy-related/substantial understatement of income.

All right --- Thus passes the glory of the "big shield" ???? I freely admit I can be dense -- help me out.

I'm missing something here as my search only gives - Sic transit gloria mundi is a Latin phrase that means "Thus passes the glory of the world." It has been interpreted as "Worldly things are fleeting." AND Scutum (plural scuta) is the Latin word for "shield", although it has in modern times come to be specifically associated with the rectangular, semi- cylindrical body ...

KC got it perfectly: no more privacy. PS: I just liked the sound of the phrase and, incidentally, I'm happy that it brought out the Latin lovers!!