Current Items:

1) Einstein, Apples and IRS
2) A Closer Look

1). Albert Einstein, with his electrified hairdo feet up in an easy chair while at Princeton University, found time to make cracks about our beloved tax system. As I remember what Al had to say went something like this: “The tax code dances before my eyes in a meaningless gesture.” Now, of course, Al never studied federal tax law. And while he may have been a genius in theoretical physics, we all know he actually had trouble with mathematics while in school. But having grown up with Isaac Newton’s physics and the fact that apples were thought to fall straight down from trees, Albert couldn’t believe that any country needed over 1 million words to form its federal tax law. And that doesn’t include another 10 million words of interpretation issued by the Internal Revenue Service and case law of all varieties. When observed that way, it is more than an oddity. But as any student of taxation can tell you, our federal tax law does a hell of a lot more than just raising revenue. If, in fact, that was its only objective, a one-sentence tax code would go something like this:

“One for me and One for you.” Done. But it is all the economic tweaking and political assuaging that results in the monster we have. And the poor IRS, understaffed and underpaid, tries to make sense of it all. Add to that fact that IRS these days attempts to be more taxpayer “friendly.” Take for instance, its announcement on January 6, 2023, that it had recently completed the final corrections of the tax year 2020 accounts for taxpayers who overpaid taxes on unemployment compensation they received in 2020. Now the American Rescue Plan Act of 2021(You have to love these catchy names) excluded up to $10,200 of 2020 unemployment compensation. The exclusion applied to individuals whose modified adjusted gross income was less than $150,000. The new law became effective March 2021. But being so friendly, IRS took it upon itself to review the tax returns that were filed prior to the law’s enactment. IRS determined the correct amount of the taxable unemployment compensation. So some taxpayers received refunds while others had that refund applied to taxes owed. IRS says it corrected 14 million tax returns which resulted in 12 million refunds totaling $14.8 billion with an average refund of $1232. If someone feels they were entitled to a refund but haven’t gotten anything from this unemployment compensation exclusion, they may need to file an amended 2020 tax return. Getting back to Albert Einstein. You see, the federal tax law is whatever Congress says it is. You may
remember the days when unemployment compensation was simply not taxed at all. But with the stroke of a pen, it can be fully taxable, partially taxable, and everything in between. In the world of taxation, apples, Dear Albert, can fall from trees in any direction without consistency and end up in apple pie or applesauce. Sort of the direction physics has recently taken as well. Heck, we all can remember when there were just nine planets.

2). Now it’s getting cold these days, and unless you have wisely purchased a ticket south of the border, you are going to be spending a lot of days indoors staring at your screen. If you have run out of good books to read, take heart in the fact that the IRS publishes a column called ”A Closer Look.” It is written by IRS executives and covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals. The latest issue is from Holly Paz, Acting Commissioner of Large Business and International Branch. She discusses her dedicated workforce and the important role it plays in IRS operations. Or you can reread “War and Peace.” As for me, I‘ve got one of those tickets southbound.

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


Theodore M. David, Chair, Tax Law Committee                       

Current Items:                                                                                    

1) The Crime Season   

2) The Real “Holidays”

 1). Santa’s tiny reindeer clip-clop across your roof. Poor unsuspecting evergreens have been yanked out of the ground and covered by all manner of plastic doodads. Some folks light real candles nightly and pray that they don’t need their fire insurance. Oh, it’s the Holidays!

Once the celebration is over, the pain begins. I don’t mean just paying off all those credit card bills. No, not by a long shot. It’s the start of Tax Season! Now tax administration in the United States is based upon voluntary compliance. Every citizen has the opportunity to step up and deal directly with his or her government. Ben Franklin said a citizen must “Turn square corners.” I think he meant trying your best to be honest. These days behind baseball, football and now soccer is the annual sport associated with filing an income tax return. It is a wonderful game and can be played by anyone with a decent income. No particular training, affiliation or uniform is necessary. Whether you choose to use TurboTax or simply a well-sharpened number two pencil, the result can be the same.

