Blog

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

Current Items:                                                             

• No IRS Fun
• IRS Interest Rates
• Nickels and Dimes for Teachers

Boy, how things have changed. I started my career in the tax world as an IRS agent trained in Newark, New Jersey, and assigned to an IRS office on Ellison St., Paterson, NJ. It was one of the least sophisticated places you can imagine. The same door that led to a staircase to the second floor where the IRS offices were located made you walk past the barstools in the rather seedy bar downstairs. The big windows overlooking Ellison Street had gold lettering announcing Internal Revenue Service. I absolutely loved the place. It had a down-home environment and a certain esprit de corps among the agents who worked there. No one had cubicles everyone had the same government-issue gray metal desks in a big, wide open space. Those of us who were in the examination division also had a side chair designed for the poor taxpayers we dragged in for audit. I remember the light fixtures were oversized frosted glass bowls hanging from metal supports on the ceiling that reminded me of my days in grammar school at St. Joseph’s. But it was the people who worked there that really made the place special. For a relatively small office, we had representation in all three branches: examination, collection, and criminal division. I immediately started fantasizing about becoming an IRS special agent. They were the fraud investigators authorized to carry guns on special occasions and assigned to assist Secret Service should the need arise to protect the president. They were a pretty intense bunch. While I am sure they loved their work, it was serious going. On the other hand revenue officers assigned to the collection branch seemed to be having a damn good time. Way back then there were few women who became revenue officers. It was a tough job. These folks are unarmed and go out visiting taxpayers trying to wring additional dollars out of them for the taxes they owe. Whenever you see an IRS agent is assaulted or even killed the odds are it is a revenue officer. We’re talking ancient history now when IRS officers had the right to seize the taxpayer’s assets with little advance notice. These guys would leave the Ellison Street office on what amounted to a tax treasure hunt. I can recall one man carrying what looked like an oversized doctor’s bag with his various tools for snipping and cutting wires, locks and things of that sort. There was one story that circulated at our office that one unfortunate taxpayer called the police as his brand-new truck had been stolen right from his driveway. The police eventually got to us and the revenue officer assigned was pleased to tell them it was a federal seizure and that the truck would be offered for sale. Personally, I’ve always thought that this style of tax-enforced collection procedures produced the correct result. But like all things, many instances of abuse existed and led to the drawn-out procedures that now exist for revenue officers to complete the seizure process. Working on this side of things for the last forty years, it was my job to see to it that the seizure process was done correctly with perhaps as much difficulty as possible for IRS. Many revenue officers grew tired and frustrated and opted for retirement when the new statutes allowed collection due process hearings drastically taking the fun out of being a revenue officer. But it is about to get worse. As part of a larger transformation effort the IRS is now ending unannounced visits to taxpayers by agency revenue officers. They say the purpose is to reduce public confusion and enhance overall safety measures for taxpayers and employees. So a mailing advising that the revenue officer is coming must be given. Advance notice. Oh, Heck. I’m sure the guy with the doctor’s bag has already retired. If not this would certainly be the last straw.

• Interest rates that IRS charges for underpayments that is amounts taxpayers owe, as well as for overpayments for refunds that are due will rise to 8% for the quarter starting October 1.
• Demonstrating once again how teachers get the short end of the tax stick, the IRS issued a new school year reminder for educators. The maximum educator expense deduction is $300 for 2023. A whopping $50.00 increase. They can claim this miserable pittance even if they also claim the standard deduction. We should all be embarrassed.

Questions or Comments should be sent to:
Theodore M. David, Tdavidlawyer@gmail.com

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

Current Items:

