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Ohio CPAs Want Some Answers On This Whole Criminals With PTINs Thing

Posted on by Adrienne Gonzalez

This is from the November issue of the Ohio Society of CPAs' CPA Voice:

OSCPA submitted a comment letter to IRS Commissioner Doug Shulman and Director of the IRS Return Preparer Office David R. Williams, regarding fingerprinting of certain non-signing PTIN applicants.

Written on behalf of OSCPA’s more than 22,000 members, the letter commended the IRS for its efforts to increase compliance, ensure high ethical standards for tax preparers and exempt non-signing return preparers who are supervised by CPAs from the continuing education and testing requirements of the preparer registration program.

However, the letter expressed concern that “those same factors appear to have not been considered given the services’ proposal to impose fingerprint requirements as a means to conduct in-depth criminal record checks of these supervised, non-signing return preparers.

OSCPA reminded the IRS that “the CPAs, attorneys or Enrolled Agents who sign the returns are already subject to return preparer regulations, penalties, Circular 230, and, in the case of CPAs, regulation and potential sanction for improper activity by state licensing boards. Potential actions by state licensing boards include possible fine and/or suspension up to the revocation of a CPA’s license to practice.”

OSCPA also requested clearer guidance as to a consistent definition of the types of felonies (and explanations) that would permit someone to still serve as a supervised preparer. Rules regarding criminal records vary from state to state; some states may treat offenses as misdemeanors while the same offense might be a felony in another state.

In the letter, the OSCPA asked the IRS to consider expanding the approach taken in Notice 2011-6 to eliminate the fingerprinting and in-depth background checks for non-signing, non-licensed return preparers supervised by CPAs, attorneys or Enrolled Agents.

Citing similar concerns raised by the U.S. Government Accountability Office (GAO) and the Treasury Inspector General for Tax Administration (TIGTA), OSCPA encouraged the IRS to address these issues before expanding the tax return preparer program further.

Tax wonks will love the "IRS' controversial letter campaign," also from OSCPA.

Earlier:
Forty-three People Who Will Never Breathe Free Air Again Are Registered Tax Return Preparers

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Indiana Department of Revenue Will Waffle on Whether It Wants Your Overdue Taxes If It Damn Well Pleases

Taxes are difficult. Given. Even for the professionals that deal with them every day, it can be an exhausting mental exercise that will inevitably lead to mistakes. Example: Back in 2003, Indiana’s Department of Revenue (“DOR”) sent a $1.1 million refund to Aisin USA Manufacturing for its 2001 return. Aisin filed an amended return to show this refund only to have the DOR inform the company that a “clerical error” had been made and the company actually owed over $600k. Aisin wasn’t exactly thrilled with this and, citing the statute of limitations, told Indiana to drop dead. Surprisingly, this seemed to work:

The company then received a letter from DOR stating, “Your recent explanation and/or payment, with respect to the specific liability number referenced above, is satisfactory. No further action is required on your part for this liability.”

Then, not unlike the girlfriend who decides to change her outfit the moment you’re working out the door, the state took it back:

[I]n 2007 and 2008, the DOR notified Aisin that they actually did have to pay the disputed sum.

The state gave the company a break, cutting the amount due by about $70k but begrudgingly added, “Aisin’s continued wrongful retention of this amount d[id] not represent the action of a responsible corporate citizen.”

Long story, short – the DOR sued Aisin to get the taxes due in trial court because it hadn’t jumped through all the hoops necessary to submit the case in tax court. The Court of Appeals wasn’t impressed by this but ultimately the Indiana Supreme Court said everything was kosher and ruled in favor of the state and is now going back to Superior Court.

So, there are lots of lessons here. It appears that Indiana’s DOR can 1) make really bad mistakes; 2) decide those mistakes are NBD; 3) can change their minds and conclude that, mistakes or not, you owing them money is a BFD; 4) don’t feel the need to follow their own rules.

And they ultimately win the right to continue a battle over half a million bucks that has been going on for almost ten years. Seems about right.

Indiana Department of Revenue Rivals the Ministry of Silly Procedures in Tax Refund Case [Tax Foundation]
Zoeller v. Aisin USA Manufacturing, Inc. [Justia]

(UPDATE 2) News Corp. Appears to Be a Big Fan of Offshore Tax Havens

Sure, GE may have the “best tax law firm” in house but the boys and girls working for Rupes seem to have a few tricks of their own. David Cay Johnston reports:

News Corp. has 152 subsidiaries in tax havens, including 62 in the British Virgin Islands and 33 in the Caymans. Among the hundred largest U.S. companies, only Citigroup and Morgan Stanley have more tax haven subsidiaries than News Corp., a 2009 U.S. Government Accountability Office study found.

News Corp. had nearly $7 billion permanently invested offshore in 2009, money on which it does not have to pay taxes unless it brings the money back to the United States. Meanwhile, it can use that money as collateral for loans in the United States, where interest paid is a tax-deductible expense.

This and other tax planning strategies result in a 20% tax rate for the company. And not a single phone hacked!

[via Reuters]

UPDATE:
Via NPR’s The Two Way news blog, Reuters has posted this statement:

Please be advised that the David Cay Johnston column published on Tuesday stating that Rupert Murdoch’s U.S.-based News Corp made money on income taxes is wrong and has been withdrawn. News Corp’s filings show the company changed reporting conventions in its 2007 annual report when it reversed the way it showed positive and negative numbers. A new column correcting and explaining the error in more detail will be issued shortly.

As of now, Johnston’s post remains unchanged and what I blockquoted above doesn’t seem to be in dispute but the situation appears to be fluid.

UPDATE 2:
Here’s a portion from Johnston’s new column:

Readers, I apologize. The premise of my debut column for Reuters, on News Corp’s taxes, was wrong, 100 percent dead wrong.

Rupert Murdoch’s News Corp did not get a $4.8 billion tax refund for the past four years, as I reported. Instead, it paid that much in cash for corporate income taxes for the years 2007 through 2010 while earning pre-tax profits of $10.4 billion.

For the first time in my 45-year-old career I am writing a skinback. That is what journalists call a retraction of the premise of a piece, as in peeling back your skin and feeling the pain. I will do all I can to make sure everyone who has read or heard secondary reports based on my column also learns the facts and would appreciate the help of readers in that cause.

Johnston goes on to explain in detail how the error occurred. He also states that a number of the facts originally reported, including the number of News Corp. subsidiaries in tax haven (that we blockquoted above), remain.

Memo to Anyone Under the Impression That There Is Some Secret Backdoor Escape Hatch in the Taxpayer Protection Pledge That Says a Hike in the Capital Gains Tax Is Allowed: There Isn’t One

Because a whole slew of people out there seem to have severe memory loss and there are rumors that the not-so-Supercommittee is kicking around a hike in the capital gains tax, Americans for Tax Reform will go over this ONE. MORE. TIME.

The Congressional “Super Committee” is now in its final week of deliberations. Rumors are constantly swirling around Washington about what they are talking about. One rumor we have heard is that the Super Committee might consider hiking the capital gains tax rate paid by a wide range of investment partnerships, including partners and employees at private equity, venture capital and real estate firms. The Taxpayer Protection Pledge commits signers to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses.” This clearly precludes any hike in the capital gains tax rate.

Does Grover Norquist have to slap you people?

Any Capital Gains Rate Hike Violates Tax Pledge [ATR]