House Votes to Impeach IRS Commissioner

John Koskinen
IRS Commissioner

The Republican majority on the House Oversight and Government Reform Committee, following the lead of panel chairman Jason Chaffetz (R-UT), on Oct. 27 voted in favor of a resolution calling for the impeachment of IRS Commissioner John Koskinen.

The impeachment resolution contains four articles which allege that Koskinen: engaged in a pattern of conduct that is incompatible with his official duties; engaged in a pattern of deception that demonstrates his unfitness to serve as head of IRS; throughout his time in office, has acted in a manner inconsistent with the trust and confidence placed in him as an officer of the U.S.; and has failed to act with competence and forthrightness in overseeing the probe into the agency's targeting of Americans because of their political affiliations.

According to Chaffetz, Koskinen violated the public trust by failing to comply with a subpoena resulting in the destruction of key evidence in various probes, failing to testify truthfully, providing false and misleading information, and failing to notify Congress that key evidence was missing. The agency "vigorously disputes allegations" made in the impeachment resolution, IRS said in a statement, adding that it has "fully cooperated with all" related investigations.

The impeachment resolution was described as "ridiculous" by Rep. Elijah Cummings (D-MD), the top Democrat on the committee. It will now be referred to the House Judiciary Committee.

The impeachment resolution can be found at https://oversight.house.gov/wp-content/uploads/2015/10/1027-Impeachment-Resolution.pdf.

This action comes on the heels of the Justice Department finding no basis for a criminal prosecution over the IRS's mishandling of requests for tax-exempt status by political groups aligned with the Tea Party.

The Justice Dept. said, "The IRS mishandled the processing of tax-exempt applications in a manner that disproportionately impacted applicants affiliated with the Tea Party and similar groups, however, ineffective management is not a crime".

Big benefits coming 11/30 with new filing system – MassTaxConnect

We are now one month away from the launch of MassTaxConnect, DOR’s newest electronic system  that will make filing and paying state taxes simpler, quicker, and more efficient than ever before. MassTaxConnect will replace WebFile for Business on November 30th, 2015. On that day, you’ll be able to log-on to MassTaxConnect using your existing WebFile for Business username and password. What’s more, all of your accounts and third-party delegations will automatically transfer over to MassTaxConnect. As we get closer to 11/30, we’ll be sending you more information on how to access and use the new system . Take note, we will roll out MassTaxConnect to personal income taxpayers in early 2017, if not sooner.

New functionalities and benefits MassTaxConnect offers you all of the things you like about WebFile for Business, plus a range of new functionalities  that will benefit you as a business taxpayer or practitioner:   Choose to file early and schedule your payments in advance Choose from several online payment options with automatic confirmations Automatic tax rate adjustments, calculations, and correction of common errors Returns can be amended through the electronic filing system Send secure e-message requests—with attachments—for information or help with your account Request and print prior electronically filed returns Ability to save returns to be retrieved and completed later Autofill dropdown options for recurring information Access your account summary information, including tax bills, returns, notices, or letters from DOR 24 hours a day Cybersecurity MassTaxConnect improves upon DOR’s cybersecurity protocols to protect sensitive taxpayer information from identity thieves and other criminals. DOR will no longer use personally identifiable information (e.g. social security numbers, employee identification numbers) on any correspondence, and will instead use a randomly assigned 14-digit account number. The new system will also require two-factor authentication (i.e. sending a special code to your email the first time you log-in) to provide an additional layer of security.

Perhaps most importantly, the technology behind MassTaxConnect is a proven-winner in identifying cybersecurity attacks early and preventing them from happening in the first place. Corporate Filers and Modernized e-File  Are you a corporation that files taxes with the Commonwealth? Or are you a practitioner that does so on behalf of a corporation? With the advent of MassTaxConnect, DOR is changing how it processes corporate returns to fall in line with most other states by moving to the IRS’ “Modernized E-file Gateway.” This will mostly impact software vendors that file on behalf of corporations. New electronic filing options and requirements Unlike WebFile for Business, MassTaxConnect will now allow taxpayers and tax practitioners to file most, if not all, tax types electronically. Further, DOR will be expanding its electronic filing requirements, which will reduce processing costs and make filing quicker for business taxpayers. For more information, please review this technical information release . Questions? Do you have questions about the transition to MassTaxConnect? Check out this FAQ page  for more information. Still can’t find the answer to your question? Email us atMTCinfo@dor.state.ma.us with your query. Visit the MassTaxConnect page  on our website for general information and news about the benefits coming your way. Check back often for updates!

Annual Meeting & Educational Seminar Recap

Yesterday, the MA/RI NATP Chapter held its Annual Meeting and Educational Seminar at the Mansfield Holiday Inn. During the seminar, our nationally renowned speaker, Kathy Morgan from Louisiana, wowed the crowd with 8 hours of CE on Tax Research Tips, Basis Reconstruction, the IRS Collections Process, Bringing Your Client Back Into Compliance and wrapped up with a session on Identity Theft.

