Tag: IRS

Is the IRS Going to War with Canada?

Wars with Canada turn out badly. While the Canadians are a seemingly peaceful people, content with their Tim Horton’s and their hockey, they seem to come out on top in a fight. Ethan Allen and Benedict Arnold learned that lesson early on, and things went no better in 1812.

Now IRS Commissioner Shulman is baiting Canada for another war:

Premier David Alward, one of New Brunswick’s best known dual citizens, says he has been caught in the same broad net U.S. officials have cast to catch international tax evaders.


This prominent Canadian has been dragged into a U.S. tax nightmare the same way as thousands of other well-meaning expats:

Alward was born in Beverly, Mass., and spent his early years in the United States before his family settled in New Brunswick.

“I’ve had to scramble like thousands of other people,” Alward said, adding that he is complying with the U.S. demand for tax returns going back years and detailed disclosures.

The IRS is going after offshore tax violators in a big way. It’s natural that there are more in Canada than anywhere else because of geography and economics. But the IRS approach has been to enforce traffic safety by shooting jaywalkers.

While the US taxes its citizens on worldwide income, many, maybe most, expatriates have little or no U.S. tax liability. The foreign earned income exclusion and the foreign tax credit take care of that. But the long-obscure “FBAR” requirement to report foreign financial accounts over $10,000 threatens to impoverish many of these people anyway. The penalties for failing to file the FBAR Form, Form TD 09.22-1, are the greater of $10,000 or half the value of the account. The IRS is freely asserting these penalties even when little or no tax is due, and is even applying them to Canadian retirement accounts of U.S. expats like Alward.

The IRS has had two “amnesties” to draw expats into its loving arms, and the program has been a disaster for many ordinary folks who have signed up to try to clean up their records. Taxpayers living in Canada since childhood are presumed to be tax cheats, and penalized accordingly.

The IRS could learn a lot from states in handling these issues. The IRS “amnesties” have been progressively more restrictive, with higher penalties, making it more and more dangerous for folks with trivial paperwork violations to come out of the cold. Many states, in contrast, have standing deals where out-of-state taxpayers can clean up their tax histories by filing a few years of back tax returns, no questions asked. If the IRS would take this approach, and waive FBAR penalties for accounts under, say, $200,000 — and for all retirement accounts –maybe we won’t have to worry about the White House getting sacked again.

IRS Stops Short of Requiring Tax Preparers to Go Through a Full Rectal Exam to Pass Suitability Check

But fingerprints, on the other hand, those will be necessary.

Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.

Under the current proposed regulations, any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the U.S. will not have to be fingerprinted to participate in these programs. Those preparers, however, must comply with all the other elements of the suitability check. In addition, the Treasury Department and the IRS are continuing to study which additional requirements should apply to people outside the U.S. Any additional requirements will be set forth in future guidance.

Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time. However, they are still required to answer all the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years. Individuals participating in the PTIN, acceptance agent, or authorized e-file provider programs also are required to meet any other requirements of the programs in which they are participating.

If you’re weren’t sufficiently annoyed with the IRS’s new oversight regulations. This might do the trick.

IRS to Begin Fingerprinting Tax Preparers [AT]

A Bright Student Would Never Leave Their Backpack at an IRS Office Unattended

A suspicious backpack was found at an IRS office Ocala, Florida yesterday that resulted in the 100 employees being evacuated from the building and also business in the surrounding area. In this day and age of misplaced IRS hating, authorities always approach these situations with caution and swiftly destroyed the pack after viewing the X-rays noting notebooks and “an electronic device with wires.” The contents turned out to be nothing more than someone’s psychology textbook, notebooks and a tape recorder, among other school-y items. This will be the best excuse that psych prof will ever hear. [Ocala]

Look for the IRS on an Upcoming Episode of ‘Hoarders’

As of September 2010, the tax agency had 80,606 items in storage, of which 28% — or 22,486 items — had been there for at least a year and a half without being used or moved, according to [a TIGTA] report. Those items took up 34,194 square feet of warehouse space costing about $862,000 in rent annually. [WSJ]

Here Are Two Examples of Things Not to Say When You’re at Your Local IRS Office

Let’s open with, “If I don’t see [so and so], I will blow this place up.” That’s a definite no-no. Also to be avoided would be statements such as, “You’re gone. You’re all [redacted but I’m guessing it was “fucking”] gone. You’re gonners.” And yet that’s what 48 year-old Paul Weber did in La Crosse, Wisconsin. What’s especially odd is that Weber didn’t make these statements in immediate succession. He first asked for “Kevin” then made the threat, bolted the office only to return and make the second threat. I guess Weber felt like returning in order to take a stand. Which is more than we can say for the Democrats in Madison.

