Checking Your Own Work

Working pretty much independently, there is nobody to check my work for errors; so I have had to devise various methods to do that on my own. With tax returns, I will generally put the file down for a day & then pick it up later with fresh eyes as if I were reviewing someone else’s work. It’s amazing & a little scary how many small and sometime large errors I catch that way, especially on returns that were done very very late at night.

I have also developed a number of check figures with QuickBooks and Lacerte to make sure everything balances properly and nothing slips through the cracks. When adding up long lists of numbers, I always add from the top down and then again from the bottom up with a good old fashioned paper tape adding machine until I come out with the same total both ways.

KMK

Living Long Enough

This recent announcement that the average life expectancy in this country is 76.9 years shows that we have definitely made great progress in dealing with medical conditions. It also clarifies what a scam the Social Security system is for younger people. According to this, somebody retiring in 2030 would have to live to 110 just to get his own money back from the system. Maybe medical technology will allow people to make it that far; but not likely.

The only fair thing to do would be to make the participation in the Social Security system completely voluntary. However, as I have to repeated ad nauseam, don’t hold your breath waiting for that to happen. If you want to protect your own retirement assets, and avoid flushing more money down the Social Security commode, there are steps that can be done on your own. While there is no one size fits all, I have found that the most effective way for most people, especially the self employed, is to utilize a corporation.

KMK

State Tax Problems

Victor Canto has an interesting look at the revenue shortfalls most State governments are facing and how they are poised to compound their problems by trying to raise tax rates rather than cut back on some of the spending programs that were established when their idiotic financial forecasters predicted an endless stream of increasing tax dollars for all time.

He also points out a very interesting observation. The states without a personal income tax have had either a much smaller decline in revenues and/or a slight increase.

KMK

Tax Heroes In DC

I’m not sure I would go so far as to categorize 202 members of the House of Representatives and 31 Senators as Heroes of the Taxpayer; but everything is relative in DC. The Americans for Tax Reform organization has tallied up how all of the Senators and representatives voted on the 20 most important taxpayer related bills in 2002. Those individuals with a “grade” of 85% or better are in the “heroes” ranks. You can see how your elected rulers stack up in this comparison.

KMK

IRS Differences

One of the many frustrating aspects to dealing with the IRS is how different things are handled between different areas of the country. For a national tax system, there is very little uniformity & consistency around the country. That wouldn’t be a problem if you were always dealing with the same IRS offices. However, they have split their tasks up in such ways that contacting several different offices is just normal procedure nowadays.

For example, filing tax returns has long been broken up by geography. While I do work with clients in practically every state, most of them are located in the closest three states, each of which files with a different IRS Service Center. Arkansans file with Memphis, TN. Oklahomans file with Austin, TX. And Missouri residents file with Kansas City, MO.

Back about a month ago, I filed over 80 extension requests (Form 2688) for clients’ 2001 1040s. As I always do, I separated them by Service Center and put the ones going to the same Service Centers in the same envelopes, which seemed like the common sense thing to do. Just yesterday, many of the approved extension forms came back to me via snail mail. A large envelope from the Kansas City Service Center contained ten approved 2688s. However, there were 54 separate #10 envelopes from the Memphis Service Center, each one containing a single 2688. As Sherry said when she saw that, “Our tax dollars at work.” I know the Postal Service needs all the money it can get, but this is ridiculous. We obviously know which Service Center has more common sense.

I don’t want to be completely negative about our friends at IRS. I do want to express my appreciation for the unusually quick turn around of the 2688 forms this year. Normally, they all come back marked as Approved some time around November. This makes attaching them to the 1040s that were due on October 15 a little difficult; so I normally just attach my photo-copy of the form that was mailed in. While some of the returns for which 2688s were received yesterday have already been completed, most of them haven’t.

Appeals

If an IRS audit doesn’t go well, that isn’t the end of the line. IRS has long had an Appellate Branch that is supposed to allow a second, and impartial look at the facts of the case. While the Appeals Officer is technically an employee of the IRS, s/he is supposed to look at the facts objectively and give both sides equal consideration. Here is where I have seen a huge discrepancy between jurisdictions.

Before moving to the Ozarks in 1993, almost all of my work with IRS Appeals Officers was with those stationed in San Francisco. I have to say that those people understood the mindset they needed to review cases. I was able to present my clients’ side of the case and in the 15+ years of handling cases there, I estimate I won about 98% of them at the Appeals level. Most of the time this was simply because the auditors were morons and the Appeals Officers knew it.

Since relocating to the Ozarks, and having to deal with Appeals Officers in Little Rock and Oklahoma City, there couldn’t be a bigger difference in attitude. Rather than start from an objective open minded “Show Me” attitude, these Appeals Officers literally rubber stamp the opinions of the auditors, even those that are blatantly idiotic and wrong. Battling this built-in bias, I have only been able to win about half of the cases I have worked on with Appeals since moving here. While this may sound like I’m just being a sore loser, that isn’t the case at all. It is a very real difference in attitude and approach that has severely hurt my faith in the entire Appeals system within IRS.

