Cathy

Thanks for the confirmation Lion...I think I will use my wrong date of birth when I file my return this year just to see what happens. Every time I go over the E-File Info page with my clients, I tell them that by using their pin numbers and dates of birth, it was told by IRS to practitioners that it would help with identity theft...NOT. Well, if the dates of birth of the taxpayer and spouse are mostly ignored, no wonder it's a crooks dream to get one's social security number to file a fraudulent tax return....we'll see.

The copy sent to the Social Security System must have the entire number on their copy of the W-2. The employees could verify with the employer that his/her number is correct on the SS copy of the W-2 by signing a verification form or what have you. The instructions for the 1099's and 1098's for 2016 are printed on the instructions as follows: Truncating recipient’s taxpayer identification number on paper statements. Pursuant to Treasury Regulations 301.6109-4, all filers of this form may truncate a recipient’s taxpayer identification number (social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN)) on payee statements. Truncation is not allowed on any documents the filer files with the IRS. A payer's taxpayer identification number may not be truncated on any form. See part J in the 2017 General Instructions for Certain Information Returns. (This is talking about one of the 1099 series.) Just wondering how in the world would any of crooks get any of the 200+ employees returns accepted inasfar as the dates of birth of the taxpayer and spouse (if any) were nowhere on the W-2's that were mailed out in error. In fact, in all of my years of e-filing, I have never, ever had a date of birth error on the taxpayer and spouse. Seems like I remember reading a dob error on a taxpayer or spouse (not dependents) would not reject returns. If not, willing to bet the majority of the identity theft issues would be moot. What am I missing? If my theory is correct, why in hell is it a requirement to list a dob for the taxpayers on the e-file info page. We were originally told in our seminars that the signature info would help prevent fraud and identity theft...it never did...so something isn't right somewhere! Ok...rant and vent over....carry on!

I read a thread on this issue from October, 2016 while researching the truncating of Social Security numbers on W-2's as I thought I read somewhere where it was to begin in 2016. What I did find was included in "The Consolidated Appropriations Act of 2016" that was signed into law on December 18, 2015. I read a synopsis of the law and it authorizes the IRS to promulgate a regulation to permit employee SS #'s to be truncated on Forms W-2 (xxx-xx-1234). The provision was effective immediately, however, the authors didn't feel IRS would have the regulation ready for the 2015 W-2's, however, probably for 2016. Well, that didn't happen either and hopefully Congress will get behind them and see to it that it's done as it would have eliminated a story that went national from our little Louisiana town. The local hospital's finance person received an e-mail from the Administrator asking to mail (US Mail) him a copy of all of the employee W-2's. Sure nuf, he was a good employee (?) and did as asked, and sure nuf, it was a scam. Some of the returns prepared for employees are still being rejected to date even though contact was made by the proper local officials to explain what happened and were given each employee's SS# to have their accounts on alert, and in addition, all employees sent in Form 14039, Identity Theft Affidavit. Truncating the Social Security numbers would put a big dent in the theft issue, so if IRS can make up the regulations for ERO's to truncate Social Security numbers, why should they be dragging their feet for the public? More funds....that's it...they need their funds restored. I have a couple of bridges for sale if anyone believes that last statement. Take care, Cathy

Catherine, you are positively correct on that observation! The idea that they are "educational institutions" intimidates them to the point to where they get what they want...how in the world are they to argue or disagree with them without the educated beings making them look like the people they really are (not that bright)?

Forgive me if I'm wrong, but I think IRS gave the educational institutions another free ride for the 2016 tax year as it had been the year where they were coming down on the institutions and making them report on a calendar year basis rather than their school year. As usual, IRS relented and now have set 2017 as the new deadline for calendar year reporting. If my memory serves me correctly, then IRS will be well aware that the 1098-T's aren't worth squat for 2016 other than proving that a person was a student for the Fall Semester of 2016 at least.......

