Empty promises endanger Social Security reform

Bush Launches Bid for Big Changes in Social Security

Tax Reform to Take a Back Seat to Social Security

In regard to whether the IRS in Ohio is doing the same thing as they are in Arkansas in relation to auditing people who file amended tax returns claiming refunds, I’ve already received two conflicting assessments from Ohio CPAs.

What an IRS employee told Ohio CPA, Dana Stahl:

Mr Guru – I spoke to Dave Holscher, who is in the Taxpayer Education & Communication section for Ohio. He denies there is such a movement afoot within IRS. His comment, which sounds reasonable, is that IRS just doesn’t have the resources for such an undertaking. He also suggested I call the local TAS office, which is in Cleveland. So, I’ll try that, probably tomorrow. I’ll let you know what I find out there.

What another Ohio CPA actually experienced:

I have run into the exact same situation in Cleveland, OH.

I filed a 1040X for a client that owns a minority interest in a company that has lost money for a number of years. The taxpayer has not had basis in any losses for many years. The taxpayer preferred to file without an extension (the S-corp was always extended). Upon preparing the 1120S one year, we discovered the taxpayer made a loan to the S-Corp, giving basis. We amended the 1040, and an audit started. After a full audit, a no change came through. It was partly due to the fact the auditor was going to be promoted and wanted to clean his files quickly. He beat on the rental property to death. The auditor told me ALL refund requests will be audited. Due to the changes in geographic service centers, it took many months for the client to actually receive their refund.

I also filed an amended 2002 1065 which has four partners. The effect was refunds, to each partner, in the $35,000 range. Strangely, three partners immediately received their refunds and one is currently being examined internally. I am hoping that an audit doesn’t start!

I hope this helps your search for justice.

I am still waiting for word from tax practitioners in Florida, Nevada and California. I have clients in those states for whom I would like to file amended returns; but would appreciate some advance warning as to whether they will be punished by IRS for that and put through the wringer if we dare try to recover taxes that they erroneously overpaid.

Jury convicts hunter who tried IRS dodge – When I saw this headline, I thought it was about another tax protestor facing the reality of his idiotic arguments.  It turned out to be a new spin.  This moron tried to get out of trouble with wildlife officers for taking more than the legal limit while hunting by pretending to be an IRS agent who would audit the officers.  That brilliant move added a felony conviction for impersonating an IRS agent to his misdemeanors for violating hunting limits.  After the deer hunter massacre in Wisconsin a few weeks ago, this additional example of a hunter’s brain power doesn’t help the image of hunters.

Speculation Grows on Social Security Fix

I have been receiving some excellent responses to my earlier piece on the new IRS practice of auditing people who file amended tax returns claiming refunds.  I will pass along and report on these.

There is an interesting slant to this story that I hadn’t considered until I received this email from another CPA:

Mr Guru – I didn’t realize that IRS is now targeting 1040X’s for full audit.  This does put a damper into some of my problem client solutions.  But, just the same, I appreciate your warning.  I’ll see what happens around here regarding this matter.
 
Also, on the Jennings/H&R Block deal, your comment “Their free service offer is worth every penny.”  Jeez, talk about a back-handed slam!  I take it you don’t think highly of H&R BlockHead, right?

My Reply:

There’s actually a connection between those two topics that I didn’t notice until your email.

It has long been a very lucrative part of a tax practice for those of us who believe in truly minimizing taxes for clients in preparing amended tax returns for clients who used H & R Block.  We could very easily recover thousands of dollars in taxes that the clients had overpaid under Block’s legendary wimpy approach to tax preparation, and we had loyal clients who were able to directly compare the two approaches.

This new policy of IRS auditing amended returns with refund claims will put a stop to many of those changes we would normally make to previously filed Block returns.  I have never heard of any connection between Block and this new IRS policy; but you have to admit that this will most likely help them.  I guess we could always still prepare the amended returns for new and prospective clients in order to illustrate the additional taxes they flushed down the toilet by using Block; but warn them not to send the returns to IRS unless they are gluttons for punishment of the audit type.

Thanks for helping me make this connection.

Kerry