This is not our usual springtime 15th tax season. This is our fall, extension time tax season.
In April, the Internal Revenue Service has been known to sprinkle the news with stories that scare taxpayers into compliance. The IRS knows that scare tactics can help people be more honest when filing their returns.
Lately, the IRS has been in the news for their misdeeds. This is not the kind of publicity they choose for themselves. They are showing their human side.
Every government office is staffed with individuals. These employees are human beings, just like you and me. Sometimes a single person may forget they are a civil servant. They forget their job is to serve the public. The fall victim to the emotional pull of power and greed.
When I was an auditor in training I heard a story about a former co-worker. Former is the key word here. Usually, when management gets wind of a choice of action that is outside an employee’s job description, that employee gets noticed. A good manager will first counsel the employee. The manager will give that person a chance to clean up their act. They will give that person an opportunity to “fly right”. Sometimes, though, the misdeed is so wrong that the person is fired and maybe also arrested for committing a crime.
This story was one I heard years ago. The story I heard was about taxpayers writing their checks for taxes due. Most people just wrote their checks payable to “I R S”. I wrote my checks to IRS, too. Then we were instructed to completely spell out the words “Internal Revenue Service”.
Would you have thought that somebody was changing the letters “IRS” to “MRS” and adding a last name? That is exactly what happened. That employee was altering the taxpayers’ checks. (More than one!) That employee was stealing the taxpayers’ tax money and putting it in their own bank account. The crime was against both the taxpayers and against the government. Today we are asked to write our checks to the “United States Treasury”.
Every year I must attend a certain amount of what is called continuing professional education, CPE, to maintain my credentials. Every year the tax laws change and I focus on knowing what I need to know in order to do my best job for you. My mind was never figuring out how to break the laws. But there are plenty of people who do just that.
Lately the IRS has been caught with their hand “in the cookie jar” so to speak. They have delayed the applications of certain groups asking for legitimate tax-exempt status. They have wrongly targeted certain individuals for audit. These are examples of human beings who have let their access to power cloud their judgment. If you keep your eyes on doing the right thing, you’ll never have to be worried about any negative consequence. You’ll be able to sleep soundly every night.
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Well, these answers about our newest tax law change are direct from the horse’s mouth, the IRS.
“The following questions and answers provide information to individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions or other similar formal relationships that are not marriages under state law. These individuals are not considered as married or spouses for federal tax purposes. For convenience, these individuals are referred to as “registered domestic partners” in these questions and answers.
Answers to Some of the Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions”
“Can registered domestic partners file federal tax returns using a married filing jointly or married filing separately status?
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 
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 