Angels at the IRS

Angel

Photo by Svenstorm at Flickr.com

My job is to fight the IRS. All year long, that’s my job. It’s like a little accounting war. I’m the soldier for the little guy.

 

But, although the IRS as an institution is pretty cold and impersonal, many of their foot soldiers are real people. They have friends and families who love them. And they are kind and generous and they actually care about the human beings that call them and try to straighten out their tax problems.

 

To you IRS agents, today is my day of truce. I’ll be back battling you again all too soon. But for today, I’d like to acknowledge the good guys.

 

To Mr. H—who helped straighten out the account of a senior lady with Alzheimer’s and understood that her tax issue really wasn’t her fault. You went above and beyond to help figure out her situation. Your information also helped the doctor understand the problem better as well. You’ll never know how you helped her that way.

 

To Mrs. G—who deals with the really hard luck cases and tries not to cry every night because she sees so much suffering. I’m sorry for sending you more hard luck stories, but I’m glad you’re out there for those people. It helps when there’s someone who actually cares on the other end of the line.

 

To Miss S—who exhausted every possible avenue until she found a way to help a taxpayer who really needed it. It took a long time to work something out, but you didn’t give up. I underestimated you, but you surprised me. Thanks.

 

To the woman whose name I don’t remember but whose laugh I’ll never forget—thank you for recognizing that the IRS really did make a mistake when they sent my client a bill for $2 million dollars! If more agents were like you, there’d be less need for people like me. The first agent my client had called was not nearly as smart, nor friendly, as you.

 

To Mr. D—you said that the IRS had, “Empowered you to help people.” I nicknamed you Captain IRS; you were like a super hero. (You even had the super hero voice!) Not only did you go out of your way to help a woman who was truly indigent, you also pressured me to do the case pro bono as well. I kept up my end of the bargain.

 

To all the phone people who answered questions correctly—please know how much that is appreciated. There’s nothing worse than getting incorrect information from the IRS.

 

To all the people who said, “I don’t know,” when they didn’t know an answer. It’s also much appreciated. “I don’t know,” is always better than wrong information. Thanks.

 

We’ve got a new year ahead of us and I’ll be back in battle mode again soon. Most of my clients think that I’m fighting against the IRS when I try to help them with their tax problems. And sometimes I am. But more often than not, there’s an IRS agent out there battling for them as well. Most people don’t know about the good guys, but they’re out there. Just thought you should know about them.

Santa and the IRS

Parody about Santa Claus being audited by the IRS

Who knew Santa kept receipts?

 

Roberg Tax Solutions will be closed from  December 24th  – January 3rd.  Generally, confidentiality rules prevent me from sharing client information, but our very special client has authorized the release of his personal information so that our clients may understand why we will be closed that week.  We were recently contacted by Mr. S. Claus concerning this letter that he recently received from the IRS.  What follows is our correspondence on behalf of our client with the IRS.

 

IRS:   Mr. Claus,   It has come to our attention that you have never filed a US Income Tax return, despite that fact that you have been receiving US business income.  We have gone back as far as 1913 and estimated your income and taxes and have determined that you owe the IRS $16,345,619,841.61 including penalties and interest.

 

Roberg Tax:  Dear IRS, Don’t you think it’s a little absurd for you to be charging tax back to 1913?  What about the 10 year statute of limitations on collections?

 

IRS:  The 10 year statute does not apply if a tax return was never filed.  Therefore, we demand full payment for all years in question.

 

Roberg Tax:  But Santa doesn’t receive US income, he delivers gifts for free.

 

IRS:  Mr. Claus has been receiving his income in the form of barter.  He has been receiving cookies, milk, and reindeer carrots for years as payment for his deliveries.  We understand, Ms. Roberg, that your parents used to leave Santa beer but we have been gracious enough not to impose federal alcohol excise taxes on Mr. Claus at this time.

 

Roberg Tax:  Well thank you for your generosity on that point, how could you possibly know my Dad used to leave Santa beer?

 

IRS:  We have our ways.  We know lots of things.

 

Roberg Tax:    I don’t think I want to know!  Anyway, you’re arguing that Santa runs a business in the US and gets paid with milk and cookies.  Therefore, since his operation is a business, then he gets to deduct his business expenses which certainly exceed any revenue he could possibly receive from the milk and cookies he receives, therefore he owes no tax.

 

IRS:  Not so fast!  Only a legal business may write off expenses.  Santa does not live in the United States and he flies into the country illegally—thereby voiding any expense deduction that he would otherwise have been allowed to claim.

