kcjenkins

(Bloomberg) Instant Tax Service, described by a U.S. judge as the fourth-biggest tax preparation business in the nation, was ordered closed after a court found it engaged in abusive and fraudulent practices. U.S. District Judge Timothy S. Black in Dayton, Ohio, said the “evidence of fraud and deception’’ perpetrated by ITS Financial LLC, the company’s formal name, and chief executive officer Fesum Ogbazion, was so overwhelming that an order barring it from the tax-return preparation business “is necessary to protect the public and the Treasury.” Evidence presented during a nine-day trial in July showed the CEO and his businesses encouraged franchisees to file false tax returns and lured low-income customers into its offices by marketing fraudulent loan products, Black said. Other wrongdoing included forging customer signatures on loan checks and using the proceeds to operate its businesses, he found. The company, in a post-trial filing, argued the evidence told a “different story.” The government’s proof was drawn from isolated incidents over several years, Instant Tax Service argued, contending it had taken “corrective action” that remedied most of the past problems identified at trial. The “death penalty” injunction was unwarranted, it said in the July 31 filing. Black was unconvinced. “Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning,” the judge said in his decision. “The court concludes that even today defendants have not fully recognized their culpability.” The case is U.S. v. ITS Financial, 12-cv-95, U.S. District Court, Southern District of Ohio (Dayton).

I get the feeling they did not have many, if any, tax professionals allowed to give input into the program. Such a logical step makes total sense, so of course it was not included.

Sounds workable to me

My basic problem with texting in business is the difficulty of saving a text message. I want something I can save and keep in the client's file, which shows who sent it, and when. 'copy' then 'paste' to an email is not good enough at documenting who sent it, and does not prove it was not edited.

And if you can get that in writing, signed by both, that's a good starting point. Still need to document exactly what each one gets of the joint account and especially of any account that was in just one name, so that the portion being transferred to the other as a 'transfer of a marital asset' can be defended if [when?] the IRS later challenges the allocations. Best advice, assume the worst and prepare for it. And, of course, the situation Taxed references is the best case situation, often they fight over everything, finally agree, then one or even both later file without mentioning to the preparer what was agreed to, and try to claim losses or ignore income that they are not entitled to Any time you deal with a new divorcee, always ask for a copy of the decree, and be suspicious if they don't want to give it to you. Protect yourself.

