Archive for August 25, 2011

IRS Allows Tax Return Do-Overs


A tax return is signed under penalties of perjury and is not an opening offer, quipped journalist Lee Sheppard.  True, but we all make mistakes.  Besides, some items—like an amended an Form K-1 or 1099, may show up after you’ve filed.  The IRS doesn’texactly allow tax return do-overs. 

Still, if you discover an error on your tax return, the only way to fix it is to amend your return.  There are many myths about amended returns, but the IRS recently listed some things they want you to know.  See IRS Summertime Tax Tip 2011-12.

Do Amend.  If your filing status, dependents, total income, deductions or credits were reported incorrectly, amend. » Read more..

Tax Filing Status For Same-Sex Partners

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Same-sex married couples have tough tax filing issues, far more complex than heterosexual couples.  Clearly that shouldn’t be true, but for the time being it is.  To its credit, New York State has released helpful information about tax filing under the Marriage Equality Act.  The Marriage Equality Act was signed into law June 24, 2011.  Little more than a month later the New York Department of Taxation and Finance weighed in with this guidance

Here are the highlights:

Different Filing Status.  Same-sex married couples in New York must file their personal tax returns as married even though their marriage isn’t recognized for federal tax purposes.  You use a filing status of single or head of household on your federal Form 1040, but for New York, either married filing » Read more..

Preparer Registration Wastes Time and Money


It’s nothing but lawless anarchy in the unregulated tax preparation industry.  Just look at what’s happening out there:

- A practitioner spends years  helping taxpayers improperly deduct “lifestyle expenses” — their clothes, their make up — even their pets!

- A practitioner costs the Treasury hundreds of millions of dollars setting up corporations and arranging sham transactions to hide income in a tax-exempt shell.

- Another practitioner helps taxpayers unlawfully avoid taxes using sham trusts and transparently phony legal arguments.

It’s no wonder the IRS has started its huge new program to register all unregulated tax practitioners, make them pass a competency test, and subject them to continuing education each year.  

Oh, wait… these cases didn’t involve unregulated preparers.  They involved an Enrolled Agent, an Attorney, and a CPA — all tax professionals that already have to pass much stiffer entrance tests and take more continuing education that anything proposed under the new unregulated preparer rules.   » Read more..

IRS Pursues Payroll Tax Pyramiding

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You may think the IRS pursues all taxes equally but they don’t.  The IRS is especially vigorous in going after payroll taxes withheld from wages that somehow don’t get paid to the government.  This is trust fund money that belongs to the government and was withheld from wages. 

That makes any failure to pay—or even late payment—much worse.  In fact, that’s so regardless of how or why the employer or its principals use the money.  See No Get-Out-Of-Jail-Free Card For Payroll Tax Liability.

When a tax shortfall occurs in this setting, the IRS will usually make personal assessments against allresponsible persons who have ownership in or signature authority over the company and its payables. » Read more..

Tips for Payroll Outsourcing

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Does your business use an outside payroll service?  Are you thinking of using one?

Payroll service companies perform an important function assisting employers comply with payroll tax laws.  But these services pose risks for employers.

There are three categories of payroll service companies.  In all three categories, the payroll service company computes employees’ withholdings and net pay, compiles payroll accounting records for the employer, and prepares payroll tax returns for the employer.

The first category of payroll service companies are payroll service providers (“PSPs”).  A PSP prepares payroll tax returns using the employer’s employer identification number (“EIN”).  The employer signs and files the tax returns. » Read more..

They say it’s a fee, but $36,500,000 is more like tax


Starting 2012 (2011 Tax year) all tax returns, prepared by tax return preparers who are paid for their services and prepare more than 10 tax returns, must be electronically filed. That includes 1040, 1120, 1120S, 1041, 1065, 990, and all extensions. IRS counts extensions as part of 10 returns. According to the IRS rules if you prepare more than 10 tax returns and do not file tax returns electronically there will be a $50 penalty to the taxpayer. Most states have jumped at the chance of reducing their work force as well. New York, for example, has made it mandatory to e-file and e-pay returns and in 2012 there will be more states that will follow. 

In 2011 new regulations came into affect requiring all paid tax return preparers to obtain a PTIN (Preparer Tax Identification Number). This will be a yearly renewal and for 2012 it is expected to start » Read more..

Industry News Flash


Recent IRS News

View recent, tax-related IRS news releases below.

Resources for Tax Preparers:

  • IRS Releases Specifications for Registered Tax Return Preparer Test IR-2011-89, Sept. 6, 2011

    WASHINGTON — The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.

    The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.

    The specifications identify the major topics that will be covered by the test, which will be available starting this fall. Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.

    The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score,

    » Read more..

Things you need to do to get ready for tax season

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As you are aware starting 2010 tax season all income tax preparers must have IRS assigned PTIN number. If you do not have one, you can REGISTER with the IRS and your PTIN number will arrive within 28 days or you can register by printing and filling out Form W-12 and then mail it to the IRS.

If you already have PTIN number, you will need to RENEW your application.

If you fail to sign-up for or refresh your PTIN, penalties may apply. Tax return preparers who use their SSN, EIN, EFIN, or ETIN, instead of a valid PTIN, on tax returns or claims for refund filed after December 31, 2010 may be subject to penalty » Read more..

Services Offered to Tax Preparers

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When tax season rolls around and you need office help, by you using my service you can eliminate all the hassles of looking and teaching someone who has no clue what your business is all about. If you are a tax preparer and spend your time visiting clients, my service is your best solution.

I will send you input sheets that are really easy to fill out. The first year will take a little longer because we don’t have any data. The following year will be a lot simpler. You will receive a proforma which will have all data from prior year printed in the prior year column. All you have to do is give me input for the current year. It is THAT SIMPLE. » Read more..