My mother was a Secret Keeper. My father was a private man. They both survived The Great Depression and World War II. I thought it was their generation that kept them tight lipped. I was never taught how to gossip.
The very first movie I remember seeing in the theater with my Mother was “Bambi”. In that movie Thumper’s mother told him, “If you can’t say anything nice, don’t say anything at all.”
Being a secret keeper means I hold the information you share with me with greatest confidence. I am not your confessional priest who will absolve you of your sins. I am your Enrolled Agent who can represent you at all levels of the Internal Revenue Service worldwide. Not just nationwide, but anywhere in the world the IRS has an office.
I became an Enrolled Agent, an EA, after working five years for the IRS. I was a Tax Audit Supervisor. That specialized training is what I rely on to help me in defending you and your tax return in a tax audit.
When I prepare your tax return I look at the information you give me with the eyes of the IRS. I sign your tax return as your preparer based on all information of which I have knowledge. You sign you tax return under penalty of perjury. That statement is called a “jurat.” It states that you have examined the return and the schedules and attachments, and to the best of your knowledge and belief, they are true, correct and complete.
I am thorough when I prepare your return. I want you to pay your lowest legal tax. But I don’t want either of us to invite trouble from the IRS. And as your preparer, I am obligated to answer any IRS question about the preparation of your return. That is different that representing you in an audit.
When I represent you in a tax audit I have confidentiality with you, but I do not have the client privilege that an attorney does. If I did NOT prepare your return, and represent you in a tax audit, I have an advantage. I will answer their questions the best I can. But I will not volunteer anything unless I think it will help your case.
If you are a new client to me, and I feel there are some audit issues that may reveal the return being examined is not totally accurate, if I think you might be flirting with tax fraud, I will refer you first to a tax attorney. Neither of us were involved in preparing your return, so we don’t have knowledge to answer IRS questions about the process of preparing your return. And if the attorney chooses to engage me to do the work of representing you in the audit, the attorney may choose to extend the client privilege to me for this audit.
Does that mean you are making a mistake by choosing me to prepare your return? Heck no! You have the best on your side. My aim is to help you file a complete and accurate return and at the same time avoid an IRS audit. Just like in Las Vegas, what happens at my desk stays at my desk. I am a secret keeper.
Always to your lowest legal tax,
Nellie T Williams, EA
How does that headline make you feel?
One of my last assignments as a Tax Audit Supervisor for the Internal Revenue Service was to manage my group of auditors working on what we called a QP Project, a Questionable Preparer Project.
When tax returns are filed the IRS computer takes the information and scores each return. There is a secret formula called DIF or Discriminant Function. When I worked at IRS we thought DIF stood for Discriminant Information Formula.
Each tax return stands alone and is scored on its own merit. The returns can also be compared to other returns from the same general area. The returns may also be compared by occupation or industry. Trends are identified.
When a preparer is thought to be questionable, IRS looks at ALL the returns signed by that preparer. Paid preparers must sign the returns they prepare. When you pay someone to prepare your return but they don’t include their name and signature or if it says “self-prepared”, that preparer is breaking the law.
In my particular project, IRS determined that the returns prepared by a particular preparer had many things in common. Today we cannot deduct our auto loan interest, but back then we could. Every single one of this man’s clients claimed interest paid to Ford Motor Credit. Some of those taxpayers did not even have a car loan at all!
The clients were all very generous both with cash and with non-cash items. Just about every return claimed $500 of non-cash contributions. This is the maximum deduction allowed before an extra schedule is required to be filed with your 1040 return. Know this: you are STILL required to be able to prove, document, or support every entry reported on your tax return.
This is just one of many recent stories. A former Alabama tax preparer was sentenced to three years in prison PLUS one year of probation. AND she was ordered to repay more than $322,800 to the US Treasury for aiding and abetting (helping) the filing of false income tax returns.
Sally Elizabeth Wynn, age 65, had prepared tax returns for 20 years. For tax years 2005, 2006 and 2007 she did the bookkeeping for Gonzalez Construction. She knew the owner was not reporting all of his income on his personal tax return. Jose Gonzalez received at least $340,000 each year, but only reported between $55,000 and $66,000. Both the taxpayer and the tax preparer are involved in signing and filing these tax returns. Mr Gonzalez still faces criminal charges for his role in these crimes.
As your tax preparer I want you to pay only your fair share of tax. I want you to pay your lowest legal tax. I want to help you take every allowable advantage. I will help you Beat the IRS, but I will not help you cheat the IRS. I will protect you and I will protect my professional standing. You and I will not see our names splashed across the headlines for anything like this.