11/01/2013 By Natalia Autenrieth It won't be long before tax season gets underway again, and before that I encourage you to reflect. Think about your clients because, after all, they're the people who contribute significantly to making your busy season what it is, in all its glory and misery. My question for you is: Which three clients are you going to fire? Wait a minute, you might say. What do you mean by "firing" a client, let alone three of them? Isn't it hard enough to get clients in this economy? And isn't it the goal of one's practice to have as many clients as one can squeeze in? Sure, those few troublesome clients might be consuming an inordinate amount of your time, energy, hope and sunshine. But how do you decide if - and when - to draw the line? Allow me to offer a roadmap. Feel free to redraw it to suit your own practice, tolerance levels and ultimately your vision for what you are trying to build. 1. DEFINE 'FIRE-ABLE' OFFENSES Walking away from a paying client (they were paying you, right?) can be scary. You probably won't feel completely secure about firing clients until you have a well-oiled marketing machine or referral network, bringing in bigger, faster, better clients at the push of a button. Setting aside the scary factor, remember that the true performance standard in an organization is "whatever does not get you fired." The same could be said about the standard of your client roster. So, what will get your client fired? While specific criteria will vary from practitioner to practitioner, here are some ideas to get you started: The client lied to you. It does not matter whether the lie was a big or a small one. The lack of integrity on the client's part opens you up to unanticipated risks and second-guessing. Do you want to be associated with a client you cannot trust? The client is verbally or physically abusive. Nothing sucks the hope and sunshine out of the office faster than an abusive client. Negativity ripples through the office, potentially compromising your relationships with staff members, and the service delivered to other clients. The client has unreasonable expectations and is never satisfied. Take it as a sign that this client is probably not a good fit for your practice. Perpetual complainers don't make the best referral resources, either. 2. IS RETRAINING AN OPTION? You have worked hard to build this client relationship. Can it be saved? It depends. Remember that in training clients, as in parenting small children, being selective and consistent about rules is the single most important variable that you can control. Be crystal clear about where you draw the line and be prepared to defend it, politely and firmly, every single time it is crossed. As with parenting, setting a boundary that you are not committed to enforcing is worse than not setting one at all. However, persistence and patience have shown good results in the following areas of infraction. Is the client habitually late? Do they delay their deliverables and then come up with last-minute requests, making your team scramble and work until midnight to get the return in on time? Perhaps this is the time to redefine the deadline. Set the deliverable due date 30 days early, and be clear that missing that deadline will mean that the return will be filed late. Be prepared to stand your ground: Clients can be just like toddlers in pushing the boundary to see whether you really meant it. Is the client a habitual time thief? Do they cause a "caller ID cringe" across the office? Try opening the call with, "I only have a couple of minutes. How may I be of service?" to help them get to the point. If they fail to do so in a reasonable time (my threshold is 90 seconds), tell them that you have another client commitment, and ask them to summarize their question in an e-mail. Does the client make uninformed judgment calls? These can often make your job harder. Consider ways to help them make better decisions. Encourage them to consult with you when in doubt. Will some of your clients walk as a result of this game-changer? Maybe. However, look at them one by one as they leave, and ask yourself how hard you want to work to keep them. Because your next step is to get even better clients! 3. GET PERFECT CLIENTS Keep your marketing and referral machine going no matter how busy you get, or what the economy is doing. Flow creates hope. Having too many qualified prospects is not a bad problem to have! As a general rule, as much as possible, only keep the clients who are a good fit for you. They are the only ones that will stick with you for the long term and will be solid referral sources. Unless you have a great personality fit with a client and a genuine desire to serve them, friction, lack of care and disinterest will eventually result in things slipping through the cracks. For larger, well-established practices that are running at or close to capacity, consider using the 80/20 rule. What are the characteristics and qualifications of the clients in your top 20 percent? Only hire the new clients who have those qualifications. And every time you do that, fire someone in your bottom 20 percent. As you do so, the inherent quality of your practice -- and your life -- will soar! So, which three clients will you fire? And what does your perfect client look like? Natalia Autenrieth has audited Fortune 500 clients as part of a Big Four team, built an accounting department as a controller of a large hospital, and served as a CPA consultant to municipalities. She continues to consult with and coach high-achieving CPAs for sustainable growth, helping them build highly profitable careers, avoid burn-out, and have more fun.

