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Category Archives: Tax Relief

Driver License Info in Tax Software

 

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Thanks to National Society of Accountants

 

Driver License Info in Tax Software May Not Be Required after All

go.nccpap.org

Tax software used by tax professionals asks for client driver license numbers even though only two states – New York and Alabama – currently have state laws requiring such information to be provided on state tax returns. No federal law requires this information to be provided on federal tax returns.


When NSA made inquired how this information came to be included in this year’s version of the software, we were told it was included at the behest of the Federation of Tax Administrators, the trade group for the state tax administrators. It seems that FTA wanted the information so its members could use the drive license numbers as one indication of a valid return, even while making the argument it was just too difficult to enact state laws requiring such information to be provided.

During a meeting with other members of the Security Summit, we pointed out that most tax software packages ask for the driver license number and, if it is not provided, asks the preparer to check a box indicating that there is no driver license.  We made the point that our members do not want to sign a sign stating there is no driver license if the client does have one. We also stated there should not be a requirement to provide a license number merely because it is on the FTA wish list.

Apparently, the tax software is written so that the return will be processed even if the driver license information box is left blank. Check with your software provider to make sure. And, if you are preparing a New York or Alabama return, this does not apply to you.



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Sanford Zinman
ZINMAN ACCOUNTING
Tarrytown NY
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Posted by on February 4, 2017 in Tax Relief

 

July 17—House passes bill with deep cuts to IRS funding.

 

On July 16, the House, by a vote of 228 to 195, passed H.R.5016, the “Financial Services and General Government Appropriations Act, 2015,” as amended. Initially, the bill had included $10.95 billion funding for IRS—a $341 million reduction from the 2014 fiscal year enacted level and $1.5 billion below the President’s budget request. Later amendments to the bill would cut more than $1.1 billion from IRS funding. The White House has indicated that the President would likely veto the bill.

 
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Posted by on July 21, 2014 in Tax Relief

 

New York State Works through Tax Refund Backlog

The New York State Department of Taxation and Finance outsourced the responsibility of refunding money to a new contractor this year and many taxpayers who filed paper-based returns still have not received their refunds.

After using Bank of America to process the paper refunds for 18 years, the state signed a $16 million contract with New York State Industries for the Disabled, a not-for-profit group that helps provide employment for thousands of disabled employees in work for state and local governments. However, there have been delays with processing some of the refunds by a subcontractor hired by NYSID known as SourceHOV, a Dallas-based company.

According to Geoff Gloak, a spokesman for the New York State Department of Taxation and Finance, 96 percent of the tax refunds have been sent out and the remaining refunds are being processed daily. He predicted they should all be “wrapped up” by early August.

“This is after 18 years with the prior contractor, Bank of America,” Gloak added. “They decided they were getting out of the business. There has been a transition period. We worked with the new contractor, and the new contractor implements new systems and processes.”

The New York State Department of Taxation and Finance said last week that so far, 5.95 million tax refunds have been issued this year representing $5.3 billion—a dollar-for-dollar increase of 3 percent over last year at this time.

By law, interest is paid on refunds that are issued after May 30 for timely filed returns. Interest is paid only on that part of the refund resulting from over-withholding. To prioritize delivery of the delayed paper refunds, the tax department is assisting the contractor in both speeding up the processing and providing quality assurance. Recovery of the department’s costs associated with this effort—including staff overtime and interest payments—is provided for in the contract, and will not come at additional taxpayer expense, the tax department noted.

“In New York State, you’re required to pay interest 45 days after the filing due date of April 15, so beginning May 31 we’re paying interest on refunds,” said Gloak. “The interest goes back to April 15, so interest payments over time are provided for in the contract and won’t come at taxpayer expense.”

This year, nearly 90 percent of New York State taxpayers filed their returns electronically, up from 87 percent last year and only 58 percent just five years ago. Since 2008, New Yorkers have saved more than $250 million in processing costs as a result of e-filing, according to the tax department.

Fred Slater, CPA, a member of the tax and accounting firm MS1040 LLC in New York City, expressed anger at the tax refund delays. “I call it the head in the sand approach,” he said. “I have all kinds of questions about how much information they were given to process it. In other words, you’re giving your private information to a third party. What were they given? The state is doing everything in its power to push people to efile, and they repeatedly contradict themselves on this, and force things. Not all of the returns are efile-able to start with, by their own system restrictions, and then they go through this process of pushing you to efile, but their system is not up to snuff.”