Schirallicpa, Wait...did I just hear you that you "are hopeful that the preparer does not wait til Oct 15 to get the return done"? Then, if the taxpayer is not going to have you prepare his tax return even though the other preparer didn't do his job correctly with not filing the electronic extension, etc... what in the world are you wasting your time for? Or maybe not....I hope your fee was extremely gratifying once you collected it before giving the person his 1040-V....as you know it's not over yet as IRS won't send him/her the NYS payment even if it was made out to the NYS Department of Revenue....so you are not through with the client of the MIA tax preparer! Or just be sure to tell the person to have his preparer include the NYS payment in his estimated payment figure he uses on his return....which should have earned you an additional fee for that knowledge. Cathy

Catherine, Be sure and tell your E & O company that the business still owes you approximately $2,000 and Pro about $500. As you have not been paid for your work, do you legally have to give them any information? I hate these situations with two owners. The ONLY 2 owners I will take on are a husband and wife team and have been thankful over the years as the ones I have sent down the road weren't worth the headache and, of course, didn't stay in business long. Sometimes, even family will steal from each other, so I am very careful about which husband and wife team I will take also. Please let us know how this turns out. And if you need us for any drive-bys, we're here for you! We'd we happy to drive by and wish you well! Take care, Cathy

Louisiana: Well, it looks like we might be ahead of the game on one thing at least! In Louisiana, we have what is called either: Independent Executors/Administrators, or just plain Executors or Administrators. The difference between the two is to allow the family to avoid costly probate expenses by the "Independent Executor" taking care of most leg work, etc. The Independent Executor can be a member of the family or someone they trust to do the work, thereby saving on attoryney fees, etc... If the will does not specify an "Independent" Administrator/Executor, then the heirs can all get together and appoint one, if they so choose. Once a Judge signs off in court on the appointment, the "Independent" Administrator/Executor, can completely handle the succession from there with a notary certifying his/her signature as being genuine in certain situations. Again, the law was established to help save families $$$$. What I see happening now is attorneys are sitting back and after letting the estate's "Independent" Executor do all of the work, the attorneys are still charging the same fees as if they would have if no "Independent" Executor existed for the estate. And who said attorneys aren't crafty???????????? Time permitting, I'll take a look at what legislator authored the bill...willing to bet it was an attorney! Can't wait to listen to the committee hearings as well. That should prove to be Comedy Central at it's finest!

Thanks for your reply, Sara! Although I have some wealthy clients, none of their families (at the present time anyway) would ever need to file a Form 706 in the event of their death. If a new client would come to me with needing to file a Form 706, I would refer him/her to someone who deals with these returns on an on-going basis for their best interest....and the fee I let "slip through my hands" is irrelevant, to say the least. It is impossible for each of us to know every single tax law. I have talked to CPAs who have no problem with performing tasks for companies such as Exxon Mobile Corporation, but same people told me they wouldn't touch a 1040 with a 10' pole! A 706 is definitely not a return to "give me a while and let me research and I will then file it for you" as was told to the individual during tax season. Mind boggling to say the least even if a Form 706 was the correct form to use! I would love to be able to talk to the preparer to make sure she understands why the return couldn't be filed, however, a family member tried to contact her in regard to the $100k tax liability was....let's just say....not met with open arms. Also, I have since discovered that some other returns she prepares aren't correct also. In those cases, she claims the standard mileage deduction in addition to depreciation and other auto costs plus the meal and incidental allowance rate (100% at that) for employees who are not eligible for either travel or the meal deductions, although they do enjoy the huge refunds they receive. So on one hand this "former IRS employee" turned tax preparer is a true Robin Hood....taking from the rich (or so she thought) and giving to the poor by preparing a return where taxpayers are told they owe right at $100,000 (when they don't owe anything at all) and giving huge refunds to others of which they do not qualify. I inquired about the age of the individual thinking that perhaps dementia had set in, however, the lady is years younger than I am. So, the questions is: exactly what job did she have when she worked for them? 1. Janitorial, 2. Receptionist, 3. Customer Service Rep answering taxpayers' questions (and we all know about the answers people receive from them), or 4. None of the above (advertising ploy) Whatever the situation, it's preparers like this one in question that give the rest of us a bad reputation sometimes. Take care, Cathy P.S. This situation has continued to be on my mind, so I know I must do something about it.....just don't know which way I'm headed just yet.

Pacun is correct, however, I must add "not no, but hell no!"

