BulldogTom
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Posts posted by BulldogTom
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It was interesting that for all the sound and fury, so few ATX respondents planned to change programs. I guess, like a lot of us here, they got over it, if the end of the community was even noticed by them. Or, they just looked at the rest of the choices, and then said that, for them, ATX fitted their needs best, anyway. I know that was my route.
It makes CCH look pretty smart that they bought ATX when 90% plus of the client list they bought is planning to stay. They probably thought it was going to be less retention than that, but hey, with the concentration between the big three providers, they probably figured they would get a fair share to switch to one of their other products anyway.
I am still waiting for Melvin to release his software. I want to be the first customer.
Tom
Lodi, CA
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What I would really appreciate is the return of the Mini Organizer.
What I really would appreciate is the return of William. Oh where are you sweet Willy?
Tom
Lodi, CA
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>>some may already be conducting interviews or soliciting information and documentation that will protect them<<
That may be. I guess. I don't know; it seems like a pretty weak statement to me. How can an interview not change when the legal environment under which it is conducted changes?
Do you have a guilty consience Jainen? I am not worried about my practices, but apparently the new 230 requirements have worried you.
I have always been very careful about my tax advice and my interview. I sleep well at night because of it. I am not worried about the new rules. I conduct my business with integrity, and I don't see a need to change my interview because the IRS might look at my practice. I am not afraid. I have nothing to hide.
Tom
Lodi, CA
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You haven't seen the new Circular 230 before, because it just came out today. You haven't seen the mortgage debt forgiveness relief before, because Congress hasn't even voted on it yet. You haven't seen the final word on that Davis case down in Kentucky, where non-state muni bonds are tax free, because the Supreme Court just picked it up. And you are NOT ready to file California domestic partners because not even the FTB knows how to figure AGI for Schedule A limits.
I declare, don't skip the Spidell update class this year. There's bound to be something surprising there.
I will take the Spidell update as I do every year.
Mortgage debt forgiveness is not a law yet, hence not to be fretted over. The Davis Case is still in the courts and we will not be able to do anything with it until the court rules. The RDP mess will be a mess no matter what the Governator signs. I don't think CA will even track down the RDP's who file single anyway.
As for the preparer penalties in Cir 230, see my earlier post - I don't worry about that. I don't make mistakes.
Tom
Lodi, CA
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Better look again, my friend. I guess you can say that subjecting non-dependent 23-year-olds to kiddie tax is next year's problem, but you just might want to mention it to your clients ahead of time.
The Small Business & Work Opportunity Act has a ton of changes other than extensions and COLA's. How about putting spousal partnerships on Schedule C? That's a retroactive change so you can use it immediately. I'm not sure what you would consider earth shaking if such a complete restructuring of the way a business is taxed doesn't count.
I hope we can just assume without any personal experience, but those new preparer penalties seem a tad more than simple inflation adjustments. They are so hot even the IRS chickened out on the subject in the new version of Circular 230 released today (September 26).
I guess I have seen all of this in previous material so I am not really suprised. But your point is well taken. I have a client who may get the AMT credit, and a client who has a son in college who might get a suprise on the kiddie tax. I have no spousal partnerships, only Schedule C's. And I am ready to prepare a California Domestic Partnership return if it walks in the door.
But I don't have to worry about preparer penalties because I never give bad advice and never miss on the tax law. All my clients are honest and every return I prepare is accurate. NO WORRIES - MON!
Tom
Lodi, CA
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Thanks Wayne. That is what I was looking for. Nothing new or earth shaking, mostly just inflation adjustments. The MIP deduction is going to be a pain when the clients don't know it only applies to loans originated in 2007.
Tom
Lodi, CA
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I have been looking around for new laws for 2007 and not really seeing anything. I was wondering if I am missing something. Is this just a real quite year for new tax legislation?
Tom
Lodi, CA
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Um, I am not Mike... Melvin here..
M M = Melvin the Surfer Tax Dude?
M M = Mike the Preacher Tax Dude?
You two need to give us a clue as to which one you are. Poor KC can't keep you straight.
But I enjoy reading both of your posts.
Tom
Lodi, CA
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CNA $165/year.
CNA for me to!!! Sole Proprietor, spouse employee, some bookkeeping revenue. Got it through a broker called Dimarak out of San Diego (I think). I believe I pay $185.