Albany, N.Y. (July 9, 2013)
By Michael Cohn
 

 
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Posted by on July 10, 2013 in Tax Relief

 

Bill Would Let EAs Promote Themselves Everywhere

Sen. Rob Portman, R-Ohio, and Rep. Charles Boustany, R-La., have introduced legislation aimed at allowing Enrolled Agents to present themselves as such and tout their credential wherever they practice.

This will “ensure that individuals, families, and businesses across the country are able to identify and access EAs,” the co-sponsors said in a statement.

The representatives said that their Enrolled Agents Credential Act or H.R. 2313 is aimed at those states that “prohibit Enrolled Agents from using their credential when representing taxpayers or advertising for potential clients. This bill would clarify that Enrolled Agents may use and display their credential when advertising their services and representing their clients.”

In statements, both Portman and Boustany stressed that access to EAs — who are certified by the U.S. Department of Treasury and have unlimited rights to represent taxpayers before the IRS — is increasingly essential as taxpayers struggle to comply with an “antiquated” and “outdated and complex” Tax Code.

“This bill is helpful because in the last year or so, the federal government has begun to promote the use of licensed tax return preparers like Enrolled Agents, CPAs and lawyers, and it’s important that Enrolled Agents be able to use their credential to distinguish themselves from unlicensed preparers,” added David Rothstein, project director at Policy Matters Ohio, in a statement on Boustany’s Web site.

“Congress and the IRS should do everything they can to encourage the professionalization of the tax industry,” added Michael Fioritto, president of the Ohio State Society of EAs, in the same statement. “By interfering with Enrolled Agents’ ability to advertise and brand themselves, a few states are hurting not only the Enrolled Agent profession but the consumers in those states who might utilize their services.”

The National Association of Enrolled Agents has long supported the “bipartisan” bill, and pointed out in an open letter to all EAs that Rep. Xavier Becerra, D-Calif., “has agreed to jump on board with Dr. Boustany and co-sponsor H.R. 2313. In addition, Representatives Tim Bishop, D-N.Y., and Delegate Eleanor Holmes Norton, D-D.C., are also original co-sponsors of H.R. 2313.”

“EAs in several states have been significantly limited in the use of their federal credential. The codification would level the playing field for Enrolled Agents in those states,” said NAEA president Betsey Buckingham.

“EAs, who have an unlimited right to prepare tax returns and to represent taxpayers in advocacy issues with IRS, believe it isn’t unreasonable to use their federally given designation,” added Robert Kerr, NAEA senior director of government relations. “The proposed legislation, which NAEA has been promoting for years, helps Enrolled Agents market themselves and to distinguish themselves from the legion of untested and unlicensed fly-by-night preparers.”

Unlike attorneys and CPAs, who are state-licensed and may or may not choose to specialize in taxes, all EAs specialize in taxation. There are some 47,000 EAs in the U.S.

“The legislation has been a priority of NAEA leadership, which has charged the GR team with doing everything it can to garner Congressional interest,” Buckingham wrote in her letter. She called the bill “simple — a one-pager and at no cost to taxpayers.”

She noted too that the organization has brought members to Washington to advocate for the bill, and her letter added tips on what EAs can do to voice their support to Congress.

 
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Posted by on June 18, 2013 in Tax Relief

 

Scandals Fueling Job Market, But Many Hires Will be Temporary

If you want a job in finance today, follow the blood trail. The most aggressive hiring is happening in business units charged with cleaning up other people’s mistakes, or making sure they don’t happen again.

Look at banks in the U.K., which created at least 20,000 new jobs last year to deal with claims over mis-sold payment protection insurance (PPI) and interest rate swaps, according to a new report from recruitment firm Manpower. The job gains generated by the scandals drove financial services to be the best performing sector in the study, despite the fact that front office staffers are getting let go each day.

“These scandals have spawned a new industry to deal with the fallout,” said ManpowerGroup U.K. Managing Director Mark Cahill.

The job gains are expected to continue through 2013, with firms like Barclays and Lloyds putting aside millions to deal with PPI claims, according to Cahill.

Recent scandals have also inspired hiring in risk and compliance on both sides of the pond as firms attempt to mitigate against future black eyes. Five of the top six most talent-starved positions are in risk and compliance, according to a recent study of our database. And the pay is pretty good. A senior compliance professional working in an investment bank in New York can expect to make between $250,000 and $525,000.

Jobs in compliance and risk are likely much safer than those tasked with handling the immediate fallout of the scandals themselves. They’re real jobs, but they likely aren’t sustainable.

