New tax bill signed by President (11-06-09)

[JRS]

Brief outline by Spidell

An extension of the First-Time Homebuyer Credit with these changes (all effective after November 6, 2009):

The credit is for first-time homebuyers who purchase their homes before July 1, 2010, if there's a binding contract in place before May 1, 2010;

There is an increase in the AGI limitations;

The purchase price is limited to $800,000;

A credit is available of up to $6,500 for purchase of principal residence by an individual who has owned and maintained the same principal residence for any five consecutive years during the eight-year period preceding the date of purchase; and

New anti-abuse provisions have been added.

Five-year carryback of NOLs extended to include 2009 NOLs and broadened to include most businesses, not just small businesses; and

Mandatory e-filing of individual and estate and trust returns for returns filed by tax return preparers after December 31, 2010.

[Lion EA]

I have a couple of clients that refuse to e-file. Not dummies that haven't thought about it. One's a banker and another an editor; both have seen too many things go wrong with electronic transmissions and refuse to have their returns e-filed. They are not going to change their minds. I've tried for 13 years. Do I have to tell them to go elsewhere now? One has two trusts plus her personal return. Both families have very complex, very expensive returns that I hate to lose. I'm not even sure that I could file the two trusts electronically as no one living has the trust papers with the true names. And, CT has some bizarre method for e-filing entity returns that does NOT feed off the federal return. Anybody out there e-file CT entity returns? Willing to give a tutorial? I guess I better learn for this season...

[TAXBILLY]

Lion:

Remember that mandatory e-file doesn't go into effect until after December 31, 2010, not the upcoming season.

taxbilly

[JohnH]

And there's plenty of time for there to be all sorts of extensions and modifications of the deadline. (And for me, plenty of time to decide whether to accelerate that retirement date)

[Lion EA]

Thank you.

[TAXBILLY]

I'd be curious to see how they handle 1041s. I've yet to do one where I did not have to override something.

taxbilly

[Catherine]

I'd be curious to see how they handle 1041s. I've yet to do one where I did not have to override something.

taxbilly

What about just waiting until after the extension date -- say, October 24th? At that point, they will -not- accept e-files and will have to take paper -- or add in some system for e-filing prior-year returns.

I also have a couple of clients (in IT) who refuse to e-file returns (one won't even log in to a bank account, and will barely use an ATM machine).

They'll have to make -some- provision for those who have complex returns but won't e-file.

[KEYWEST_RICKS]

What about just waiting until after the extension date -- say, October 24th? At that point, they will -not- accept e-files and will have to take paper -- or add in some system for e-filing prior-year returns.

I also have a couple of clients (in IT) who refuse to e-file returns (one won't even log in to a bank account, and will barely use an ATM machine).

They'll have to make -some- provision for those who have complex returns but won't e-file.

Indiana went to a requirement to e file a couple of years ago but they do have a way that the taxpayer can elect out. I havent had to worry about it but i would hope that the feds would also have something like this

[jainen]

>>They are not going to change their minds<<

California, with an extremely broad spectrum of taxpayers, has had mandatory e-file for years. We all feared it, but the transition proved effortless. Even when servers overloaded and everyone missed the deadline, problems were trivial. Lion, ask your client whether they trust your data entry, or prefer to have a seasonal temp re-type those complicated returns. The debate is long over, E-file works beautifully these days, and the benefits are overwhelming.

California has three ways an individual can opt out. The taxpayer can request it without giving any reason, the tax preparer can pay a small fine, or both can simply ignore the requirement.

[Lynn EA USTCP in Louisiana]

>>They are not going to change their minds<<

California, with an extremely broad spectrum of taxpayers, has had mandatory e-file for years. We all feared it, but the transition proved effortless. Even when servers overloaded and everyone missed the deadline, problems were trivial. Lion, ask your client whether they trust your data entry, or prefer to have a seasonal temp re-type those complicated returns. The debate is long over, E-file works beautifully these days, and the benefits are overwhelming.

California has three ways an individual can opt out. The taxpayer can request it without giving any reason, the tax preparer can pay a small fine, or both can simply ignore the requirement.

The other ways to opt out of mandated e-filing in California are for the taxpayer to either sign the opt-out form, or always miss the filing deadline and file the tax returns late. I have one CA client who is consistently 2 years behind filing her returns.

Lynn Jacobs, EA, NP

Kenner, LA

[Catherine]

The other ways to opt out of mandated e-filing in California are for the taxpayer to either sign the opt-out form, or always miss the filing deadline and file the tax returns late. I have one CA client who is consistently 2 years behind filing her returns.

Lynn Jacobs, EA, NP

Kenner, LA

Massachusetts has a check-box opt-out, as well. And then there are the inevitable folks who just can't stay up-to-date no matter what.

