Tax Professionals: Use Systemic Advocacy Management System (SAMS)

Posted on July 23, 2021 by Russ

With the pandemic, the IRS has faced a lot of issues.  One that has faced my clients is the IRS ignoring responses to Automated Underreporting Unit (AUR) notices.  These notices are sent when the IRS receives notification of items of income that the IRS thinks should be on the return but are not on the return.  These are not audits.  These typically arrive to taxpayers as CP2000 notices.  Taxpayers have 30 days to respond to the notice, either by mail or by fax.

Unfortunately, several of my clients received CP2000 notices and responded (or I responded on their behalf) and the IRS ignored the response and sent a statutory Notice of Deficiency.  You can respond to the IRS to a Notice of Deficiency; however, if the IRS doesn’t respond back to you within 90 days the tax will be assessed (unless you file a petition for Tax Court).  I had clients respond both by fax and by mail and their responses were ignored.

One such client isn’t a systemic issue (mistakes do happen), but when it is several it’s a systemic issue.  I reported this on the Systemic Advocacy Management System (SAMS).  The IRS was aware of mail issues, but had not been aware of the issues with faxes.  I could prove to the IRS that the faxes were sent (we had the receipts generated by my fax machine showing that all pages were sent and received).  The SAMS group–which works within the Taxpayer Advocate Office–agreed that it’s a systemic issue and is working to (hopefully) prevent this from recurring.

Figuring out what went wrong will help protect taxpayer rights and reduce the burden on both taxpayers and the IRS.  I’ve spoken to SAMS representatives a few times on this issue, and they are trying to resolve this.  It may not help my clients (unfortunately, the deadline on a Notice of Deficiency is a ‘set in stone’ date though the IRS is trying to resolve the problems faced by my clients), but it will help others.

I encourage any of you to use the SAMS system if you see an issue that faces multiple taxpayers and are “big picture” issues:

These systemic issues:

  • Always affect multiple taxpayers;
  • Don’t apply to just one taxpayer (but if you personally have an unresolved IRS problem, TAS may be able to help);
  • Involve IRS systems, policies, and procedures;
  • Involve protecting taxpayer rights, reducing burden, ensuring fair treatment, or providing essential taxpayer services.

You can report such issues on the SAMS system.  The Taxpayer Advocate does look at these, and resolving these issues helps everyone.

Posted in IRS | Tagged | Comments Off on Tax Professionals: Use Systemic Advocacy Management System (SAMS)

At Least I’m Not Classified as “Dead”

Posted on July 16, 2021 by Russ

I’ve been talking over the past months about the issues faced by taxpayers in dealing with the IRS.  Suffice to say, when you have a 3% chance of reaching a human things aren’t going well.  But we should always look at the good side of things: I’m still breathing (in reality and in view of the IRS).

One woman in New Jersey is classified as “deceased” according to this report in the New York Post.  It’s going on seven years of bureaucratic futility in rising like a Phoenix to life.  Of course, she is really breathing and this is something that should just have gotten fixed immediately.  And yes, she still must pay taxes even though she’s “deceased.”

Indeed, I was able to give a client good news this week.  He was erroneously assessed a late filing penalty on a foreign trust return (the return was timely filed with an extension, and we had proof of both the timely filing and the extension).  Late filed foreign trust returns (Form 3520) are assessed a $10,000 penalty.  When the client was assessed the penalty he wrote the IRS with proof.  When the IRS ignored him, he asked me to write the IRS.  I did so, but the IRS refused to reverse the ruling.  We appealed, and after eighteen months of waiting we received a letter reversing the penalty.  (We never had an Appeals hearing–it appears that the Appeals screener realized that my client did have an extension.)

The overall theme when dealing with the IRS remains the same: patience.  You need it when dealing with the IRS.  I do expect things to slowly improve once the IRS moves employees back to the Service Centers (probably this Fall), but given the humongous backlog it will takes years for the IRS to be back to normal.

Posted in IRS | Tagged | Comments Off on At Least I’m Not Classified as “Dead”

IRS Wakes Up, Still Smells Like Crown Imperials

Posted on July 7, 2021 by Russ

Normally when we talk about smelling flowers we’ll use a line like, “Waking up and smelling like roses.”  But that is decidedly not the case with this story, so we chose a different plant: Crown Imperial (Fritillaria imperialis).  You’ll see why shortly.

