Tag: IRS

The TIGTA Would Prefer It if the IRS Could Use a Nicer Term Than “Tax Protester”

Back in 1998 when some of you were just starting your careers, some of you were discovering alcohol and some of you still hadn’t hit puberty, Congress enacted the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98). In Section 3707 of this piece of legislative ingenuity, the IRS is prohibited from using the term “illegal tax protesters or any similar designations.”

Why no name calling? The TIGTA claims it “may stigmatize taxpayers and may cause employee bias in future contacts with these taxpayers.” Plus, it really hurst people’s feelings.


This latest edition of government-mandated IRS bashing especially seems like a stretch since this “problem” of calling a spade a spade isn’t that widespread:

We found that, out of approximately 80.6 million records and cases, there were 196 instances in which employees had labeled taxpayers as “Tax Protester,” “Constitutionally Challenged,” or other similar designations in case narratives on the following computer systems during the period of October 2008 through September 2009[.]

For starters, “Constitutionally Challenged” sounds like something you might apply to a Tea Party member. Secondly, you can do the math on the 196 instances out of 80-odd million but the concern on the part of the Inspector General might be overblown.

Luckily for us citizens, we can throw around any term we want with reckless abandon and there’s no repercussions. That being said, the TIGTA didn’t make any recommendations to the IRS on how to curb the usage of axtay rotestorpay and the IRS didn’t buy the Inspector’s story that the 196 instances were, in fact, violations. So, if you’ve come to the conclusion that this TIGTA report was the biggest waste of time and tax dollars in the history of the Treasury Department, you probably wouldn’t be far off.

The IRS Is Giving Small Nonprofits One Final Chance to File Their 990s

Remember the IRS’ failed outreach to small nonprofits back in the spring? Yeah, the May 17th deadline threw a lot small NFPs for a loop and they up and missed the filing deadline completely.

IRS Commish Doug Shulman figured that, despite the unprecedented outreach, the whole snafu was his bad and that nonprofits shouldn’t worry their pretty little heads about missing the deadline, the Service will still take your 990, tardiness notwithstanding.

But that can’t go on forever now, can it? Accordingly, the IRS set a new deadline today to file the 990s and it’s set for a much more memorable October 15th.

WASHINGTON — Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

The IRS today posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

It’s simple people. If your gross receipts are under $25,000, get yourself a 990-N (e-Postcard), fill it out and you’re done. If you have receipts up to $500k, you’ll have to fill out either Form 990 or 990-EZ which will probably take you all of 15 minutes.

Get it? No more blowing this off. OCTOBER 15TH is the drop dead date. After that, Shulman & Co. will be busting down the doors to inform you that you’re no longer tax exempt. And trust us, you don’t want to deal with that.

IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status [IRS]

Accounting News Roundup: Geithner Is Ready to Let Tax Cuts Die; Hayward on His Way Out?; PwC Wants Glitnir Lawsuit Tossed | 07.26.10

No new recession, let tax cuts die: Geithner [Reuters]
“The economy is not likely to slip back into recession but letting tax cuts for tans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans — those making $250,000 or more a year — will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.”

BP Said to Prepare Dudley as CEO as Board Looks for Recovery [Bloomberg]
“BP Plc plans to name Robert Dudley to succeed Tony Hayward as chief executive officer as the board looks to recover the company’s position in the U.S., two people with knowledge of the matter said.

Dudley, the director of BP’s oil spill response unit, is ready to be announced as the company’s first American chief and to take the helm Oct. 1, one of the people said, asking not to be identified because a final decision hasn’t yet been made. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.”

Madoff Investors Brace for Lawsuits [WSJ]
“Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called “net winners” from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff’s firm than the amount of principal they invested.

‘The people who made money, who got more, have made money at the expense of the people who didn’t,’ said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.

Mr. Picard must file any so-called clawback lawsuits by December, the two-year anniversary of Mr. Madoff’s arrest and the filing of regulatory proceedings against him. ‘We’re not going to wait until the last minute,’ Mr. Picard said.”


Change the world or go home [AccMan]
Dennis Howlett implores you that if you want your firm or business to really stand out then it’s going to take more than a catchy slogan or a boilerplate email to get people’s attention. You best recognize an opportunity when you see one.

“I’ve lost count the number of times I’ve said but it is worth repeating. When disruption like SaaS comes along, it represents an opportunity. From a professional standpoint it should mean that firms can further commoditize what they do by using accounting dashboards that show them the status of their clients’ activity. It is a short step to seeing how this might be integrated into fees, billing, customer satisfaction measurement and the like.”