[Jack from Ohio]

For crying out loud!! It is almost 2010. Those who say they don't trust electronic transmission of data to be safe are the same ones that believed Y2K and believe in man-made global warming! Lets not forget the black helicopters with blue helmeted troops inside them either!

If they TRULY believe in NO electronic transmissions of data, then they must ONLY USE CASH for all money transactions, and NOT USE a checking account, or a debit or credit card, and can only take cash for their paychecks each week!

They could only use a savings account located at the main headquarters of a bank.

It is my opinion that folks that present those outdated and futile reasons, are just trying to be "different" so they can brag about not conforming!

It IS almost 2010!

[bstaxes]

NJ lets you opt out if you so desire. Some of my clients demand to opt out. Also NJ will not except e-file with k-1's.

Last year I e-filed a return that need a SCH J (farmer), the SCH J wasn't attached to the e-file and the client got a love note. Had to amend all returns that had a SCH J. I was not a happy camper. If we have to e-file by 2010 I hope all forms will fly in cyberspace or will we have to mail all attachments? I hope we will be able to opt out on certain types of returns.

[Catherine]

For crying out loud!! It is almost 2010. Those who say they don't trust electronic transmission of data to be safe are the same ones that believed Y2K and believe in man-made global warming! Lets not forget the black helicopters with blue helmeted troops inside them either! <snip>

It IS almost 2010!

Well, my two are both IT and internet security professionals, and I must admit it makes me wonder sometimes. My brother-in-law is nearly as bad, and his wife torments him into eating right and exercising by telling him that if he keels over, she's going to spend all their money online after he's gone. :lol:

[OldJack]

Well, I plan to retire when there is any such requirement. I don't efile and I don't have any clients that want to efile although most would probably not care if it was efiled. I have never understood why a tax preparer wants the responsibility of filing someone else's tax return. Yes, I know all the advantages such as saving paper, but you have to admit you have to spend time checking to see if it was accepted and correcting any typo's or checkbox errors that I don't have to deal with.

Thank God it is 2010 and in spite of many in our government we are still a free country. I drive faster than the speed limit and enjoy the privilege of paying for it.

[Don in Upstate NY]

They just passed the law, and there are no regulations yet, so who knows what eventually will be required. Right now there are just too many returns that cannot be e-filed to make a blanket requirement meaningful.

[JohnH]

They just passed the law, and there are no regulations yet, so who knows what eventually will be required. Right now there are just too many returns that cannot be e-filed to make a blanket requirement meaningful.

Yes, exactly right.

I'll bet there will be at least one extension of the deadline - at least a year and maybe more.

[mcb39]

This issue is the least of my worries. It is not even a done deal yet and so many are in an uproar. As someone said, this is a free country and there are bound to be opt outs for those that want them. Personally, I have no clients who do not embrace the tecnological wonders of e-file and fast refunds or even the direct debits on chosen dates.

[Lion EA]

I'm a big supporter of efile, so I've been trying to convert all my clients for 13 years. I still have a couple of holdouts. With the new MeF, we can file returns at any time, even after 15 October, so that won't let clients -- or me -- off the hook. And, you can attach .pdf files, so there shouldn't be anything that can't be efiled. No excuses. My banker does use cash and checks on his own bank branch, and he's the one who calls in payroll (of course, he receives a paper check and not direct deposit). His wife is a worrier. I don't think I'll ever succeed at convincing them to try efile. My other client is almost as fanatical and even older and more set in her ways.

I'm most worried about suddenly having to efile a lot of entities that I never efiled before when no one is around to know what the real title of each trust is (Grandma and her lawyer set it up for grandson long ago and have long since passed away with any paperwork). I tried efiling extensions the last couple of years on some of my entities just to find out if what we had was the real title that matched the tax ID number. Some matched, some didn't. We've begun trying to track down the real titles for the non-matches.

I really love and support efile. CT allows opt-out, but doesn't provide a handy form. I had to type up something for clients to sign to COA. I just hope the feds provide an easy opt-out.

Last year I had a new client; efiled. Rejected for both her name/SSN mismatch and for one of her two sons. I could call and get info re which son, but she had to call both IRS and SSA to get info re mismatch. SSA wouldn't release info on her minor son to her; however, so we were still doing some guessing. Both sons had multiple middle names (British dad), so I transmitted several times to cover the various combinations and permutations of her names and son's names until return was accepted. Whole experience took days. According to paperwork from prior preparer, prior Form 8879, etc., we were using correct info. I don't look forward to going through that for a dozen clients, mostly entities that I haven't efiled before, all in one season. If I can opt out after one rejections, I'd be satisfied.