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Tax Return Preparer Review in Washing DC - July 30, 2009,

Check this page for updates about the Tax Return Preparer Review.
News:

Have you RSVP'ed for the July 30 Public Forum in Washington, DC? Email cl.npl.communications@irs.gov if you can attend!

Logistics for the Tax Return Preparer Review Public Forum: July 30, 2009
Location: Ronald Reagan Building and International Trade Center Amphitheater, Washington, DC

**The public forum will begin promptly at 9:00 AM. Please note that the Ronald Reagan Building requires a photo I.D. for entrance. The amphitheater is located on the concourse level. Please see the Ronald Reagan Building website for further information.

Notes: We are hoping that all this talk won't affect California tax preparers. We are tested each year, due to the dozens and dozens of new tax laws that take effect each year. We have to be bonded and adhere to strict policies.

The problem seems to be, that the majority of states do NOT require their tax preparers to be licensed or registered and as a result, many preparers are completing tax returns incorrectly.

It also appears that the IRS may be deciding to take on the burden of making sure tax preparers are qualified.

What is a CP-515 and CP-518?

If you received these Letters of Communications from the IRS, it clearly states what each of the Notices represent.



CP-515 and CP-518 are a part of the IRS's CP series of forms sent to taxpayers to inform you of different actions and request.



The CP 515 deals directly with "request for your tax return" and CP-518 is sent when taxpayers don't respond to CP-515 and explains that you have committed a crime by not filing your past due tax return.



If what you really want to know, is how serious these notices are? They are VERY serious and you can contact the IRS at 1 800 829-4477 or contact a tax professional as soon as possible.

I read in one of your articles that a person could go to prison for failure to file a TD F90-22.1, is this really true?

Yes.

TD F 90-22.1 - Report of Foreign Ban and Financial Accounts must be filed by June 30th of each year, if you have over a certain amount in foreign bank accounts or financial institutions. ($10,000)

Failure to file a required T DF 90-22.1 is a felony, punishable by a 5 year prison term. This form generates from Schedule B, Line 7a.

I am not sure why you asked this question, however, if your past due returns include this area of reporting, I strongly suggest that you contact a Tax Attorney or call the IRS, immediately.

You can find more information at http://www.irs.gov/ - keywords: instructions, schedule b

I am a website owner, my tax preparer filed my 1099 income on a Schedule C-EZ, why not a regular Schedule C?

You are correct to ask questions about the selection of forms your preparer used. The Schedule C-EZ is a short version of Schedule C and has, in Part II, Line 2, a place for Total Expenses.

Being a web site owner, you surely had enough expenses to justify a Schedule C.

For instance you could automatically have the following expenses or deductions
as a web site owner:

ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or upgraded your site.
Monthly fees for email communications
Cost of graphics
Monthly Online services
Mileage to and from the store for office supplies
All office supplies
High speed Internet connection cost
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line

Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?

What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliate? (Travel)
Plus, there could be any number of additional expenses as a web site owner.

This seems a little much to put on a Schedule C -EZ - perhaps you might want to keep better records for next year, so that you can take advantage of expenses.

If you need help with your bookkeeping and or tax preparation, let us know, perhaps we can work something out.

New Tax Law Concerning Unemployment Compensation

The first $2,400 of unemployment compensation is excluded from income in 2009.

A Loan company sent me a 1099-C , do I have to file this on my tax return?

Yes.

Gross income includes income from discharge of indebtedness. It goes on 1040 under "other income"

Lenders have also filed the 1099-C with the IRS, so if you forgot to include it on your tax return, the IRS will contact you later with a recalculation of your tax return.

What is a SFR? Should I accept it?

A SFR is the IRS's nickname for "Substitute for Return"

When a taxpayer fails to respond to the IRS's communications, or file his/her past due returns, the IRS uses information they have received from your employers and lending institutions, to estimate your tax liability, then files the SFR (Substitute for Return) as your legal tax return; so they can start the collection process.

Before the IRS prepares a Substitute Return for a taxpayer, they send out a letter called "Notice of Proposed Assessment"

The only way to undo a SFR is for a taxpayer to file his/her own tax return.

It should be noted, that when the IRS prepares an SFR (Substitute for Return) for you, they do NOT include tax deductions or credits that you may qualify for.

Not sure how you hear about the SFR, however, if you need to file your own past due returns, which is strongly suggested, then we can help you with past due returns. http://taxeswilltravel.com/pdr.htm

I haven't filed my tax returns in 6 years, the IRS has said nothing, should I call them?

Yes.

Or you can hire a tax professional to call for you. There is a thin line between tax evasion and none-filed tax returns.

