Dec 31, 2012

Run Katt, The IRS Is Coming: Katt Williams Hit With $4 Million Tax Lien

The IRS is coming....Run Katt Run!!!!

The IRS is claiming that comedian Katt Williams failed to pay $3.2 million dollars in taxes for 2008 and also failed to pay another $829 thousand dollar for 2009.

Imagine the interest and penalties accruing on that bill! We are not even talking about state taxes.

Click on this link to read more about this story:

Dec 28, 2012

Tax Preparers' Hall of Shame: Taxes by Mr. Bill in Kissimmee prepared fraudulent tax returns

It been awhile but there are still preparers doing fraudalent work. The new inductee of the Tax Preparers' Hall of Shame comes from the great state of Florida.

Preparer William M. Gatlin has been sentenced in an Orlando court to 36 months in federal prison for aiding and abetting the false preparation of returns. According to court documents, Gatlin was president of Taxes By Mr. Bill Inc., in Orlando and Kissimmee, where he helped prepare phony returns for clients that inflated refunds for the tax years 2006, 2007 and 2008. Gatlin fraudulently claimed the First-Time Homebuyer Credit on returns and also deducted student tuition, fees and student loan interest on returns where individuals did not pay these costs. He also prepared returns fraudulently listing deductions for Schedule C business losses when he knew that his clients did not own a business or have such losses. (All of the deductions were done without his clients’ knowledge.) The court also ordered Gatlin to serve a one-year term of supervised release following his prison term. In September, he pleaded guilty to two counts of aiding and abetting the false preparation of returns.

We would like to welcome Mr. Gatlin to the infamous Tax Preparers' Hall of Shame.

We admire your creative tax deductions and plan on writing you regularly when you go to jail for them!

Dec 26, 2012

Reasons Why You Should Love Enrolled Agents: Rich Rhodes, EA

Just in case you didn't know (and I will keep reminding you).... Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.

I believe that Rich Rhodes is one of the National Association of Enrolled Agents' (NAEA) rising stars. I had the honor of working with him on some NAEA committees.

Rich shares his views on the infamous fiscal cliff:

Is all of this talk of the fiscal cliff just intentional noise and drama? I think that it may be. I think that the politicians in Washington want us to remain uncertain over certain tax issues until it is too late for us to take evasive action. I think that the GOP and the Dems both know that they are going to raise the tax rate on capital gains.  If we (taxpayers) know this to be a fact, good tax planning strategy may insist that we sell all of our stocks and mutual funds that have been carrying an unrealized capital gain, recognize the gain in 2012 when cap gain taxes are lower, then buy back our previously sold shares for nearly the same price that we sold them for. By doing this you are insuring that you will avoid the tax hike on gains that have accumulated prior to the date of the tax increase. If everyone who has an unrealized gain, on their stocks and mutual funds, sell their shares in a short time frame, the market may crash and the country may be headed for even bigger problems. My guess is that Washington will not make a move to confirm increasing the capital gains tax rates until it is too late for anyone to react.  They will confirm the increases after the markets are closed for the year.

Who is Rich Rhodes, EA?
Rich Rhodes started his own tax practice in 1992 and became an enrolled agent in 1999.  Soon after, he became involved in the Enrolled Agents of Greater Cleveland and the Ohio State Society of Enrolled Agents. He has held numerous leadership positions at the local and state level. Currently, Rich Rhodes serves his fellow EA’s as a Director on the Board of Directors for the National Asociation of Enrolled Agents (NAEA).  He holds a BS degree from The Ohio State University

How can you contact Rich?

Office: 330-225-3928

Dec 24, 2012

Make It Rain On The IRS: Rapper Fat Joe Admits Tax Evasion

Hip-hop rap master "Fat Joe" pleaded guilty today to criminal charges of failing to file federal income tax returns. The 42-year-old performer -- whose real name is Joseph Antonio Cartagena -- appeared before Magistrate Judge Cathy Waldor in Newark federal court and admitted that he failed to file tax returns for the years 2007 and 2008.