Just something I want to share. I still can't get over my response to a return that was brought to me today after a family member's brother picked it up from another preparer. Long story short: In-law (who didn't want to bother me during tax season...I told her what the results of the return should be...0 taxes owed) had brother bring to me a copy of the return necessary to be filed because the estate had sold a piece of property for $100,000 in 2015 under the estate's name of their father who had died. Father's assets before liabilities were approx $300,000. The value of the property was $100,000 at time of death (at least). In-law called me and said brother had picked up the return his preparer had filed for the estate, and the family owed right at $100,000. I immediately told her to have the preparer put a hold on e-filing the return and prayed that it had not been e-filed and asked to see a copy of the return. When her brother got to my office and laid down upon my desk a copy of a completed Form 706, I cried....I literally cried! Thoughts running through my head were "OMG, how many other families paid these kind of taxes needlessly, etc...?" I showed him the first line of the Form 706 in which it stated to list the "Total gross estate less exclusion,,,". "What exclusion?", he asked me. "Not important at all....just the $5,300,000 exclusion of assets for a U. S. Estate Tax Return", I replied!!! I then prepared and e-filed a Form 1041, and it has been accepted by IRS...all within an hour. And, of course, as there was no gain on the property sold and the estate had no other income in 2015, no taxes are due. Thank God, Form 706 can't be e-filed! OK...so who thinks I'm nuts for having cried? I have seen my share (more than my share really) of returns prepared incorrectly by other preparers, but this one absolutely topped the cake!

One of my clients died in 2015. His brother (also a client) is his court appointed Independent Administrator of his deceased brother's estate. I have attached a pdf copy of the court document indicating such (signed by a judge) to the return as per the instructions. Also, per Publication 559, a tax return for a decedent can be electronically filed. NO Form 1310 in this case is needed per instructions on Form 1310! Estate is due a refund. EVEN IF a 1310 was necessary to be filed with this return (which it isn't), the original return can be electronically filed and the Form 1310 can be mailed to the IRS Service Center designated for the address shown on the 1040 per the instructions on the bottom of a paper 1310. Before anyone types a reply that a return with a personal representative or a Form 1310 must be paper filed, please pull a Form 1310 from IRS.gov and read the instructions on the bottom of the 1310. The instructions even goes on to say that the 1310 can be sent by mail to the IRS Service Center for the original address as shown on the original return that was E-FILED. I spoke with a supervisor at ATX. I am to be contacted within 24 to 48 hours after they review this issue....stay tuned!

Terry, You did everything humanly possible. The problem is the spouse and not you! If they don't return next year it will probably due to embarassment from the husband to face you again with his wife in tow......and ditto on what KC just posted!

Years back, one of my clients had a child attending a school in China that was accredited and participated in the Federal student aid program. The taxpayers were thus able to take an education credit.

Have huge favor if u live in Greenville.

John, The State of North Carolina sounds like a wonderful state to live in! Don't know if I'm naive or just really hoping that North Carolina's justice system (or any other state's justice system for that matter) is better than Louisiana's justice system. I could see a contempt of court charge being immediately filed on anyone who corrects a judge in Louisiana....no matter what injustice would take place as a result of the judge's statement. I was almost sentenced to 10 years at hard labor for my cell phone ringing (I thought I had the volume off) while court was in session. The court bailiff was to have collected my phone before I entered the courtroom, but let me keep it as a personal favor. As it would just happen to be, the judge was walking around in the courtroom while lecturing the defendent during the case I was observing. Said judge just happened to be exactly in line with my row of seats when my phone rang. Of course, I was sitting on the end of that row. The judge could have touched me he was that close. And of course, he looked at me instantly. Thank goodness we both coached and referreed soccer years earlier when it was first introduced to our youth years ago. Also, I was greatful that the night before I had changed my ringtone to his Alma Mater, LSU's, fight song! Now every time I see my "ex friend, the court bailiff", I automatically hand him my cell phone...whether I'm at the grocery store, the post office or Wal-Mart, he keeps it until I leave to go home.

I use Nextiva for my faxes that come and go out through my email. The best part is not hearing the fax machine ringing!!! The cost of printing the copies on my laser printer is way cheaper than my fax machine used to be.

ATX and other software providers are holding their clients returns until they get the all clear from IRS. In the interim, we can continue to transmit to ATX, and I'm assuming other vendors as well.