 

Roberg Tax:  So you’re calling Santa’s delivering of toys a criminal activity?  But if he has proper permission to enter the country, then his business is legal and he may deduct his business expenses which would make his tax bill zero.  Is that correct?

 

IRS:  Well, it will work on the business income, but we’ll probably be asking for his federal fuel excise tax on the reindeer.

 

Roberg Tax:  I don’t believe that reindeer feed falls under fuel tax guidelines.

 

IRS:  We’re reaching.  We’ve got to close the tax gap and the fat guy could be our ticket out of trouble.

 

Roberg Tax:  Don’t call my client fat, he prefers the term, “Jolly.”  And you can’t use Santa to solve the federal deficit.  That’s Congress’ job.

 

Anyway, we’ll be closed for the week.  I’m going to be spending my time with a very nasty IRS agent, who really should be dropping this case if he doesn’t want to stay on Santa’s naughty list.  We’ll all be back in time for tax season.  Don’t you worry about Santa, we’ve got him covered.

 

Merry Christmas.

***Roberg Tax Solutions EITC Special Offer***

 

EITC Special (February 2013)
__________________________________________________

Roberg Tax Solutions is offering a limited time, special deal on tax returns with an Earned Income Tax Credit.

 

This special price is only available to the first 200 people who make an appointment for this special offer, and is limited to February 1, 2013 – February 28, 2013.

 

For this time, we will offer our full service tax preparation services to our wage earning EITC clients for $200; that includes the cost of a bank product and all state returns.   A bank product means that we take your payment out of your tax refund.  You may either have your refund direct deposited into your bank account, or we can print a check in our office for you to pick up later.  This works out to be a $50 to $75 savings off of our regular price depending upon your tax return.

 

This is a great savings from those other big ticket tax companies.

 

If you are self employed, for this special offer, we will prepare your EITC tax return for $350 including a bank product.  That’s a $150 savings off of our regular price.

 

We do not provide Refund Anticipation Loans—that is, we don’t do fast refund money.  Your refund will come after the IRS funds the money to the bank which generally is expected to take 21 days.  If you have had problems with other people claiming your children on tax returns, this could take as long as 75 days.

 

What are the rules?  You must legally be able to qualify for the Earned Income Tax Credit and you must provide the necessary documents that are required in the new IRS regulations.  We will be making copies of all of your documents and we are required by law to hold copies of those documents for three years.

 

You will need to bring the following paperwork with you to your appointment:

 

  • Social security cards for every person listed on your tax return
  • W-2s
  • 1099-MISC forms
  • Any other income documentation
  • Proof of your child’s residency such as recent school report cards or medical statements
  • Proof of self employment income (if relevant)
  • Driver’s license or other state issued photo ID

 

For more information on documentation, read our post about the new EITC rules:  http://robergtaxsolutions.com/2012/11/what%e2%80%99s-new-with-the-earned-income-tax-credit-you-need-to-know-this/

 

This offer is limited to persons who can come to our office in person.  We will not do EITC returns over the internet.  (Sorry.)

 

If we discover that you are not eligible to claim an Earned Income Tax Credit, we will return your paperwork and you will be under no obligation to file your tax return with Roberg Tax Solutions.  Of course, if you still choose to file with us, we’ll be happy to have you as a regular client—in which we have another offer for you on our special offers tab.

 

If you’ve been filing your tax returns with some cattle call tax office that treats you like a number instead of a person, maybe it’s time to try something different.

 

Call today to set up your appointment.  (314) 275-9160 or visit www.robergtaxsolutions.

 

***Roberg Tax Solutions EITC Tax Return Special Offer***

Our Government Officials Should be Required to Pay Their Taxes: An Editorial

Treasury Secretary Tim Geithner

Photo by Talk Radio News Service at Flickr.com

I opened up my newspaper on Thursday morning and there it was on the front page, “New Tax Collector Hasn’t Paid Hers.”   Once again, someone in charge of making us pay our taxes doesn’t see to paying her own.  See link:  http://www.stltoday.com/news/local/metro/st-louis-county-tax-collector-owes-personal-property-taxes/article_08e2dd2a-f9e2-59f4-b1e9-a7d99fe01ed6.html.

 

It’s not that difficult to check if someone has paid their property taxes in St. Louis County.   You can check on real estate taxes here:  http://revenue.stlouisco.com/ias/ and you can check on personal property taxes here:  http://revenue.stlouisco.com/Collection/ppInfo/.  Would it really be that difficult for the county officials who do the hiring to check these things?  It’s really not rocket science.  (And yes, you can go to that website and check which of your neighbors has or has not paid their taxes as well.)