Kathy Morgan & Her Travelling Monkey

During our Annual Meeting the following folks were re-elected to the Board of Directors -

June Massee, Blandford MA (Region 1) - 3 Year Term
Dorothy Dimo, Warren MA (Region 2) - 3 Year Term
Joseph Serrecchia, Wakefiled MA (Region 3) - 3 Year Term
Virginia Arlington, New Bedford MA (Region 4) - 3 Year Term

And we welcome the following new comers to the Board of Directors -

Paul DeBloise, Glendale RI (Region 5)  - 2 Year Term
Louis Vastano Jr., West Warwick RI (Region 5) - 3 Year Term

Paul DeBlois

Louis Vastano Jr/

Paul and Louis are replacing Paul Malone and Walter Matisewski. Both Paul and Walt served on the Board for the last 6 years and we THANK them for their dedicated time and hard work.

All of the members voted in above, will start their terms on January 1st, 2016.

Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar - January 7th 2016

Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar - January 7th 2016

Join the Massachusetts / Rhode Island NATP Chapter on Thursday, January 7th, 2016 for our Annual State Update Seminar. This all day event will be held at the Sturbridge Host in Sturbridge MA. Registration details are below, and will be handled online by National this year. A link to the registration website is listed below. Please take a look at the details on our speakers and topics provided in this great update opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities PLUS even 2 CE Credit Hours.

• Register online with credit card.
• For more information or to register by phone, fax or mail, use this form.
• After January 6, please register at the door with the form above.

Topics:

Connecticut State Tax Update presented by Danielle Toce of Connecticut Department of Revenue Services.

Massachusetts State Tax Update presented by Brian Lynch & Dana Ackerman of Massachusetts Department of Revenue.

Rhode Island State Tax Update presented by Matthew Lawlor & Kenneth Drezek of Rhode Island Division of Taxation.

New York State Tax Update presented by Kathryn Keane, VP of New York NATP Chapter.

Federal Tax Update presented by Kathryn Keane of New York NATP Chapter. (2 Hours of CE Credits)

Featured Speaker - Kathryn M. Keane, EA.

Kathryn is a principal of Macanta, a small tax and related services practice located in Brooklyn, NY, serving over 850 individual clients and 50 businesses. In December 2006, Kathryn completed two three-year terms on the National Board of Directors of NATP and was twice awarded Chapter Person of the Year for 2002 and 2008 for her volunteer service to the community at large as well as to NATP. In addition to serving as an Education Committee member for NY NATP, she currently serves as Chair of the IRS Tri-Boro Practitioner Liaison Committee. Kathryn is a frequent speaker for NATP Chapters. She has also presented for VASEA, NCCPAC (Nassau-Suffolk County Chapter) and local chapters of NYSSCPA. Kathryn has a B.S. degree from Brooklyn College.

Massachusetts / Rhode Island NATP Chapter Annual Meeting & Educational Seminar is TOMORROW!

Massachusetts / Rhode Island NATP Chapter Annual Meeting & Educational Seminar October 27th 2015

Join the Massachusetts / Rhode Island NATP Chapter on Tuesday, October 27th, 2015 for our Annual Meeting & Educational Seminar. This all day event will be held at the Holiday Inn in Mansfield, MA. Registration details are below, and is handled online by National. Take a look at the details on our speaker and topics provided in this great 8 CE Hour opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities. This seminar is limited to the First 100 Registrants!

• After October 26th, please print the form (click for the registration form) and register at the door.

7:00-7:45 AM            Registration

7:45-8:00 AM            Introduction                     Walter Matisewski, CPA- President

                                                                        Presented by Kathryn M. Morgan, EA, Fellow NTPI                                         

8:00-9:40 AM            Tax Research Tips & Techniques for Citations, Court Cases & Basis Reconstruction

                                    Good research is necessary to keep up with the ever-changing tax laws and practical procedures.              This course will include research methodology, tips and techniques.  Case studies will demonstrate research methods and locations as well as due diligence procedures for reconstructing basis in capital assets.  Participants will learn the hierarchy of citation authority as well as the standards of reliance on opinions when working with tax positions.           IRS #JSAQG-T-00016-15-I                                                           

9:40-9:55 AM            Break

9:55-11:35 AM          Notice of Deficiency: It’s NOT The End Of The World!  Judicial Review, Collections Appeals and Collections Due Process

                                    This presentation will discuss the actions that need to be taken when a client receives a Statutory Notice of Deficiency from the IRS. A thorough review of the timing aspects of appeals and Tax Court filings will be covered as well as case reviews of each option. (IRC §6212)  Participants will learn how to use the IRS Collections Appeal Program (CAP) or the Collection Due Process (CDP) program to their client’s benefit; the pros and cons of both programs; and Judicial Review procedures and restrictions.  We will also briefly review the integration of the collections and exams sides of this topic.

