Archive for 'Above the Line'

FDIC moves to shut down RALs for Jackson Hewitt, Liberty

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Last year, the IRS put the first nail in the RAL coffin when it announced it would no longer feed information on taxpayer eligibility for refunds. Then early this year came the announcement by the Comptroller of the Currency that HSBC, H&R Block’s provider of RAL loans, was not permitted to, and thus wouldn’t, offer RAL loans. Jackson Hewitt and Liberty Tax quickly announced that the prohibition had no effect on their ability to offer RALs, and that they would ...

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Just in time for tax season – the IRS moves to shut down preparers

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This week, the IRS announced that it requested an injunction be issued against Martha Jones. According to the complaint, Jones claimed invalid and illegal deductions and charitable contribution carryovers, failed to sign returns, and failed to discuss returns with taxpayers. The IRS reviewed 56 returns and found errors on all of them, with an average deficiency of $4,700 per return. The IRS estimated that Jones prepared over 200 returns (she claimed 50 to 100), but since she did not ...

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How long do I have to keep this crap?

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It’s one of my favorite questions, and one that I get every year.

How long do you have to keep your tax records? Is it really seven years?

No, not really. But there also isn’t a straightforward answer, either.

In general, the IRS has three years from the later of when a return is filed or is due to assess additional tax (remember, filing the return qualifies as an assessment). See 26 USC 6501. After that, the IRS is stuck with ...

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And you thought YOUR performance review was bad…

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No one – no one – likes performance reviews. Whether your firm/company does them mid-year, at the end of the year, or some other time, it’s pretty much a given that it doesn’t matter which side of the table you’re on – giver or recipient – you’re not going to be happy.

But at least it’s private (for most people). Your boss (probably) doesn’t stand at the head of the department and say “Bob really screwed up this year! Boy, it’s ...

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Surprise! IRS Continues to use illegal designations

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Breaking news over at Tax Prof Blog: Despite Congressional orders to the contrary, the IRS still labels people as ‘Tax Protester,’ ‘Constitutionally Challenged,’ and the like. Congress’ concern was that people so labeled would have a stigma attached to them, and so, in 1998 prohibited the use of such terms. In a recent report, TIGTA indicated that 196 out of 80 million returns still used the label (a small, small number, to be sure, but still…).

On the other hand, ...

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Proving undocumented expenses, shifting burdens and avoiding penalties: a look at some audit issues.

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Here’s the scene: you go to the mailbox, and inside is a letter from the IRS.

They want more information about your 2008 tax return, specifically some deductions on your Schedule A. Problem is, those records got lost when you moved last month, and you’re not sure you can prove all of your expenses. Is all lost?

Some may be, but not necessarily all.

What can be saved? Well, to answer that, you need to look at some tax ...
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Live in NV? Haven’t filed in a while? Here’s your chance….

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There’s only a handful of ways to put money in the state’s coffers. One is to raise taxes, an unpopular option, which could backfire. Another is to increase enforcement via audits, equally unpopular. A third is an amnesty, which avoids the unpleasantness of the other two options, and allows non-filers to get an albatross off their necks and avoid penalties and interest to boot. Even better, there may be no requirement to file timely afterward (though it’s probably a good ...

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When it rains, it pours…

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If you commit a crime these days – particularly white-collar crime, such as identity theft, or fraud – you’re likely to also be hit with tax-related charges. Take Kathy Chen, for example. Ms. Chen – who, in addition to being a real estate agent, owned a tax service, two financial service firms and an escrow firm – used information gained from those businesses to either steal or create wholly fictitious identities. She – and her alleged co-conspirators – then ...

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This just in: IRS releases 2008 data

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The IRS has released their report on 2008 tax data.

It’s 190 pages of engrossing reading.

Ok, maybe not, but it does serve as a useful guide for answering that annual question: How much can I deduct?

The correct answer, of course, is: you can deduct what you actually paid (assuming you can deduct anything, of course), and not a penny more. But for those clients who are skittish about taking the deduction in the first place (I’ve had clients refuse to ...

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Decisions, decisions

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A Massachusetts District Court – in a decision not likely to go unchallenged – has said that the Defense Of Marriage Act (DOMA for short) violates the 10th Amendment. While that has good implications for same sex couples who wish to file joint returns, it really just means that the battle over the rights of same sex couples continues.

And while I’d love to not have to prepare 3 tax returns for RDPs here in California, the truth is, for the ...

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