Always to your lowest legal tax,
Nellie T Williams, EA 
How can you play to win if you don’t know the rules? I have always focused on how to do things correctly. I want to know the rules of the games I play so I can play to win. And that’s what I want to give you, also.
When I was in law enforcement, I learned that there are some people who will never want to knowingly break the law. There are others who want to know what they can do to bend the rules. They don’t really want to break the law, but they don’t want to follow the straight and narrow path, either. And there are others who might have cared at one time, but don’t care anymore and they just want what they want. They care about themselves. They don’t think of anyone else involved.
The Internal Revenue Service is often in the news. But usually that news is to tell us, the tax-paying public, the changes in the tax law. Tax season is the time when the IRS wants to spotlight public figures who have done something wrong tax-wise. They get mileage out of these stories in trying to help the law-bending public understand the penalty of breaking the tax laws.
Tax season is never over. But today it is after April 15th. And the IRS is in the news again. This time IRS is the one in the spotlight. Somebody done somebody else wrong. We are being told that the IRS targeted specific groups. They did what some police people are accused of doing. They used profiling. They were on the lookout for groups that appeared to be more conservative than others. IRS is accused of denying or delaying the applications of groups wanting tax-exempt status.
The first group I think of as tax-exempt is religious. Other tax-exempt groups include scientific, literary and other charitable organizations. There are hundreds of other tax-exempt groups. Like social groups and fraternal societies, veterans organizations, political organizations. Don’t forget homeowners associations.
I’m not here to defend the IRS. I am just sharing with you some of what I learned as their former employee. When I was an auditor-in-training I was learning the ropes of the job of income tax auditor. What was my job? How do I do it well? As an employee of the federal government I had an honorable job and I wanted to do it well. It was the auditor’s job to see that the law was properly applied.
Even then, the IRS wanted me to know the penalty for stepping over the line. They have their own internal affairs division. IRS wants their employees to do their job properly. And if an employee chooses to cross the line, there is a penalty to pay. In most jobs those penalties may include time off without pay, demotion to a lower pay grade position, and even dismissal. Heads will roll.
Why does it take so long to discover this bad news? It takes time for cream to rise and It takes time for dust to settle. Before any case can be brought to trial, first someone has to be found out. Then evidence must be collected. Only the TV crime show can solve a case in 60 minutes.
When this kind of bad news goes viral, we can be glad to know that the system does work. Yes, one bad apple will spoil the whole barrel. That apple is removed. The barrel gets washed out. We begin again.
The IRS is here to stay. They are not going away. I play by the rules. When the rules change, I have to change my game plan. I hope I can help you, too.
Always to your lowest legal tax,
Nellie T Williams, EA 
Do you remember when “Human Resources” was called “Personnel”? Maybe you didn’t even know this little bit of workplace trivia history.
If you are a business owner you may have a Human Resources Department. If you are a “solo-preneur” YOU may BE the Human Resources Department.
Whether you are employed as the HR Department Head or whether you an employee of any business, you want sound Human Resources practices to implement and follow.
I am experienced with tax audits by the Internal Revenue Service. I am dedicated to helping you both prevent and defend an IRS tax audit. I didn’t realize that we could also be audited because of vulnerable Human Resources policies.
Human Resources is directly involved in the hiring, training, development and management of their people, their personnel, their human resources.
The TOP TEN most common pitfalls are really easy to understand once you think about them.
1. Company managers represent the company to the employees. Train your managers on the basics of your business: Hire, discipline, and deliver the difficult messages when they are necessary.
2. A poor or inconsistent selection process can be costly. Who is your BEST choice for YOUR business? Can you fill your positions with the best at the start?
3. The poor or inconsistent orientation of new hires can cause confusion and misunderstandings. Have a standard method of sharing the duties and expectations with each of your employees.
4. Inconsistent compensation practices can result in negative feelings among workers. Give equal pay for equal work.
5. Employee misclassification is another common mistake. According to the Fair Labor Standards Act (FLSA) certain employees receive overtime pay for overtime work. Just like in the tax field, you must be careful in determining whether your new hire is an employee or an independent contractor. The laws in this area are so deep you are encouraged to seek local counsel.
6. Insufficient documentation of poor performance issues can be very costly.
7. Failure to have a performance management system is a mistake. You need a system that improves communication, that rewards and pays employees based on what they deliver. Be sure to document your decisions.
8. Have job descriptions that are accurate and complete. Do not underestimate the importance of job descriptions that cover not only essential work but also any other work the job requires.