IRS #JSAQG-T-00017-15-I         

11:35-11:50 AM        National Representative- Kim P. Loewer, EA, ATA

11:50-1:15 PM          Annual Meeting, Elections and Lunch

1:15-2:55 PM            Living Off The Grid:  Bringing Your Client Back Into Compliance

                                    In this course, we will tackle the long term non-filer, (I.R.M. Sec. 4.19.17) taxpayers who live by working in an “under the table” environment.  We will learn the types of situations that make non-filers need to get compliant; what options for getting and remaining compliant the taxpayer has; how far back the taxpayer needs to go to get compliant; and review payment options for taxpayers who have large balances once the returns are filed.  IRS #JSAQG-T-00018-15-I

2:55-3:10 PM            Break

3:10-4:50 PM            Identity Theft: Everyone Can Become A Victim!

                                    Identity Theft: It’s a worldwide crime wave and it can affect every aspect of a taxpayer’s life.  We will discuss how to keep clients safe from this crime, what to do if they are a victim, steps the IRS is taking to help prevent identity theft, and ways to speed the process through the IRS Identity Protection Specialized Unit to get the clients back on track in a timely manner.  IRS #JSAQG-T-00019-15-I      

Continental Breakfast, Breaks, and Luncheon included in registration fee.

Special Offer for the January 7, 2016 State Update Seminar

Sign up on October 27, 2015 and pay by November 9, 2015 for ½ Price 

Speaker - Kathryn M. Morgan, EA, Fellow NTPI

Born and raised in the San Diego California area as a Navy “brat”, Kathy joined the US Air Force straight out of high school.  Serving for 13 years as a Military Police Officer in Washington DC, in the Presidential Security Squadron, in the United Kingdom as RAF Greenham Common, assisting in opening the first Ground Launched Cruise Missile base in the European Theater amid large protests, and at Barksdale AFB is NW Louisiana guarding our nations B52 fleet and participating in Desert Storm.

In 1993 Kathy took an early retirement from the military during the force reduction and went to work for the Bossier City Louisiana Police Department as a Police Communications Office and Dispatcher. She worked in this position for 13 years.

While working for the police department, Kathy decided to try something completely new and took a basic income tax class from H&R Block.  The rest, as they say, is history.  She just completed her 21st  year with H&R Block working in the Bossier City Premium office.  Kathy earned her Enrolled Agent license in 2002 and has completed the prestigious National Tax Practice Institute Fellowship (NTPI).  Kathy has also been the lead writer of the Louisiana State Manual for the H&R Block Income Tax Course for the last five years, assists with upper level courses, and teaches at every level for the company.  She proudly holds the titles of Enrolled Agent, Master Tax Advisor, Fellow NTPI, Speaker, Instructor, Representation Specialist and Consultant.

She has been published by several tax research companies, including Parker Tax Publishing and TaxConnections.com.  She is a accomplished speaker and instructor on a wide variety of tax issues. Through her company, Puzzled By Taxes?, she offers speaking, writing, and instruction.

Kathy lives and practices in the Shreveport Louisiana area and when not “talking tax” she enjoys spending time with her grandchildren and family, writing and reading.

IRS, States, Industry Continue Progress to Protect Taxpayers from Identity Theft

WASHINGTON —The Internal Revenue Service, state tax administrators and leaders of the tax industry announced today continued progress to expand and strengthen protections against identity theft refund fraud for the 2016 tax season.

The public-private sector partnership announced success in identifying and testing more than 20 new data elements on tax return submissions that will be shared with the IRS and the states to help detect and prevent identity-theft related filings. In addition, the software industry is putting in place enhanced identity requirements and validation procedures for their customers to protect accounts from identity thieves.

“This unprecedented partnership continues to put strong new safeguards in place for the 2016 tax season,” IRS Commissioner John Koskinen said. “We are breaking new ground in the battle against identity theft. Taxpayers will have more protection than ever when they file their tax returns.”   Known as the Security Summit, the unprecedented collaborative effort began in March and culminated in the development of several recommendations in June between the IRS, leaders of tax preparation and software firms, payroll and tax financial product processors and state tax administrators.  Security Summit participants also identified additional topics for collaboration in the months ahead, and have continued to work together as a group to leverage their collective resources and efforts to protect taxpayers.