Back on June 20th we reported on the IRS denying 501(c)(3) status to Christians Engaged.  The reason given hearkened back to the IRS Scandal on non-profits:

[Y]ou are serving the private interests of the D party [D means Republican] more than incidentally in contravention to Treas. Reg. Section 1.501(c)(3)-1(d)1(ii) as well as serving a substantial nonexempt private purpose. For example, you educate Christians on what the bible says in areas where they can be instrumental including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations. The bible teachings are typically affiliated with the D party [Republican] and candidates. This disqualifies you from exemption under IRC Section 501(c)(3).

Well, it appears the IRS got the message.  Christians Engaged received a new IRS Letter dated today that states: “We’re pleased to tell you we determined you’re exempt from federal income tax under Internal Revenue Code (IRC) Section 501(c)(3).”  There was no explanation given why the denial was reversed, but a cynic–and I am definitely one on this issue–believes the IRS figured out that only bad things would happen if the denial were to stand.  Indeed, under President Biden’s proposed budget the IRS is looking at an $80 billion increase in funding.  I strongly suspect IRS management realized that funding was in grave danger if the IRS continued to publicly discriminate against conservative (and religious based) nonprofits.

So does the IRS come up smelling like roses?  Hardly.  The IRS didn’t explain why Christians Engaged didn’t receive 501(c)(3) status to begin with.  Had I formed a new charity (and complied with all the minutiae regarding 501(c)(3) organizations) titled, “Ultra Liberals Engaged,” does anyone think that I wouldn’t have quickly received approval?

So the IRS comes up smelling like the Crown Imperial plant.  You haven’t heard of this plant?  It’s “a dazzling and unique member of the Lily family…In addition to adding visual interest, these flowers…have a potent, musky scent almost like a skunk….”

Hat Tip: Tyler O’Neil

Posted in IRS | Tagged | Comments Off on IRS Wakes Up, Still Smells Like Crown Imperials

Is the IRS Telling Tax Professionals the Truth?

Posted on July 7, 2021 by Russ

Yesterday, a fellow tax professional posted on Twitter:

Ogden currently has 70 tractor trailers of unopened mail. – per IRS agent trying to explain why a POA from 2019 still hasn’t cleared yet.

Yet if you read the IRS Operations page on the current status of IRS operations you get a different picture:

[On Individual Tax Returns] The IRS is opening mail within normal timeframes and all returns received prior to 2021 have been processed if the return had no errors or did not require further review. As of June 25, 2021, we had 16.7 million unprocessed individual returns in the pipeline…

Status of Processing Form 941, Employer’s Quarterly Federal Tax Return: The IRS is now opening mail within normal timeframes. The IRS has also made significant progress in processing Forms 941. As of July 2, 2021, we had about 5,000 Forms 941 received prior to 2021 in the processing pipeline. Including current year returns, as of July 2, 2021, we had 1.6 million unprocessed 941s in the pipeline.

An individual tractor trailer has a volume of 3,489 cubic feet; 70 of these would have a volume of 244,230 cubic feet.  You could fit 1,826,967 gallons of fluid in 70 tractor trailers.  That’s a lot of mail.  Sure, Ogden does now receive all paper-filed individual returns for the western United States, but what the IRS is saying doesn’t make sense if the IRS is telling us the truth.

Ogden is where almost all specialty returns are filed (Forms 3520, 3520-A, 8804/8805/8813, etc.), and those are not mentioned in the IRS pronouncement.  Yes, that will add to the unprocessed paper (these returns must all be paper-filed), but in volume it’s not large.  Paper-filed business returns (corporations, S-Corporations, and partnerships) also mainly go to Ogden; however, most such returns are electronically filed so in volume this is likely not a big factor.

My suspicion is that a large amount of the 70 trailers are filled with returns waiting to be sent to federal warehouses.  Because of Covid, most federal employees are working from home.  Paper-filed returns are generally stored for years in federal warehouses.  The IRS cannot send those returns from Ogden to various warehouses because the warehouses are closed.  Thus, they fill tractor trailers waiting for them to reopen.  These do not represent unprocessed paperwork; they are filled with processed paperwork that must be stored.  My guess is that the telephone representative the tax professional spoke with saw the trailers, knew that some are filled with unprocessed mail, and assumed the rest were too.  I’m reaching out to my IRS Stakeholder Liaison on this issue.