Massachusetts Connector Announces Significant Changes to the Commonwealth’s Cafeteria Plan Rules BY PATRICIA MORAN On October 29, 2013, the Massachusetts Connector released Bulletin 03-13, which sets forth a significant course change in the Commonwealth’s cafeteria plan, HIRD, and free rider surcharge rules. History Under current Massachusetts law, employers with at least 11 employees are required to offer certain eligible employees an opportunity to purchase coverage under one or more “medical care coverage options” on a pre-tax basis through an employer-sponsored “cafeteria plan.”1 For many employers in the Commonwealth, the group of employees eligible for the pre-tax cafeteria plan was broader than the set of employees eligible for the employer’s group health plan.2 But employers could meet the requirements of the law by establishing a cafeteria plan which allowed employees to use pre-tax salary reductions to purchase coverage through the Massachusetts Connector. Employers who did not meet these requirements were required to pay a “free rider” surcharge to the Commonwealth.3 In addition, employers were required to submit certain “Health Insurance Responsibility Disclosure” or “HIRD” reports to the Commonwealth,4 and inform eligible employees of the cafeteria plan opportunity.5 The Affordable Care Act Shifts the Commonwealth’s Position The Affordable Care Act establishes public exchanges modeled on (but not identical to) the Commonwealth Connector. Unlike the Commonwealth Connector, individuals may not purchase coverage through public exchanges with pre-tax cafeteria plan dollars.6 Accordingly, exchange purchasers cannot reap the benefits of both an exchange subsidy and a pre-tax purchasing option. Massachusetts has aligned the Connector’s purchasing rules with the Affordable Care Act’s requirements; accordingly, effective January 1, 2014, pre-tax cafeteria plan money can no longer be used to purchase coverage from the Connector. But until now, the Commonwealth has held firm to its cafeteria plan rules, and insisted that subject employers find a way to provide a pre-tax option to all eligible employees under a “medical care coverage option.” Employers thus faced two choices: either offer all cafeteria-plan eligible employees employer-sponsored group coverage, or arrange for their employees to purchase non-group coverage elsewhere, such as through a private exchange. This dilemma was discussed at length in our previous alert accessible at http://www.mintz.com/newsletter/2013/Advisories/3268-0713-NAT-ELB/index.html. IRS Guidance Causes Further Conflict On September 13, 2013, the IRS issued Notice 2013-54, which provided that employers cannot offer cafeteria plans to employees to purchase non-group health insurance without an employer contribution. Notice 2013-54 is accessible at http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions. This new guidance created a conflict between the Commonwealth’s cafeteria plan rules and position on the one hand and the Affordable Care Act’s guidance on the other. Bulletin 03-13: the Connector Changes Course In Bulletin 03-13, in response to IRS Notice 2013-54, the Connector announced significant changes in its cafeteria plan and related rules. Specifically, the Commonwealth plans to pursue legislation to repeal the state’s cafeteria plan, HIRD, free rider surcharge, and cafeteria plan notification requirements. Pending repeal, the Health Connector plans to pursue a path of “non-enforcement” with respect to the free rider surcharge, and plans to cease development of the HIRD filing and the cafeteria plan notification requirements. Next Steps for Employers For plan years beginning in 2013, employers may continue to permit employees to use cafeteria plans to purchase individual plans on a pre-tax basis until the plan year expires in 2014. For plan years starting in 2014, under the federal guidance, employers may no longer offer cafeteria plans that permit their employees to purchase their own non-group health insurance policies using pre-tax income. Cafeteria plans can continue to be offered to employees for other purposes, such as the purchase of group health insurance or other benefits. Employers are advised to review and amend their cafeteria plans accordingly.

http://blog.discoverybenefits.com/post/2013/10/14/Summary-and-FAQs-Impact-on-HRAs-and-Other-Pre-tax-Accounts-IRS-Notice-2013-54-and-DOL-Tech-Rel-2013-03.aspx

Look at the newest posted thread "Tax Traps", for the section on divorcing clients for some warnings to consider. BTW, Tabby, my reminder above was not directed to you, specifically, but just a general reminder, mostly, in my mind, directed to 'newbies' in the profession. We experienced ones have already learned not to let the clients bully us.