John Koskinen
IRS Commissioner

Koskinen and other leaders met in Washington, D.C. Tuesday to update the effort. To date, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding roles, responsibilities and information sharing, with more expected to sign later.
As part of the Security Summit process, members from the IRS, states and industry are co-chairing and serving on several teams. The teams have focused on a number of areas including improved validation of the authenticity of taxpayers and information included on tax return submissions, increased information sharing to improve refund fraud detection and expand prevention, as well as more sophisticated threat assessment and strategy development to prevent risks and threats.

The industry and government groups identified numerous new data elements that can be shared at the time of filing with the IRS and states to help authenticate a taxpayer and detect identity theft refund fraud. There are more than 20 new data components that will help detect possible identity theft. The data will be submitted with the tax return transmission for the 2016 filing season, a step that will help detect and prevent refund fraud on both the federal and state level.

Another component will enhance identity validation for taxpayers using tax software. These stronger steps will protect taxpayer accounts by creating stronger verification of customers. This effort will include creation of security questions and device identity recognition at the time of log-on – both steps being used in the financial sector.

“We are taking new steps upfront to protect taxpayers at the time they file and beyond,” Koskinen said. “Thanks to the cooperative efforts taking place between the industry, the states and the IRS, we will have new tools in place this January to protect taxpayers during the 2016 filing season.”

In addition to the states and companies from the private sector, the summit team includes several groups including the Federation of Tax Administrators (FTA) representing the states, the Council for Electronic Revenue Communication Advancement (CERCA) and the American Coalition for Taxpayer Rights (ACTR). A wide variety of groups have also joined in supporting the summit effort, including Free File Inc., the National Association of Computerized Tax Processors, the National Branded Prepaid Card Association and the Financial Services Roundtable.

Coming Soon - Mass Tax Connect

On November 30th 2015, the Massachusetts Department of Revenue will be replacing WebFile for Business with a new state-of-the-art online tax filing system – MassTaxConnect. 

Rhode Island Estate Tax Threshold and Credit Unchanged for 2016

Law provides for annual adjustment for inflation, but latest data shows inflation unchanged over past year

PROVIDENCE, R.I. – Rhode Island Tax Administrator David M. Sullivan announced today that the Rhode Island estate tax threshold and the related credit amount will remain unchanged for 2016. The threshold will be $1.5 million and the related credit amount will be $64,400 for decedents dying on or after January 1, 2016. The same amounts apply for decedents dying in 2015.

Legislation enacted in 2014 requires that, beginning on January 1, 2016, the Rhode Island credit amount be adjusted by the percentage increase in the consumer price index for all urban consumers (CPI-U) determined as of September 30 of the prior calendar year. The U.S. Department of Labor’s Bureau of Labor Statistics announced on October 15, 2015, that the index was unchanged. Accordingly, the Rhode Island credit amount will remain at $64,400 in 2016, effectively shielding from taxation the first $1.5 million of an estate. Thus, in general, for a decedent dying in 2016, a net taxable estate valued at $1,500,000 or less will not be subject to Rhode Island’s estate tax.

• In certain circumstances, the Rhode Island estate tax will not apply no matter the estate’s size: Rhode Island General Laws Chapter 44-22 provides full details on the computation of the tax, including such factors as the marital and charitable deductions.
• For more information about the legislative changes in 2014, see Rhode Island General Laws § 44-22-1.1, as amended by Rhode Island Public Law 2014, ch. 145, art. 12, § 12.
• The Division of Taxation’s Estate Tax section is available by phone from 8:30 a.m. to 3:30 p.m. business days at (401) 574-8900.

For decedent whose death occurs in:      Rhode Island estate tax threshold amount is:
                2016                                                         $  1,500,000
                2015                                                             1,500,000
                2014                                                                921,655
                2013                                                                910,725
                2012                                                                892,865
                2011                                                                859,350
                2010                                                                850,000
                2009                                                                675,000

Rhode Island Division of Taxation -- Computer Changeover Coming Soon

The Rhode Island Division of Taxation is changing over to a new agency-wide computer system – and the next phase starts next week.

The changeover will take place on six consecutive business days: from Monday, October 26, 2015, through Monday, November 2, 2015.

During that time, the Tax Division office -- at One Capitol Hill in Providence -- will remain open during its usual hours: 8:30 a.m. to 3:30 p.m. Phones will be staffed, emails answered, payments received, and returns accepted, as usual. But certain services will be limited, including issuing of letters of good standing and releasing motor vehicle license blocks, motor vehicle registration blocks, and certain liens and levies.

“We will remain open and we will continue to provide the kinds of services that are regularly used by the vast majority of taxpayers and practitioners,” said Rhode Island Tax Administrator David M. Sullivan. “However, we want to let everyone know now, in advance, that certain services used by a limited number of taxpayers and practitioners will not be available during the six-day changeover,” he said. For example, “If you’re blocked from renewing a driver’s license because you owe back taxes, you should pay the tax debt on or before this Friday, October 23,” Sullivan said.

