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Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

1) Call the Midwife?
2) The Dirty Dozen, Again?
3) IRS Side Gig

1) Now, I am not going to ask you what you did last week. Heaven knows I didn’t do much myself, but certainly, there has been a swirl of activity affecting our tax administration system and the rest of the world. I’ll take it back: if you are a practicing lawyer, you probably do know what you did last week and at least who you will bill for all that time. The old tired joke goes that the young lawyer dies prematurely, goes to heaven, and meets St. Peter at the pearly gates. St. Peter says to him, “We were expecting a much older person.” The lawyer says, “I’m barely 45.” St. Peter responds, “Oh, we were judging from your billing time records.” If you are one of the hundreds of thousands of federal employees, you may have a tougher time deciding whether you are staying or going and what you did last week. And the IRS is no exception. Apparently, the same offer has been made to the Internal Revenue Service to trim the fat of our bloated government. Helping the trimming, the former Commissioner took off on January 20, 2025. And of course, the question then came up of who would replace him. Now, there is no cause for alarm because we now have an Acting (soon to be fired, retired, let go or downsized) Commissioner. IRS Chief Operating Officer Melanie Krause will become the Acting IRS Commissioner. The deputy commissioner who could have become Commissioner “retired” two weeks ago. What a coincidence. So Krause has moved into the new acting position. She is relatively new to the IRS, having joined in October 2021. But no matter, she spent 12 years in the federal oversight community in the Government Accountability Office.

Now, all of this would be ordinary, except that Krause also maintains an active license as a registered nurse. That is just perfect. Everyone knows these days that nurses are far more important than doctors. If you don’t believe me, catch the PBS series called “Call the Midwife.” It will make you glad that you went to law school instead of medical school. Someone at the IRS has realized that the system is currently sick. So, it’s time to call the midwife or at least a registered nurse. By the way, IRS employees have been prevented from skipping and grabbing eight months of free pay until the end of tax season. Come May 15, I am sure thousands, some with great relief, will find employment elsewhere. What effect this will have long-term on tax administration remains to be seen. Thousands of robots coming?

2) Annually, the Internal Revenue Service publishes the Dirty Dozen list. The IRS warns that these things are common schemes that threaten taxpayers’ tax and financial information. It is not a formal listing of agency enforcement priorities. But it has become somewhat of a tradition. So I list here the notorious dozen: email scams of all varieties; bad social media advice: online account help from scammers; fake charities; false fuel tax credit claims; credits for sick leave and family leave; bogus self-employment tax credits; improper household employment taxes; overstated withholding scam; misleading offers in compromise; ghost tax return preparers and lastly, new client scams where cyber criminals impersonate new potential clients to trick tax professionals into responding to their emails. Be on alert as well for those false emails asking what you did last week. IRS would like taxpayers who have been involved as a victim in any of these to file form 14242 with the Internal Revenue Service at 24000 Avila Rd., Laguna Niguel CA 92677.

3) The US District Court for the Southern District of Florida issued a permanent injunction against a Miami tax return preparer named Jean-Lewis. It appears Mr. Lewis had simply started a side gig involving filing tax returns for taxpayers. It was simple: he would prepare a tax return for the clients and give them a copy. He would then create a phony tax return file it with IRS requesting a larger refund. When the refund was received he would make sure the client got that which was set forth on the return he had provided. The difference was Jean-Louis’ profit. So he has been banned from doing most anything having to do with federal income tax returns and has been ordered to pay up $245,275 in ill-gotten gains from his side gig. He has also declined the position of Acting, Acting Commissioner of Internal Revenue as he said, “it is not my type of gig and besides, it lacks job security.”