[via La Crosse Tribune]

IRS Criminal Investigation Unit Bringing the A Game

You’ve been warned, scofflaws.

The inspector general audit found that the criminal unit closed 4,325 cases in fiscal 2010, well above its goal of 3,900, a mark the unit did not hit in 2009.

The average investigation, meanwhile, took exactly one year, a roughly 9 percent improvement over 2009, and the number of convictions in legal source tax cases also rose 7 percent from 2009 to 2010, and has jumped close to 23 percent since fiscal 2006.

As the audit points out, the unit’s performance also improved even as its staffing numbers decreased by roughly 2 percent since 2006.

And they probably all carry shotguns.

IRS hitting criminal investigation targets [OTM/The Hill]

Uncategorized

IRS: Get Off Our Backs About Following Up with Taxpayers That Suck at Math

The IRS’s naggy watchdog, the Treasury Insepector General of Tax Administration, has released a new audit that found the Service doesn’t follow up on math errors quickly enough and that they should start picking up their game, especially in the case of taxpayers who are trying to utilize the Earned Income Tax Credit. The IRS, who is normally looking to do things better, did not appreciate the sentiment:

[T]he IRS was cool to the report’s recommendations, asserting that it has limited resources and noting that it usually sends interim letters to taxpayers if their cases will not be handled within 30 days. The agency’s Richard Byrd also noted that the IRS receives some 20 million paper letters each year. “While important, replies to math errors represent a small fraction of our overall inventory,” Byrd wrote.

Seriously. They’ve got an over-eager AICPA to deal with.

[via OTM/The Hill]

For Reasons Unknown, Some People Are Listening to Mike Huckabee Talk About Taxes

The House of Representatives’ Ways and Means Committee held a hearing yesterday to discuss how to best reform the Internal Revenue Code.

Oddly, former Republican Presidential Candidate and conservative stud of the Fox News stable, Mike Huckabee, was invited to give his thoughts on the matter which include eliminating the IRS and replacing it with the dead in the water FairTax:

[Huckabee] is urging Congress to eliminate the Internal Revenue Service, along with taxes on income, payrolls and estates, and replace them all with a single retail sales tax. Huckabee told the House Ways and Means Committee today that Congress should pass legislation to achieve those goals, dubbed the FairTax, which is popular with many Republican voters even as it makes little legislative progress.

Now maybe Huckabee secretly crammed in rigorous tax study during his one year at seminary but this is a guy who was convinced Donald Trump was going to run for President.

Huckabee Tells Congress to Scrap IRS for Single Retail Sales Tax [Bloomberg]

IRS Agent Wants to Know If There’s Life After Government Work

Welcome to the when-do-the-blackouts-start edition of Accounting Career Emergencies. In today’s edition, an IRS revenue agent is thinking about the future and wonders if there is anything to look forward to after a stretch inside the House of Shulman. Will he be greeted with contempt or disdain by potential employers outside of the Treasury Department?

Trapped in your job? Not sure if you can bottle up your rage during your upcoming compensation discussion? Need ideas for your next advice@goingconcern.com and we’ll come up with something to bring everyone closer together.

Back to the Shulman Soldier:

Dear Career Advice Brain Trust,

I am currently a freshly minted IRS revenue agent in the Northeast right out of school. I’m the guy that audits the tax returns of small business and the self-employed (Schedule C’s and 1120’s). I’ve been at the job for about 10 months, and lately I’ve been starting to wonder: if this whole IRS thing doesn’t pan out, what are my options? Do public accounting firms of any size see any value in the experience gained here? From what I’ve experienced, employment at the IRS is a one-way street, either attracting grads with the ink still wet from their degree, or mid-career public accountants who value personal and family time more than money. Since I’m a young grad with no family to speak of, I feel like a lot of the non-monetary benefits are lost on me.