Your biggest practice area may be your biggest risk 11/01/2013 By Roger Russell Year after year, audit claims are the most severe among errors and omissions, or E&O, claims - but tax claims are the most likely to be brought, according to insurance experts. "The majority of carriers report somewhere between 50 and 60 percent of claim activity against accountants arises out of tax engagements," said John Raspante, senior vice president and director of risk management for NAPLIA (North American Professional Liability Insurance Agency). "They're not the most significant claims, but they're the most frequent. It's like a baseball player who bats .333 but hits mainly singles, compared to a player who bats .200 but hits a lot of home runs." Nevertheless, the majority of funds paid out in claims indemnity and in defense of claims arise out of tax services, according to Raspante. "That's because of the sheer multitude of claims in that area," he said. Wes Marston, vice president of claims at CPA Mutual RRG, agreed. "Taxes are the mainstay of so many accounting practices, so the sheer numbers weigh into it," he said. "Tax returns are also subject to review not only by taxing authorities but also successor accountants and even financial advisors that might point out potential problem areas. They are documents that tend to be looked at in the future - they don't just go away." One of the reasons for a tax claim is typically the result of an examination change, observed Raspante. "Everything is going fine, then there's an examination by the taxing authority, and then an assessment. The client thinks the results of the audit are the accountant's responsibility. For example, you list the taxpayer as a real estate professional on the return, and the IRS is successful in asserting that the taxpayer is not a real estate professional. When the allowable real estate losses become unallowable, the reaction is to go to the accountant and say, 'You advised me to do that, so you should be responsible for the penalties and interest.'" THEY'VE GOT ISSUES Claims resulting from marital dissolution or separation are also common, Raspante noted. "There are so many exceptions in matrimonial taxation, and divorces are so common these days, so preparers need to be aware of the rules involving divorcing spouses." One example is in the area of the ability to carry forward losses and deductions."When the taxpayers get divorced, it's important who gets the carry-forward," he said. "Many times accountants don't quantify what these are. They need to be quantified and listed as a marital asset. Where the spouse is receiving an increase in marital assets, the other spouse can propose lower alimony payments.Matrimonial tax is complex because it creates exceptions to otherwise basic rules, and many accountants are not aware of these." One of the problem areas is when the statute of limitations begins with state nexus claims, Raspante indicated. "If you are a New York corporation but Illinois feels that you have a connection, and you should have filed for 20 years, the statute of limitations doesn't begin running if you never registered there. It can result from business or sales and use tax filings that the taxpayer was never aware of." "Each state's nexus rules are different, but the taxpayer hires us with the understanding that we are familiar with what those rules are," he said. Payroll tax reporting often creates liability in the area of employees versus independent contractors. "Many times, accountants are not familiar with the rules, which are complex," said Raspante, "and they are subject to multiple review - the IRS, the [Department of Labor] or the state worker's compensation board can dispute the status of a worker. The IRS is very successful in these types of examinations." Ethical standards such as those found in Circular 230 or the AICPA's Statements on Standards for Tax Services can create claims, Raspante noted. "If you have knowledge of an error on a previously filed tax return, you have to convey to your client what the rules are. For example, if you see the client took a deduction for a political contribution on a previous return, you have to inform them that it's not allowable as a charitable contribution. If you notice but don't inform the client and he or she is audited, he'll say that you could have mitigated the situation two years ago." PREVENTIVE MEASURES There are a number of things preparers can do to protect themselves. "Weeding out potentially bad clients is the best way," said CPA Mutual's Marston. "You can do your best work for some people and they'll still sue, while others won't sue when confronted by the worst work. Engagement letters, while they are not as widely used in tax engagements, can certainly help for the same reasons as in audits." Also, it is important to stay within your area of expertise, especially when faced with issues such as estate tax issues or like-kind exchanges, he observed."Someone who doesn't usually prepare estate tax returns might take on the estate of a long-term client. If you have no expertise in an area, turn it down or get outside help." "Communicate in writing to clients when you don't have sufficient information to file a return well ahead of the due date, with the understanding that it won't be filed unless certain items are provided," advised Marston. A contributing factor to the current number of tax issues is that there have been so many changes in the tax law, especially since 2008, observed Randy Werner, loss prevention executive at Camico. "Preparers have a hard time just keeping up with tax law changes and advising and warning their clients," she said. "There's been an uptick in the common areas such as late filing and late payment - it goes back to trying to determine the preparer's obligations to the taxpayer." "Then there are the complex areas such as S corporation or C corporation