 

But it’s not just here in St. Louis County, it’s all over.  The example that still makes me angry after four years is Secretary of the Treasury, Tim Geithner.  If you recall, he was appointed to his cabinet position despite the fact that he had “erroneously” failed to pay his Social Security and Medicare taxes on income he earned in 2001 and 2002.  http://articles.businessinsider.com/2009-01-13/wall_street/30038796_1_imf-medicare-taxes-tax-audit

 

Now, I can actually understand that mistake, but he was audited for that same issue on his 2003 and 2004 tax returns, so it’s not like he didn’t know that he had done wrong here.  Granted, he did pay the tax after Obama’s team vetted him for the position, but being realistic, I’m pretty sure those taxes would never have been paid had he not been trying for the Secretary of the Treasury job.  If you want to be the Secretary of the Treasury—you should have paid all of your taxes before the president’s team asks you to.

 

It looks like Mr. Geithner will be leaving us soon and the Obama administration will need to appoint a new Secretary of the Treasury.  Is it really asking too much to want someone at Treasury who obeys the same rules that the rest of us are required to obey?  I don’t think so.

 

I’d like to see some type of rule that says a person running for public office needs to be in compliance with all their federal, state, and local tax laws before they’re even allowed to run for office.  I’d have a lot more confidence in our elected and appointed officials handling our taxes if I knew they took care of their own first.

Employee or Contract Labor: How Do You Classify Your Employees?

Snow Plow

Photo by Will Merydith on Flickr.com

I’m an employer.  In addition to paying wages, I also have to pay payroll taxes and unemployment taxes as well.  I’ll be honest with you.  It can be a pain in the behind.

 

I’m guessing that a lot of employers feel that way.  Some hate dealing with payroll so much, that they don’t hire “employees” they just make everyone be “contract labor”.   Here’s the thing—misclassifying your employees as contract labor is illegal.

 

Seriously illegal!  Did you know that employers in Missouri who misclassify their employees as contract labor face penalties between $50 and $1,000 a day per worker and/or up to six months in jail per violation?  In addition to that—yes, there’s more—the employer could also pay a penalty of 25% of the amount that the state was defrauded.  (Yeah, they consider misclassifying employees to be a form of fraud.)   If the employer has no basis for classifying the worker as contract labor, he’ll also be held liable for the employee’s unemployment contributions.

 

Here’s the big one though:  Knowingly failing to insure workers’ compensation liability under the law is a class A misdemeanor, and is also punishable by a civil penalty of up to three times the annual premium the employer would have paid had it been insured or up to $50,000, whichever is greater.  (You got an extra $50,000 lying around?  I don’t.)

 

Do I have your attention yet?  If you mess around with labeling employees as contract labor when they should be employees, you’re risking huge fines and jail.   Suddenly, paying those payroll taxes doesn’t seem like such a burden after all.

 

So how do you know the difference between whether the person you hire should be a contract laborer or if you need to put him on the payroll as an employee?

 

Here’s a very over-simplified answer:  control.  Who has control of the employee’s work?   Do you set the time and location of the person’s work?  Do you provide all the tools and materials?  That sounds like you have an employee.  Does the worker also work for other companies doing a similar type of work?   That sounds like contract labor.  The quick and dirty analysis is—if you’ve got complete control over the person’s work—then that person is an employee.  If the person does the same work for other people, controls pricing, etc., then they’re contract labor.

 

It’s not always easy to determine.  Like I said, I just gave an oversimplified answer.  The state of Missouri has a free booklet out that explains it pretty thoroughly.  Here’s a link to get it:  http://www.labor.mo.gov/DES/Forms/M-INF-310-AI.pdf .

 

If you have any questions about whether your contract laborer should be reclassified as an employee or not, then you need to read the whole booklet.   It’s not a hard and fast “rule book” but rather guidelines of twenty areas that you can look at to see whether your worker falls into the employee or contract labor category.   If you read the pamphlet and you’re still unsure about how you should classify somebody, call the Missouri Department of Labor and talk to one of their representatives.  The main switchboard number is:    573-751-3215.  I had to call them and they were friendly and helpful.

 

It’s really important to classify your employees properly.  Missouri has the tools you need to make sure you do it right.  If you’re still confused, they’re willing to help.  There’s no excuse for messing this up.