If You’re Going To San Francisco…AAA Will Be There [FEI Financial Reporting Blog]
Edith Orenstein has the lowdown on this year’s American Accounting Association’s (AAA) annual meeting. This year’s event is in AG’s backyard (she loves giving directions, btw) from July 31 to August 4th and will feature Francine McKenna and Professor Albrecht on one of the panels.

Join Me For a Nice Little CPA Exam Chat on August 3rd! [JDA]
Speaking of Adrienne, she’ll be over at CPA Exam Club to take your questions on everyone’s favorite test on August 3rd. Yes, that’s one week from tomorrow.

PwC Demands Dismissal of Glitnir Lawsuit [Iceland Review]
PwC’s lawyers argue that Glitnir and the firm agreed to do any legal wrangling in Iceland if the poo hit the fan. Late last week they requested that the lawsuit in New York be tossed.

Saltzman Hamma firm details merger with RubinBrown [Denver Business Journal]
“Saltzman Hamma Nelson Massaro LLP, a century-old Denver accounting firm, is merging with St. Louis-based RubinBrown LLP to form what’s expected to be among the 50 largest accounting firms in the United States, principals were set to announce on July 23.

The new entity, which will operate as RubinBrown, will employ 375 people in offices in Denver, St. Louis and Kansas City, Mo. The merger will be effective Aug. 1.”

District Court Denies Charitable Deduction for Donation of Home to Fire Department [TaxProf Blog]
Just donate a car next time. It’s a far worse investment than a house.

IRS Proposes PTIN Fees [JofA]
$50 for your very own preparer tax identification number! Of course there’s also a ‘reasonable fee’ on top of that from “a third-party vendor that will administer the application and renewal process,” that gets thrown in for good measure.

My Life as a White-Collar Criminal [White Collar Fraud]
Sam Antar went on Canadian TV last week to talk about how much fun it is to be a crook. Except the whole possibility of prison part.

Filthy Rich Guy Loses Fight with IRS, Remains Filthy Rich

Phil Anschutz, like most multi-billionaires, didn’t get rich being a passive dude. Case in point, Mr Anschutz just lost a battle with the IRS over $143.8 million in capital gains taxes that the Service argues he and his company, Anschutz, Co. owed for for transactions related to Union Pacific and Anadarko Petroleum.

According to Forbes’ latest Billionaire list, Phil is worth $6 billion. Before you reach for your 10-key, we’ll just tell you – this little capital gain issue amounts to less than 2.5% of his net worth.


In a similar vein, these transactions occurred in 2000 and 2001 so this particular battle is entering it’s second decade if you consider the birth of the transaction that gave life to the IRS’ beef.

Yes, he’s appealing ruling. See you in another 10 years.

Billionaire Anschutz Loses Capital Gains Ruling Over $144 Million Tax Bill [Bloomberg]

Tax Court Rules That Feng Shui-Inspired Business Plan Made Couple Professional Gamblers

There are plenty of businesses out there that simply don’t have a plan. They may have a sign in the window, products on their shelves and a room full of “keepers” but not much else.

Trieu Le and Baymone Thongtheposmphou, on the other hand, had a plan. When Le’s company moved to Costa Rica in 2005, he opted to turn his focus towards professional gambling.

Sure, there are plenty of people out there that claim to be professional gamblers that would probably be better described as “degenerates” but not Le and Thongtheposmphou. They would use the principles of Feng Shui to focus their wagering efforts on their “lucky days,” increasing their wagering, foregoing sleep and possibly unnecessary food or bathroom breaks in order to maximize their luckiness.


Things were going on swimmingly for the couple until, at some point in 2007, they realized they were 200k in debt, having “withdrawn money from their retirement funds and borrowed against various assets to finance their attempt to make a profit.” These two were obviously committed to their idea and their plan.

TL and BT filed their losses (not to the exceed their winnings, of course) on a Schedule C to be included on the 1040. Unfortch, the IRS wasn’t buying the notion of this “professional gambling” and called bullshit:

Respondent treated petitioner’s winnings as not being from a business (i.e., that petitioner was not in the business of gambling) and accordingly determined that his losses should have been reported on Schedule A, Itemized Deductions, as an itemized deduction rather than a business deduction. The income tax deficiency respondent determined arose from the inclusion of the gambling winnings in income and the resulting increase of the limitations on miscellaneous itemized deductions claimed on Schedule A.

The tax court decided to boil this down to the facts. That being, these two people had a plan – to gamble based on Feng Shui principles. Was this a bad business plan? Certainly not the best but far from the worst. Was it harebrained? Maybe. But was the tax treatment correct? The tax court says yes!