New Jersey federal prosecutors say the rapper had received money from concerts and music sales royalties that amounted to gross income in excess of $1.3 million during 2007 and more than $1.4 million in gross income during 2008.

Fat Joe used to make it rain in the club, but now he has to scrape up over $700,000 and make it rain on Uncle Sam. I wonder if the beautiful females in his music videos will help him out with repaying the IRS.

Full story:

Dec 21, 2012

Where's My Money: IRS States Refunds Will Be Delayed and Refund Cycle Chart Discontinued

I have bad news.....

The IRS is not producing a 2013 IRS e-file refund cycle chart for tax preparers.  The commonly used chart has been discontinued and Publication 2043 has been dramatically revised due to IRS uncertainty about issuing refunds.

Badder news....

The IRS states “In a change from previous filing seasons, taxpayers won’t get an estimated refund date right away.”

Even badder news....

The IRS states that “most taxpayers will have their refunds within 23 days”, a significant delay from recent years.

Tax preparers are going to catch "hell" for their clients. I already know some of my clients will call me everyday until they get their refund. I love the refund schedule because it calmed their nerves. Now, I need to study crisis management techniques to deal with the calls. Okay, maybe it is not that extreme. I can't stress over something I have no control over.

Good news....

The delay in issuing refunds is due to a new processing method with an emphasis on fraud. The IRS’s new processing method includes multiple fraud checks based on the information in your tax return. Tax returns will be analyzed for what the IRS calls “Incoming transactions” and placed in a different category for funding. This may prevent the increase in fraud. I had to deal with numerous clients that were victims of tax return fraud. If it takes a longer refund period to prevent fraud, then so be it.

The best news.....

Receiving a refund is good enough news for me. Just exercise some patience. Vegas will always be around waiting for your arrival.

Dec 17, 2012

Reasons Why You Should Love EAs: John Sheeley, EA

Just in case you didn't know (and I will keep reminding you).... Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.

I would like to introduce the Man, the Legend, the Myth. Show your love for....John Sheeley!

John has been my mentor for the past two years. He has helped me out big time during my years as a member of NAEA.

John Sheeley, EA thought you may want to know about this:

The Use of “Unpaid Interns” in Your Business

My tax and advisory practice is located in New York, with many of our clients located in New York City. New York is an exciting place for both students and those beginning their careers. New York is a center for the arts, finance, fashion, technology, and startup companies in all industries.

Many companies offer“unpaid” internships to college students or recent graduates. These interns are excited about the prospect of “real work” in their industry with a small, growing company.

Regardless of whether the intern agrees with the arrangement, the use of unpaid interns can easily violate federal and state labor laws.

Generally, for an individual to be considered an unpaid intern rather than an employee, certain specific criteria need to be met according to the Department of Labor. Specifically, the ”intern” needs to be part of a training program, and not be treated as an employee. The six criteria necessary for an internship training program are:
1.      The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocation school;

2.      The training is for the benefit of the trainee;

3.      The trainees do not displace regular employees, but work under close observation
4.      The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer's operations may actually be impeded;

5.      The trainees are not necessarily entitled to a job at the completion of the training period; and

6.      The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

Notably, the law is unsettled as to whether all the criteria must be met or if only most of the criteria need to be met for an individual to be considered an employee under the law.

article on the NYU website discusses interns and volunteers.

Without careful documentation, an “intern’s” complaint to the US or NY Department of Labor could result in the company being required to retroactively pay the intern for all "volunteer" hours worked.

I am not an attorney. It might be advisable to have your attorney draft a blanket memorandum of understanding for use between the Company and any current or future interns. You might also discuss this issue with your enrolled agent.

Who is John Sheeley, EA?

2012 represented his 26th tax season advising non-resident aliens and entrepreneurs in matters of tax planning. While his current practice emphasizes advising non-resident aliens and foreign nationals present in the United States on matters of taxation and finance, he also possesses extensive experience in assisting individuals, the self-employed, and closely held businesses in these same areas.

John possesses seventeen years’ experience as an Enrolled Agent, representing taxpayers before the Examination, Collection, and Appeals branches of the Internal Revenue Service.