9. Management that fails to follow published policies invites trouble. Create, implement and evaluate your workplace policies.
10. Failure to train your management team on dealing with and preventing harassment puts your company at risk. Every two years conduct and document your training. Whether attended online or in person, DOCUMENT participant names, dates and location of trainings.
BONUS: PROTECT yourself from risk. Here are three tips you need to help you avoid lawsuits, audits and fines.
1. Develop a training plan for legal compliance. This includes necessary training on dealing with sexual harassment, discrimination and a hostile work environment.
2. Choose the most effective way to deliver this training.
3. Conduct an effective training session.
Finally, when creating your employee manual, be aware of your state’s laws. Make your manual a policy and not a contract. Train your supervisors in the use of your employee manual. Coordinate the employee manual with other company manuals. And lastly, KEEP the manual UP TO DATE.
Always to your lowest legal tax,
Nellie T. Williams, EA 
We have just celebrated the end of the “1040 Marathon”. But that does not mean that income tax season is over. Have you filed your return or are you “on extension?” Or maybe you are just going to file your tax return later this year.
This blog is “a day late and a dollar short” for filing 2012 tax returns. But it is right on time for 2013 tax planning!
Even if you are afraid you will owe tax, I do recommend you file your return before April 15th. Especially if you are going to owe tax. When you owe more than $1000 when you file your return, the Internal Revenue Service will assess you a late-filing penalty of 5% per month. That’s 5% of the tax due. The only good news about this is that the maximum penalty is 25%. Well, 25% of $1000 is $250. PLUS the IRS must charge you interest on top of the penalty.
If you think you are going to owe tax and you request an extension of time to file, pay some money with that extension to keep that extension valid. If you don’t pay your tax by April 15th, the IRS must assess that late penalty.
Here’s a tip you can start using right away. If you are self-employed it is up to you to estimate your taxes. You make quarterly estimated tax payments. If you don’t pay enough, and you don’t pay enough on the date the quarterly estimated tax payments are due, you can be assessed a late-payment penalty. This is different from the late-filing penalty I talked about earlier.
If you are an employee, you should have taxes withheld from your paycheck. That income tax withholding is considered paid evenly throughout the year. If you have more withheld in November and December than in the earlier months, your total withholding for the year is still considered paid evenly all through the year.
You can adjust your withholding any time during the year. Does your payroll department restrict how many times they will adjust your paycheck? Just be careful that if you are not taking enough out in the first part of the year, that you don’t run out of paychecks before the end of the year. You want to have enough withheld to make your total enough to cover your tax bill on April 15th. Once January comes around you are already into the next year.
You may have other income that is taxable, like interest or dividends, rental income or sale of property. You might want to or need to make estimated tax payments. Estimated tax payments are due April 15th, June 15th, September 15th and January 15th. If you want more information on how to estimate your taxes, shoot me an email.
Remember this. Failing to plan is planning to fail. Nobody ever PLANS to pay more than they have to. So keep you eyes open on your own tax situation to keep the IRS out of your wallet.
Always to your lowest legal tax,
Nellie T Williams, EA 
I am a solo-preneur. Williams Audit Specialists of Arizona is a single owner corporation. Bullet Proof Your Taxes is one division of Audit Specialists.
Yes, I am a brick and mortar business. Yes, I have employees. There was a time when I had several employees. I still do have one employee. I am my number one employee.
Now that our annual 1040 Marathon has finished, I’ll admit that I am tired. Tax season may have critical dates, but it is never really ever over. Most of us in this business will tell you we love it when tax season begins. And we love it when it ends.
Between April 15th and April 30th employment tax returns for my own firm and for my clients must be prepared, filed, and paid. After-season “Post Mortem” professional meetings are held to share stories of the good, the bad and they ugly of our recent months.
Office hours are adjusted. I may have worked evenings and Saturdays before April 15th. Now that our days are getting longer and warmer, my office hours are getting shorter.
I do taxes all year long. And now I am also adding more services. Now I can attend the seminars I want and need to maintain my various certifications. It is important to me to stay up-to-date in the tax laws, policies and procedures for YOU.
Certain activities that were put on the “back-burner” during income tax season are moved to the forefront. Soon I will begin mid-year tax planning for those of you who want to or who need to adjust your tax withholding. And now I can resume my coaching services.
Did you see vacation on that list? I didn’t. When I was an employee it was mandatory that we take our annual leave every year. I remember “use it or lose it.” It is important to take a break to re-charge your energy, to renew your spirit. It is also good business that every company require employees to be away from their job for some time every year. If you have someone refusing to take time off, ask yourself, “What do they NOT want you to know about what goes on at their desk?”