Questions or Comments   should be sent to:    Tdavidlawyer@gmail.com

Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

• IRS Gone?
• Tax Season Internal and External?
• IRS “Buy-Out”

1) This is going to be a short bar bulletin. In fact, I’m getting this ready even before our new President takes office on January 20. Those who know me realize I am a first-class procrastinator but this time I hope to have my feet in the sand when this bar bulletin actually gets sent. So, I thought I’d take the time right now on a rainy, chilly, dismal kind of New Jersey day to bring you some frightening news about the likelihood of a mess in tax administration about to happen. Now, you may recall that Congress actually funded the Internal Revenue Service in a meaningful way after many years of delay. But now that is one of the areas the President will be looking at to cut and if rumors are to be believed, eliminate. Now, your guess is as good as mine as to what will actually happen after January 20. Tax law is wed to politics. It’s not like a science with immutable rules and results. Even the great Einstein said he couldn’t make sense of it. The problem is, it is whatever Congress says it is. If the Congress is married to the Executive branch, the potential for disruption is present. It’s a shame as the IRS has recently gotten its computers working reasonably well, and its website is simply first class. But any plan to reduce funding and make the IRS and DOJ an arm of the executive is complicated, messy, as well as, I’d guess unconstitutional. “If they can’t follow the agenda, they should leave.” And they have started to do just that. The Commissioner of IRS, Dan Werfel, announced the other day that he will resign on January 20. His term was to go until 2027. IRS top brass always stay through at least a year or two to ease a transition. So, the world of tax administration that we lawyers and accountants contend with will be something as yet unseen. The promise to eliminate the income tax is more concerning but highly unlikely. All this does not seem to add up to a successful Trump term in office with pandemonium in tax administration. So, cutting and firing senior officials at the Internal Revenue Service and losing senior lawyers at DOJ makes no sense and claiming to eliminate the agency altogether sounds truly ridiculous. Or does it? See Item #3. Needless to say, 2025 will be an interesting year.

Among tax ideas floated these days are: eliminate the income tax; make tips tax free; acquire Canada and Greenland (will they be tax havens?); restore the Salt deduction (We in NJ would love that one). Once details seem “real”, if there will be any, I will be glad to let you know. These are strange times in many ways and the tax world is no exception.

By the way, far from being early this Bull ended up late. Typical.

2) An annoying fact of life is that tax season starts in January. But not to fret. You can always visit the IRS website at the Get Ready Page to view key information such as steps to make filing easier, gathering and organizing tax records and life changes that could affect a refund. Or instead you could simply board a plane to somewhere warmer and put this stuff off until the very last minute. Oh, by the way, we will have a brand-new Federal agency on Jan 21. That will have all kinds of fun things to do. The External Revenue Service. It will collect all the Tariff money from Canada and Mexico and the rest of the world too without passing any cost to us citizens, so there will be another tax season coming. An External Tax Season. I’ll let you know when.

3) Where will the ax fall at IRS? The federal “buy-out “may result in whole sections of IRS deciding to grab 8 months of severance and run. You may want to get your 2024 tax return in asap. The idea of eliminating the IRS as an agency sounds beyond the realm. But why not just privatize it? Have a bidding for the job. Like what NASA did to the space race. Maybe even let that high bidder get a cut of the action as well. It’s not a new idea just another complicated and messy one.

Questions or Comments should be sent to:  Tdavidlawyer@gmail.com

Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

1. A Plea for Monica McGinley
2. See the Drones in Your Hood                                                                      

1. Chances are you have never heard of Monica McGinley. The poor woman is an unfortunate soon-to-be tax felon. She was recently indicted for tax fraud and theft of government funds by a Grand Jury sitting in Greenbelt, Maryland. According to the indictment McGinley assisted with the preparation and filing of false tax returns so that she could receive large refunds from the IRS to which she was not entitled from 2014 to 2024.