For more information, call the Division of Taxation at (401) 574-8829 from 8:30 a.m. to 3:30 p.m. business days. Or see the following Advisory:
http://go.usa.gov/3zmH3

Rhode Island Division of Taxation -- Seminar for Tax Preparers

The RI Division of Taxation is holding a seminar, in two locations, for paid preparers of tax returns. The seminar is free but pre-registration is required.

Seats for the first session, in Warwick, went quickly; all of them have been claimed, so registration for that session is now closed.

Seats are still available for the second session, in Newport. To register, please use the following link:
http://bit.ly/1R1oeCv

The agenda is the same for both sessions. To view a copy, please use the following link:
http://go.usa.gov/3Jq4F

Neil Downing
Chief Revenue Agent
Rhode Island Division of Taxation
One Capitol Hill
Providence R.I. 02908

Neil.Downing@tax.ri.gov
(401) 574-8115

MA Senior Circuit Breaker Credit Updated

Mark E. Nunnelly

MA Commissioner of Revenue

TIR 15-11: Annual Update of Real Estate Tax Credit for Certain Persons Age 65 and Older

I.  Introduction

For tax years beginning on or after January 1, 2001, an owner or renter of a principal residence located in Massachusetts who is age 65 or older at the close of the taxable year may be eligible to claim a refundable credit against personal income taxes.  Known as the “circuit breaker credit,” this credit is based upon the actual real estate taxes or rent paid by a taxpayer eligible to claim the credit.  See G.L. c. 62, § 6(k), added by sections 80 and 81 of chapter 127 of the Acts of 1999.  This TIR updates TIR 01-19 by providing the income and assessed valuation threshold amounts and the maximum credit amount for tax year 2015.

II.  2015 Income Threshold Amounts for Renters and Homeowners

A Massachusetts taxpayer age 65 or older that owns or rents his or her principal residence may qualify for the circuit breaker credit if he or she meets the eligibility requirements as stated in TIR 01-19, Real Estate Tax Credit for Certain Persons Age 65 and Older.

Under G.L. c. 62, § 6(k)(4), for purposes of calculating the circuit breaker credit, total income, and maximum credit thresholds are adjusted annually to reflect inflation for the calendar year in which the taxable year begins.

For tax year 2015, the taxpayer's "total income" cannot exceed $57,000 for a single individual who is not the head of a household, $71,000 for a head of household, and $85,000 for married couples filing a joint return.

III.  2015 Assessed Valuation Threshold Amount for Homeowners

For tax year 2015, the assessed valuation, before the residential exemptions but after abatements, of the homeowner's principal residence may not exceed $693,000.  If the taxpayer owns more than one acre of land, only the assessed value of the principal residence, together with the land that immediately surrounds and is associated with that residence, not to exceed one acre, should be used in determining the eligibility of the taxpayer for the credit.

The Department annually adjusts the assessed value threshold limit by using a cost-of-housing adjustment that reflects the change in the average assessed value of single family homes in Massachusetts from the previous calendar year.

IV.  Calculation of the Credit Available in 2015

A.  Renters

The credit is equal to the amount by which 25% of the rent actually paid by the taxpayer during the taxable year for the occupancy of the principal residence exceeds 10% of the taxpayer's total income for the taxable year, provided that such amount does not exceed the maximum credit amount. For tax year 2015, the maximum credit amount is $1,070.

B.  Homeowners

The credit is equal to the amount by which the taxpayer's property tax payments in the current tax year, including water and sewer use charges paid to a municipality, but excluding any abatement or exemption granted, exceeds 10% of the taxpayer's total income, for the taxable year, provided that such amount does not exceed the maximum credit amount. For tax year 2015, the maximum credit amount is $1,070.

Mark E. Nunnelly
Commissioner of Revenue

Social Security Amounts for 2016

The Social Security Administration has announced the new amounts for 2016.  Due to the CPI index factors for this past year, the gross Social Security benefits do not have an increase for 2016.  Even though benefits do not change for 2016, some of the other limits do change.  Here is the information for 2016:

 

The amount of earnings subject to Social Security taxes remains at $118,500.

 

The amount of earnings required to be subjected to Social Security taxes in order to receive a quarter of coverage increases to $1,260 (up from $1,220 for 2015).

 

Earnings limitations for taxpayers who have not reached full retirement age (before having to repay Social Security benefits) remains at $15,720 ($1,310/month).

 

Earnings limitations for taxpayers who reach full retirement age in the current year (before having to repay Social Security benefits) remains at $41,880 ($3,490/month). (“Full retirement age” is age 66 for those born in 1943-1954.)

 

The amount of the SSI Federal Payment Standard remains at $733/month.  For a married couple this remains at $1,100/month.  The SSI Student Exclusion Limits remains at $1,780/month with the annual limit remaining at $7,180.

