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Archive for the ‘IRS’ Category

Mandatory E-Filing Update

Posted by taxguru on August 3, 2011

I am still holding out and only preparing paper tax returns for our clients and am not planning to change any time soon. However, I am monitoring the IRS and their rules for trying to force more of us professional preparers to use their electronic filing for 1040s.

I was browsing the newest draft IRS forms and came across the draft for the December 2011 version of Form 8948: Preparer Explanation for Not Filing Electronically.

As I have discussed on numerous occasions, there has been a lot of debate as to the coverage of the new more aggressive mandatory e-filing rules in regard to our Preparing or Filing tax returns for clients. It has always been our practice to prepare tax returns and allow the clients to mail them in themselves.

The following is from the instructions to the new version of the 8948:

A specified tax return preparer is a tax return preparer, as identified in section 7701(a)(36) and Regulations section 301.7701-15, who is a preparer of covered returns and who reasonably expects (if the preparer is a member of a firm, the firm’s members in the aggregate reasonably expect) to file 11 or more covered returns during a calendar year.

Aggregate filing of returns For the e-file requirement, “aggregate” means the total number of covered returns reasonably expected to be filed by the firm as a whole. For example, if a firm has 2 preparers and each preparer in the firm reasonably expects to prepare and file 6 covered returns, the aggregate for the firm equals 12 covered returns, and each preparer is a specified tax return preparer.

When a return is considered filed by a preparer. For the e-file requirement, a return is considered filed by a preparer if the preparer or any member, employee, or agent of the preparer or the preparer’s firm submits the tax return to the IRS on the taxpayer’s behalf, either electronically or in paper format. For example, the act of submitting includes having the preparer or a member of the preparer’s firm drop the return in a mailbox for the taxpayer. Acts such as providing filing or delivery instructions, an addressed envelope, postage estimates, stamps, or similar acts designated to assist the taxpayer in the taxpayer’s efforts to correctly mail or otherwise deliver a paper return to the IRS do not constitute filing by the preparer as long as the taxpayer actually mails or otherwise delivers the return to the IRS.

That last sentence seems to make it very clear that tax returns mailed in to IRS by our clients are not being filed by us and thus do not count towards the 11 or more threshold for mandatory e-filing.

Posted in E-Filing, IRS | Comments Off on Mandatory E-Filing Update

The long tradition of the IRS…

Posted by taxguru on July 17, 2011

From Blog Comix

Posted in comix, IRS | Comments Off on The long tradition of the IRS…

Posted by taxguru on October 24, 2010

New Online Registration System for Paid Tax Return Preparers Is Now Available – The IRS’s online application system for all of us to obtain PTINs is now active. Even those of us who already have PTINs need to renew them and pay the new fee of $64.25.

I decided to give it a spin to see how easy it was to use and if the promise was true that we could keep our existing PTINs. In typical government fashion, it was less efficient than it needed to be. Rather than allow those us with PTINs to start from there, I had to enter my SSN and everything else from scratch, as if I hadn’t been preparing tax returns professionally for the past 35 years. I had to type in the same address info twice. I entered my nine digit zipcode, which it accepted. Then, a few screens later, it said the zip was in the wrong format and I had to go back to both address screens and change them to five digits. It asked for my FEIN and CAF numbers, but not my existing PTIN. My full CAF number wouldn’t fit in the allowed space, so I had to remove a zero from the middle. I’ll see if that screws this up. They don’t accept American Express, my favorite credit card; so I had to use a MasterCard.

The website estimates 20 minutes to fill it in, and that was about right. I submitted everything and paid the fee on 9/28/10. Now I’ll see how long it takes for my new or renewed PTIN to arrive.

Update – On 10/15/10, I received a postcard from IRS via snail mail, saying that an online account had been created in my name. Today (10/24/10), I logged in to my IRS.gov account and it showed my PTIN number as the same one I had been using for several years and an expiration date of 10/31/2011. When I went in to check my details, I noticed that they had fixed the CAF section to allow the proper number of digits; so I added back the zero I had left out of the original application.