The object of the game is to pay the least amount of tax possible under the most strained interpretation of federal tax law. Those players who are picked up for audit by the Internal Revenue Service Examination Branch are immediately disqualified. To be frank, many accountants are very good at this game and have earned a tidy sum over the years with not a disqualification in sight. Some tax preparation programs actually will give you the likelihood of a civil audit! This is a vast improvement over just guessing what your odds are of surviving tax audit season.

Now let’s be clear about one thing. IRS is well aware of the tax game. They play it too. They use a great deal of smoke and mirrors to convince taxpayers that they are there watching your every move. Those damn computers do, in fact, tend to match up information supplied by payers to items missing on individual tax returns. But in many cases, game players enjoy the suspense associated with not knowing whether they will be caught. In most cases, only a tiny bit of interest and a few dollars worth of penalty make the game worth playing. If interest and penalties were the only tools the IRS could use to get voluntary compliance, I am sure voluntary compliance would go the way of the Sony Walkman.

But there is more to this game! It is the IRS criminal division! Around the holidays, the IRS announces the results of criminal activity and the punishment of tax evaders. It is no accident. It is the IRS’s contribution to the tax game. This year is no exception. Just recently, the IRS declared that in the fiscal year 2022, IRS criminal investigation initiated more than 2,550 criminal investigations, identified more than $31 billion in tax and financial crimes, and obtained a 90.6% conviction rate on cases accepted for prosecution. You can go to the IRS website under the fiscal year annual report and get the details if you have the stomach for it. So do play the tax game but be aware that though the odds are small, there can be some nasty consequences. Enjoy the Tax Season.

2). Now, continuing the theme of honesty and trying to connect it to this Holiday Season, I submit this poem for your jaded enjoyment:

The Holidays

Holidays and conflict go together,

Like ribboned gifts and winter weather;

Christmas cheer with those who rate,

Who sit beside those you hate.


There’s snow and tension in the air;

Season’s Greetings yet tempers flare;

Who but Santa survives this blast?

And even he leaves rooftops fast.


Bells that jingle that all is well

Try to hide this Christmas hell;

New Year’s soon, toasts on high;

Resolutions to do or die.


All is forgiven for those so near

Let’s give them one more year!

The Holidays, thank God, last for but a week,

Then quiet times we are left to seek.

Make the Most of the Holiday……

Questions or Comments   should be sent to:

e-mail: Tdavidlawyer@gmail.com

Written by Theodore M. David, Chair

Tax Law Committee


Current Items:                                                             

  • Wordle?
  • Go Appeals
  • Uncle Sam Wants You                                                                    

1). I’m sure you remember the Donna Reed Show or Father Knows Best or, how can I leave out, Leave It to Beaver. Whenever there was an episode that opened up at breakfast, there was Dad buried in his daily newspaper, oblivious to his surroundings, while mom, in her apron, flitted around the kitchen getting a cholesterol-filled breakfast ready for the kiddies. These days of course, newspapers are only used to line birdcages. In reality, most everyone is now buried in their screens from the moment their eyes open until they close later in the evening. Most of what is being watched, in my humble estimation, doesn’t amount to much. Don’t get me wrong — I think it is important that you know exactly where your friends had dinner and what they thought of that restaurant newly opened down the block. And let’s not forget all those pictures of happy couples on vacation, making it look like they are having the time of their lives. But now there is a new game in town, and it is called Wordle. Read More

Written by: Theodore M. David

Current Items:                                                                                    

1) Hurricane Scammers   

2) Adjust Withholding?

