Hair Styling & Manicures now deductible?

[Jack from Ohio]

Hello all you experienced members of this board,

I have a client that is a cosmetics salesperson. She asked about deducting these costs as business expense. My response to her was to direct her to this page on the IRS website... http://www.irs.gov/businesses/small/industries/article/0,,id=100676,00.html

This very clearly states that: No deduction is allowed for wardrobe, general make-up, or hair styles for auditions, job interviews, or "to maintain an image".

This has been my position on this matter since day one. She still thinks I am wrong. Here is what she sent me. (names removed to protect the guilty)

<<<Report from a director on a previous intelliverse voice message last week. On Intelliverse this morning CPA Xxxxxxxxxx who does thousands of (name of company) returns recorded an awesome message! As a result of 2 Sept. Audits, the IRS has states in AU1 the following:

In our business, Paid Professional Care for hair and nails is deductible in 2009 with the following conditions met:

• You must pay by check from your Business Checking Account.
  
• You must get a receipt for the professional services.
  

Note that this deduction does NOT apply for any products purchased over the counter . This is for Paid Professional Care only!>>>!>>>

Before I decide to tell this client to go to this person to let her do her return, does anyone else have information to confirm or deny this? And just what is an "AU1?"

I cannot find this information on the IRS site at all. I just want to make sure I have not missed something.

[TAXBILLY]

Sounds like someone is starting an internet rumor. Just what we need this time of year.

taxbilly

[jainen]

>>Paid Professional Care for hair<<

This is just one of those wiggy rumors that go around, so tell her it only applies to wigs.

The IRS is never going to change on this ruling--hair is "inherently personal." There are a few old cases where performers (even newscasters) might deduct extremely specific hair management as a costume cost, but that can not be applied generally. Anyway, the "result of 2 Sept. Audits" would only apply to the particular taxpayer under examination and can not be cited as precedent.

[Jack from Ohio]

Back Again!!

This preparer (remaining nameless) has created a phone message and attached it to an e-mail with the information I posted earlier. The e-mail names the preparer and the name of the firm. This is spreading through many of our clients and is causing much uproar, and dissent when we disagree with her contentions base on the IRS regulations and printed information.

In the audio message, the preparer claims that a person from her business (a tax preparation business) won this position in two different audits. Therefore, (according to the message) this means, as long as the consultants pay for the professionally done hair and nails through their business accounts, it is an ACCEPTABLE business expense.

I am asking opinions... Is this something that should be reported? Or am I just being too strict about sticking to the regs. Any opinions would be appreciated.

[schirallicpa]

No - it doesn't fly. That's like paying for your groceries with your business account. Doesn't mean we can deduct tonights tuna noodle.

Nails and hair are personal, and not deductible.

[jainen]

>>won this position in two different audits<<

Well, frankly I think they are lying about that, but if it is true then one wonders why the IRS is so interested in this preparer's clients. Anyway, as I already said, audits are not authority for anybody else. Tell your clients that your work is confidential and you don't use one return to justify another, and that the returns you sign can be supported by the code and regs instead of negotiations with an IRS auditor.

Those ads are a violation of Circular 230 and you can complain to the Office of Professional Responsibility if you want, but I think it's a waste of time. If a client can't see that you don't need to make ridiculous claims promoting tax fraud, then you can probably get along without them.

[David1980]

This reminds me of Kapp. Being on the coast we do get a few fishers and a lot would refer to Kapp's website which of course listed "won" court cases. I did read through those for one of the people and he was even intelligent enough to see Kapp actually lost those cases and was spinning it by highlighting parts out of context (like where the court quoted Kapp and it looked like the court said it). Even after losing cases though the fishers were getting caught by the fraud.

And that's the reality. Even if you show people why it's not correct, often they simply don't care. They see about 2-weeks out and their buddies are getting refund checks. They don't look 2-years out at audits. Let someone else deal with those kinds of customers, you don't want them.

[Daune/CA]

And that's the reality. Even if you show people why it's not correct, often they simply don't care. They see about 2-weeks out and their buddies are getting refund checks. They don't look 2-years out at audits. Let someone else deal with those kinds of customers, you don't want them.

It appears to me that using mentioned preparer is a guarantee of being audited. I would wonder why so many have been audited and only 2 won, if so. If your clients desire to be audited, then by all means suggest they go to that preparer. Short term refund vs long term audit and pay back!