Are you employed or self-employed? Were federal taxes withheld from your paycheck? How many dependents do you have? Have you moved 2 or 3 times since you filed your last tax return?

These are all questions that might explain why the IRS has NOT contacted you.

There is a good chance that the IRS owes you. If they didn't, you would have heard from them by now.

File the past due tax returns ASAP.

If you need help contact us through http://taxeswilltravel.com/pdr.htm

I lost my W2, can you help me get a copy?

Taxpayers can call the IRS directly and ask that W2 or 1099 information and any other information reported - be mailed to them.

However, you will need to contact your state tax agency to secure the state withholding amount, if any.

Taxpayers who would rather not speak to the IRS directly, can seek the help of an online tax resolution service for past due returns, such as http://taxeswilltravel.com/pdr.htm

For clarification of tax codes, visit irs.gov

I put my 401K into my savings account and when the tax software asked me if I rolled my 401K over, I replyed, yes. Was this correct?

No.

Contact a financial planner ASAP, and hope the IRS does NOT ask questions.

My husband passed away, can I still qualify for $500,000 exclusion on the sale of my house?

Question: I just sold my home in May of this year. My husband passed away in November of last year. Can I still qualify for the $500,000 exclusion of gain?

Answer: The surviving spouse qualifies for the $500,000 exclusion of gain, if:
1) unmarried at the time of sale, 2) sale occurs within 2 years after date of death, 3) time, use and frequency requirements were met before your husband passed aw

For clarification of tax laws, visit irs.gov

Will filing bankruptcy stop the IRS from levying my bank account?

Filing a Bankruptcy petition puts an immediate STOP to ALL IRS collection actions. This does not mean that your tax liability will be wiped out, however, it does mean that the IRS won't have access to your assets without going through the US Bankruptcy court.

You will need to filed all past due tax returns before filing bankruptcy.

Please contact a bankruptcy attorney for more information.

Bloglisting.net link

I am on disability and I rent rooms in my home - one of the tenants told the IRS that she paid me $500 a month for 2 years, what should I do?

I am thinking that you did not include the rental income on your tax returns for the 2 year period or that you didn't even file returns, because this is a "file your past due tax return" email question?

If you didn't include or file a return for the years in questions, now would be the time to do so. If you did file a return and forgot to include the rental income - file a 1040-X (Amended Return) ASAP.

If you provided more services other then rental of the room, such as laundry, meals, etc, then you would put the income on a Schedule C. Profit and Loss from Business

If you only rented the room with no services included - then you would include the income on a Schedule E - Supplemental Income and Loss OMB No. 1545-0074
(Form 1040) (From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)

If you have never filed either of these forms, you may want to think about an experienced tax professional. Especially if you rented more than one room at a time. You will need to divide out the utility cost, insurance and a number of other expenses to arrive at a more correct tax return.

for exact clarification of tax codes, visit irs.gov

We are available to prepare past due tax returns that include Schedule C or Schedule E.

International Taxes, I receive income outside the US, where can I get more information on my filing requirements?

You can call International customer Services at 215 516-2000, Monday through Friday from 6am to 11pm EST.

You can also visit the irs.gov site and put in the keyword: international

Publications that will help you with International Tax issues are 54, 514,901, 4588 and 4732.

Tips on Self-Help for Offer in Compromise - IRS releases new Form 656-B Offer in Compromise Booklet

Below is the direct quote of the announcement on the IRS's new Offer in Compromise Booklet.



for those of you who have little income and cannot afford to hire an Enrolled Agent or Tax Attorney - you may want to visit the irs.gov and put in "Form 656-B" into the search box.



Download, read and then re-read the booklet before taking any actions. If you don't understand a section of the booklet, call the IRS and ask for clarification, They will not provide legal advise, however, they may help you with direct question pertaining to the instruction booklet.



Before you can file an Offer in Compromise (OIC), you will need to fill all of your past due tax returns.



IRS -July 8, 2009 - The Internal Revenue Service has released the new Form 656-B, Offer in Compromise Booklet, and the revised Form 656, Offer in Compromise.


The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to easily access the offer-in-compromise application without printing or sorting through the offer booklet.



The new Form 656-B contains all forms and instructions necessary to file an offer in compromise, including:


A checklist to determine if the offer can be processed.


The revised Worksheet to Calculate an Offer Amount. The worksheet was revised to be used with the new Form 433-A (revision Jan. 2008).


Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, revision Jan. 2008, and Form 433-B, Collection Information Statement for Businesses, revision Jan. 2008.


A revised IRS Offer in Compromise Low Income Guidelines table based on the 2009 U.S.



Department of Health and Human Services (HHS) standards.


A revised Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment.


The Offer in Compromise Summary Checklist to ensure all necessary information has been reviewed and the appropriate forms have been completed.