Like - Click this link to Add this page to your bookmarks Share - Click this link to Share this page through email or social media Print - Click this link to Print this page IRS Statement on Experiencing Systems Outage Feb. 3, 2016 The IRS experienced a hardware failure this afternoon affecting a number of tax processing systems, which are currently unavailable. Several of our systems are not currently operating, including our modernized e-file system and a number of other related systems. The IRS is currently in the process of making repairs and working to restore normal operations as soon as possible. We anticipate some of the systems will remain unavailable until tomorrow. The IRS remains in close contact with e-file software transmitters and the tax community during this period. A number of taxpayer and tax practitioner tools are unavailable. IRS.gov remains available, although a number of the services on the site are not, including Where’s My Refund. Taxpayers can continue to prepare and file their tax returns as they normally would. Taxpayers can continue to send their tax returns to their e-file provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns. Taxpayers who have already filed their tax returns do not need to take any additional action. The IRS is still assessing the scope of the outage. At this time, the IRS does not anticipate major refund disruptions; we continue to expect that 9 out of 10 taxpayers will receive their refunds within 21 days. Page Last Reviewed or Updated: 03-Feb-2016

FINAL UPDATE ON CREDIT PAID TO OTHER STATES: After not hearing from the LDR Policy Division regarding my correspondence to them on Jan. 24th...it was to have taken 72 hours, I called today and was told my response would not be sent to me until 4 to 6 weeks. I talked with a rep. in the Policy Division and got absolutely nowhere. Her supervisor is to call me back within 2 to 48 hours. I'm not holding my breath. I was told by the rep. that it was the practitioner's responsibility to contact each state to see if that state was an eligible state for Louisiana's residents to be able to take the credit against income taxes paid to that state (even with the confusion of the law itself). After further researching the 2015 Act No. 109, I do feel more comfortable in what I have decided to personally do to protect my client's interest the best way that I can. At the moment, I have three out of state issues and have gone to each state and printed their instructions and forms to be used by their residents for the credit paid to other states. I will keep that information as proof in addition to what I discovered when researching Act No. 109. When Act No. 109 was originally introduced (House Bill No. 402) a new section: R.S. 47:33 (A) (4) read: (4) The credit shall be allowed only if the other state provides a similar credit for Louisiana income taxes paid on income derived from property located in Louisiana. The "Digest" prepared by the House Legislature Services and presented to lawmakers on the same instrument as the author of the original bill (on the same pages as the original bill but not an official part of the law) stated that: Present law authorizes an individual income tax credit in an amount equal to income taxes which were paid for the same taxable period to another state on income which is subject to La. tax. Proposed law retains present law and adds the following requirement for eligibility for the tax credit: (1) The credit is allowed if the other state provides a similar credit for La. income taxes paid on income derived from property located in La. THEN, AMENDMENT NO. 1 and AMENDMENT NO. 2 WAS INTRODUCED. Basically, Amendment 1 amended #4 above by adding a comma after "located in" and inserting "or" from services rendered in, "or" from business transacted in Louisiana. The key word in the above amendment was the word OR! What is "comical" to me is that the "Resume Digest" of ACT 109 (the last summary of the bill to tell legislators what they will be voting on) states that the wordage has commas without the word "OR", and has in the sentence the word "AND" which makes all of the issues necessary to be true in order to claim the credit. HOWEVER, FINAL BILL, ACT NO. 109 (OF THE 2015 REGULAR SESSION) HAS THE "OR" BETWEEN EACH REQUIREMENT AND NO "AND" IN R.S. 47:33(A)(4); therefore, that is the reasoning behind my conclusion I have drawn. It appears there was a screw up in the final bill in the way it was presented to legislators and the way the bill was written for the last time and voted on and made official......but that's their problem....not mine. That's my conclusion...take it with a grain of salt.

The State of Louisiana is very unique (to say the least), and for our state government to "assume" anything is over-taxing (pardon the pun) it's capabilities and purpose (as they seem to think). Several years ago, our immediate area had another such fraudulent tax preparer who prepared many returns for area non-employed residents who all happened to "own barber shops"....mega illegal refunds from what was announced in the media. That case was brought against the preparer by the Feds. Same situation with the "poor misinformed taxpayers" (I'm assuming) who signed those fraudulent returns....nothing....yada...nada...zilch....zero made public (or otherwise) about any action taken against those participating in the scam. And living in a small area, certainly somebody would have heard something. I guess that's why others in our area felt comfortable to continue to use the preparer located in the "big city" who was recently exposed also for his many, many clients having Sch C's....this time, however, all of those businesses lost money which helped immensely with the amount of refunds because his clients had high paying jobs with mega withholding. I would imagine that this type of fraud, if not already, will soon surpass the EIC fraud, especially if participants from either side gets a free ride.