3) Annual Turkey Tribute

1). September 28, 2022, was a nasty day for South Florida. What has become known as the largest and strongest hurricane ever to hit Florida made landfall over some really beautiful places like Captiva and Sanibel islands? In Naples, seawater, rainwater and sewer discharge made for an ugly glop they say may take years to remove before things can get back to normal. The losses are in the billions. If you have seen the pictures of a place like Fort Myers Beach, you know the extent of the damage that a nasty hurricane can do. Relief centers were set up almost immediately and neighbors trying to help neighbors were out amidst the devastation. Now I don’t know about your feelings about scammers, but I can guess you feel as I do. The IRS declared October 17-21 to be charity fraud alert week. It seems these lowlifes have been contacting people and fraudulently requesting money donations to help in the Florida relief. Organized charities lose about 5% of their annual donations every year to scammers. This is an international problem and IRS continues to work with global agencies on the issue. IRS says cybercrime is on the rise including attacks on charities, their supporters and beneficiaries. If you are thinking of making a donation to any charity, IRS encourages donors to verify a charity’s tax-exempt status at IRS.gov/TEOS before donating goods, services or money. Fake charities are part of the IRS’s dirty dozen tax scams for 2022. If apprehended, I would suggest taking these fine folks to some of the places that have been hardest hit by the hurricane and allowing neighbors who have lost everything to have a chat with them.

2). The Internal Revenue Service has suggested that taxpayers take a look at their withholding to make sure there will be no surprises during tax filing season in 2023. Changes in withholding will be treated as made during the entire tax year and should avoid any underestimation penalties. The IRS provides a tool at its website called the “tax withholding estimator,” which can help taxpayers determine if they have too much income tax withheld and how to make an adjustment to increase the cash in their own pocket. It will also guide taxpayers to increase withholding or make an estimated tax payment if necessary. According to IRS, about 70% of taxpayers withhold too much every year. This results in a refund which averages about $3000. For some people, this may be a forced savings plan, but it amounts to an interest-free loan to your favorite tax agency.

With regard to 2022 tax returns to be filed in 2023:

  • The standard deduction for married couples filing jointly for tax year 2022 is $25,900. For single taxpayers and married individuals filing separately $12,950, and for heads of households, $19,400
  • The personal exemption for tax year 2022 remains at 0, as it was for 2021
  • Marginal Rates: For tax year 2022, the top tax rate is 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly). The other six brackets are 35%, 32%, 24%, 22%, 12%, and the lowest rate is 10%.

There are new inflation-adjusted amounts that will apply to tax year 2023. The standard deduction for married couples will be $27,700. For single individuals and those filing married, filing separately $13,850 and for heads of household, $20,800. There will continue to be the seven tax brackets but there are increases for inflation at the breakpoints. View them in detail at IRS.gov.

 Thank God You’re Not 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.

So when it’s time to dine and sip,

Include this prayer upon your lip:

“Be grateful for all you see

And that a turkey, you will never be.

Thank God for birds* who don’t mind the loss,

When plucked and stuffed

And cooked in sauce.

*It may be time for a soybean alternative. Just ask any turkey what they think.

Be Thankful and Do Some Good

Questions or Comments should be sent to:

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

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

Current Items:

1) Fun Times at the FBI
2) IRA? Or Whatever You Call It

1) You may have noticed that no bar bulletin filled your inbox for June, July or August. I have dealt with the onslaught of my lawyer colleagues demanding answers to why I have been so lax. I have responded to each of them in a handwritten letter, including a fist full of sand as an explanation. During the summer, laziness is more contagious than the coronavirus. It starts with one ice-cold beer and before you know it, it’s September. Read More

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

Current Items:

1) How Far the FBAR?
2) IRS Stats
3) Where’s the Refund?

1) Unfortunately way too many Americans hide their assets overseas. That goes for individuals as well as corporations. It is a game played by the 1% you read about. In a very weak effort to control where exactly this stuff is to be found, IRS created the FBAR project. It requires taxpayers to file a form with the IRS with stiff penalties for those who get caught. Though I cannot confirm my belief, I think this is another example of IRS smoke and mirrors. Giving people the impression that they are in fact on top of this worldwide abuse. The IRS recently posted a reminder with regard to this form filing: A special reporting requirement applies to most people who have foreign bank or financial accounts. Often referred to as the FBAR requirement, it is separate from and in addition to any reporting required on either Schedule B or Form 8938.The FBAR requirement applies to anyone with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2021. They must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website. Tied to the regular tax-filing due date, the deadline for filing the annual FBAR was generally April 18, 2022. But FinCEN is granting filers who missed the original deadline an automatic extension until Oct. 17, 2022. There is no need to request this extension. And for those who dodge reporting their “world wide “income another IRS warning: Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located. So rest assured the problem is being addressed, sort of.
2) If you have read all of Shakespeare’s sonnets and looking for some really intriguing stuff to sink your teeth into nothing beats the IRS Data Book! The IRS has issued the Data Book detailing the agency’s activities during fiscal year 2021 (October 1, 2020 – September 30, 2021) as well as new information on recent audit data. In addition to describing work performed during the pandemic, the IRS Data Book comprises 33 tables describing a variety of IRS activities from returns processed, revenue collected and refunds issued to the number of examinations conducted and the amount of additional tax recommended as well as budget and personnel information. The Data Book provides point-in-time estimates of IRS activities as of September 2021. For additional context, the IRS also released a related, lengthier discussion on recent audit data.