 

The Substantial Gainful Activity earnings increase to $1,130/month for non-blind disabled recipients while the blind disabled recipient amount remains at $1,820/month.  The Trial Work Period earnings increase to $810/month.

 

The full Fact Sheet can be found on Social Security’s web site www.socialsecurity.gov

.

  

 

This text has been shared with you courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (fax 920-496-9111).

 

Community Investment Tax Credit sponsored by Somerville Community Corporation

Please Note - this is not a MA/RI NATP Chapter Event but something we thought our members would be interested in. All contact info is included above.

2015 MA/RI NATP Annual Meeting & Educational Seminar - A Week and a Half Away - Register Now!

Massachusetts / Rhode Island NATP Chapter Annual Meeting & Educational Seminar October 27th 2015

Join the Massachusetts / Rhode Island NATP Chapter on Tuesday, October 27th, 2015 for our Annual Meeting & Educational Seminar. This all day event will be held at the Holiday Inn in Mansfield, MA. Registration details are below, and is handled online by National. Take a look at the details on our speaker and topics provided in this great 8 CE Hour opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities. This seminar is limited to the First 100 Registrants!

• For online registration with credit card, click here.
• To register by phone, fax or mail, click for the registration form.
• After October 26th, please print the form (see link above) and register at the door.

Speaker - Kathryn M. Morgan, EA, Fellow NTPI

Born and raised in the San Diego California area as a Navy “brat”, Kathy joined the US Air Force straight out of high school.  Serving for 13 years as a Military Police Officer in Washington DC, in the Presidential Security Squadron, in the United Kingdom as RAF Greenham Common, assisting in opening the first Ground Launched Cruise Missile base in the European Theater amid large protests, and at Barksdale AFB is NW Louisiana guarding our nations B52 fleet and participating in Desert Storm.

In 1993 Kathy took an early retirement from the military during the force reduction and went to work for the Bossier City Louisiana Police Department as a Police Communications Office and Dispatcher. She worked in this position for 13 years.

While working for the police department, Kathy decided to try something completely new and took a basic income tax class from H&R Block.  The rest, as they say, is history.  She just completed her 21st  year with H&R Block working in the Bossier City Premium office.  Kathy earned her Enrolled Agent license in 2002 and has completed the prestigious National Tax Practice Institute Fellowship (NTPI).  Kathy has also been the lead writer of the Louisiana State Manual for the H&R Block Income Tax Course for the last five years, assists with upper level courses, and teaches at every level for the company.  She proudly holds the titles of Enrolled Agent, Master Tax Advisor, Fellow NTPI, Speaker, Instructor, Representation Specialist and Consultant.

She has been published by several tax research companies, including Parker Tax Publishing and TaxConnections.com.  She is a accomplished speaker and instructor on a wide variety of tax issues. Through her company, Puzzled By Taxes?, she offers speaking, writing, and instruction.

Kathy lives and practices in the Shreveport Louisiana area and when not “talking tax” she enjoys spending time with her grandchildren and family, writing and reading.

Tax Research Tips & Techniques for Citations, Court Cases & Basis Reconstruction

Good research is necessary to keep up with the ever-changing tax laws and practical procedures. This course will include research methodology, tips and techniques.  Case studies will demonstrate research methods and locations as well as due diligence procedures for reconstructing basis in capital assets. Participants will learn the hierarchy of citation authority as well as the standards of reliance on opinions when working with tax positions. IRS #JSAQG-T-00016-15-I

Notice of Deficiency: It’s NOT The End Of The World!  Judicial Review, Collections Appeals and Collections Due Process

This presentation will discuss the actions that need to be taken when a client receives a Statutory Notice of Deficiency from the IRS. A thorough review of the timing aspects of appeals and Tax Court filings will be covered as well as case reviews of each option. (IRC §6212)  Participants will learn how to use the IRS Collections Appeal Program (CAP) or the Collection Due Process (CDP) program to their client’s benefit; the pros and cons of both programs; and Judicial Review procedures and restrictions.  We will also briefly review the integration of the collections and exams sides of this topic. IRS #JSAQG-T-00017-15-I 

Living Off The Grid:  Bringing Your Client Back Into Compliance

In this course, we will tackle the long term non-filer, (I.R.M. Sec. 4.19.17) taxpayers who live by working in an “under the table” environment.  We will learn the types of situations that make non-filers need to get compliant; what options for getting and remaining compliant the taxpayer has; how far back the taxpayer needs to go to get compliant; and review payment options for taxpayers who have large balances once the returns are filed.  IRS #JSAQG-T-00018-15-I

Identity Theft: Everyone Can Become A Victim!