Still, if you’re dealing with the IRS patience is a necessity.  We’re telling clients the following timelines (these are averages) when dealing with the IRS:

  • Refunds Where You Claim the Recovery Rebate Payment (as a tax credit): 4 months
  • Processing Time for Paper-Filed Return: 10 months
  • Processing Time for Paper-Filed Amended Return: 12 months
  • Processing Time for Electronically Filed Amended Return: 11 months
  • Response Time on Correspondence to AUR Group (CP2000s, etc.): 6 months
  • Response Time on Other Correspondence to the IRS: 12 months

Those timelines are, bluntly, ridiculous.  But that’s what’s going on today.  Though I expect the IRS to return to full staffing at Service Centers this Fall, it will likely take the IRS years to get out from under the backlog.

Posted in IRS | Tagged | Comments Off on Is the IRS Telling Tax Professionals the Truth?

The Trump Organization Indictments

Posted on July 5, 2021 by Russ

Unless you’ve been hiding under a rock, you know that The Trump Organization and its Chief Financial Officer, Allen Weisselberg, were indicted on 15 counts including grand larceny, conspiracy, and tax fraud.  The former President is (and has been) a very divisive figure, and the comments on this run the gamut from “witch hunt” to “justifiably deserved.”  Is this from a banana republic (as Dan McLaughlin alleged) or a “travesty of justice” (as the New York Post opined)?  The indictment can be read here.

First, note these are all allegations; no one has been found guilty.  It’s also possible that former President Trump had nothing to do with this and had no knowledge of it.  However, in a closely-held family business its usual that all senior personnel would be aware of something like this.

So are these serious charges?  Absolutely.  If we take the allegations as true, there was $556,000 in federal taxes, $107,000 in state taxes, and $238,000 in New York City taxes that were evaded.  You cannot deduct personal expenses on a business return–this is something we tell everyone.  (Do note that some businesses can take a Home Office deduction, and other similar items related to business use of home.)  I’d love it if my business could pay my mortgage, utilities, and property tax.  That would be decidedly dumb (and illegal), so I manage to pay those expenses myself.  Now, a business can pay personal expenses for an employee, but those expenses paid become additional compensation.  If we take the indictment’s allegations as true, that didn’t happen here.

Is the dollar amount involved enough to warrant criminal charges?  Yes.  This is over $900,000 in total tax evaded, and that’s more than enough to cause a criminal charge.  But are those on the right correct that the only reason there are criminal charges is Trump?  Almost certainly, yes.  The Manhattan District Attorney doesn’t like the former president, so he was a target.  In most tax investigations, if the business admits liability and agrees to pay the tax and penalties criminal indictments don’t happen.  However, if you’re a celebrity or a politician (or worse, both), the ‘normal’ rules don’t apply and you’re a target.  You need to be clean, because you will be audited.

(An interesting fact is that President Trump a few years ago noted that he had been audited almost constantly over time.  Yet the IRS didn’t come after him.  It may be that they didn’t see the information that the Manhattan D.A. saw, or it may be they didn’t find anything illegal.)

The Trump Organization’s attorney noted he’s never seen such an indictment; that when companies do things like this they normally pay a civil fine (along with the tax, penalties and interest).  Is this prosecution politically motivate?  Absolutely, and here I agree with the critics.  There’s no doubt that if it were my business accused of this we would have been offered that.

Still, the scheme (if true) is quite brazen and decidedly wrong.  It will be interesting to see how this plays out over the next year or so.

 

Posted in New York | Tagged | Comments Off on The Trump Organization Indictments

35,300,000

Posted on June 30, 2021 by Russ

This morning, The National Taxpayer Advocate issued her semi-annual report to Congress.  In the report is the true state of tax returns at the IRS.  Fair warning, it’s not a pretty picture.

As of the close of the filing season (late May), there were 35.3 million tax returns that were unprocessed.  This includes:

  • 1.1 million paper returns received in 2020 (100,000 for individuals and 1 million for businesses);
  • 15.7 million paper returns received in 2021 (6 million for individuals, 4.6 million for businesses, and 5.1 million “unspecified”);
  • 10.3 million returns awaiting “Error Resolution” (9.8 million for individuals, 500,000 for businesses);
  • 1.4 million returns that are “Processing Rejects” (1.2 million for individuals, 200,000 for businesses);
  • 2 million returns that are “Unpostable” (1.1 million for individuals, 900,000 for businesses); and
  • 2.1 million ID Theft returns (all individuals).