Tom
Lodi, CA
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Unless the lawyers were knowingly participating in the fraud, there is no reason why they should repay their fees, the crooks should have to repay it. The lawyers earned what they got. Only if they knew that their clients were lying to defraud the defendants, would they have any reason to repay anything. My guess is that they were victims of these crooks, too. No sane lawyer would participate knowingly in such a fraud, and lose their law license for such a relatively small fee.
KC,
I know that, I was trying to be funny - guess it didn't work. Lawyers are usually an easy target for a quick joke. Of course, that does hit a little too close to home for you.
Good to see you back on the board. Do you have an update for us?
You are in my prayers.
Tom
Lodi, CA
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they got $250,000 in the settlement, which worked out to $150,000 after paying the lawyers.
Did the lawyers have to pay back their Fee for helping their clients defraud the company? That is the more interesting question.
Tom
Lodi, CA
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I received the following query from a client this morning via e-mail.
"I have received documentation from the department of internal revenue servies indicating that I have been selected for examination due to involvement and participation in the HART Down Payment Assistance program. Please advise as I do not know what HART program is all about and that I have made a contribution to HART in relation to the sale of a house. I did not make any contributions to HART as far as I know."
I must admit that I have not hear of this. Can somebody clear this up for me?
Mike
Mike,
I bought my first home under a program similar to what is described by Gene, except it was not a gift but a loan. It was basically a piggyback loan of the 20% down payment. The program was called DAP - Downpayment Assistance Program - and was intended for first time homebuyers. Worked a miracle for us as I was able to buy a new home with good credit and closing costs while I was still a senior in college.
It sounds like there is a private group or foundation in SoCal that has attracted the attention of the IRS and your client was linked to them in some way. Has your client bought or sold property in the last couple of years? Is it possible that there is some SS# mix up? Could this group have reported some "creative" items on a closing statement where your client was involved in the transactions?
I would advise the client to give you a power of attorney and stay out of any conversation with the IRS for the time being. You talk to the IRS and then advise the client if he needs the services of an attorney or if it is something the client can handle.
Something smells - I would tread very lightly through this. And be careful not to make the client's problems your problems.
Good Luck.
Tom
Lodi, CA
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Bill,
I want to start a new thread so it does not get buried.
I just want to make sure I understand your post earlier. You got MAX for $695 plus S&H? Were you on Max last year? Would you mind posting the contents of the e-mail that you got from ATX (hopefully with a salesperson's name)?
That is a huge discount, and if the rest of us can get on that offer, ATX will have a lot of renewals. I have not renewed, but I will for that price.
BTW, ATX cannot stop you from posting that e-mail here - because they don't own the site. Isn't that cool? Maybe they will regret their decision to cancel their board. They could have deleted posts like this in the past.
Tom
Lodi, CA
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You are in our prayers.
Tom
Lodi, CA
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Tom,
Just my 2 cents on this...I do not think you have an option not to setup the credit card as a liability on the books if it is in the company's name. Any personal charges, depending on the type of entitiy would be charged against distributions, draws, or maybe to reduce a SH loan balance. Just my thoughts.
Laurie
I appologize for my unclear post. I should have said "if the card is in the name of the owner and the organization is a corporation and there is mixed use, I would shy away from putting the CC on the balance sheet."
My point was (1) if the entity is a proprietor, and the card is in the owners name, I have no issue with putting it on the BS and recording each transaction as either an expense or capital draw, (2) if the entity is a corp and the card is in the owners name, but strictly used for business purposes, I have no issue putting it on the balance sheet, and (3) if the entity is a corp and the card is in the name of the owner but is mixed use, I prefer not to put the card on the balance sheet, opting for recording the business transactions from the card usage as a transaction between the owner and the corporation.
My assumption was always that the card was in the name of the owner, and I was approaching the question from that assumption.
That is the problem with quick answers to questions, we sometimes think that what we think we said(or typed) is what will be understood.
Tom
Lodi, CA
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How would you handle this? I'm doing bookkeeping for a business who has taken out a credit advance on their credit card and loaned it to their business.
I am trying to imput it in such a way so that it tracks through the credit card account, (this way I can reconcile the statement each month) but I originally set it up as a long term liability. When I post the payment it will credit the credit card account but does nothing in reducing the long term liability. Am I missing something or am I hoping for the impossible?
