…and it’s so much more fun when they’re doing it with other people’s hard earned money.

One of the many frustrations in dealing with the tax system in this country is the propensity for our rulers to continuously tinker with it.  To say that it is a constantly moving target is quite the understatement.  

To add to the already mind boggling level of complexity is the fact that so many of the minute details of the tax code have different expiration dates.  These are meant to give our rulers an opportunity to revisit those issues on a perpetual basis and renew them for a few more years, or just allow them to die off.

Thanks to Tom Herman at the Wall Street Journal for the link to this recently published 18 page pdf list of the various tax provisions expiring for each year from 2004 through 2014. Most of them are esoteric items that few regular people ever encounter; but some are very important, such as an end to the reduced capital gain rates at the end of 2008.

Of course, this entire list is subject to change at the whim of our rulers, especially if the tax reform panel does anything.

I was intrigued by the new low cost Apple Mac mini that was just introduced because we have long had a few clients who use Macs for their QuickBooks and  it has been impossible for me to work with their data files, as I do with clients using Windows versions of QB.  The conversion feature in the Mac version of QB, which is supposed to allow data files to be accessed by Windows users, has never worked for any of our clients, so I have been stuck having to rely on printed reports and write out journal entries for the clients to enter themselves.

I was actually starting to order one of these new computers from Apple, as well as a KVM switch and USB keyboard from Tiger, when I thought I should check to see if the Mac version of QB was among the dozen or so discs that I was sent a few months back as part of the 2005 product release.  It had been my understanding that we QuickBooks Pro Advisors were supplied with every version of the program so that we could service our QB using clients.

After a lengthy wait on hold, and a discussion with the Pro Advisor contact, I learned that I would have to actually buy a copy of the QB for Mac at the new user price of almost $300 for the cheapest version.  The fact that I have been using QuickBooks since it first came out in the DOS and Windows formats, and have been a Pro Advisor since that program was started, don’t mean anything to them.  I’m obviously a little disappointed in this attitude by the powers that be at Intuit.  We Pro Advisors are provided with free copies of the useless Online and Simple Start versions; but not the Mac, which I would be more likely to actually use.

I told the QB rep that if they want to enlarge their user base among Macs, they would need to support us Pro Advisors in that format.  She said that there are currently so few Mac users of the program that they don’t care about them and don’t see any need to help Pro Advisors with those users.  It seems like we have a classic “chicken or egg” scenario here that Steve Jobs may want to look into if he is serious about expanding Apple’s market share beyond its current three percent.

For now, I’m holding off on buying one of the new Mac minis and will continue to work with print-outs for those clients using QB for Mac.

IRS’s warnings on fraudulent tax preparers

State of MA eyes property tax relief for seniors – Good point made by Rush on his show today that if they can afford a special tax break for a specific demographic, why can’t they afford similar breaks for other groups? 

Age gap may be trouble for Bush – Pitting age groups against each other in their attempt to keep the Ponzi Scheme alive by forcing younger people to continue paying in.

Crooks faking Web sites to bilk unwitting donors – Any time there’s a lot of money involved there will be scum floating up to try and steal it. 

How to Spot a Loaded Mutual Fund

Financial Front in ‘War on Terror’ Expanding – Following the money has long been the most effective way to catch crooks. 

AARP on Social Security Risk – According to them, we’re all too stupid and irresponsible to have any control over our own retirement accounts.  Have I mentioned recently Art Linkletter’s United Seniors, which opposes the AARP on many issues involving higher taxes and bigger government?

National Taxpayer Advocate Cites Complexity as Top Issue – A good grasp of the obvious there.

A New Real-Estate Agent Must Fire Difficult Clients – We do it here a lot because some clients are just too much hassle, regardless of the money.

Taxes: What You Need To Know For This Year – Handy tips related to real estate from the Wall Street Journal.

DC Mayor says traffic cameras needed for revenue – It always bugs be when fairness takes a back seat to money for government, an all too prevalent occurrence at all levels of government in this country.