Most years I include an extra personal day at the beginning or at the end of a business trip. There is work involved, but there is also a free day for me and for my husband, Steve, if he comes with me. A hotel room costs the same for one or for two in a room.
I can deduct my travel expense and my meals while away from home on business. And while Steve is very important to me, he is not an integral part of my business so his personal expenses are just that. His expenses are personal and are not tax deductible. I can deduct the cost of my travel and meals. I cannot deduct the cost of Steve’s travel and meals. I am deducting the cost of my hotel room. I just choose to share that room with Steve. There is no extra cost for the second person in the room.
Sometimes I will share the room with another woman attending the same seminar. When we share the room, we share the hotel bill. Of course there are extras that can be added to the room. If you choose to buy from their in-room mini bar that expense is usually not deductible. If you choose to order a movie, it is probably not business-related and would not be deductible. When the hotel adds taxes and a resort fee to your room bill, those are part of your deductible hotel cost.
When I am away from the office my attention is not on the office. My attention is on my seminar or on enjoying my day off. You can still leave me a voice mail message. You can send me an email message. When I return I will give my full attention to you and your needs.
Always to your lowest legal tax,
Nellie T Williams, EA 
Can you “fix” your tax return?
I don’t mean toy with the numbers. Not THAT kind of fix. I mean repair or correct a return that has already been filed.
Yes, you can fix a mistake on your tax return. This is called AMENDING your tax return. You file an amendment to your tax return. This is an amended tax return.
Form 1040X is the special form used to file a change to an original 1040 series return. Use the 1040X to “fix” a 1040EZ (the easy form), a 1040A (the short form), a 1040 (the long form) or even a 1040NR (the form used by non-residents with income from the United States).
Some of my clients are frustrated when I wait to finish their tax return. And that turns out to be the BEST thing we could have done. Because while they think we’re finished and ready to file, later comes a corrected form or a late-issued form that usually means more tax is due. If we had filed the tax return early in the season, we would be filing an amended return now.
Amended returns are not just for current tax year returns. They are not just for the 2012 tax return you are filing in 2013. Sometimes there is a balance due the IRS. Sometimes the IRS owes YOU a refund.
Tax returns have a time limit for the IRS to review what you have voluntarily filed. Tax returns also have a time limit for you, the taxpayer, to file a claim for refund. You can file an amended return for any tax return that has not run out of time, or “the statute” has not expired.
You might be like one of my clients. We are filing for a solar water heater credit on their 2012 return. AND we are filing a 1040X, amended return, for 2009 to claim the credit for qualifying windows they installed that year. If we waited until after April 15, 2013, we would have run out of time to file that 1040X for 2009 and they would have lost their chance to “claim” that year’s energy credit.
Another client is new to me this year. He is retired from the fire department. He has his health insurance premiums withheld from his pension benefits. I learned that this qualifies for a special treatment on his tax return. The preparer he used the last three years didn’t know about this special treatment. So I am amending his 2009, 2010 and 2011 returns to claim a larger refund. That 2009 1040X will be filed before April 15, 2013 so he doesn’t lose his refund for that year. The other years will be filed now, too. They will each go in their own separate envelope to the IRS.
Another client is going to have to amend his 2011 tax return for additional income he just found out about. In this case he’ll have to pay more tax. But by coming forward voluntarily, he will avoid some penalties that IRS would definitely assess if they had to tell him that he owed money. IRS punishes you with penalties when they have to hunt you down.
There are many different situations that will cause you to file an amended. Can you think of a reason why any of your tax returns should be changed? Did you realize you claimed too much of one deduction? Did you realize you have MORE deduction you are allowed to claim. Did you find out something you didn’t know when you first filed your return?
Preparing the 1040X form is a little more complicated than preparing a return the first time. Don’t be afraid to get some help with this one. IRS will take a close look before they send you money. You’ve waited this long. You don’t want to run out of time to claim the money you are entitled to.
Always to your lowest legal tax,
Nellie T Williams, EA 
OMG! It’s almost April 15th. I’m not ready. What do I do now?
Relax. Breathe. Take inventory. Do you have all your W2 forms? Do you have all of your interest and dividend 1099 forms? Do you have your other income records? Gambling? Alimony? Hobby? Small Business? More?
What about deductions? Is this your challenge? Your papers are all over the place. Some are in this box over here, some are in that file over there. Oh, where IS that receipt? It’s not too late to start getting organized for THIS year. But what do you do now about last year’s information? It is the 2012 tax return we file in 2013. And the 2013 tax return will be filed in 2014.