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Posted by taxguru on October 14, 2010

Thousands of Nonprofit Groups Face New Tax Burden Starting Friday – The effect of a recent change in filing requirement for smaller lower revenue organizations kicks in tomorrow.

Has Obama Raised Taxes? That Depends on Whom You Ask – Of course, being a rabid disciple of Karl Marx, we can all be sure that he will do everything he can to continue to redistribute as much wealth as possible from those he considers to be evil rich.

Government Greed. Politicians are more rapacious than CEOs. – Thomas Sowell on the insatiable desire for our rulers to come up with ways to steal money from the producers in this country.

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From Snopes.com

Posted by taxguru on October 9, 2010

Another phishing scheme uses e-mail messages camouflaged as communications from the IRS. – I’ve received about a dozen of these over the past few days.

Is the U.S. government proposing a 1% tax on debit card usage and/or banking transactions? – This has been creating a lot of concern.

Posted in IRS | Comments Off on From Snopes.com

More on New IRS PTIN Applications

Posted by taxguru on October 2, 2010

From a CPA in California:

Subject: PTIN Reg Debacle

Good Morning,

I am a fellow tax pro in California. Saw your blog about the PTIN reg….Mine did not go well either. I got through the application, paid the fee and still no PTIN. They are saying it is a systems glitch. No solution yet, and we should call back next week (sigh). Once they get a solution, our PTIN may or may not arrive via email.

Anyway, about the CAF—-I had the same problem. Space for too few digits. The agent I spoke with earlier today said they are aware of the issue and this will not cause a problem because they are ignoring the number.

My reply:

Thanks for sharing your experience with the PTIN reg process. It’s been almost three days since I submitted my application and payment, and still no response from IRS. I was wondering if something was wrong when I read other news articles about this that claimed that the number would be issued almost immediately. I’m guessing that those news sites just relied on the IRS press release, which is why I wanted to test it for myself before writing about it.

That is very typical “government intelligence” for them to ignore a number they require us to submit (CAF) and not even request a number that would save everyone a lot of time, the existing PTIN.

I’ve been too busy with extension returns to spend time calling IRS about this issue, so I appreciate your sharing your experience. Please keep me posted as to when you receive your PTIN and if it is the same one you already had.

If there is any lesson for other tax pros, it would be to hold off on this for at least a few more weeks until IRS can straighten out their glitches.

Kerry Kerstetter

Follow-Up:

Thanks, Kerry. Some practitioners in this area did get their number right away, and generally, it was the same as their old PTIN. Others, like me, got through the process and paid. But after 3 days, still no PTIN. Still another group of folks can’t get through the process because the system claims not to recognize their zip code or their SSN.

I wonder what the ratio is of people who get their number to people who have problems….

I will keep you posted.

Posted in IRS | Comments Off on More on New IRS PTIN Applications

Flying Monkeys

Posted by taxguru on September 13, 2010

I got a kick out of this campaign video from Nancy Pelosi’s opponent, John Dennis, where she summons her flying monkey IRS agents to do her evil bidding. Too close to reality to ignore.

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22 Billion Schedule Cs?

Posted by taxguru on September 5, 2010

I wonder how many other tax pros noticed this. I was scanning over the hundreds of emails in my inbox, including dozens for tax webinars, and noticed this unusual sounding claim in one such ad.

Considering that there are approximately 300 million people living in the USA, and that the actual number of 1040s filed each year is in the 100 million range, how could there be 22 Billion Schedule Cs filed each year? It is true that some tax returns have multiple Schedule Cs. However, for that 22 Billion figure to be correct, every 1040 would have to have 220 Schedule Cs attached. As much as I enjoy making fun of IRS mistakes, I have to assume this one came from the company promoting the webinar, Lorman Education Services.

Luckily, they seem to have detected their typo and have corrected this on their website and show the much more realistic figure of 22 Million. As ridiculous as it was, at least they didn’t show it as 22 Trillion, a word that is becoming too common in the lexicon of DC nowadays.