1) IRS “Vacation”
2) Summer Reading

1) I woke up this morning and made the mistake of asking Alexa what was the news. I was frankly poking around looking for a hook for this bar bulletin. Apparently, a young and eager meteorologist was laying out what Americans could anticipate this summer. While he said millions and millions of people will take to the roads like never before, he warned of extreme heat rising into the hundreds with tornadoes, hurricanes and smoke from Canadian wildfires. I could just imagine the havoc trying to find that perfect family vacation. Now if you were around in 1983, you may remember one of the greatest comedy films of all time. It was the same year that Gandhi, Star Wars and Flashdance appeared. It ended up having five sequels earning about $60 million in its first year. How could anyone forget National Lampoon Vacation? There was Chevy Chase as Clark Griswold driving his family from Chicago to Southern California to visit Wally World. Their mishaps and near-death experiences, including cranky Aunt Edna strapped to the roof, is a storyline that is hard to forget. Anyone who is trying to do the same thing with their kids knows how close it is to reality. So maybe it’s time for you to consider something truly different and indoors as well, away from all that nasty weather. Besides, you can stuff the family station wagon and drive to these vacations. I know by this point, I’ve lost most of you. Where the hell is he going with this? This week the IRS released its seminar lineup for the 2023 nationwide tax forms! These meetings provide tax professionals with multiple opportunities to learn more about changes to tax law and IRS transformation efforts. Who needs Wally World? It gets even better. Forty seminars will be offered for which tax professionals can earn up to 18 continuing education credits. Each forum is a three-day session that will be held in one of five cities picked, I am sure, as family dream vacation itineraries: New Orleans, Atlanta, Washington DC, San Diego and finally Orlando. Just imagine dragging the kiddies to some of these seminars where they will learn soon enough just how lousy a tax system we have. Forgive me for not getting this to you sooner, as those who registered by June 15 could take advantage of the low early bird rate of $245 per person. Better yet all of this could be tax-deductible and not even Clark Griswold could claim that.
2) If instead of taking a summer road trip, you decide to plop yourself down, whether at the beach or in your own backyard, nothing is better than a good book to cozy up to. I just downloaded one called “The Wager,” a true story of high seas adventure. The subtitle is “a tale of shipwreck, mutiny and murder.” It’s the story of the boat which set sail from Portsmouth, England in 1740 on a mission as part of an ongoing conflict with Spain. The book jacket shows a square rigger being tossed about in an angry sea. It’s by David Grann. Stranded on an uninhabited island, it’s got a Robinson Crusoe appeal. And the reviews have been dazzling. But there are many tax professionals who instead may enjoy reading the Internal Revenue Service electronic tax administration advisory committee report. This page-turner features recommendations to Congress and the IRS that focus on electronic tax administration and cyber security. Among its 26 recommendations, the report advises Congress to provide timely tax legislation and consistent multiyear funding while it urges the IRS to prioritize modernization and search engine optimization. It’s not available on Amazon but on IRS.gov for free. So you decide. I’d rather sink with the “Wager.”

To my Faithful readers: No Bull for July and August. Taking a vacation with the Griswolds.

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

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

Current Items:                                                              

• Debt Be Gone
• IRS Rates
• Turbo Tax Terror
• Make More Taxpayers

1. The old joke goes: I can’t be overdrawn at the bank… I still have checks. I was all prepared to write a long narrative about how bad things were going to be when the United States actually defaulted on its debts. Janet Yellen convinced me that China would end up owning at least Rhode Island and Delaware as soon as we skipped a single payment on any of our debts. Interest rates would rise like an ugly tsunami swallowing up the entire real estate industry, and taxpayers would be on the street once again selling apples like they did in the Great Depression. But these damn politicians ruined everything by coming up with some kind of agreement. Let’s be clear on one thing. If you did what the US government does, you would probably get a minimum 10-year sentence vacationing in New England, as low-risk criminals refer to their low-security prisons. But all is well with the United States getting deeper in debt with the rest of the world. We have been around for about 247 years so far. We will have to survive at least another 800 to pay off the massive debt we have accumulated. The British in the War of 1812, I think, actually burned the White House. If they waited until we got deeper in debt, they could have just bought it instead. Sort of a fire sale without the fire. It seems that that is the way we are headed. Down deep, no one really seems to be all that concerned. Personally, I’m more upset by having this bar bulletin later than usual because of all the governmental hijinks. I should have known that only a madman would take on a woman as smart and powerful as Janet Yellen. So, for the time being, the government will just continue writing more checks and printing more money. And those people living in Rhode Island and Delaware can rest easy.
2. You may have terrible credit with creditors chasing you down. Even your brother-in-law has denied you even the smallest loan. What to do? The Internal Revenue Service is still open as a reasonably available creditor willing to lend without any financial documentation of any kind. That is the beauty of our self-assessment tax system of voluntarily filing tax returns like Johnny Carson did with Karnac the Magnificent. Find the number that you need, and you and your accountant fill in whatever figures are necessary to get to that number. The tax savings that result is the document-free loan from Uncle Sam. Now, of course, in the age of computers, IRS may eventually wise up and track you down. So understand that in addition to other penalties for things like negligence and perhaps fraud, both of the civil and criminal nature IRS charges a measly 7% annually these days on tax underpayments with no points or vig like the mob. Still better than your local bank or any of your relatives.
3. Intuit is the company that puts out TurboTax. It is an ingenious computer AI.and although the tax law keeps changing, it’s not very hard to change the program once you get it running. Besides, there are lots of folks overseas who charge virtually nothing for their computer skills. Intuit has been making a lot of money with Turbo Tax. I don’t own any Intuit stock. But it did send a chill down my back to learn that IRS is intending to give Intuit a run for its money. What I understand is that IRS has a goal of allowing most taxpayers to use an IRS program to file all types of tax returns at no cost. So this may be a good time if you happen to be an Intuit stockholder to rethink your investment position. But certainly, don’t take my advice. I thought Microsoft was a flash in the pan.
4. Avoid listening to NPR radio. The stuff they broadcast can really shake you to the core. They all sound so incredibly smart. I confess I like it. Recently a spot on one of their shows talked about the scientific potential of creating artificial sperm and artificial eggs. They said we are no more than maybe a decade away from being able to make babies outside of the womb, if necessary. Now I was driving at the time and frankly didn’t pay attention to all the details, but one scientist was convinced that no matter government policy here in the United States, the world would work toward this result. Now with taxes as the angle for this bulletin, it dawned on me that this could be the biggest boon to tax collection ever. Simply make more taxpayers. All those folks who have not had children for whatever reason will someday be able to purchase a version of themselves containing their own DNA with fake sperm and fake eggs. Designer taxpayers who like paying taxes could be next. If you are science-minded, the process is called IVG…look it up.