3). So you filed your tax return and still haven’t gotten your refund. There’s no point asking your accountant about it, they have no clue. But IRS can in fact help. The Where’s My Refund? Online tool has been enhanced to allow taxpayers to check the status of their current tax year and two previous years’ refunds. They can select any of the three most recent tax years to check their refund status. They’ll need their Social Security number or ITIN, filing status and expected refund amount from the original filed tax return for the tax year they’re checking. Please direct your clients to Where’s My Refund? on IRS.gov for more information.

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


Written by: Theodore M. David, Well Retired

Chair, Tax Law Committee

Current Items:
1) Can’t Pay Up?
2) Justice on Fire
3) Crowdfunding?

1). So you owe back taxes. Big deal. Work out an arrangement with IRS to pay up. We have fine lawyers who can help all over the state. The amount you’ll be allowed to keep out of your income is determined by using forms on the IRS website taking into consideration some standard allowances. These Collection Financial Standards are used to help determine a taxpayer’s ability to pay a delinquent tax liability. Allowable living expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family’s) health and welfare and/or production of income. Read More

Written by: Theodore M. David,

Chair, Tax Law Committee


Current Items:

1) Join the IRS?
2) A New Tax Page
3) Don’t Do It
4) IRS Raises Rates

1) I know there are lawyers out there who are building their practices or trying to stay afloat in these difficult virus filled times. I get emails every day with suggestions how to expand a lawyer’s business. They come in right alongside those who advocate a keto diet so I can be healthier I guess while I am busy expanding my business. And then of course there are plenty of invitations to join match up applications guaranteeing a future and active love life. And it’s nice to know that if all else fails, Amazon is also interested in hiring me. I guess the headhunters don’t get the idea that I’m not expanding my business, nor looking for a mate or in need of the premium diet suggestion or a new career putting packages on a conveyor belt so some goof ball can go into space. But for lawyers who are in fact civic minded and willing to volunteer… (And for those not familiar with that term it means not being paid, and for most of you I know you’re not gonna read any further) I won’t argue with you except to say if you are in fact interested in making an IRS connection then a recent notice by IRS asking for persons to serve on the Taxpayer Advocacy Panel may be of interest. TAP, as those who need that sort of alphabet soup, is a federal advisory committee that works to improve IRS services and taxpayer satisfaction. You can go to IRS.gov for more information and to begin the application process. But before you do perhaps you should read an Op Ed article written by Commissioner Chuck Rettig for Yahoo money where he notes that “the IRS is facing enormous challenges this filing season related to the pandemic and resource limitations.” Frankly, I think those members of the bar with that part of the practice would conclude that the IRS would probably file for bankruptcy protection if it could. That would give them some time to sort out the tons of yellowing letters and taxpayer documents sitting in piles somewhere. With 45 years of experience and having been a former IRS agent and IRS lawyer I would in fact volunteer but I’m scared to death to think that they would accept my humble application and actually ask me to do something. And I must confess that taking a job with Amazon on the conveyor belt has more attraction as I am sure I could use the exercise and perhaps I could go along on the next space flight with what’s his name. Wasn’t that guy on one of those space TV shows years ago in a tight spandex get up? BTW the Keto diet doesn’t give rules for calories. That’s a lot like the tax code.