elections," she said. "What happens is the clients think they have elected to be an S corporation but they don't follow through. The CPA files as if the entity is an S corporation but it's not because it never properly elected to be one." "We see a lot of late filing and late payment in the estate tax area because there's no regular filing date," Werner said. An estate return might be due on June 26. "We recommend double-calendaring when you do estate and trust work.Someone else should be responsible on that calendar as well as yourself." Another potential cause of professional liability of CPAs doing tax work is when they start dabbling in more complex areas in which they don't have expertise, she said: "Don't decide, 'Well, my client of 20 years died and I think I'll help out the family.' This can get you into a lot of trouble." Foreign Bank and Financial Accounts, or FBAR, reporting issues have also become more prevalent, according to Anthony Cooper, tax analyst in Camico's Loss Prevention division. "The FBAR issue typically comes up because the accountant didn't ask the right question," he said. "Practitioners might learn about it through an organizer, or they might get a form that indicates interest from a foreign bank. Sometimes their clients receive an inheritance from someone abroad. There may be no income involved, so the clients don't think they have to tell practitioners." The penalties are stiff, so it behooves the practitioner to drill down to determine whether or not an FBAR is required. The uncooperative client can be a potential area for liability, Werner observed."For example, a CPA just told us they received an e-mail from a client that he was away and couldn't be back until after October 16. He's on extension, and is not responding to the CPA's e-mails that it will be too late." "Section 7216 confidentiality issues and foreign bank accounts are the two things that accountants involved in tax practice call me about the most," said Ralph Picardi, a partner in Boston-based Lapping and Picardi, whose practice focuses entirely on serving as a consultant to accountants and their insurers. TRAPS FOR THE UNWARY "The regulations under Code Section 7216 were amended several years ago to be stricter, and as a result, tax professionals need to be more careful before they disclose information in their files to third parties," said Picardi. "It used to be that a client would call and say, 'I'm getting a loan' or 'I'm extending a line of credit, please send the bank a copy of my return.' Now you have to get their permission in writing and it must be in a specific form. Even if the accountant receives a subpoena, they must be careful to follow the rules. And the IRS hasn't come out with a lot of guidance to explain to accountants what they should do or not in light of the new regulations." "Accountants and preparers need to be aware that these restrictions are out there, become familiar with them, and when asked to provide information to anyone other than the client, they should ask their insurance carrier, their own legal counsel, or the AICPA for guidance on whether they should give information, and if so, how," he advised. "The penalties are both civil and there are potential criminal penalties for violating the rules." Foreign accounts can be a trap for the unwary accountant, Picardi observed: "A lot of them get into trouble with foreign bank accounts or foreign entities.Several forms have to be filed, with different due dates. It's a way for the government to track who has what internationally. A lot of preparers don't have a good working knowledge of the rules." In many instances, clients don't disclose foreign accounts to their accountants, Picardi indicated. "Accountants need to be aware of the pitfalls and tailor their questionnaires to that and address the topic in engagement letters as to whether they are handling the foreign aspects of their clients' returns." BE CAREFUL OUT THERE Rickard Jorgensen, president and chief underwriting officer at Jorgensen & Co., a professional liability and risk management consulting firm, offers these tips to minimize liability in tax practice: The key issue is to secure an engagement letter or, at the least, some form of signed acknowledgement from the client regarding the scope of services. If there is no signed acknowledgement, CPAs leave themselves open to allegations from owners and third parties (like lenders) for risks beyond the scope of a relatively conventional tax assignment. Put it in writing so that the client fully understands the nature of the services you are providing. Make sure that you are aware of all deadlines and adhere to them. Set up a diary to ensure appropriate acknowledgements and receipts. Do not assume anything -- keep following up until you are satisfied. Don't rely on client representations or verbal assurances that something has been completed and sent off. Your fees for service should contain a detailed description of the services provided and timely. Do not batch invoices. Get them out immediately and create milestones for payment. Accumulation of an outstanding account is the quickest way to a dispute. Many claims against CPAs (and other professionals) arise from attempts to collect fees. Often a cash-strapped client will use a countersuit that alleges negligence to negotiate a lower fee. It is prudent to avoid permitting the outstanding fees to accumulate. Stay within your comfort zone and only provide services where you have true expertise. Do not provide tax services to a public company if your primary business is 1040s. Only make promises that you can fulfill. Keep an open and regular dialogue with clients and always return communications - phone calls, faxes or e-mails -- within a reasonably short time frame. If nothing else, observe good business courtesy and treat your client with the respect you expect from them. [emphasis added]