We find that petitioner’s gambling activity was a trade or business that was pursued in good faith, with regularity, and for the production of income, and that it was not merely recreation or a hobby.

[…]

Respondent also argues that petitioners’ approach was not businesslike and that it was irrational. The standard, however, requires only that the profit objective be actual and honest. It would be difficult to find on the record before the Court that petitioner’s approach to making a profit was irrational. For example, if someone’s investment in a stock or a business were based on Feng Shui or some other cultural judgment, that would not per se be “irrational”. Petitioners used their best judgment and successfully tested their business approach. Ultimately, the fact that their approach was unsuccessful does not make it irrational.

So take heed degenerate gamblers with crackpot business plans! As long as you’re using your best judgment and have some semblance of an “business approach” you too can take on the IRS (these two were pro sese, no less). Good luck!

[h/t TaxProf]

How Big of a Burden Will the New 1099 Reporting Requirements Be for Small Businesses?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Slipped into the health care reform bill passed in March was a new tax reporting regulation likely to create a huge burden for businesses, something we wrote about recently. Now a government watchdog, the National Taxpayer Advocate, is questioning the rule’s potential unintended consequences for small companies.

Plus, it looks like the regulation won’t raise a heck of a lot of money anyway.


The rule would require anyone with business income to issue 1099 tax forms to all vendors from whom they bought more than $600 worth of goods and services that year.

In her report, Nina Olson, the Taxpayer Advocate, warned that the rule could prove to be an unacceptable added burden for small businesses, which would face a virtual cyclone of new paperwork to comply with the regulation. “The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance,” she wrote. And the rule could also give an unfair advantage to large suppliers that have the resources to help customers track purchases.

What’s really going on here? The regulation, which would take effect in 2012, seems to be yet another attempt by federal and state government agencies to shore up revenues by cracking down on unpaid tax liabilities–and taking steps that intentionally or unintentionally impact small businesses in particular. For example, a bevy of agencies, plus Congress, are on a regulatory jihad against corporate misclassification of independent contractors. And there are reports that the IRS is especially eyeing small businesses in that crackdown.

Thing is, like that effort, the new 1099 tax reporting regulation isn’t likely to reap a whole lot of money. For example, the nonpartisan Joint Committee on Taxation recently estimated the rule would raise an underwhelming $2 billion annually in added revenue, according to CNNMoney.com.

Will the Taxpayer Advocate’s remarks have any effect? Even before Olson’s report, there were signs that the IRS had started to backtrack. For example, the IRS announced in May that the rule won’t include transactions made through credit and debit cards. As the tax agency addresses all the compliance complexities of the rule, it’s likely to make other changes, as well.

But with government agencies in desperate need of money, the reporting rule isn’t going to disappear completely.

People Get More Satisfaction From Filing Their Taxes Online Than Using Facebook

The emphasis isn’t needed but we’ve provided it anyway:

Despite being the most popular website in America, consumers don’t like Facebook, according to the 2010 American Customer Satisfaction Index (ACSI) E-Business Report, produced in partnership with ForeSee Results. Facebook scored 64 on the ACSI’s 100-point scale, which puts its satisfaction even lower than IRS e-filers. This puts Facebook in the bottom 5% of all measured private sector companies and in the same range as airlines and cable companies, two perennially low-scoring industries with terrible customer satisfaction.

It makes sense, really. If someone is filing their taxes electronically and something goes wrong, he/she is probably able to keep it together long enough to call up the IRS and tell him what the problem is. On the other hand, if Farmville starts acting up on Patrick Byrne (just as an example), we’re guessing the man loses his shit.

It’s Possible That the IRS Is Partly to Blame for Postal Workers Going Postal

Our favorite corner of the Federal bureaucracy, the Treasury Inspector General for Tax Administration, has come out with a new report today that admits that the IRS current method of sending notices and letters is costing us – taxpayers – millions because so much of it is undeliverable. This happens for various reasons, including nearly 25% of instances where recipients may or may not have physically threatened their mail carrier.


Press release (our emphasis):

TIGTA Report: Current Practices Are Preventing a Reduction in the Volume of Undeliverable Mail

The Internal Revenue Service’s (IRS) current method of sending notices and letters is costing taxpayers millions of dollars because it results in a large amount of undeliverable mail, according to a report publicly released today by the Treasury Office of the Treasury Inspector General for Tax Administration (TIGTA).

The IRS sends out approximately 200 million notices and letters each year to individual and business taxpayers and their representatives at a cost of $141 million. In 2009, approximately 19.3 million of those mailings were returned to the IRS at an estimated cost of $57.9 million.

