"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 http://www.theprogressiveaccountant.com/tax/justice-seeks-to-shut-down-early-bird-preparer.html

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.

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 IRS.gov 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 IRS.gov or order by mail at 800-TAX-FORM (800-829-3676).

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)
www.chr-tax.com

Facebook: www.facebook.com/chrtax