John's Specialties: US federal, state, and local income tax compliance for Non-resident aliens living and working in the United States; US Citizens living and working abroad; and Foreign Corporations operating branches and subsidiaries in the United States.

How can you contact Mr. Sheeley?

John Sheeley, Inc
27 Saint John Street
Goshen, NY 10924

(O) (845) 360-0913

(F) (845) 206-0648

Twitter: @johnsheeley



Dec 14, 2012

"Mo Money Mo Money Mo": Justice Seeks to Shut Down Early Bird Preparer

The Department of Justice has asked a federal court to shut down a tax office in Nashville, Tenn., that allegedly prepared returns before tax season started. An injunction is being sought against Mo' Money Taxes licensee Toney Fields and co-defendant, Trumekia Shaw, who allegedly prepared tax returns based on pay stubs. It was only the latest in a string of problems and allegations surrounding the Mo Money tax preparation chain.

The two allegedly opened their office in December and utilized end-of-year pay stubs to prepare returns before employers issued W-2 forms in violation of rules of the Internal Revenue Service. They also are accused of creating fake W-2s to file with returns and of inflating or claiming fax tax credits, including the earned-income credit, in order to get larger refunds for their customers, along with utilizing false filing statuses and bogus charitable contributions. The IRS estimates it lost more than $15 million in tax revenue on more than 1,100 returns prepared in 2011.

The entire story can be found at

Also, stay tuned because these two preparers may make the legendary Tax Preparers' Hall of Shame in 2013. The preparers have to be proven guilty before joining the club.

Dec 12, 2012

IRS Offers Tax Tips for “The Season of Giving”


Here is a word from the Goodfellas at the IRS:

IRS Special Edition Tax Tip 2012-15

December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are some “Season of Giving” tips from the IRS covering everything from charity donations to refund planning:
  • Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31. Ask the charity about its tax-exempt status. You can also visit and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity. Donations charged to a credit card by Dec. 31 are deductible for 2012, even if you pay the bill in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
  • What You Can Deduct. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified charity. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
  • Keep Records of All Donations. You need to keep a record of any donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction. This may include a cancelled check, bank or credit card statement or payroll deduction record. You can also ask the charity for a written statement that shows the charity’s name, contribution date and amount.
  • Gather Records in a Safe Place. As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return in 2013. This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file your tax return.
  • Plan Ahead for Major Purchases. If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive. Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return. However, if your tax return requires additional review, it may take longer to receive your refund.
For more information about contributions, check out Publication 526, Charitable Contributions. The booklet is available on or order by mail at 800-TAX-FORM (800-829-3676).