TIGTA assessed whether the IRS can reduce the volume of undeliverable mail. Its review of a random sample of 331 notices and letters returned to the IRS found that 37 percent were undeliverable because of invalid or nonexistent addresses; 35 percent had the wrong address; 24 percent were refused by the taxpayer or the taxpayer was not at home to receive the certified or registered mail; and four percent were returned for other reasons.

TIGTA recommended that the IRS allow taxpayers to submit a change of address over the telephone and improve its systems for identifying known bad addresses. TIGTA also recommended implementing a standardized procedure for processing undeliverable mail.

“The Internal Revenue Service needs to take advantage of the latest technologies and systems now available to cut down on undeliverable mail, thereby saving the taxpayers money,” said J. Russell George, the Treasury Inspector General for Tax Administration.

In response, the IRS agreed with all of TIGTA’s recommendations and has begun the process of planning to implement them.

So, in other words, the IRS is partly responsible for several instances of the following:

The IRS Is Giving Gulf Oil Spill Victims Their Full and Undivided Attention This Saturday

Attention “self-reliant nonconformists who don’t pay much heed to everyday rules and regulations”! The IRS is offering you help with your nonconformist ways this very Saturday!


If you’re not interested in conforming with, you know, the Internal Revenue Code, then the Service might be a little bit less accommodating. Sure, it’s a Saturday but this is the government offering you help for free. No physical harm intended.

The Internal Revenue Service announced the locations of Taxpayer Assistance Centers in seven Gulf Coast cities that will be open this Saturday, July 17 to provide help to taxpayers impacted by the BP oil spill.

The following locations will be open from 9 a.m. to 2 p.m. Central Time:

1110 Montlimar Drive, Mobile, Ala.
651-F West 14th St., Panama City, Fla.
7180 9th Ave. North, Pensacola, Fla.
2600 Citiplace Centre, Baton Rouge, La.
423 Lafayette St., Houma, La.
1555 Poydras Street, New Orleans, La.
11309 Old Highway 49, Gulfport, Miss.
Individuals who have questions about the tax treatment of BP claims payments or who are experiencing filing or payment hardships because of the oil spill will be able to work directly with IRS personnel at any of these locations on Saturday.

Accounting News Roundup: Quasi-Exodus at H&R Block?; National Taxpayer Advocate Issues Report That Congress Won’t Read; SEC Might Want to Take a Closer Look at Amedisys | 07.08.10

H&R Block names Alan Bennett as CEO [AP]
This all came about since Russ Smyth resigned, made official by a two sentence 8-K filing, “On June 30, 2010, Russell P. Smyth provided H&R Block, Inc. (the “Company”) with notice of his resignation as President and Chief Executive Officer of the Company, and as a director of the Company. The effective date of Mr. Smyth’s resignation from these positions is August 29, 2010, unless the Board of Directors selects an earlier date.”

It seems like there’s a quasi-exodus in the C-Suite at HRB as General Counsned on Friday and the company is still on the hunt for a CFO after Becky Shulman left in April.

Yahoo CFO Aims to End Buy-High, Sell-Low Record on Deals [Bloomberg]
Tim Morse told Bloomberg that the company has been doing things completely bassackwards, “You’ve seen our track record on M&A with buying really high and selling pretty low,” Morse said in an interview. “We’ve got to be careful.”

Some examples of doing things exactly wrong include, “Yahoo, the second-biggest U.S. search engine, agreed to sell its HotJobs website for $225 million in February after paying about $436 million for it in 2002. In January, Yahoo sold Zimbra, an e-mail and collaboration unit, netting $100 million. Yahoo bought it in 2007 for $350 million.”

Auditors could face grillings from analysts [Accountancy Age]
“Steve Maslin, chair of the partnership oversight board at Grant Thornton, envisages an expanded audit role which may involve greater face-to-face time with stakeholders, including question and answer sessions at annual general meetings.

‘Many investors believe there is valuable information that gets discussed by the auditors with management and audit committees to which investors do not have access – and I think they are right,’ he said.”


Legg Mason CFO resigns [Baltimore Sun]
Get your resumé in now.

FEI Announces 2010 Hall of Fame Inductees [FEI Financial Reporting Blog]
Come on down! “FEI’s 2010 Hall of Fame inductees: Karl M. von der Heyden, former Vice Chairman of the Board of Directors and Chief Financial Officer of PepsiCo, Inc., and Ulyesse J. LeGrange, retired Senior Vice President and Chief Financial Officer of ExxonMobil Corporation’s U.S. Oil and Gas Operations.”