Has anyone had experience in handling advances on credit cards in this way?
Thanks for any imput! :
Deb,
Is this a sole proprietor? If so, are there any other expenses on that card?
If the card has no other charges that are personal to the owner, set it up as a credit card in QB, and just post the payments and interest charges to it .
If the card is being used for mixed purposes (business and personal) it will make the interest calculation manual at tax time, but I would still set it up as a business credit card, post all the transactions, and show the personal ones as owner distributions.
If it is a corporation and there is personal uses, I would shy away from the credit card showing up on the balance sheet and record a loan from the shareholder and document it. Have the corp pay the shareholder and the shareholder pay the credit card.
My 2 cents.
Tom
Lodi, CA
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Tom,
I really like what you put in your letters. I feel bad for the client, but I'm not putting my neck out because he is in financial trouble. I put a lot of the blame on my liability insurance company and told him that they don't want us to write letters for the lenders. I'm just sick of seeing so many of clients in over their heads with these stupid mortgages that they couldn't afford in the first place. I'm sorry that you probably lost a client because of greed.
Bonnie
Bonnie,
Good for you. Nobody likes insurance companies, so laying the blame at their feet is a good move.
I too am sick of the government bailing out people who make stupid mistakes. And then you see the President going out and proposing to bail these people out at taxpayer expense.
2 years ago, I could have "qualified" for and gotten a loan on a 600,000 home. I could have put no money down and made teaser interest only payments for 2 years. If I had known the government was going to bail me out when the rates reset and I was over my head, I would have done it. Instead, stupid me, I bought what I could afford with 20% down and a traditional mortgage. Now the guy down the street in the better home with a reckless streak is going to get ahead. Makes you want to just take all the cash from all the credit card offers you get in the mail every day and head to Mexico for a margarita.
Responsibility is not paying off in America today.
Tom
Lodi, CA
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A client called and his mortgage lender wants a letter from me stating that he has owned investment property for more than two years. This is the first time that I have had this request. I told him that the mortgage broker could verify that he owned it by checking with the county. Should I have given him the letter? It just looks like another way for the lender to try to hang something on me. They have the tax returns. Am I being too picky? This guy has more mortgages than he knows what to do with and I know that he's upside down. Thanks!
Bonnie
I feel for you. I have a client that I went down this road with. My advice is DON'T DO IT. You will get request after request to rewrite the letter to the broker's standards. I may now have lost my client because the last time the broker called and asked for a letter, I would not change the wording and she hung up on me. They will try to tell you that it is just a formality that the lender is asking for verification that the return was processed by you. Then they will try to get you to make statements about items in the return, especially income, assets, and confirmation of business ownership. They will try to dictate the letter for you.
BTW, the letter I have given this client's broker says 2 things very clearly:
1. I make no representations about the information in the return(s), as it is the taxpayers representation to me and I do not have any knowledge of the accuracy of the information the client gives me.
2. The letter is not intended to be used as a factor in denying or granting of credit, and I expressly forbid it use in that manner.
These two items usually get the second call from the broker, trying to get them changed.
It is hard when you need clients, but they put you in this position to help them out. I have resigned myself to losing this client (he has not called after the broker hung up), but I am not going to get sucked into his problems with his mortgages. It ain't my risk, and I ain't taking it on.
Good Luck
Tom
Lodi, CA
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Thanks again, Tom and also good luck to the Bulldogs! We kickoff tomorrow night....we're holding our breath for the season....don't like going into it rated so high...only one way down!
I am looking forward to that game tonight. Sorry, I am rooting for the upset. I want to see if LSU is really that good. They lost a lot of talent. I never bet on a highly ranked team with a new starting quarterback.
Enjoy the game.
Tom
Lodi, CA
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P.S. Sorry about the "dogging" you pun!
Not playing the "KittyKats" again. That was a once in a lifetime thing. No way LSU travels to the DogHouse. However, we do get Kansas State at home this year. Playing on the road at Texas A&M and Oregon.
It is only 3 days till kickoff. Hope springs eternal in Bulldog Land.
Good luck to your Tigers.
Tom
Lodi, CA
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Thanks for your reply Tom. We also filed a 1040X for 2003 in August of 2007. We haven't heard anything on that one yet. It also included a payment of taxes. We might also receive a letter on the 2003 return or am I not correct in thinking that IRS is following the same 3 year statue as applying to refunds?