Form 656 (PDF) and Form 656-B (PDF) are available on IRS.gov in the Forms and Publication section, at the IRS Taxpayer Assistance Centers and by calling the IRS toll free at 1-800-TAX-FORM (1-800-829-3676).......###

IRS Summertime Tax Tip

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

1) The cost of day camp can count as an expense towards the child and dependent care credit.

2) Expenses for overnight camps do not qualify.

3) If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.

4) The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.

5) You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).

I had a dispute with my tax preparer over the fees for the tax return, she won't return my tax documents, what shall I do?

Practioners must promptly return ALL records of the clent, even if a fee dispute exists. Even if the state law permits retention, the Federal law does not. Especially if the documents must be attached to the tax return.

Also the IRS states that the client must be allowed to access his/her tax documents to review and copy necessary records to comply with the Federal tax obligation.

Practitioner may retain copies of clients records. (Visit irs.gov for exact tax code/law)

It would be in your best interest to resolve the dispute. Try to understand why the Practitioner is charging you the amount that is in dispute. Usually the fee for service goes up when the tax professional has to complete an additional form, (and there are new and additional forms that we must complete by law) or they had to spend time completing bookkeeping services because you gave the information in a folder with no totals.

You response may be, but why didn't she tell me when I meet with her?. And her response may be, she didn't know how much time sorting out the folder or shoebox full of receipts would take.

If you don't have the money. Be honest and tell the tax professional. Being reported to the IRS for holding up a client's tax return is NOT something a tax professional wants to happen.

DOJ and the IRS's answer to unfiled taxes over a period of time

WASHINGTON – Sheri Redekker Barry and Warren Thomas Barry, a wife and husband who are both real estate agents in Fort Myers, Fla., have been sentenced to prison for conspiracy and failure to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge John E. Steele on Monday sentenced Sheri Barry to 36 months in prison and Warren Barry to 24 months in prison. The court also ordered the Barrys to pay restitution in the amount of $555,728.

In March 2009, a federal jury convicted the Barrys of conspiring to impede and impair the IRS. The jury also convicted Sheri Barry of four counts of failure to file for the tax years 2002 through 2005 and convicted her husband of three counts of failure to file for the tax years 2003 through 2005.

According to the indictment and evidence presented at trial, Sheri Barry had not filed a tax return since 1988, and Warren Barry had not filed a tax return since 2000. The Barrys sent multiple letters to the IRS advancing false and frivolous tax defer claims purporting to set forth reasons why the defendants were not required to file returns or pay taxes.

My tax preparer made a mistake on my tax return, what should I do?

It depends. Did you sign and mail the tax return?

If so, the error is yours and you will be held responsible should the IRS ask questions.

You can file a 1040 X to correct the error. (Amended U.S. Individual Income Tax Return) Allow the IRS 8 to 12 weeks to process the Form 1040 X

At the bottom of the 1040 X http://www.irs.gov/pub/irs-pdf/f1040x.pdf in Part II, there is a place to explain why you are making the changes on your tax return.

Should you need help with this issue, visit, http://taxeswilltravel.com/pdr.htm

Is it true that you can get IRS penalties lowered?

Yes. Under certain circumstances you can request an Abatement of Penalties, using form 843.

The are a number of stipulations. For exact tax codes, visit irs.gov and put in abatement into the search box

What's IRS's telephone number?

1 800 829-1040

Be prepared; If you owe the IRS, they will ask you who your employer is and where do you bank.

Remember it is a Federal crime to lie to a Federal Agent. Are IRS customer service agents considered Federal Agents? I wouldn't want to be the one to find out.

Answer each question honestly. Try not to volunteer information unless you are sure it will help your situation. Often times volunteering information leads to additional questions that may not be helpful to your case.

For help with past due tax returns, visit http://taxeswilltravel.com/pdr.htm

I just got married and my wife didn't file her taxes for the past two years. How will this affect me?

It depends. Did you file a married filing joint return with her yet?

If not, then don't until her past due tax returns are filed. You can file married: filing jointly, after your wife files and pays (if there is a balance) her past due tax returns.

If you already filed a tax return with your new wife - you will want to learn more about: http://www.irs.gov/pub/irs-pdf/f8857.pdf - Form 8857 - Request for Innocent Spouse Relief

If the IRS finds your wife's social security number on a bank account, they may levy the funds, even if it is a joint bank account.

You may be an innocent spouse, but not until you can prove it.

For the exact tax code (laws) on Innocent Spouse - visit the irs.gov site and in the search box put in: innocent spouse. This will provide you with more detailed information.

Should you need help with past due tax returns - we are available. http://taxeswilltravel.com/pdr.htm