Bold and Unrelenting (LA Times)
Mary Jo White, President Obama’s nominee for the head of the Securities and Exchange Commission, will take a tough stance on Wall Street if confirmed, telling senators that she will be “bold and unrelenting.” Wrongdoers “will be aggressively and successfully called to account by the SEC,” she said.

They’re Still Commodities (Bloomberg)
Former Citigroup oil trader Andrew Hall, who made headlines for receiving $100 million in compensation the same year Citigroup received a federal bailout, is putting his money to work in Vermont. Hall bought a farm that sells handmade lavender soap and grass- fed Angus beef.

 
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Posted by on March 13, 2013 in Tax Relief

 

Fiscal Deal Passes As House GOP Clown Car Crashes, Again

Observing the Congressional Republicans repeatedly stumble in and out of their caucus clown car, blowing loud kazoos and muttering angry threats, should be painful, embarrassing, and highly instructive to any American voter with the patience to watch.  When their latest performance concluded late Tuesday night with a 257 to 187 vote passing the stopgap fiscal deal negotiated by the Senate and the White House, an unavoidable question lingered: What is wrong with those people?

The simple explanation is that the House of Representatives has increasingly been dominated over the past two decades by a coterie of tantrum-prone extremists, who lack the probity and steadiness required for democratic self-government. Their diminished capacity is reflected in the low quality of leadership they have chosen during this long twilight, from Newt Gingrich, Dennis Hastert and Tom DeLay to John Boehner and Eric Cantor, even as their politics have grown more and more extreme.

Under the stress of their incoherence, the Republican caucus is unable to escape one humiliating mess after another. The damage they routinely inflict on the country’s economy and future is reaching incalculable levels – and is almost certain to grow worse when they again hold the debt ceiling hostage next month.

By the end of the current episode – which is only an interlude rather than a true resolution – the top Republicans in the House had split, with Boehner casting a rare vote in favor, and House Budget Committee chair and former vice-presidential nominee Paul Ryan (R-WI) voting yes, along with 84 fellow Republicans and almost all of the House Democrats, while House Majority Leader and would-be Speaker Eric Cantor (R-VA) voted no. On the floor, House Ways and Means chair Dave Camp (R-MI) tried to claim that this bill is “the largest tax cut in history,” although he might have difficulty explaining why more than 150 Republicans voted against it.

The Republicans’ incompetence in government is inextricably connected with their ideological extremism, as the latest events demonstrate. Hogtied by the craziness of the ultra-right Tea Party faction, the House GOP leadership cannot even cooperate with other Republicans in the Senate – who overwhelmingly voted for the “cliff” deal negotiated with Vice President Joe Biden – let alone conduct serious discussions with the White House.

Having refused to support the leadership’s “Plan B” scheme to raise taxes only on households making $1 million or more annually – despite confident claims by Boehner and Cantor that they had counted the necessary votes — the Republican caucus made both themselves and their leaders look ridiculous. It was a dreadful right-wing plan, but still much too liberal for too many of them. Tacitly acknowledging that he could no longer manage his restless wingnuts, Boehner insisted that the Senate and White House should come up with an emergency measure on their own.

Yet when the Senate leadership, including Minority Leader Mitch McConnell, offered a bill negotiated with Vice President Joe Biden — just as Boehner had urged — the House Republicans descended into crisis. Their leaders couldn’t endorse the bill, fearing that the GOP caucus crazies would defenestrate them. But they could hardly employ their usual partisan tactics to keep the bill off the House floor, after the Senate had passed it by a vote of 89-8, with only five Republican defections. They might have noticed as well their declining numbers in every public poll, with the latest Republican-leaning Rasmussen survey showing a Democratic lead in the generic congressional contest of 11 points and climbing.

Astonishingly, they nevertheless wasted several hours debating whether to amend the bill with new spending cuts and then send it back to the Senate, where leaders of both parties would have surely and justly rejected such tardy handiwork. Consistent only in their ineptitude, the House Republicans were reportedly unable to agree among themselves on exactly how to change the bill, in any case.

Finally, they folded – or at least their leaders did – and proclaimed that they were girding themselves for the battles to come over the budget and the debt ceiling, which have now been postponed for another month or so.

The deal itself is not a bad one, from the Democratic perspective, raising significant new revenues from the wealthiest taxpayers and excluding any “grand bargain” (or raw deal) to weaken Medicare, Social Security and Medicaid. Its specific provisions are still far too generous to the highest-income taxpayers and will not, in the long run, raise enough revenue to sustain decent government, rebuild the nation’s infrastructure, and prepare for the future.