2) Your car is ensconced in ice. Walking out your door poses the threat of real harm. You have read all of the novels you have piled up over the years. What to do next? It is time to get to a new special page on IRS.gov to provide the latest details and information affecting the 2022 filings season. A number of tax issues that took place in 2021 are addressed at the new page. It is designed to raise awareness about these issues and provide people with the latest timely information. According to the tax Commissioner this new page provides a “one-stop-shop” for the latest key information people and the tax community may need. The tax filing season started officially on January 24 and IRS says it has already sent out 4 million tax refunds amounting to $10 billion. I promise I will get to that page but I still have a few books like War and Peace and the collected works of Ernest Hemmingway to get to first.

3). If you need to be reminded that helping clients commit tax fraud is a crime spend a few minutes looking at the recently released cases brought by the tax division of the Department of Justice. One lady got three years in prison and one year of supervised release for filing fraudulent tax returns for her clients. Another preparer was banned from ever operating a tax-preparation service again. What hurts more is that courts will also determine that these unsavory characters are required to disgorge the fees they obtained by preparing false and fraudulent tax returns. In one case it amounted to $353,000 payable to the United States. The wheels of the Department of Justice turn very very slowly but as most practitioners will attest they eventually grind those caught up in the mechanism.

4) The party’s over. The IRS is raising the rate it charges on underpayments. For the second quarter of 2022 that rate will be 4%. That’s the same rate for individuals on overpayments that is on refunds the IRS doesn’t make in 45 days. But IRS interest rates still offer a financial bonanza for companies and individuals who know how to play the game. Frankly IRS does not require you to submit bona fide financial statements like a bank would before it lends you money. Many taxpayers use the IRS tax money for all host of things including lavish birthday parties, air-conditioned dog houses and all the rest. So long as they don’t encounter any of the stiff penalties, paying interest at 4% without having to disclose their financial wherewithal is a bargain. Needless to say the IRS being overwhelmed and undermanned has no chance in curbing this kind of activity. Some employers don’t show the existence of their employees until the very last quarter of the tax year thereby saving taxes by delaying payment to the end of the year.. They say a tax-deferred is a tax saved. The tax system counts on the honesty of taxpayers and their tax preparers and advisers. Any questions?

Questions or comments should be sent to:

E-mail: Tdavidlawyer@gmail.com

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

1) What does January 24 mean to you? If you’re being sensible about this winter business, it will be just another day to go for a dip or a stroll at the beach in sunny Florida. But if you find that you are still well anchored in New Jersey and worse, responsible for the preparation of individual income tax returns, that day is the official start of tax season. Read More

By: Theodore M. Davis, Chair, Tax Law Committee

Current Items:

1) The Maltese Pension Falcon
2) Santa’s Wishes

1) It’s almost Christmas and you’re still stuck at home with this new virus threat. What to do, oh, what to do! Now, who doesn’t love Humphrey Bogart, Sidney Greenstreet, Peter Lorre, and Mary Astor? If you’re guessing Casablanca you would be close. In the fall of 1941 director, John Houston put together a dazzling cast to create what is perhaps the first noir classic detective story where Bogie plays Sam Spade. By now you of celluloid addictions may be able to guess “The Maltese Falcon.” In this detective thriller, Sam Spade gets more than he bargained for when a case is brought to him by beautiful and secretive Mary Astor playing Miss Wonderly. Sam’s partner is soon murdered and Peter Lorre shows up demanding he locates a valuable statuette. In 1539, the Knight Templars of Malta paid tribute to Charles V of Spain by sending him a golden falcon encrusted from beak to claw with the rarest jewels. But Pirates seized the galley carrying this priceless token and the fate of the Maltese falcon remained a mystery. Of course, none of this is true but it is a great backdrop for the film. Now I will bet you have no idea where Malta is. It is actually an island country located in the central Mediterranean Sea. It played a strategic role in World War II and these days a wonderful vacation spot. I won’t spoil the mystery by telling you how the movie comes out. But by this time you must be asking yourself what does this have to do with the tax law. Read More