Identity Theft: It’s a worldwide crime wave and it can affect every aspect of a taxpayer’s life.  We will discuss how to keep clients safe from this crime, what to do if they are a victim, steps the IRS is taking to help prevent identity theft, and ways to speed the process through the IRS Identity Protection Specialized Unit to get the clients back on track in a timely manner.  IRS #JSAQG-T-00019-15-I

Special Offer for the January 7, 2016 State Update Seminar

Sign up on October 27, 2015 and pay by November 9, 2015 for ½ Price 

Reacquisition of Principal Residence Triggers Loss of Exclusion

The 8th Circuit Court of Appeals affirmed the opinion of IRS and Tax Court in this case.

On July 11, 2006 Marvin DeBough sold his principal residence on the installment method for $1.4 million.  He reported gain on the sale of 658k, of which 500k was excluded under IRC Section 121.  The remaining 158k of gain was reported on the installment method.  From 2006-2008 he collected 505k in principal payments and reported 56k of this as gain through the installment method.  The buyers failed to comply with the terms of the contract, so Mr. DeBough took the property back during July 2009.

The rules under Section 1038, which control the gain on a repossession/foreclosure, basically require reporting as income the difference between the amount of value (i.e., money) received and the amount already taxed.

The Section 121 exclusion permits a taxpayer to exclude up to $500,000 ($250,000 if single or MFS) of the gain as long as the taxpayer meets the “two out of the last five year” ownership and occupancy conditions.  If the taxpayer did not have enough gain to use the maximum exclusion AND resells the property within one year of the repossession/foreclosure date, the taxpayer can use the rest of the maximum exclusion to offset gain from the resale.  Mr. DeBough did not resell the property within one year of the repossession/foreclosure date.

The issue in the DeBough case is whether, 1) the exclusion amount of 500k claimed on the original sale still applies, or 2) Mr. DeBough has to report income equal to the entire amount received less the 158k already taxed.  IRS and Tax Court said the answer is #2 – Mr. DeBough has to report income equal to the excess of the principal payments received over the amount already taxed.

In his appeal Mr. DeBough stated Section 1038 didn’t apply since he did not resell the property within one year of the repossession/foreclosure date.  He further argued the Code was “silent on the question” of whether the exclusion originally taken was still applicable.  The Court of Appeals, 8th Circuit agreed with IRS and Tax Court – Mr. DeBough owed taxes on the 448k he received in excess of the 56k already taxed.

Marvin DeBough, CA 8 8/28/15, 106 AFTR 2d, 2015-5192


This text has been shared with you courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Identity Theft and Tax Refund Fraud

By William Delaney, EA
Westwood, Massachusetts

Is this a solution or does it add to the problem?

A proposal currently scheduled for hearing by the U.S. Senate Finance Committee
described as a “Bill to Prevent Identity Theft and Tax Refund Fraud” includes a major provision which would mandate the regulation of all presently unregulated paid tax return preparers by reestablishing the Registered Tax Return Preparer status.  Aside from that, the proposal has a number of provisions which are actually suggestive of its’ title.

Improper use of information by preparers of returns.  The penalty for “unauthorized disclosure or use of information by tax return preparers” is increased from $250 to $1,000 per incident.  The criminal penalty for knowing or reckless conduct would be increased to $100,000 “in the case of disclosures or uses in connection with taxpayer identity theft.”

Require the IRS to study the feasibility of blocking electronically-filed tax returns.  This would be a process whereby a taxpayer who has filed an “identity theft affidavit” and been properly identified, may elect to block a tax return or returns filed either by that taxpayer or by someone purporting to be that taxpayer.  Question:  How would the IRS be able to tell the difference?  This blocking would have to be in place prior to a filing.  Perhaps it has to do with the presence or absence of a taxpayer PIN (see following)?

Enhancements to the IRS PIN program.  Expands the program (6-digit identifier which authenticates a return filer as the legitimate taxpayer) to require the IRS “…to issue an IP PIN to any individual requesting protection from identity theft-related tax fraud…”  This proposal would be effective on a nation-wide basis by July 1, 2018.

Increase electronic filing of returns.  Individual tax return preparers would be required to file all individual returns electronically effective for returns with a due date (without extension) after December 31, 2016.  A waiver would be possible for return preparers whose business is operated in a geographic location which has “technological constraints such as lack of internet availability.”

Information returns regarding wages paid employees.  “The proposal accelerates the filing of Forms W-2 and W-3, and Forms 1099-MISC…”  The due date for providing copies to recipients would still be January 31, but the employer (whether paper filed or electronically filed) due date would be 15 days later (i.e. Feb. 15th).  At present, the electronically filed due date is March 31.  Effective for calendar years beginning after December 31, 2015.

Taxpayer notification of suspected identity theft.  If there may have been unauthorized use of a taxpayer’s identity or that of a dependent, the secretary shall (as soon as practicable) “notify the taxpayer of such determination…”  “In addition, the Secretary shall disclose to the taxpayer (or such person’s designee) whether an investigation has been initiated, is open or is closed…As under present law, the Secretary is not obliged to disclose return information the disclosure of which would seriously impair Federal tax administration.”

