Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for February, 2003

Posted by taxguru on February 24, 2003

IRS Claims Homeless Man Owes Six Million Dollars

Proving once again that all IRS notices should be verified before being accepted as accurate.

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Posted by taxguru on February 24, 2003

H&R Block Agrees to Pull Ad Dissing CPAs

I guess a lot of CPAs have no sense of humor. I haven’t seen this commercial, but any CPA who feels threatened by H&R Block has bigger problems to worry about.

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Posted by taxguru on February 24, 2003

IRS Carrot To Entice E-Filing

I mentioned several weeks ago that IRS was planning to make some new efficient web based services available to tax practitioners who participate in their e-filing program. I really liked the ideas for the new services and, although I still think actually using e-filing for clients of the kind I work with (complicated) is irresponsible, I mentioned that I might just sign up with IRS as an e-filer in order to be able to use the new services.

It doesn’t look like that is going to be possible, according to this news release from IRS. They are only going to allow the new web based services to be accessed by practitioners who e-file at least 100 1040s each year. That counts me out.

I guess I’ll have to continue dealing with IRS via the old fashioned ways until they realize that they are just hurting themselves by denying us non e-filers access to the more efficient methods. It may take several years for IRS to come to that realization since they don’t do anything quickly and are not exactly filled with rocket scientists. But, I do have to give IRS some credit for using the Carrot approach to encouraging e-filing rather than the Stick approach being discussed by the PRC to make e-filing mandatory there.

KMK

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Posted by taxguru on February 23, 2003


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Posted by taxguru on February 23, 2003

Taxes In the PRC

Having worked for several years on the Left Coast, I long ago learned that, when it comes to collecting taxes, the most ruthless bunch in the entire country are the Franchise Tax Board. While it may be hard to believe, they are much more trigger happy than even the IRS. In fact, the FTB trains IRS employees on better means of collecting past due taxes.

That came to mind when I saw this item from Spidell that the PRC is planning to be much more aggressive than IRS in its desire to have taxpayers file their returns electronically. They are discussing making it mandatory for practitioners who prepare more than 50 (or 100) tax returns each year. Then to top it off, they are planning to charge the practitioners an annual fee for use of the Tax Practitioner Hotline.

If these changes make it through in the PRC, you can expect them to spread across other states and even to the IRS.

KMK

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Posted by taxguru on February 23, 2003

Churches Getting More Online Donations

This make a lot of sense as well. All charities should be able to accept donations online. It’s a big convenience for both them and their donors. I’m a big fan of PayPal and have been using it for the past few years. In fact, when I am shopping online, such as at eBay (where I find the lowest prices for new software), I select vendors who accept PayPal.

KMK

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Posted by taxguru on February 23, 2003

Doctors Add Fees For Calls, e-mails

This makes a lot of sense to me. Of course, it’s because I long ago understood the motivating power of money to influence behavior and have always charged for my services purely based on time spent. Doctors who do start charging will find they receive fewer calls from people who are – for lack of a better term – too lazy to look for things on their own. It happens here in our office every year. We receive calls from clients who can’t find the tax organizer we sent them and want us to mail them another copy. When Sherry notifies them that they will be charged for the time it takes us to print and mail a new copy, it’s amazing how the clients are all of a sudden willing to look a little harder and can locate the earlier copy we sent. It will be no different for doctors’ patients.

KMK

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Posted by taxguru on February 22, 2003

QuickBooks Training Guide

As always, I am running behind in the production of my new QuickBooks training video. In the meantime, I have posted the official QuickBooks training tools that are supplied to us Certified QuickBooks Pro Advisors on my website.

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Posted by taxguru on February 21, 2003

Tax Free Residence Sales

Even the “experts” get confused on the rules. Gail Buckner had this erroneous explanation on how the pro-rated exclusion works when a home is sold after less than 24 months.

Here is my e-mail to her:

Ms. Buckner:

Your explanation in today’s FoxNews.com column on the reduced primary residence exclusion was wrong. The excludable gain itself isn’t pro-rated. The maximum exclusion is prorated.

For example, someone who owned & lived in the home for 12 months and was selling for valid unforeseen circumstances would be entitled to half of the maximum excludable gain, which would be $125,000 for a single person or $250,000 for a married couple. If their gain is less than those amounts, their entire gain would be tax free; not just a portion of it as in your example.

I have much more on this rule on my website at:

http://www.taxguru.org/re/primary.htm

It may seem like being overly picky, but it does make a difference.

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Posted by taxguru on February 20, 2003

Social Security is structurally damaged and in need of immediate repair

I can still remember, 30 years ago in my first college accounting class, one of our first financial analysis projects was of the Social Security system and the financial assumptions and formulas on which it has been based. Our conclusion was that it was a house of cards that could not last in perpetuity as its supporters had claimed. Any private company promoting a similarly structured investment plan would be shut down and its officers tossed into the slammer for fraud. A similar fate would be certain for any trustee of a private pension fund who commingled plan monies and dipped into them as readily as our rulers in DC have been doing for the past forty years.

That is why it has been my biggest priority to help people legally avoid pouring the hundreds of thousands of dollars down the toilet that most workers end up losing through this Ponzi scheme. At least one tip-off to the fraudulent intent in the design of the system is the fact that the only way you can ever receive any money back is to live well beyond the average expected life span and if you pass away before getting any or all of your money back, tough luck. It’s all lost. Who would invest in such a policy in the real free market world? This also explains why participation is mandatory, enforced at the point of a gun by the IRS; unless you take steps to keep yourself (and your money) out of the scheme.

KMK

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