Dec 10, 2012

Reasons Why You Should Love Enrolled Agents: Patrick W. O’Hara, EA

Just in case you didn't know (and I will keep reminding you).... Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.
Let’s show how passionate Enrolled Agents can be. You want passion? I can't hear you. Ok, I give you passion!
Patrick W. O’Hara, EA thought you might want to read this:
The value of today’s tax professional
The work of the income tax professional has changed significantly from when I first started 22 years ago. My first year marked the major transition from preparing returns by hand to using computer software. The returns were printed out neatly, and mailed to the IRS. Then came electronic filing, the revenue anticipation loan, the growth of home-use return preparation software packages, and today, the push for the paperless office.
Should we ask ourselves though, has this technology helped us understand taxation? Or has it dumbed us down in a way? I raise this question specifically because this past filing season, America’s most popular (cloud-based) tax software didn’t even resemble a form. It was just data entry fields. You don’t see the form until you pay, and print it out. I often get people calling my office to verify their self-prepared calculation, because they don’t want to pay the fee until they know it is right. Even though I am generally a nice guy and will help people out when I can, it’s hard to even discern how the bottom line is calculated if you can’t refer to form numbers.
Every American should understand how the income tax system works. It’s fairly simple. All income is taxable unless specifically excluded by the tax code. From our income we can deduct a standard deduction based on our “filing status” or choose to itemize our deductible expenses. Then we deduct our exemptions based on the number of taxpayers and dependents. The resulting taxable income is taxed at the rates prescribed based on filing status. Once we determine the tax, we claim any credits and any tax that was withheld throughout the year. Most of us hope the credits and withholding are greater than the tax because this means we are getting a refund. Refunds are good, although I’ll argue if your big refund is from having too much tax withheld from each paycheck, then you need to spend some more time watching Suzy Orman reruns.
There is no mystique to tax preparation. Anyone can put numbers on a form. I have no fear as a professional letting people know this. But I find taxpayers often have trouble determining some basic issues. Believe it or not, determining their filing status – Single, Head of Household, Married filing jointly, or Married filing separately – can be the biggest hurdle. Choosing whether your dependents may be a qualifying child or a qualifying relative is another issue. These seemingly basics selections determine how much income may be excluded, which itemized deductions may be taken, the tax rate, and which credits are available. If you get it wrong, you could end up either getting too much of a refund, or paying more than you needed to. This is where hiring a tax professional can make a huge difference, saving the client time and money along with reassurance that the return is correct.
Last filing season I had a handful of new clients that self-prepared returns in prior years and were unhappy with their results. When we looked at their returns, we determined they had chosen the wrong filing status. It is very rewarding to find the mistakes where we can go back and file amended returns to get refunds. It is not so rewarding to notify a new client that they filed their past returns incorrectly and may owe money to the IRS. But it is usually better to find the mistakes before the IRS does.
I have found that over the years, some of the greatest value I can provide to my clients is educating them about the tax code and their specific tax situations. If my client will permit me, I actually prefer to go over their return line by line so they understand how the tax is calculated. I often emphasize the importance of tax planning and implementation of tax savings strategies before we file the next years return.
The value of a tax professional far exceeds putting numbers on paper. Today’s tax professional should be one of your most trusted advisors – a value that extends much farther than the software.
Who is Patrick W. O’Hara, EA?
He is the owner of a small tax practice in Salt Point, NY and provides tax consultation, tax preparation and taxpayer representation services. As an Enrolled Agent, he is federally licensed to unlimited practice before the IRS and he is a Fellow of the prestigious National Tax Practice Institute.
How can you contact Mr. O'Hara?
Patrick W. O'Hara, EA NTPI Fellow
CHR Associates

(845) 242-2151 (office)
(855) 309-0281 (toll free fax)

Dec 7, 2012

Tax Preparers Hall of Shame: Tax Preparer Charged With Filing Fradualent Tax Returns

The New Inductee to the Tax Preparers' Hall of Shame comes from.....The Boogie Down Bronx!!!

A Bronx tax preparer has been charged with 46 counts for filing tax returns with the Internal Revenue Service and New York State that contained more than $7 million in fraudulent tax deductions and credits, resulting in over $2.5 million in fraudulent tax refunds.

Prosecutors indicted tax preparer Mark Goldberg for participating in a multi-year tax fraud scheme during which he prepared for clients thousands of tax returns that contained millions of dollars in fraudulent, itemized deductions and tax credits. 

Goldberg also allegedly prepared and filed tax returns for himself that fraudulently claimed that he had received significant amounts of wage income from which taxes had been withheld, and that he had paid significant amounts of state and local taxes.

Original story:

Mr. Goldberg welcome to the Tax Preparers Hall of Shame! You have join an elite group of crooked tax preparers.

Dec 5, 2012

Free Falling: The Fiscal Cliff Explained

What is the "fiscal cliff?"

“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. The Budget Control Act of 2011 was enacted due to the failure of the 111th Congress (bunch of suckas) to pass a Federal Budget and therefore as a compromise to resolve a dispute concerning the public debt ceiling.

Why should we care about the fiscal cliff?

A lot of tax laws are at stake that could affect our income. Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. If that is not enough to worry you, according to Barron's, over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts."

What is the Republicans position?

Not to piss off anti-tax super lobbyist Grover Norquist and his infamous Tax Pledge.

What is the Democrats position?

Not to piss off President Obama and the 62,611,250 Americans that supported him in the 2012 election.

What are the chances that a compromise is reached before January 1, 2013?

I’m no political expert but I think at the last minute Congress will extend the tax laws for another year. Therefore, we will be dealing with the same mess next year around this time.

