Pop quiz, CPAs: What do you tell a client who asks you about the tax benefits of direct indexing? If your answer is “Pretend I need to go to the bathroom and hope I can get one of my advisor friends on the phone to explain it to me in time,” this article is for […]
Now, before the trolls rally and start complaining about how this post is stupid and totally useless for 99% of the people who read this website, let us all take a moment to remember that accounting professionals (I use the term loosely) aren't the only ones who read Going Concern. Plus, auditors despise taxes down […]
[caption id="attachment_8735" align="alignright" width="260" caption="Chad, sans sombrero"][/caption]
Misbehaving athletes (or fun hating NFL, NBA, MLB administrators) should take note, getting fined can apparently do wonders for your itemized deductions.
That’s according to a report from Darren Rovell at CNBC, anyway. He cites sports accountant Robert Raiola of Van Duyne, Behrens & Co. who says that fines are “classified as ordinary business expenses,” so once the amount of those expenses exceed 2% of the taxpayers adjusted gross income, the expenses are deductible.
Of course, what isn’t mentioned is that it’s likely that a professional athlete’s itemized deductions would probably be limited since it’s safe to assume that their itemized deductions are greater than $166,800. So in other words, it might work out well for Chad Ochocinco to get fined on a weekly basis for wearing sombreros, bribing officials, and/or any other tomfoolery that the NFL finds fineable but without all the information it’s difficult to determine if this is actually a worth tax-planning strategy. Athletes – please consult your tax advisor that is probably already robbing you blind.
Tax professionals require many traits: good with numbers; explaining complex issues; the ability to forego adequate sleep regularly; borderline insanity, among others. One talent that some tax gurus, certainly not all, possess is that of makeshift therapist. When you think about it, this makes perfect sense, since Americans hate taxes and the IRS.
This passionate resentment obviously leads to strong emotions and sometimes actions; emotions that have to be addressed by tax professionals. Many situations that CPA, EA, or tax attorney encounter necessitate the phrase “calm your ass down.”
From the San Francisco Chronicle, a few examples include, marital relations “My actual designation is enrolled agent, but it should be marriage and family counselor…Sometimes I know about a divorce before the spouse. Or I’ll get a call after a couple has just had a hellacious fight, and she or he wants to have the tax refund put in another account.”
Then of course, the overall warped fear of the IRS that no amount of Xanax will help subside:
“People have had it drilled into their heads that the IRS is as close as we can get to the secret police,” says Stephen Graves, a CPA in downtown San Francisco who has been preparing tax returns for more than 40 years.
“The IRS (audit) is the adult equivalent of being called into the office — it’s a very interesting, basic emotion,” he adds. “Twenty to 30 percent of my job is kind of like being a shrink, and guiding them through that fear.”
However, the biggest common denominator that tax pros report is the weeping. All clients have personal problems of some sort but when you break the news to them that they owe the Feds a grip of cash, that can be too much to bear.
Your inclination may be to roll your eyes and drum your fingers on your desk until they get it out or to point at them accusingly and shout, “Jesus! Pull yourself together man!” but this would not be the advised course of action. The most effective? Nod, listen and don’t get all judge-y:
[T]heir techniques are decidedly un-quantitative. “I listen…I try not to patronize them and say, ‘Everything will be OK.’ I try and be a good listener. A lot of times people just need to get it off their chest and get on with it.”
“I try to be empathetic…Nobody leaves my office without a hug.”
There’s the answer friends. Hugs. More hugs.
Tears and taxes: Meet my therapist, the accountant [SF Chronicle]
Charlie Rangel may have lost (temporarily!) his Chairmanship of the House Ways & Means committee because of a few tax issues but that doesn’t mean he isn’t willing to shell out a bit of tax advice during tax season.
Rangs sent a flier in the mail to his 15th District constituents so they could “put money back into your pockets.”
This particular bit of irony was not lost on the voters in the 15th District; the Daily News shared some of their thoughts including the obvious, “It’s probably not the best time to put something like that out,” to the practical, “I’d never take tax advice from that guy,” and those pointing out the chutzpah, “That is amazing. He certainly has gall.”
A spokesman is quoted that this SOP for Charlie during this time of year, “[He] has sent his tax newsletter to constituents for many years in order to assist them in filing their tax returns and ensuring that those who are eligible take advantage of important benefits, including the Earned Income Tax Credit.”
So maybe this is one of those time-honored Congressman Rangel traditions in the 15th District that operates like clockwork. Every tax season, voters can expect to get Chuck’s smiling face in their mailbox sharing tax advice on laws that he has helped write for decades. A little tax-related scandal isn’t going to put a stop to that. Unfortunately, we’re guessing the pamphlet doesn’t discuss how to exclude $75,000 in income from a rental property in the Dominican Republic. That would be taking things a bit too far.
After yesterday’s words of wisdom from Joe Biden on your taxes, we stumbled across the “tax savings tool” that’s so easy
a caveman Joe Biden can do it.
We actually do believe the VPOTUS when he says it’s easy because he made the announcement yesterday with two men who aren’t exactly known to be tax mavens: IRS Commish Doug “I find the tax code complex” Shulman and Tim “I think I’ll try using TaxCut this year” Geithner.
Try your hand this thing and make up your own mind, after the jump.
Our feeling that it’s like tax planning a step or two above what Fisher-Price might put out. Which, for the majority of the American People, might still be tricky.
Everybody got it?
“It’s not hard. Not even hard for me.”
“I used to do my own taxes but now everybody thinks it’s too dangerous.”
“The American People pay me a really good salary. I don’t deserve a tax break.”
Then there’s the Joseph Robinette Biden, Jr. kitchen table talk; you know the drill.
It makes sense that financial crimes increase during a recession. People get desperate and they start taking crazy-ass chances. Crazy-ass chances like, let’s request a tax refund for a couple hundred million dollars.
Papers filed in the cases say the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. One defendant – Dick Jenkins, of Heber City, Utah – allegedly holds himself out as a CPA and requested a $210 million fraudulent refund for one customer. The Internal Revenue Service (IRS) catches the vast majority of the bogus tax returns and blocks the claimed refunds…Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in the seven lawsuits filed this week) have requested a total of $3.3 trillion in fraudulent refunds.
According to the AP, “Officials say the tax preparers often falsely tell customers the government maintains secrets accounts of money for its citizens that can be accessed by filing false returns.”
So your tax preparer tells you that by filing a fake tax return you’ll be able access a secret pile of money. Is this remotely believable? Believable to the point of saying, “Excuse me, Internal Revenue Service, you owe me $210 million”?
Some discretion, people.
DOJ Charges Seven With Seeking $562m of Bogus Tax Refunds [TaxProf Blog]
Feds file suits over $562 million bogus tax claims [AP]
ACORN, yes, Bill O’Reilly’s favorite non-profit, is giving tax advice. Apparently, prostitution qualifies as a performing art. Who are we to argue?
Yes, it’s almost ten minutes but it’s worth it.
Check out Part II over at TaxProf Blog.