Ironically, I found that I’m not the only one upset with the Oklahoma City Appeals Office. I was speaking with an IRS Auditor out of the Fayetteville, AR office a little while ago and I was explaining to him how frustrated I was getting with the Appeals Officers. To my surprise, he said that he & his fellow Fayetteville auditors were also unhappy with the way they are treated by the OK City Appeals Officers after the merger a few years ago of control over Arkansas into the Oklahoma City office, in one of the IRS’s many reorganizations (Titanic deck chairs?). He said that all of the policies & practices that had controlled the Arkansas offices were tossed out and replaced by those developed by Oklahoma. This is just like the situation in corporate mergers, when the dominating company crams its policies down the throats of the vanquished employees. However, it also illustrates how varied the policies for a national tax agency are.

I have recently spoken with other tax practitioners around the country who have noticed similar variations between Appeals attitudes in different IRS offices, often within the same state. We are trying our best to work cooperatively with IRS; but this sure makes it difficult when rules and procedures are interpreted so differently by so many different IRS offices.

KMK

Tax Cuts Or Out

I like the tone of this piece by Bruce Bartlett. The GOP needs to get off their collective butts and support tax cuts or they can expect low turnout of their supporters this November. That’s exactly what happened to Bush 41 in 1992 after he raised taxes and refused to lower capital gains taxes. GOP voters don’t take kindly to tax cut wimps.

KMK

Don’t Hold Your Breath

As I have long warned, if you are waiting for our rulers in DC to fix the Ponzi Scheme called Social Security, you’re nuts. It’s money down a rat hole; and unless you take steps to structure things differently, you will continue to pour thousands & thousands of dollars right down that hole. True to its reputation as the deadly third rail of politics, our rulers, of both parties, are once again chickening out from the task of the major surgery that is essential.

KMK

Peter Jennings

I’m glad I wasn’t the only one who noticed Socialist ABC NewsReader Peter Jennings’ admission on David Letterman’s show last week. Unlike most liberal media folks, who pretend that they have no bias, Jennings came right out & admitted that he dislikes the USA. He claims it was because his parents hated the USA and it was in his mother’s milk. He also admitted that he is able to earn a ton more money here in the USA than he ever could in his dear homeland of Canada. When I didn’t see any mention of this in the Wahoo Gazette’s recap of the show, I thought I might have imagined it; but Brent Bozell heard it as well.

One of my vivid memories of last September 11 was Jennings’ constant haranguing of George W. Bush; including outright calling him a coward for not returning directly to the White House as soon as the attacks started. That was before we got FoxNews on our satellite dish; so ABC was the clearest signal we received at the time. I now no longer watch any news except FoxNews and only have to see lefty journalists, such as Jennings, Brokaw & Rather, when they appear on Letterman’s show.

I have been a huge fan of Dave’s since the beginning of his NBC show in 1982. My only complaint is the constant stream of left wing Bush bashing newsreaders & politicians as guests. However, I realize it’s Dave’s show, and if he chooses to have slimeballs like SerpentHead James Carville or Bill Clinton on, that’s what the Fast Forward button on my VCR remote is for.

KMK

There Is A Choice

The upcoming PRC election for governor is shaping up to be a real nose holder. Bill Simon’s campaign is literally imploding by the day. NOTA isn’t available. Rather than vote for the lesser evil or sit out the election, there couldn’t be a better time to send a real message to the duopoly political parties and support a real alternative, such as the Libertarian Party.

Unlike most states, where the LP has almost no visibility on the ballot, the Libertarian Party of California has been growing and is fielding a candidate in almost every race, including Gary Copeland for Governor. Part of his campaign platform that is near & dear to my heart, and hopefully to my readers, is his call for an end to the state income tax. He wants the only taxes that the state may collect to be use taxes and fees for services.

To have that many Libertarian candidates on the ballot is still only a dream for us here in Arkansas. I hope plenty of people appreciate having an alternative choice out there on the Left Coast.

KMK

Not Feeling So Charitable?

Is it any surprise, after the scandals with charities misrepresenting their intentions for special September 11 donations, that fewer people trust charities nowadays? They received huge sums of money and money does bring out the worst in people.

I like the idea that some charities are drawing up a donors’ bill of rights that assures contributors access to information about a charity’s finances to determine, among other things, that their money is being used for the purpose for which it was given.

I have always been a big supporter of charity. However, my advice still stands. Give your money directly to those charities that are helping to solve the problems you are concerned about. Avoid like the plague giving anything to United Way and other middleman bureaucracies that do nothing but get in the way and waste money. Our rulers in DC already have those tasks covered.

KMK