And if you called the IRS general phone line for individuals, you had a 3% chance of getting through!  (This is actually better than the Taxpayer Advocate’s initial estimate of 2%, not that there’s a significant difference here).  Tax professionals have special phone numbers to call.  I found that I had about a 5% chance of getting through–or a 95% chance of not getting through.  And I pity those who had to go through Identity Verification.  The IRS increased the number of returns subject to this while phone staffing on these lines decreased.  The Taxpayer Advocate called it a “Historically low level of IRS telephone service.” I won’t argue.

While I expect things to improve, it’s likely going to take years for the IRS to work through the backlog.  I currently quote to my clients the following timelines:

  • Processing time for a paper return: 10 months
  • Processing time for an amended return: 12 months
  • Processing time for your refund if you do not get it in the first month after e-filing: 5 months

The above numbers are averages.  I had a client (who I helped come into compliance) file back returns last year.  One return took 16 months to be processed.   That return was incorrectly processed by the IRS, so a letter must be sent (so the client is likely looking at another few months before it’s correctly processed).

The IRS is doing better on correspondence (the average response time is 6 months), but it’s nothing to write home about.  An issue not mentioned in the report is the IRS issuing Notices of Deficiency prior to reading correspondence addressing underlying issues (thus, the notices should not have been issued).  I know that the Taxpayer Advocate is working on this systemic issue, but a resolution is, unfortunately, unlikely in the near future.

I do expect the IRS Service Centers to be restaffed this Fall, and this will then start to help on reducing the backlog.  Unfortunately, a backlog that was built over 18 months will take at least that long to be undone.

 

Posted in IRS | Tagged | Comments Off on 35,300,000

Here We Go Again: Bias in the IRS’s Tax Exempt Group

Posted on June 20, 2021 by Russ

Most of us remember the IRS scandal from 2013.  In that scandal we learned that the IRS and/or individuals working at the IRS deliberately targeted conservative tax exempt (nonprofit) organizations.  It was a huge scandal at the time, and it led directly to the IRS’s budget being cut.  It’s now eight years later, and one would assume the IRS had learned.

One would be wrong.

From various sources we learn that the IRS has denied 501(c)(3) status to a group titled Christians Engaged.  Why? Quoting from the actual letter denying 501(c)(3) status:

[Y]ou are serving the private interests of the D party [D means Republican] more than incidentally in contravention to Treas. Reg. Section 1.501(c)(3)-1(d)1(ii) as well as serving a substantial nonexempt private purpose. For example, you educate Christians on what the bible says in areas where they can be instrumental including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations. The bible teachings are typically affiliated with the D party [Republican] and candidates. This disqualifies you from exemption under IRC Section 501(c)(3).

This is, bluntly, unbelievable.  President Biden, a Democrat, is a practicing Catholic who presumably believes in the Bible.  If we believe this letter, only Republicans believe in the sanctity of life, marriage, freedom of speech, defense, and US-Israel relations.   I guess if the IRS says its true we must now all vote Republican, because apparently God is a Republican.

A 501(c)(3) charity does need a charitable purpose.  According to the President of Christians Engaged, Bunni Pounds, they, “…[W]ant to encourage more people to vote and participate in the political process.  How can anyone be against that?”  It appears that for at least a few individuals at the IRS (the employee who wrote this letter and his supervisor), having more Christians engaged in the political process is a bad thing.

I do expect IRS Appeals to overrule the tax exempt group.  I also hope that there is some additional remedial training for that group because it sure looks like they haven’t learned a thing in eight years.

 

Posted in IRS | Tagged | Comments Off on Here We Go Again: Bias in the IRS’s Tax Exempt Group

§1031 Exchanges for Cryptocurrency: The IRS Thinks Not

Posted on June 19, 2021 by Russ

Back in September 2017 I wrote a piece titled, “Can You Use a §1031 Exchange to Defer Gain with Cryptocurrency?”  The conclusion I drew was, “[M]ost exchanges of one cryptocurrency for another do not qualify as §1031 exchanges and it’s more likely than not that the IRS will rule that two different cryptocurrencies are not eligible for like-kind treatment.”  Do note that after December 2017 you can only use a §1031 like-kind exchange for real property, so today the answer is clearly no.

It’s likely some taxpayer was audited on this issue by the IRS, and the auditor asked the Chief Counsel’s Office for whether a like-kind exchange (aka a §1031 exchange) was allowed for cryptocurrency.  The Chief Counsel’s Office issued a memorandum that for Ether (ETH) from Bitcoin (BTC), Bitcoin for Litecoin (LTC), and Ether for Litecoin, the answer is no.  The Chief Counsel’s office looked at the underlying character of the cryptocurrencies and found them to be different and, thus, not qualifying for a like-kind exchange.