National Taxpayer Advocate Submits Mid-Year Report to Congress [IRS]
Nina Olson’s mid-year report to Congress has plenty to wade through so that means none of the members will likely read it. Fortunately the IRS narrowed the three biggies (Taxpayer Services, New Business and Tax-Exempt Organization Reporting Requirements, IRS Collection Practices) into a much more consumable version.

Open Letter to the [SEC]: Investigate Troubling Issues at Amedisys Missed by Wall Street Journal [White Collar Fraud]
In Sam Antar’s latest WTFU letter to the SEC, he details some issues at Amedisys which weren’t covered in the Journal‘s report from back in April. Since we are into the whole brevity thing, we won’t get into the number crunching here but things look fishy. Plus there’s this:

On September 3, 2009, Amedisys President and COO Larry Graham and Alice Ann Schwartz, its chief information officer, suddenly resigned from the company. Amedisys provided no reason for their resignations and simply said that the two execs “are leaving the company to pursue other interests.”

In my experience, sudden, unexpected executive departures are often a sign of problems beneath the surface. And while it could be entirely coincidental, the trends at Amedisys appear to be consistent with my experience.

But Sam doesn’t believe in coincidences.

Accounting News Roundup: IRS Probing HSBC Clients with Accounts in Asia; Saints Deny State Money Was Taxable; Pot Tax Helps Helps Another California Budget | 07.07.10

HSBC Clients With Asian Accounts Said to Face Probe [Bloomberg BusinessWeek]
“The Justice Department is conducting a criminal investigation of HSBC Holdings Plc clients who may have failed to disclose accounts in India or Singapore to the Internal Revenue Service, according to three people familiar with the matter.

‘This is a global initiative by IRS and the Department of Justice,’ said Robert McKenzie, an attorney at Arnstein & Lehr in Chicago who said he spoke to two people who got letters.

The probes show how the U.S. is expanding its crackdown on offshore tax evasion beyond Switzerland and UBS AG, the largest Swiss bank, sa tax lawyer at Greenberg Traurig LLP in New York. London-based HSBC is Europe’s biggest lender by market value.

‘It’s clear that the IRS and the Department of Justice are intending to pursue other depositors outside of Switzerland,’ Kaplan said. ‘They’ve announced it before, and they are moving forward in that regard.’ “

A.T. Kearney, Booz Call Off Merger Talks [WSJ]
“A.T. Kearney Inc. and Booz & Co. called off discussions about a possible merger that would have given the two midsize firms greater scale in a highly competitive industry.

The two have flirted with each other multiple times over the years without completing a deal. The most recent talks occurred on and off over the past six months, says a person familiar with the matter.

The combined firm would still have been smaller than market leaders such as Deloitte LLP, McKinsey & Co. and Accenture Ltd in an industry where scale is increasingly important in wooing global business.”


Did Tax Ploy Help Saints Win Super Bowl? [Forbes]
If you feel so inclined, you could probably blame this on Reggie Bush but otherwise it’s probably due to some clever tax attorneys, “In a just-filed U.S. Tax Court lawsuit, the partnership owning the Saints acknowledges that it didn’t treat an $8.5 million annual payment from the state of Louisiana as income and therefore didn’t pay taxes on the sum. Rather, the team said the money was an addition to “working capital” and a nontaxable transaction.

The Internal Revenue Service insists the money should have been included in income by the franchise, owned for a quarter-century by auto dealer Thomas M. Benson Jr. The Tax Court case challenges that position.”

Pot Tax Helping Long Beach Plug Budget Deficit Faces Vote in California [Bloomberg]
“The city council of Long Beach, California, voted last night to pursue taxes on medical marijuana dispensaries, part of what may become a wave of communities turning to such proceeds to plug budget deficits.

The Los Angeles suburb with a population of almost 500,000 scheduled a public hearing on the drug levy for Aug. 3. If the council later approves the wording, a ballot initiative establishing a 5 percent tax on the city’s 35 dispensaries could go to voters in November, according to Lori Ann Farrell, Long Beach’s director of financial management.”

IRS Disbars CPA for Relying on Client’s Income and Expense Numbers [Tax Lawyer’s Blog]
How much due diligence should a tax preparer perform to be comfortable with their clients numbers?

Ex-Qwest Accountant Says SEC Should Be Sanctioned [CBS4]
“The SEC has said [James] Kozlowski hasn’t shown that it acted in bad faith. It has accused him of ‘theatrical conduct,’ including filing ‘numerous losing motions.’ Kozlowski’s attorneys dispute that.”