I think it's too late now, as all those cancellations, and the business decisions behind them, have already been made.

No, I'm suggesting that they use info they already have, to sort returns into two groups, those with a verified history in their system and those that do not.

If they wanted to assign the resources to it, they could even tie the returns to prior years which had been verified, so that the majority of legit returns could get the fast processing. If they did that hardly any honest tp would be delayed, but most of the scammers would be blocked. Maybe the IRS could find money for this programming, if the cut out the spoof videos and the conferences?

You can use Adobe® Acrobat® XI to quickly Convert PDF to Any Doc. Or there is http://www.wondershare.net/ad/pdf-editor/converter.html?gclid=CP6-sbSA1roCFaQ9QgodNUIAlg Or https://www.pdftoword.com/ is free. So is http://download.cnet.com/Free-PDF-to-Word/3000-10743_4-75732609.html

And just remember, YOU should not, at any point, feel defensive if they do have problems. Often clients tend to blame us for problems that their decisions created. If they do, politely reminding them that it all goes back to how THEY set the account up originally puts it right back on them. And don't forget to charge for any of your time spent dealing with THEIR problem.

It does seem like they could AT LEAST hold refunds going to out-of-country addresses until verified, doesn't it? And multiple refunds to the same address, ditto.

Cookies are important, for sure.

New York (November 4, 2013) By Michael Cohn Thomson Reuters has released a new special report on year-end tax planning for 2013 for individuals and businesses. The report highlights the opportunities and challenges that taxpayers and their tax advisers face as they engage in 2013 year-end planning, including the 0.9 percent payroll tax on wages and self-employment income and the complicated 3.8 percent surtax on net investment income, both new for 2013. The special report includes an overview of recent legislation impacting 2013 tax planning, how to make the most of enhanced expensing and depreciation, how to avoid reduction (or elimination) of the many tax breaks that phase out over higher levels of income, tips for taking full advantage of the tax credits available, how to make the best tax use of losses, and checklists of planning moves for individuals and businesses. “Year-end tax planning could be especially productive this year because timely action can nail down a host of tax breaks that won't be around next year unless Congress acts to extend them, which looks doubtful,” said Thomas Long, senior tax analyst at Thomson Reuters and an author of the report. “Businesses and individuals can potentially achieve significant tax savings by taking advantage of tax provisions that are scheduled to expire on Dec. 31.” The Thomson Reuters Checkpoint report is available for download at no cost at https://tax.thomsonreuters.com/2013TaxTips .

Try naming them "First PersonName Trust FBO Grandchild", then 'Second PersonName Trust FBO Grandchild", then "Third PersonName Trust FBO Grandchild", etc.

Judy, by the end 2012 was working fine, so getting it to demo should not be a problem.

Sounds like a good idea, Tom. Keep trying to sell it. It sounds like something that a Charter school might offer.

That is good. And the CPA will respect you more now, too. Always a plus.

Good luck.

I tried college kids three years before I gave up on them. Spring Break is in March, you know. Best help I ever found was old, not so pretty woman who totally appreciated the job, never made personal calls on my time, showed up on time and worked hard, looking for things to do when she got caught up on what I'd given her. When it comes to office help, I am 'ageist' I guess, but work ethic among most kids is just missing in action.

Win 7 is a good platform, very stable. Win 8 was not so greatt, but Win 8.1 is a significant improvement. I agree, IF you go with Win8.1, you should get it now so you have time to get used to it. We've mostly all gone through many platforms, and learned them all. And each had something more to offer. I don't ever think it's good to jump into a new platform before it's had it's bugs worked out, but we do have to move forward now and then.