AARP’s Selfish Gamble – The propaganda war is in full swing to convince people that only the big central government can protect our retirement funds from losses.  As I scan hundreds of editorial cartoons each day, there is no shortage of ones equating changes in the SS system to gambling at a casino and as a windfall to Wall Street fat cats in attempt to scare everyone.

I always enjoy F.R. Duplantier’s verses, and have been looking forward to some tax related ones to post here, such as from this week’s update:

  PORK RINOS
The Republicans have been disgraced
By their failure to rein in the waste.
Are they really expected
To get reelected
When they act like the pigs they replaced?

TAXING OUR PATIENCE
The flat tax is best, some contend,
But the sales tax has much to commend.
Taxing income or sales —
These are minor details
‘Til we limit what Congress can spend!

Although I haven’t received any more direct updates from other practitioners on how this problem is playing out around the country, it is still ongoing.  Last week, I came across and responded to this posting from a California CPA on the Kleinrock discussion board.  I’m copying it here because I think you need to be registered to read it directly on the board.

Would appreciate your comments/suggestions on the following situation:

Taxpayer filed 1040X for 2001 in May, 2004 requesting huge refund.
IRS issued notice in Sept 2004 notifying t/p that case will be referred to district office
T/P received notice of exam Dec 29, 2004

Question:
Since refund claim was filed timely, if the exam is conducted past 4/15/05, would the statute of limitations have any effect on the refund?

It might be wishful thinking to delay the case for 3+ months, but I certainly hate to deal with any exam during the tax season. After all, the IRS is taking 8 months to notify the T/P. ( I wish I knew the date that the district office got the case. My understanding is that examination or other audit action must take place within 30 days after the District Office receives the claim from the regional service center.)

Selina Kong, C.P.A.

Reply 1:

Selina…when the taxpayer did the 1040X…he started the wheel again….

Reply 2:

If the refund claim was timely, your client can file suit in District Court
(or Court of Claims) after 6 months from the time the 1040X was filed. The
limitations period for filing the suit is generally 2 years after the
refund claim is denied. See IRC 6532.

Assuming the original return was filed on or before 04/15/2002, the statute
of limitations for assessments expires 04/15/2005. After that date, unless
the statute is extended, the tax shown on the original return cannot be
increased, although the requested refund could be decreased or eliminated
entirely by the IRS audit.

Ralph H. Weintraub, CPA
Los Angeles, CA

My first reply:

Selina:

What state are you in? I have been chronicling the spread of this program by IRS to audit 1040Xs with refunds and violate the statute of limitation in my blog, such as here.

Kerry Kerstetter
Osage, Arkansas

From Selina:

I’m in CA.

I’m just frustrated for the IRS’s delay to notify T/P of the audit (8 months from the date 1040X was filed, not to mention the fact that its the start of tax season now).

May be the amount of refund requested has something to do with it: close to $ 40k. May be it’s the complexity of the issue: I.R.C. Sec. 1202.

You mentioned in your blog that IRS have recently started a policy of running full blown audits of anyone who files amended tax returns requesting a refund. Is this “policy” in writing, & if so, did you get your hands on a copy of same?

Selina Kong, C.P.A.

My Last Post:

Selina:

I haven’t been able to get the auditor or audit manager to give me anything official in writing from DC authorizing this new practice; just their verbal claims that this is the new policy. I think it’s time for me to submit a FOIA request, which may or may not turn up anything in writing.

I have an auditor coming out to my office on Tuesday to go fishing for things that he can disallow in order to offset the $13,000 + that we requested on a 1040X that had been in IRS limbo for several months.

The other similar situation is with a 1040X for about $10,000, where the auditor went fishing around and opened up completely new issues that have cost us a lot of time to defend against his imaginative theories. He is definitely exploiting the burden of proof anomaly by tossing out all kinds of crazy ideas and making us scramble to prove him wrong without his having to prove his theories are anywhere close to accurate.

Good luck with your case. I will be posting my ongoing findings on these matters on my blog.

Kerry