Assuming the 2003 return was timely filed (april 15th or whatever the date was in 2004), taxes were paid, and there was no fraud or gross understatement of income, the statute would have run on April 15, 2007. You should see the same result as the 2002 1040X.
But then, this is the IRS we are talking about, and they just might go tilt on this one. ;0)
BTW, this is why I don't normally go beyond 3 years back with a new client. I know it is not right, but I ask very vauge questions about anything prior to 3 years old. I don't want to get sucked into a multiyear mess.
Tom
Lodi, CA
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Client received a letter from IRS after filing a 1040X in August of 2007 that increased the income tax liability for the year of 2002.
The IRS letter states: "The IRS has a legal period in which to charge and collect additional tax on your Form 1040. This legal period has expired for the tax period shown above." The client had paid the additional tax due with the 1040X. The letter goes on to say that the taxpayer "must file a claim within two years from the date you paid the tax" in order to claim a refund for these taxes.
I'm completely baffled as I have never seen this before! I know IRS can only make rules and regulations to enforce the IRS Code. It appears to me that possibly a recent "rule" change has been made.
Am I going crazy?
What say you?It sounds correct to me. 2002 was a closed year when the 1040X was filed in 2007. The IRS is barred by statute from assessing new taxes. The taxpayer's statute is two years to file a claim for refund from the date the "tax" was paid to the IRS. They are inviting the taxpayer to claim the "overpaid tax" on the 2002 that they don't owe.
Tom
Lodi, CA
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Jainen,
>>A very small dig at the poor service of national companies might fit in, but don't get into the blame game<<
Is this too big of a dig?
At the initial audit, the taxpayer relied on his preparer and the reputation of the national company that prepared his return, not understanding that the preparer was unable to practice before the IRS during the examination. Taxpayer contends the evidence establishing his positions taken on the tax return was not fully disclosed, nor properly presented to the service at the time of the audit.
>>Also include a proposed result<< Is this veiled threat to go to Court of Claims to obvious?
In the interest of effective tax administration, taxpayer requests audit reconsideration as opposed to other avenues of review available to him. If you grant this request, we believe you will conclude, based on the law and evidence, that the taxpayer is entitled to earned income tax credit.
I have the letter down to one page, it starts with who I am and the request for reconsideration. I then include the first paragraph above. That is followed by the law upon which the taxpayer relies and the application of the current facts to that law. It closes with the second paragraph above.
Am I on the right track? If you were the lucky auditor who got this letter, would you grant the request?
Tom
Lodi, CA
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I have been contacted by a new client who is a "new" sole proprietor that has never filed as a sole proprietor before. He has not filed a tax return in "several years" since he last held a W-2 job. In his words, he moved around a lot and just took odd jobs on the side (probably for cash).
He now wants to settle down and grow his carpentry business and get caught up on past returns.
My question is, how many years do you go back? He represents that there has been very little net income (don't they all), but is willing to provide me his records to file the prior three years.
I told him there are no guarantees that IRS might not decide to look back further.
What have any of you done in situations like this? I guess I'm thinking 3 years is better than nothing if it gets him back on the right track. Am I way off base?
I would do it a little different. I would work on the books for this year. When you start asking for all the records of ALL the cash and reciepts of the business, you may find that he is not so keen to "get caught up on past returns". If he is cooperative and you feel he is really giving you all the info, then go back and do the three years. It will look better for you in the long run if the first year you have the client, the books and return are pristine. Might help when you file the back returns with less than perfect data from the client.
Just my 2 cents.
Tom
Lodi, CA
IRS hiring blind and visually impaired people
in General Chat
Posted
I hear you. I have spent the last 2 days trying to track down my client's tax return so we can finish the audit. We used to get very good service from the Practitioner Helpline, but that seems to be invaded by the "lumps of flesh" that normally exist on the taxpayer phone lines. I had a very simple question - "Where is my client's tax return? I received a letter 7 weeks ago that said it was going to the local office. Where is it?" Then I got to take a telephone tour of the United States from Atlanta, to Philadelphia, to Ogden, back to the practioner (no)helpline which is somewhere, to Fresno, only to be told that Fresno does not know for sure where the return is, but that they would send a request to some office to call either me or the taxpayer at some point, but that there is no deadline or timeline for them to respond.
Tom
Lodi, CA