Archive for April, 2015


April 28th, 2015 No comments

IRS To Make Changes in Correspondence Exam Process

The IRS has conducted a comprehensive review of its correspondence exam process and is planning to make several changes, all of which are supposedly designed to make it easier for taxpayers and tax practitioners to communicate with the IRS. While these steps are progressive, it also demonstrates just how out-of-touch the IRS has been for so many years.

IRS officials recently revealed that pilot programs will be conducted to allow:

  • Virtual meetings between IRS examiners, taxpayers, and tax practitioners. Think Skype and similar video services. The IRS believes better use of video technology in its difficult budget environment will allow it to have better communication with the public and that the video interaction would also lead to a better understanding of the issues and more case closures.
  • Secure email communication with the IRS.  The procedure would require users to login to a secure web portal. Once logged in, practitioners could send emails and documents to IRS correspondence audit examiners. Identity theft concerns have been a big problem with the IRS. It is hard to believe that the IRS is just now considering implementing secure email correspondence.
  • IRS representatives assigned to the tax practitioner priority service line in the correspondence exam area will be required to have at least three years of experience with the IRS. This step, while very much needed, illustrates the frustrations tax practitioners have when dealing with the IRS. Tax practitioners have a special priority line that can be called to discuss taxpayer issues, cut through the red tape, and quickly resolve these issues. So with that objective in mind, why did the IRS assign inexperienced employees to handle these cases? The IRS did not address the wait times. Whereas a tax practitioner could in years past usually have his call answered within 10-20 minutes, the wait time is now often between 1 – 2 hours.

In all, these are positive developments and we look forward to the IRS continuing its efforts to make working with the IRS easier for tax practitioners and taxpayers.

If you want to learn more about tax planning strategies and tax preparation services, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

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April 21st, 2015 No comments

We can all learn from the mistakes of others. If you work closely with your tax professional and use him/her for tax planning services rather than merely tax preparation services, you would better understand the many nuances of the tax laws and how to survive an IRS audit examination.

The Tax Court case of Roberta Lee Howe vs. the IRS, Docket No. 21360-13S, TC Summary Opinion 2015-26 dated April 10, 2015, illustrates why taxpayers claiming donations of clothing, furniture, and other non-cash items to charities such as Goodwill have a difficult time sustaining their donations if challenged by the IRS. While many a taxpayer complains about the information the IRS requires, they need to keep in mind that it is the taxpayer’s responsibility to carry the burden of proving the entitlement to the claimed deductions. By knowing what the IRS requires, you have a much better chance of having your tax deductions accepted by the IRS.

The Tax Court decided in favor of the IRS’s denying the taxpayer’s non-cash charitable contributions when considering the following factors: Read more…



April 14th, 2015 No comments

The Philadelphia Department of Revenue (PDOR) had announced that effective January 1, 2015, ALL employers are required to provide notice of the federal Earned Income Tax Credit (EITC) program to all Philadelphia resident employees and non-payroll workers (independent contractors) at the “same time” that they receive their 2014 W-2, Form 1099, or other comparable form. It is important to note that this new law applies to not only companies located or doing business in Philadelphia, but also to those businesses not located in Philadelphia that employ or pay residents of the City of Philadelphia.

The PDOR has posted on its website ( the City of Philadelphia’s “2014 Earned Income Tax Credit (“EITC”) form.

The PDOR will allow employers to provide this notification electronically or in hardcopy.

What happens if such notice was not provided to the employee or independent contractor when sent the W-2 or Form 1099-MISC? Read more…

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April 7th, 2015 No comments

Since taxpayers and tax preparers often discuss expenses that cannot be deducted, let’s discuss expenses paid by another person that a taxpayer can deduct. Perhaps this discussion may save you from overpaying your 2014 taxes. It is also one of the rare examples when the tax ruling is logical and makes sense.

In the case of Judith Lang, TC Memo 2010-286, the IRS argued that a daughter could not deduct medical expenses and real estate taxes on her Form 1040 since the expenditures were paid directly by her mother to the medical service providers and local tax authorities. The Tax Court disagreed! The Court found Read more…

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