McGinley allegedly claimed nonexistent payments or withholdings and requested nearly $12 million in refunds. The IRS issued refunds to McGinley totaling over $1.5 million. In one example, she received a U.S. Treasury check for over $1 million. McGinley, the poor girl, faces a maximum penalty of 10 years in prison for the theft of government funds and a maximum penalty of three years in prison for each of the six counts of aiding and assisting in the preparation of false tax returns. Now is that any way to treat a misguided, otherwise honest, and incredibly cunning taxpayer during the holiday season? The other day, Pres. Biden commuted the sentences for 37 out of 40 federal inmates on death row, converting them to life in prison without parole before he hands over power to President-elect Trump on January 20. These folks will be getting a break in true Christmas spirit. The fact that they are all convicted murderers, rapists and kidnappers is beside the point. Biden has for years sought the elimination of the federal death penalty. He wanted to move to commute these folks so that incoming Pres. Trump who has vowed to restore a speedy return to federal executions could not have his way. Biden said that “In good conscience I cannot stand back and let a new administration resume executions that I halted.” Earlier this month, Biden commuted the sentences of nearly 1500 people and pardoned 39 more convicted of nonviolent crimes, and of course, his son Hunter walked away from a guilty plea to tax violations and firearms-related charges. But where does that leave poor Monica? Did the IRS really send her a million-dollar check? Monica obviously knows the ins and outs of dealing with the IRS. Perhaps Trump can both pardon her and name her new Commissioner of the Internal Revenue Service.

2. Here in New Jersey and in a bunch of states across the country, people have been straining their eyes looking for drones. Of course the federal government has said all of the sightings except for a hundred or so have been determined to be not credible. Years ago, I bought a pair of Sears binoculars for $20 at a local garage sale. The other night I declared a “Drone-athon” in my neighborhood. Ten people showed up. Within minutes, around 9 PM, it was clear to me and the group that at least two of these drones were flying high and nearby. They were flashing red and green. If you download an app called flightradar24 it can tell you where all the planes and helicopters are in your area. These were not planes or helicopters.

So I state unequivocally that you are not losing your marbles if you think you have been seeing drones. But what are they up to? The list of theories is getting longer by the day. Some are confident they are searching for lost nuclear bombs. Others that it is an attempt by Amazon to demonstrate its ability to deliver really big car sized packages. Some believe it is part of the Trump deportation promise using a claw like device he once saw at Seaside Heights to remove millions of illegal aliens. My favorite is that it is part of the inauguration spectacle planned for January 20 which will spell out MAGA in huge letters country wide. Not sure about that one as a slight glitch could turn it into an embarrassing MAGGOT. And of course it could be the Russians just having some fun. But here and now is my own theory. The IRS recently announced that it will be sending $1400 to taxpayers who were eligible for the Recovery Rebate Credit even though they never claimed it on their tax returns. These payments will be made either by direct deposit or sent by paper check. Eligible taxpayers will receive a separate letter notifying them of the payment. The Commissioner of Internal Revenue said “these payments are an example of our commitment to go the extra mile (That’s the hint) for taxpayers.” At least 1 million taxpayers overlooked claiming this complex credit when they were actually eligible. Now the drones make sense. I forecast in the next few weeks correspondence from the Internal Revenue Service with attached paper checks $1400 each will be drifting down from drones in your neighborhood. Keep a watchful eye. Credit should go to Shadow President Elon Musk for coming up with this novel high tech idea. It’s hard to state but if the checks don’t come this way, then the drones are in fact from an alien source like in “War of the Worlds” the 1953 film. A great holiday classic to watch with the entire family. Oh yes, the Red and Green lights are an alien attempt to communicate their message: We are here to “Stop (Red) you from Going (Green)” just like in “Close Encounters of the Third Kind” the film from 1972. Please forgive me for “droning” on. I just couldn’t resist.

Questions or Comments? Please email: Tdavidlawyer@gmail.com.

Written by: Theodore M. David, Chair, Tax Law Committee 

Current Items:                                                              

1. Tis the Season to be …Fraudulent

1) Well, it all started with that: “It was the night before Christmas and all through the house…” You know the business about the place being real quiet and the stockings were hung by the chimney with care in hopes that you know who would soon be there. Kids of all ages set out cookies and milk and perhaps treats for reindeer as well. My son-in-law who happens to be Jewish, one year dressed up as Santa Claus and snuck outside around his house at night so that he would be recorded on his ring system.

