Jack from Ohio Posted September 26, 2016 Report Share Posted September 26, 2016 Tax year 2013. Our client is being audited in relation to a court case specifically http://law.justia.com/cases/federal/appellate-courts/ca11/14-15773/14-15773-2016-05-24.html She is a retired National Sales Director and receiving an annual payment from Mary Kay. These payments will continue for 15 years. Here is our question: The auditor is assessing SE tax on the payments from Mary Kay in compliance with the 11th Circuit Court of Appeals ruling. There is a group of these retired ladies who have enlisted the help of an attorney that thinks he can get it changed. Frankly, we don't think it will be changed unless pushed to the Supreme Court and then it is not likely to ever see the light of day there. But I digress. Client wants to know if, they sign and agree to the audit changes, then later the law gets overturned (see my previous comment) do they have recourse to file an amended return to recover the payments they will make as a result of the audit? Does signing off on the audit report forever bar any options to amend in the future? What about filing an amended return now (Using the IRS position as beginning then amend to remove SE) as a protective claim, since the statute is about to expire on the 2013 return. We do not want to give the client any false hope about the future, but if there is any chance, we don't want to miss that either. This will cost our client approx $13K for each year starting with 2013 and going forward. Any opinions or suggestions are welcomed. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted September 26, 2016 Report Share Posted September 26, 2016 Wouldn't it be easier to get Mary Kay to issue a corrected 1099's Box 3, instead of Box 7, or could it be it's really a commission for people she brought into Mary Kay and she is getting a cut from the sales? Found this http://www.journalofaccountancy.com/news/2016/may/self-employment-tax-for-consultants-201614534.html MAS Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted September 26, 2016 Author Report Share Posted September 26, 2016 25 minutes ago, ILLMAS said: Wouldn't it be easier to get Mary Kay to issue a corrected 1099's Box 3, instead of Box 7, or could it be it's really a commission for people she brought into Mary Kay and she is getting a cut from the sales? Found this http://www.journalofaccountancy.com/news/2016/may/self-employment-tax-for-consultants-201614534.html MAS They have refused. This fact was included in the tax court procedure. Only box 7. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted September 26, 2016 Author Report Share Posted September 26, 2016 If anyone has insomnia, reading all 87 pages of the original court case will cure it. My question is not about the tax court ruling being right or wrong. My question is about possible future changes. Quote Link to comment Share on other sites More sharing options...
Lynn EA USTCP in Louisiana Posted September 26, 2016 Report Share Posted September 26, 2016 Is your client in the 11th circuit? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted September 27, 2016 Author Report Share Posted September 27, 2016 2 hours ago, lynn EA in Louisiana said: Is your client in the 11th circuit? Yes. The 11th Circuit Court of Appeals handed down this judgment. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted September 27, 2016 Report Share Posted September 27, 2016 Your client doesn't have tax attorney? Hopefully your hourly rate is equal to a tax attorney rate, last time my associated contacted a tax attorney, cost him $150 for a 10 minute question. 1 Quote Link to comment Share on other sites More sharing options...
RitaB Posted September 27, 2016 Report Share Posted September 27, 2016 2 minutes ago, ILLMAS said: Your client doesn't have tax attorney? Hopefully your hourly rate is equal to a tax attorney rate, last time my associated contacted a tax attorney, cost him $150 for a 10 minute question. 21 hours ago, Jack from Ohio said: There is a group of these retired ladies who have enlisted the help of an attorney that thinks he can get it changed. Yeah, they have one. He's gonna get the law changed. /s 4 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted September 27, 2016 Report Share Posted September 27, 2016 4 minutes ago, RitaB said: Yeah, they have one. He's gonna get the law changed. /s I missed that but good luck. Quote Link to comment Share on other sites More sharing options...
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