While it’s nice to have my conclusion verified, this is now fairly irrelevant.  As I noted above, today you can only do a §1031 like-kind exchange for real property.  There are few taxpayers who will be impacted by this given that generally 2017 returns are beyond the statute date.

Posted in Cryptocurrencies, IRS | Comments Off on §1031 Exchanges for Cryptocurrency: The IRS Thinks Not

“I Haven’t Received My IRS Refund. Can You Help Me?”

Posted on June 18, 2021 by Russ

This past week I fielded a number of phone calls asking this question.  Unfortunately, the answer is no.  Neither I nor any other tax professional can speed up your IRS refund.

First, the good news: about 90% of IRS refunds are moving through the system normally (with the refund being issued between 10 and 21 days after filing).  However, the remaining 10% of returns with refunds are facing long delays; I estimate that these refunds will be delayed on average between three and five months.  Why?

There are two issues causing the delays.  First, the IRS is manually checking all refunds where an individual is claiming a refund for not receiving the Recovery Rebate Payment(s) (Form 1040, Line 30).  Due to staffing issues at IRS Service Centers, this takes quite some time.

The other issue is “errors” when processing.  This doesn’t mean there’s an error on your return.  Rather, as part of normal processing a few returns “fall out of processing.”  In most years, the “errors” are fixed within one to four days, and the delay is hardly noticed.  But 2021 isn’t a normal year.  Because of Covid, IRS Service Centers are not fully staffed.  Returns that fall out of processing go in a giant (virtual) stack to await a human to review the error, fix it, and have the return complete being processed.  Instead of taking days, we’re talking months.

Your tax professional cannot fix this.  There is no one to call to have this resolved.  Indeed, the IRS asks that you do not call them as there really is nothing that can be done.  Please don’t call your tax professional either; he or she cannot make your refund come to you any faster this year.  You must just be patient.

The only good news is that we expect to see many IRS employees return to Service Centers in the coming weeks.  That should eventually help to resolve the problem.  Until then, you should just periodically check the IRS’s “Where’s My Refund” website.  And do realize that you will receive interest from the IRS on your delayed refund (though that interest is taxable).

Posted in IRS | Tagged | Comments Off on “I Haven’t Received My IRS Refund. Can You Help Me?”

The 2021 Tax Season (Part 1)

Posted on June 14, 2021 by Russ

I’ve had good Tax Seasons and bad Tax Seasons, but the first part of the 2021 Tax Season was unique.  And uniqueness doesn’t mean good nor does it mean bad.  Both points were present this year, and continue to be present.  Let’s look at the highlights and lowlights of the first part of the 2021 Tax Season.  (I state “first part” because we still have 50% of our clients’ returns to file–we always have a lot of clients on extension.)

The IRS’s Does Great!  Let’s heap some praise on the IRS.  The IRS generally did an excellent job in implementing the laws that Congress passed dealing with Covid relief.  These laws required many changes to the antiquated computers that the IRS uses to process tax returns and given the IRS’s systemic issues (low staffing, ancient computer systems, etc.) they did an excellent job.

The IRS Made Some Confounding Decisions.  Let’s take tomorrow’s tax deadline (June 15th) for residents of Texas, Louisiana, and Oklahoma as an example.  Residents of those states can timely file returns tomorrow, and timely file extensions tomorrow.  (Individuals residing outside the United States can also so file.)  But if a resident of Texas wants to file an extension, that extension must be mailed to the IRS.  Ask any tax professional about correspondence sent to the IRS and the theme song from the musical Annie comes to mind (tomorrow, tomorrow, it’s always a day away).  Yet the IRS wants to increase the mail backlog.  This makes no sense.

Speaking to the IRS Is Near Impossible.  The Taxpayer Advocate reported that 2% of individuals attempting to reach the IRS actually do so.  And when you do, you’re likely on hold for a long time.  I have eight matters that require that I speak with the Practitioner Priority Service (PPS).  I have either Power of Attorney forms or Tax Information Authorizations for each client.  Some of these I could handle using the IRS’s e-services system if the IRS would timely process the forms.  It’s currently taking the IRS three months to process forms.  So I (along with other tax professionals) must call the IRS up.