The next day the kids were incredibly wide-eyed to see Santa Claus actually stomping around their neighborhood. At my age, I don’t remember having much belief in Santa Claus, but then again, I did become a lawyer. Frankly, I think the kids hate to put their parents on the spot so they go along with their parent’s silly conduct. After all what’s the damage? Just a tiny bit of kid fraud. Then there is the gift business. That didn’t even start with ole St Nick but maybe thousands of years before. You know just as well as I do that every consumer product is decked out with holly and is offered for sale with special discounts during the Christmas season. Things that nobody really wants or needs. So the whole ball of wax is based upon us fooling each other. Acting well, fraudulently. Is it any wonder that cybercriminals would jump on this season to capitalize on the foolhardy snow sled, ice-skating, snowmen-making dreamers we turn into at this time of year? While visions of sugar plums dance in their heads, crooks say, is the best time to relieve them of their excess dollars and assets.

If you haven’t already received a phone call, you’ll be getting it soon. Your kid has been taken by some cop in a distant place and the poor kid needs bail money immediately. They even have his voice mimicked just enough so you’re convinced. Even though sensible people know it’s not possible, you’d be surprised at the millions of dollars that are forked over. So it’s the peace on earth and goodwill to men that gets us every time. We lower our guard thinking we hear angels in our belfry when it’s really just the wind whistling through the hole in our head. Now annually the IRS reaches out to taxpayers to alert them to the common scams that are going around while the snowflakes are falling. These include all variety of emails and telephone scam calls as well as fraudulent promises by tax return preparers for exaggerated refunds that seem to fall out of the snow laden clouds. Fake deductions and credits for childcare and employee retention are the icing on the evergreen tree.

For those who may have an IRS tax debt, greasy looking phony lawyers and accountants pop up promising $.10 on the dollar reduction in the tax bill. Many of the scams are aiming for your Social Security number. Recently at a doctor’s office I was given a form to fill out and there was the line requesting by Social Security number. I looked around the office to see whether my doctor was part of a cabal stealing Social Security numbers and selling them to some faraway land for unimaginable amounts. I didn’t fill it in. No one seemed to notice. There’s another reason to remain vigilant about tax and business scams of all kinds. You could actually make a buck. Legally. IRS says that anyone experiencing scams or encountering promoters or tax preparers peddling schemes should file Form 14242, Report Suspected Abusive Tax Promoters or Preparers. Send that form with any supporting materials to the IRS Lead Development Center IRS, 1973 N. Rulon White Blvd., Ogden, UT 84404. The lead development center within the office of promoter investigations follows up on each referral. By the way, to get yourself out of the credit card hole you’ve dug buying all those gifts, consider filing Form 211 to request a possible monetary award. You see, there really may be a Santa Claus after all.

2) Not to be outdone by the fat guy in the red suit with the long white beard, IRS recently announced that the interest rate it applies to taxes owed has dropped to 7%. That’s the same rate they pay on overpayments/refunds.

Enjoy Your Holiday. Be Grateful at Thanksgiving and Generous at Christmas and Chanukah

If You Were a Turkey

Wouldn’t it be pleasant
To perhaps be a pheasant?
Or maybe a goose
Out on the loose?
But when leaves turn red,
You’d be filled with dread,
If you were a turkey.

Why, if you were a turkey,
You’d be on the phone all day,
Talking with your lawyers,
Having bills to pay
To settle up the life jams,
Waiting for the roast yams.

If you were a turkey,
You’d be gobbling with your friends
Kissing good bye to hens;
Wishing if somehow
You could be some other fowl.

So when it’s time to sup and sip,
Include this prayer upon your lip:
Be grateful for all you see
And that a turkey you will never be.

Questions or Comments should be sent to: Tdavidlawyer@gmail.com