2012 Refunds: What You Need to Know

Sloth

Photo by Thowra_uk at Flickr.com

So what’s with the sloth?  Refunds are going to be late this year.  If you’re charging up a storm for Christmas and expecting to pay off your credit cards with your tax refund in January, you may be in for a rough go of it.  Here’s what you need to know for this coming tax season:

 

  1. The first date that e-file will be open is January 22nd, that’s already a little later than usual.  Couple that with the fact that Congress is still messing around with 2012 tax issues and that could hold up the filing season even more.
  2. The IRS is no longer providing a refund schedule.  Instead, they are saying that most people can expect their refund within 21 days if they e-file, and longer if they mail in their return.  While there’s a possibility that some refunds will be faster, you can’t count on receiving any faster than 21 days.
  3. Most refunds are expected to arrive within 21 days, but some refunds can be expected to take 75 days.  That’s not a typo, I said seventy-five days.

 

How will I know if I should expect a 21 day or a 75 day refund? Basically, if you’ve ever had an issue with claiming a dependent, or if you’ve had an identity theft problem, you’re going to fall into the 75 day category.  Let’s say your ex claimed your daughter on his return last year and he shouldn’t have.  You fought it and won.  This year, he tries it again.  The IRS snags his return and it’s held up for 75 days.  And that’s a good thing, he’s cheating on his taxes and this time it won’t work.

 

Here’s the down side.  You go to file your taxes the right way, but the sneaky ex’s return is already in the system.  Now you’re automatically flagged and your return is also getting held for 75 days also.  So even though you’re the good person doing the right thing, your tax return can be delayed for up to 75 days because someone else illegally tries to claim your child.

 

So, be prepared for a late refund and plan accordingly.

Can I Claim EIC if I Don’t Have a Job?

EIC with no income

Raising a child is a big job, we just don’t get paid for it. In order to qualify for EIC, you need to have what the IRS considers to be “earned income” which comes from a paying job.

 

 

The short answer is no.  But I’ve had about 10 phone calls or emails this week with this question, or something similar anyway, so I figured I should post something about it so people will understand it better.

 

First, EIC stands for the Earned Income Credit (or some people call it EITC for Earned Income Tax Credit, they’re the same thing.)  The key phrase here is “Earned Income”.  You earn income from a job—like working at Target, or you might be self employed like me.  I own my business so I don’t get a W2 but I still earn income.

 

Social security, welfare, child support, food stamps, VA benefits, SSI, and gifts from friends or family—none of those count as earned income.  Neither does bank interest, stock sales or dividends, or rental income.  As far as the IRS is concerned, these things do not count as “earned income” for EIC.  (I know those Smith Barney commercials say they “earn” their income, but if you’re making money in a Smith Barney account—it doesn’t get you anything for EIC either.)

 

Alimony—does not count as earned income for EIC, but it does count as taxable income and can affect how much EIC you can get.  Don’t confuse child support with alimony.  Child support ends when your kids grow up.  Alimony lasts forever or has an end date that has nothing to do with children.  Most people get child support, alimony is pretty rare these days.

 

So if you have a job that gives you a W2—you’re set because the W2 proves your income.   But if you’re self employed—proving your income is harder.

 

The IRS is demanding that tax preparers have proof of your self-employment income before we can file your EIC tax return.  We’ll be fined  for not having proper information.  So if you don’t have good records of your income,  you might get turned away by your tax preparer.

 

So the obvious question is—what records do you need to prove your income?  The IRS has a list that includes the following:  a business license, 1099MISC forms, records of gross receipts, income summary, expense summary, and bank statements.

 

The 1099MISC is really the best proof of income if you receive those.  1099MISC is given to anyone performing work for a small business that got paid over $600 during the year.  If you’re like me, you don’t get 1099MISC forms.  Most of the work I do is for individual people, not businesses so I need to prove my income another way.  But I’m an accountant—I have all the bank statements and business records and a license to back up my income.  It’s what I do for a living.  Not everyone is going to have my kind of records.

 

What do you do if you just clean Mrs. Jones’ house for $50 a week?  Or, maybe you helped paint Mr. Anderson’s garage for $200 last spring.  It’s all cash, you’re just helping out.  Those don’t seem like they’re really jobs but they are.  If Mrs. Jones gives you $50 a week for the whole year, then that’s $2,600.  Add Mr. Anderson’s $200 and you’ve got $2800.  It’s not much but it’s something.

 

If you’ve been doing odd jobs like that, you’ll need to get some kind of documentation.  Put it in writing and have the people you worked for sign it.  In the future, you should keep a log of every place you work:  the date, the location, the person you worked for, and the type of work you did.

 

You can’t make stuff up!  That’s illegal.  And remember, EIC returns with self-employment are an audit target—if you lie about this stuff there’s a really good chance that you’ll get caught.

 

But, if you really did work and you really do deserve to claim EIC, then you should be claiming it.  You just need to make sure that you’ve got your documentation in order so you can prove it.

 

The IRS has a website full of information about EIC.  Check it out:  EIC Home Page