How can you take action?

First, stop being so angry at the IRS and do some research. The IRS is only the enforcer of the tax laws. Begin to direct your attention at the politicians that pimped your vote. Politicians in Washington make our national tax laws. Tell them that they need to stop playing games and come up with a compromise. I’m not here to pick a side and tell you who is right or wrong. However, I do believe that we did not vote for politicians to play such childish games with our money. Write, call, email, or tweet your elected officials.



Dec 3, 2012

Reasons Why You Should Love Enrolled Agents: Kenneth L. Bailey, EA

Just in case you didn't know (and I will keep reminding you).... Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.

Kenneth L. Bailey, EA thought you may want to know about this:

Understanding IRS Liens and Levies

There are many misunderstandings about IRS liens and levies. It is important to understand the differences between the various actions the IRS can take, and what they mean for a taxpayer.

Tax Liens - Filing liens are a normal course of business for the IRS when you owe taxes for an extended period of time. Liens are filed to protect the interest of the government. They are reflected on your credit report, and negatively affect your credit score. A tax lien is filed with your local clerk of court, and is a matter of public record. Unlike a collateral lien which entitles a lender to reposes a vehicle if you do not pay your liability, a tax lien is not against any particular piece of property that you own. A tax lien is filed against you as an individual, and "attaches" to your property. It entitles the IRS to any proceeds from the sale of attached assets such as real-estate.

Bank Levies - A bank levy is a one time action that seizes the balance of your bank account on a specific date. You only have 21 days from the date the letter was issued, or about two weeks from when you realize that your funds are missing, after considering the time it takes for mailing the levy notice and the time required by the bank to process it. It is important to contact the IRS as soon as possible and resolve your account if you wish to get the funds released. During this 21 day period, you can deposit additional funds without them being seized. The levy only freezes the balance as of the date the notice was received as well as the interest accrued on that balance during the 21 day holding period. After this period, the bank sends the funds to the IRS.

Wage Garnishments - A wage garnishment is a continuous action. It will continue to take up to 100% of your net income until it is released. Once they start taking the money, those funds are not recoverable under most circumstances, so it is important to act quickly to get them released. The Internal Revenue Manual (IRM) provides a minimum necessary amount be paid to a wage earner to afford basic living expenses. A subcontractor is treated as a business and does not hold that requirement.

Asset Seizures - In rare circumstances the IRS will seize assets such as vehicles, real-estate, or other personal property. This only happens in complex and high dollar cases. Only a Revenue Officer (collections field agent) can perform an asset seizure, not the general collection department (ACS). The IRS will only do this in rare circumstances because they are not in the business of selling property, they are much more interested in collecting cash to pay tax liabilities.

It is important to hire a competent representative to help fight for you if you owe back taxes to the IRS. Some local CPAs, EAs, and tax professionals deal with representation, however many are not very experienced in doing so. To get the best result possible, it is best to trust a company that specializes in tax negotiations and knows the rules of engagement. It is important to know that there are many bad companies in the industry that only want to take your money based on empty promises.

Who is Kenneth L. Bailey, EA?
Kenneth L. Bailey is an Enrolled Agent and has been working in the tax industry for over 7 years. He has previously managed a Liberty Tax Service franchise for two years, and has spent the last three years working exclusively in tax representation. He deals with clients that have IRS debt of anywhere from ten thousand to several million dollars, as well as represents clients through the audit or exam process. He knows the IRS rules and regulations, as well as how to represent clients to the highest standards in the industry. He is a member of the National Association of Enrolled Agents (NAEA), Florida Society of Enrolled Agents (FSEA), California Society of Enrolled Agents (CSEA), and National Association of Tax Professionals (NATP).
How can I contact Mr. Bailey?
If you are in a predicament with the IRS or state tax departments, contact Mr. Bailey at the National Tax Support by visiting today.

National Tax Support, LLC
P.O. Box 6074
Vero Beach, FL 32961

Toll-free: 855-PAY-0-TAX (855-729-0829)
Local: (772) 242-9034
Fax: (772) 242-9033