I’m currently on hold for the business side of PPS, with a hold time of more than one hour noted.  Now, I can work while I’m on hold but most individuals cannot–they can’t take phone calls, they must sit at home, etc.  Meanwhile, I’ve tried to reach the individual side of PPS four times a day for the last week and cannot get through.  If I cannot get through over this week I will have to mail letters on some of these matters, delaying resolutions for months–it’s taking the IRS on average ten months to read the mail.  (While Commissioner Rettig states the IRS is timely opening their mail, they are not timely reading their mail.)

I have a client who had to mail his 2019 tax return to the IRS (the return has a form that is not allowed by the IRS to be efiled).  It was mailed in late September (he was on extension, waiting for a K-1). The return was just processed.  But my client was selected for Identity Protection Verification–that requires my client to call the IRS.  He’s tried three times a day for the last week and cannot get through.  Now, my client’s refund is about $40, so it’s not a big deal but the IRS’s inability to handle phone calls right now is a disaster that retards effective tax administration.

This Was an Early Year.  Tax seasons are sometimes late (everyone wants extensions) or early (everyone wants to file yesterday).  This was an early year–many clients wanted their stimulus money and, thus, wanted to file early.  Unfortunately, there are so many hours in the day (my cloning machine still needs work) and…

Tax Paperwork Comes Later and Later Every Year.  This year was no exception.  Most of my clients who are in partnerships saw their K-1s come one week later than last year.  That doesn’t sound like much, but a day here, a day there, and then you’re talking about many days.  (My apologies to Senator Dirksen.)  Adding to this was…

Congress Changing the Tax Law in the Middle of Tax Season Delays Tax Filings.  Many clients received unemployment.  When Congress changed 2020 tax law in March 2021, that means that tax professionals had to wait for (1) the IRS to update their computers and make any rules about the new laws and (2) the tax software to be updated.  While the IRS and the software companies generally did a good job, this added to delays.

Most of Our Clients Understood This.  We appreciate your patience this year.  For those who did not understand, please note that we did inform you of our deadlines when we sent our Engagement Letters (and all returns whose paperwork was received prior to the deadline were filed).

There Are Black Clouds on the Horizon for Tax Administration.  Congress and the IRS keep putting more and more work on tax professionals, and this is going to add to the cost of tax filings.  Consider the new Schedule K-2s and K-3s.  These are going to be forms used to report international transactions on partnerships and S-Corporations.  Lots more work.  Congress tends to pass laws mandating things like phone interviews for the Child Tax Credit.  This doesn’t sound like much, but take three minutes here and three minutes there–well, I’ve used my Dirksen quote already but you get the idea.

However, that’s nothing compared to the Pro Publica leak.  For those who haven’t heard, Pro Publica, a liberal special interest group, was provided tax documents showing how much various millionaires and billionaires paid in taxes.  (I will have a lot more on this later this week.)  Tax documents are never supposed to be released.  Indeed, felonies have been committed.

Democrats want to increase reporting to the IRS (as a way to pay for increases in taxes.)  Does anyone think that Republicans in Congress will go along with this given that the IRS can’t safeguard what they currently have?  When the previous tax scandal occurred (the Lois Lerner/targeting GOP-leaning non-profits), Republicans cut the IRS’s budget (it was the only thing they could do to show their displeasure).  Unless the felon is found in the next few weeks, expect the GOP to do the same thing as it’s their only means of showing displeasure.

Many Tax Professionals Are Unhappy.  Jason Dinesen, an Enrolled Agent in Iowa, penned a piece titled “The Tax Field is Broken.”  I don’t completely agree with the article, but much of what he writes is true.  Tax professionals do have lives outside of their businesses, and many have not had a break in over a year.  I have seen many posts about tax professionals retiring.  That said,…

I’m Still Standing.  Our business is doing fine (indeed, if you’re a tax professional and are interested in joining our firm, let us know), and I have no plans on retiring.  This was, though, the first year I was generally miserable for more than a month.

Expect Tax Preparation to Impact Inflation.  Everything I see shows that the supply of tax professionals is decreasing, the amount of work necessary to prepare a return is increasing, and the demand is increasing.  The Law of Supply and Demand says that if supply decreases and demand is constant, prices go up.  Here, we have a decrease in supply and an increase in demand and the amount of time needed to prepare the average return increasing.  Prices are going to increase, possibly significantly.

That’s my rundown on the May deadline.  We’ll see what the second half of the Tax Season brings us.

Posted in IRS, Tax Preparation | Tagged | Comments Off on The 2021 Tax Season (Part 1)