Questions or Comments   should be sent to:

Theodore M. David, e-mail: Tdavidlawyer@gmail.com

WRITTEN BY: Theodore M. David, Chairman

TAX LAW COMMITTEE

Current Items:                                                             

•  Know When to Fold Them
• How You Do-in’?
• A Sweet Spot                                                                    

1) Congratulations you’ve been a good citizen. Survived another tax season and you join the other hundred and 60 million individual tax returns that were filed. This year the tax filing deadline was April 18, 2023 and it is now safely behind us. Of course there are those who file for extensions and will get their stuff together in time to get those papers filed properly. But there are approximately on the other hand 1.5 million people who are about to fold their cards with regard to tax refunds they are entitled to for tax year 2019. That year IRS extended the filing date to July 17. What this means is that about $1.3 billion is about to go unclaimed by those millions of people. So should you have a client or perhaps actually be one yourself it’s time to get that return filed for 2019 before July 17, 2023. The average refund that is going unclaimed is about $900 per taxpayer. IRS does not create a return for taxpayers who are owed any money. Ours is a self-assessment system and you just have to file. The confusion comes in because single taxpayers with income less than $12,200 and married couples with income less than $24,400 for 2019 were not required to file tax returns. And they are still not required to file. However, if those taxpayers were subject to withholding that money is sitting waiting to be claimed as a refund with IRS. Even in cases where no withholding or other payments were made some taxpayers will qualify for “refundable” credits. This could be $6000 or more for 2019. So even if no payments were made during the tax year a taxpayer can still receive a refund as the refundable credit is treated like a payment. There are some special rules about filing a 2019 return now. Taxpayers cannot use the IRS Free File Tool on the IRS website. It is available only for current tax year returns. Taxpayers must also file a paper tax return so no electronic filing is permitted. Filing a paper tax return guarantees that any refund will take longer to receive. Lastly a “hold” may be placed on the issuance of the refund if the taxpayer has not filed subsequent tax returns for 2020 and 2021. You can get the necessary forms for tax year 2019 at IRS.gov. The July 17, 2023 date can’t be extended under federal tax law.

2) When Ed Koch was mayor of New York he was fond of asking people: How am I doing? The IRS feels the same way about that stuff. So annually it publishes the IRS Data Book. And for those enthusiasts interested in exactly how IRS was doing from October 1, 2021 to September 30, 2022 the 2022 Data Book, available at IRS.gov, is for you. But if instead you have a decent life to lead and have other ways of squandering your time here are some tidbits from that report: IRS collected $4.9 trillion during that time period. That amounts to 96% of the cost of the entire government. As expenses go, for every $.29 spent funding the agency it collected $100. So it would appear that we are getting our money’s worth. IRS also says that in its survey of taxpayers it gets a 78% satisfaction rating! Not bad and way better than any of the recent sitting Presidents, indicted or not. IRS said 262.8 million tax returns were filed during the period which included 160.6 million individual tax returns. And taking their advice, 94% of those individual tax returns amounting to 150.6 million tax returns were e-filed electronically. The IRS also declared that it is continuing to pursue higher income taxpayers with no plans to increase audit levels for taxpayers whose income is less than $400,000. A Biden magic number? So now you decide how are they do-in’?

3). A healthy lawyer is a happy lawyer. A happy lawyer has happy clients. So what is the easiest way to become a happy lawyer with happy clients? Easy. Recognize the science behind chocolate. Fill client reception areas and your own office with chocolate not flowers and certainly not magazines declaring you as a Super Lawyer or boring ABA journals. You see cocoa is good for you. It contains high dosages of fiber and something called phytonutrients. Now before you think I have lost my mind let me tell you there are a number of medical journals which have concluded dark chocolate can assist in lowering blood pressure and reduce the incidence of heart disease. In one study there was a 27% reduction in heart related deaths. Now before you go and binge keep in mind that the fat, sugar and those extra calories that chocolate has may, in some cases, offset the advantages. Can chocolate ice cream be far behind?

Questions or comments should be emailed to: Tdavidlawyer@gmail.com