One cannot help but wonder just what can or will be disclosed under such a provision which the taxpayer does not know under “present law,” which is often very little.  This is really a negative reaction to N. H. Senator Kelly Ayottee’s recent initiative whereby the IRS Commissioner agreed to look into providing a copy to the taxpayer of a fraudulently filed return using that taxpayer’s and/or dependent’s identity information.  It appears to your Editor that the government is having second thoughts about letting us know what they know…privacy and all, don’t you know!

Sales of Real Estate Equal Ordinary Income or Capital Gain

SI Boo LLC was formed as a multi member LLC, treated as a partnership for tax purposes. SI Boo purchased real estate tax liens (certificates) at public auctions held by county tax collectors. These certificates could be assigned to other parties.  These certificates could also be "redeemed” by the real estate owners for various amounts based on the price sold at the auction. If the real estate owner didn’t redeem the certificate within a specific time frame, the holder of the certificate became the owner of the real estate.

After acquiring certificates, SI Boo attempted to sell them to third parties.  SI Boo’s method of making money was to borrow money to purchase these certificates and resell them at a profit.  If certificates were not transferred to other parties, SI Boo would try to negotiate a redemption by the property owner, tenants, or neighbors.  If this was unsuccessful, a “For Sale” sign would be put in the property’s yard or a real estate broker was hired to sell the property.  Some of the unredeemed properties sold were held for more than one year.  SI Boo’s 2007 partnership return showed $0 gross receipts, about $700,000 of deductions (mostly management fees paid to related companies), $1 million of short term capital gain, and $500,000 of long-term capital gains.  (SI Boo did not have any employees and relied entirely on the staff of the related companies, thus the management fees.)

Tax Court agreed with IRS determining SI Boo LLC’s purpose was to acquire certificates primarily for sale to customers in the ordinary course of a trade or business.  The subsequent sale of property not redeemed was considered to be a part of this same activity.  This “acquire and resell” activity was deemed to be a business activity and not an investment activity, therefore the income from the sales should be reported as ordinary income and not as capital gain.  Side note – Since this is ordinary income from a trade or business activity, it is also self-employment income.

SI Boo LLC, TC Memo 2015-19


This text has been shared with you courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Listed Property Limits for 2015

IRC §280F (listed property) provides ceilings on the amount of depreciation and §179 that can be
claimed on passenger automobiles, light duty trucks and vans.  This email gives you these limits for vehicles placed in service beginning in 2015.

These limits are multiplied by the taxpayer’s business use percentage of the vehicle.

Limits for passenger automobiles

The §280F limits for passenger automobiles first placed in service during the calendar year 2015 that are neither trucks nor vans:

• Year 1 - 3,160
• Year 2 - 5,100
• Year 3 - 3,050
• Year 4 & after - 1,875

Limits for trucks and vans

The §280F limits for trucks and vans first placed in service during the calendar year 2015 are:

• Year 1 - 3,460
• Year 2 – 5,600
• Year 3 – 3,350
• Year 4 & after - 1,975

 Currently bonus depreciation does not exist for 2015.  If Congress renews the bonus depreciation, it may also renew a higher amount for Year 1 above (such as the extra $8,000 we had for 2014 purchases).

 The leasehold inclusion for 2015 applies to a passenger automobile when the FMV of the vehicle exceeds $17,500 and apply to a light duty truck and van when the FMV of the vehicle exceeds $18,500.

This information including the lease tables for 2015 can be found in Revenue Procedure 2015-19 which can be found at www.irs.gov/pub/ by clicking on irs-drop and then on rp-15-19.



This text has been shared with you courtesy of:  David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065.

Per Diem Amounts Effective October 1, 2015

The M&IE rates have increased effective October 1, 2015.  Prior to this date the M&IE rates are $46, $51, $56, $61, $66, and $71 depending on the locality the taxpayer sleeps that night.  Effective October 1, 2015, the M&IE rates increase to $51, $54, $59, $64, $69, and $74.  The full per diem tables by state and key city can be found at www.gsa.gov.

The High/Low cost amounts are now $275 and $185 with the M&IE portion deemed to be $68 and $57, respectively.  As normal some of the localities included in the High cost areas have changed.  These can be found in the Notice.

The special M&IE per diem rate for taxpayers in the transportation industry is $63 for travel in the continental United States on or after October 1, 2015 ($59 for travel before October 1, 2015).

As in the past, taxpayer can choose to use the new rates beginning October 1, 2015, OR continue to use the old rates for the entire year.

Notice 2015-63


This text has been shared with you courtesy of:  David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (920-496-9111).