This job has its pros and cons. It’s probably one of the safest jobs in the country for anyone with an accounting degree, and it’s borderline illegal to work more than 40 hours per week because we’re unionized. Supposedly once you’re in for a few years, you can do “anything you want” within the organization, but I find that hard to believe because due to our reduced FY 2012 budget, we’re the last class to be hired for a while, so who is going to keep doing my job when everyone goes to do “anything they want?” Also, after 3-4 years, the salaries plateau big time, and we definitely make less than our public accounting counterparts throughout our careers. Furthermore, it literally takes an act of Congress to get anything substantial changed.

So my bottom line question to you (and the readers) is this: if I wanted to jump ship and go somewhere that my title carries a little less universal hatred, as well as advance my career prospects, what could I expect for opportunities, particularly in the public accounting sector?

Sincerely,
Agent Curious

Dear Agent Curious,

I’m happy to say that you’re first IRS agent to come to us for advice. Whether that means you value what we have to say or you’re simply desperate isn’t clear but regardless, thanks for reaching out.

Now then. Your problem. Personally, I feel as though the stigma associated with working for the IRS is a little overblown. Just because some of your colleagues chase down loose change and politicians call you names, that doesn’t mean you don’t have skills that aren’t valuable for private employers. The knowledge you are curating about small businesses and their compliance issues are extremely valuable and many CPA firms would gladly talk to you about your experience and how it will work for them and their clients.

Furthermore, with your inside knowledge about the Service and how is picks and chooses returns for audit, you’ll be able to better serve your clients by saying, “I assure you this will result in a Young Buck-esque raid of your business.” This knowledge of the inner workings might even be more valuable than what you actually learn on the job.

Right now, your best opportunities would be with public accounting firms that specialize in tax compliance for small businesses. Just like any other job, if you are able to jump around inside the Service and see various types of returns (partnerships, larger businesses), your skill set will be even more valuable. A few more years doing Doug Shulman’s dirty work could pay big dividends down the road.

Any former/current IRS agents out there with insight? Drop your knowledge in the comments.

About 100,000 Tax Preparers Sorta Forgot Those Identification Number Rules Went into Effect This Year

For those of you that haven’t nailed down the CPA yet, hopefully you’re not amongst those receiving nastygrams from the IRS for not complying with the new ID requirements.

And, on behalf of the thousands of tax preparers who did comply with the new rules, Doug Shulman doesn’t appreciate your apathy, “The vast majority of federal tax return preparers complied with the rules. We owe it to the compliant tax preparers to make sure that everyone is on a level playing field.” [Bloomberg]

AICPA Enthusiastically Offers the IRS Its Help Developing the Registered Tax Return Preparer Exam

Not unlike the overachiever that sits in the front row of class waving their outstretched hand like some ecstatic cruise ship passenger, the eager beavers at the AICPA have put the IRS on notice that they are willing and able to help out with the registered tax return preparers (“RTRPs”) exam.

As the national professional organization of certified public accountants comprised of approximately 370,000 members, the AICPA is well situated to provide input to the IRS on the technical issues related to developing and administering competency examinations. AICPA members provide services to individuals, not-for-profit organizations, and small and medium-sized businesses, as well as America’s largest businesses.

The AICPA offers to assist the IRS build on the Service’s already significant experience with the Special Enrollment Examination. Our own experience with the Uniform CPA examination has shown us that there are a number of critical steps in the test development process, including: (1) defining the material to be tested; (2) developing the test questions; (3) pre-testing or trying out test questions; (4) constructing and reviewing test forms which require that the final test be fair to all candidates regardless of which test form they take; (5) reviewing candidate comments on test questions; (6) protecting the security of the examination (including the examination questions and candidate data); and (7) conducting an annual review of the quality of the examination.

Despite the hint at a compliment (e.g. “Service’s already significant experience”), you can’t help but think that AICPA doesn’t quite trust the IRS to pull this off. What with the security issues, lack of warm bodies and beating terroristic threats off with a stick.

IRS Comp Examination

[via AT]