Forget what I just posted!

Me too, KC....I found her answer about "no list" to be right on par with our State government in particular.....on one hand Louisiana's tax practitioners constantly get bad publicity for a small handful of crooks and on the other hand we are constantly reminded of the inefficiency of the DOR with issues such as the credit on taxes paid to other states. I asked another question that got the same type of answer that should have surprised me, but it didn't....regarding the "fraud" cases in which are given so much publicity where one or two tax preparers get busted for such things as indicating on many of their taxpayers returns that bogus "businesses" existed with huge losses which enabled millions of dollars in fraudulent refunds. I have seen this happen all too often when a client leaves my business and goes to "John Doe" because "John Does gets back huge refunds for his clients, and everybody at work goes to John Doe". And I'm not talking about ignorant people by any means. My question was what happens to the taxpayers who receive the fraudulent refunds...."NOTHING"...."we are working hard to build fraud cases on those tax preparers who prepares the returns". Ok....so what have you got....10 at the most tax preparers per year who serve a few years and the taxpayers finding another firm to get their huge refunds continued. As long as nothing happens to said taxpayers, fraud such as this will grow in leaps and bounds each year! Hopefully, I'll get a response on the tax credits by tomorrow as the "72 hour" response time has already turned into 96 hours!

For LOUISIANA returns: FROM THE POWER POINT PRESENTATION AT THE 2015 MEETING WITH IRS AND PRACTITIONERS (This is how it has been for as long as I can remember even though the E-Filing handbook only describes what to do when E-Filing a Louisiana return only.) WHEN E-FILING BOTH THE FEDERAL AND LOUISIANA RETURNS: If using a PIN, retain the Federal E-file signature Authorization Document, IRS Form 8879. (IRS 8879 serves as the LA signature document as well.) The LA8453 will be used as an information document when IRS Form 8879 is used. IF E-FILING LOUISIANA RETURN ONLY: The LA8453 must be signed and retained when a state only return is transmitted. Every once in a while, you discover that you did not make up things in your mind! I have been worrying about jail time as I have always followed what LDR has told us in the yearly meetings and haven't had but 4 or 5 Louisiana 8453's signed. I was elated to print out the power point presentation for my records as proof!!

Mini Update: I've emailed the Policy Division explaining my concern about the credit for taxes paid in other states and was told they respond within 3 days. I expect to hear something soon as my email was sent Sunday evening. In the interim, however, I reviewed RS 47:33 and feel more comfortable than before as the requirements stated in RS 47:33 (A) (4) has the word "or" between each requirement rather than the word "and" which makes a HUGE difference in the meaning of the law. RS 47:33 (A) (4) reads the following: (4) The credit shall be allowed only if the other state provides a similar credit for Louisiana income taxes paid on income derived from property located in, OR from services rendered in, OR from business transacted in Louisiana. NOTE: I emphasized the word "OR" above by capitalizing and underscoring it myself. From the little bit I have learned about laws is that there is a big difference, of course, in the meaning of "or" and "and" when used alone (rather than and/or). I paniced as I initially read it to mean in order to take the credit on taxes paid to another state (such as from work performed in that other state), ALL of the requirements had to be met. From reading it again, I now interpret it to mean that if a taxpayer takes a credit paid to another state from work performed in that state, then that other state must allow their residents to do the same when they (their residents) work in Louisiana. The credit for taxes paid to another state based on income derived from property in that other state is a moot case as that part of the original act expired in the year of 2000. My initial concern was based on the instructions for Schedule G - Nonrefundable Credits in regard to Credits for Taxes Paid to Other States. After reviewing the instructions again, I'm not going to kick myself this time as the way the instructions are written, it can be taken to mean what I had originally thought. Who knows how the LDR would have interpreted it in processing returns.... Again, I'll update when I hear directly from the Policy Division. Hopefully, they will provide us with a list of those states that are approved for Louisiana taxpayers to receive the credit. In a telephone conversation yesterday with a lady with the Policy Division, I was told no list exists. OK....so how do they know if they can accept the credits paid to another state on a Louisiana tax return???