The struggle over what government should do and how to pay for its functions continues, almost immediately. And perhaps soon the president and his party will explain, without hesitation, what this brief tumble over the “cliff” has shown us, and what we may hope they have finally learned: That there is no negotiating partner among the House Republicans, who must be defeated if progress is to be possible.

January 2nd, 2013  12:25 am Joe Conason

 
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Posted by on January 2, 2013 in Tax Relief

 

IRS retroactively removes de minimis rule for testing partnership allocations

IRS has retroactively removed a de minimis rule in the partnership regs because it may have resulted in unintended tax consequences. The rule had provided that, for purposes of determining substantiality of a partnership allocation, the attributes of de minimis partners (those owning less than 10% of capital and profits and who are allocated less than 10% of each partnership item) need not be taken into account. IRS will study alternative approaches suggested by commentators.

Background. Under Code Sec. 705(b), a partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof) is determined in accordance with the partner’s interest in the partnership (determined by taking into account all facts and circumstances) if the allocation to a partner under the partnership agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect. The determination of whether an allocation of income, gain, loss, or deduction to a partner has substantial economic effect involves a two-part analysis that is made as of the end of the partnership tax year to which the allocation relates. (Reg. § 1.704-1(b)(2)(i)) (1) The allocation must have economic effect within the meaning of Reg. § 1.704-1(b)(2)(ii); and (2) the economic effect of the allocation must be substantial within the meaning of Reg. § 1.704-1(b)(2)(iii).

In general, for an allocation to have economic effect, it must be consistent with the underlying economic arrangement of the partners. This means that, if there is an economic benefit or burden that corresponds to the allocation, the partner to whom the allocation is made must receive such economic benefit or bear such economic burden. In general, the economic effect of an allocation (or allocations) is substantial if there is a reasonable possibility that the allocation (or allocations) will affect substantially the dollar amounts to be received by the partners from the partnership, independent of tax consequences.

Removed de minimis partner rule. Under the de minimis partner rule, for purposes of applying the substantiality rules, the tax attributes of a de minimis partner did not need to be taken into account. A de minimis partner was any partner, including a lookthrough entity, that owned, directly or indirectly, less than 10% of the capital and profits of a partnership, and who is allocated less than 10% of each partnership item of income, gain, loss, deduction, and credit.

IRS says that commentators agreed with it that the de minimis partner rule was too broad, was easily abused, and/or was not consistent with sound tax policy. Accordingly, the rule has been removed from the final regs.

Alternative approaches. The preamble to the proposed regs requested comments on how to reduce the burden of complying with the substantial economic effect rules, with respect to lookthrough partners, without diminishing the safeguards the rules provide. In response to this request, IRS received a number of comments. Some commentators requested that future guidance in regs amend the de minimis rule, while others suggested alternative approaches for de minimis partners and look-through partners. IRS says it needs more time to consider these comments and may address them in future guidance.

Effective date. Whether an allocation is considered to be substantial is generally determined at the time the allocation becomes part of the partnership agreement. The final regs provide that the de minimis partner rule does not apply to allocations that become part of the partnership agreement on or after Dec. 28, 2012. (Reg. § 1.704-1(b)(2)(iii)(e)(1))

With respect to preexisting allocations, IRS agreed with one commentator who suggested that the de minimis partner rule was sufficiently flawed that it should not continue to apply to allocations that became part of the partnership agreement before its removal. Accordingly, the final regs are effective, and the de minimis partner rule is no longer applicable, for all partnership tax years beginning on or after Dec. 28, 2012, regardless of when the allocation became part of the partnership agreement. Thus, the substantiality of all partnership allocations, regardless of when they became part of the partnership agreement, must be retested without the benefit of the de minimis partner rule. For allocations in existing partnership agreements, the retest has to be as of the first day of the first partnership tax year beginning on or after Dec. 28, 2012. (Reg. § 1.704-1(b)(2)(iii)(e)(2); T.D. 9607)

References: For partnership allocations, see FTC 2d/FIN ¶ B-2400 ; United States Tax Reporter ¶ 7044 ; TaxDesk ¶ 586,100 ; TG ¶ 2162 .

(12/27/2012)
Federal Taxes Weekly Alert Newsletter

 
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Posted by on December 27, 2012 in Tax Relief

 

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