Posts Tagged ‘Turbotax’

Tax Roundup, 9/5/2012: Laying it on thick for the fertilizer plant. Math is hard. So is tax, even with TurboTax.

Wednesday, September 5th, 2012 by Joe Kristan

Governor Branstad’s administration is making a big push to promote STEM education: Science, Technology, Engineering and Math.  This headline in the Des Moines Register today shows how badly we need math education, especially in Iowa’s “Economic Development” bureaucracy:

165 jobs, $110 million in aid

Officials mull boosting incentives to keep $1.3 billion fertilizer plant project in Iowa

This is the worst kind of smokestack chasing, which is always the preferred approach of “economic development officials.”  Never mind that Iowa already has competing fertilizer plants — as Sioux Citian Debi Durham, Iowa chief official economic developer, surely knows.    Never mind that Iowa and Illinois are getting played shamelessly by Orascom, the fertilizer company.  Never mind that the money comes from taxes paid by existing competitors, and by thousands of unsubsidized businesses like ours, and our employees.  Never mind all that — it’s about buying a ribbon-cutting, not about making the state a good place for everyone to do business Unless, of course, Roth & Company gets a nice state check for $21.3 million for the jobs we have already created.

At least some folks are catching on to the game.  From the article:

Orascom has attracted a diverse group of opponents, from parents, environmentalists and liberal groups such as Iowa Citizens for Community Improvement and Iowa Policy Project, to conservative groups such as Public Interest Group, Lee County Tea Party and Americans for Tax Reform.

So there’s agreement from left to right that it’s a bad idea for the state.  But if politicians think it’s a good idea for them, it will go through.

Related: Taking your wife’s purse to buy drinks for the girls and  LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION

 

Who catches the identity thieves?  Hint: it’s not Doug Shulman’s IRS.  From the Bradenton (Florida) Patch:

Det. B. Pieper from the police department’s gang unit put together the case by paying close attention during a routine drug bust…

Pieper was one of several detectives watching traffic coming to and from a house where police suspected drugs were sold. He said he and his partner watched a car leave the house and then run a stop sign. When they pulled over the car Brydson was in the passenger seat with a laptop and a bag of marijuana on her lap.

Brydson quickly closed the laptop, which made Pieper suspicious. When he searched her purse, he said he found several TurboTax debit cards with different names on them. He also noticed a 60-step instruction sheet on how to perform tax fraud through TurboTax.

So local cops have to do the IRS’s job of stopping the thieves who take $5 billion of our taxes annually while the IRS is busy building a new preparer regulation bureaucracy at the behest of the national tax prep firms.  Priorities!

 

 Courtney A. Strutt Todd: Congratulations on Your Scholarship. Don’t Forget to Pay Uncle Sam (Davis Brown Tax Law Blog)

TaxProf, Tax Planks in Democratic Party Platform

Andrew Mitchel, Partnership Definition

Martin Sullivan, The Effects of Interest Allocation Rules in a Territorial System (Tax.com)

Linda Beale, Romney and Private Equity’s Questionable Schemes for Paying Very Little Tax

Kay Bell, Tax moves to make in September 2012

Robert D. Flach has a new Buzz roundup of tax blog posts.

Jim Maule offers A Peek at the Production of Tax Ignorance.  It’s booming.

I think spending less than you earn works even betterDo Mandates or Tax Subsidies Do a Better Job of Boosting Savings?

Have a nice dayCBO: Federal Healthcare Spending Will Exceed Discretionary Spending by 2016 (William McBride, Tax Policy Blog)

GIGO: it’s Tax Court Doctrine!  From a case rejecting a taxpayer’s use of TurboTax as an excuse for a bad return:

It is apparent that a portion of the information petitioner entered into the TurboTax program was incorrect; hence the mistakes made (which resulted in the underpayment) were made by petitioner, not TurboTax. TurboTax is only as good as the information entered into its software program. See Bunney v. Commissioner, 114 T.C. 259, 267 (2000). Simply put: garbage in, garbage out.

Tim Geithner, call your office.

Cite:  Bartlett, T.C. Memo 2012-254.

Related:  Reason #17 to Hire Me: Blaming Turbo Tax Can Not Protect You From Penalties (Anthony Nitti)

 

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There ain’t no such thing as free tax software

Thursday, June 23rd, 2011 by Joe Kristan

There is a push for the IRS to provide “free” tax software. Consider tax attorney Peter Pappas unimpressed:

This is a bad idea for several reasons:
-The IRS has a poor track record of developing software;
-The development of the software will cost taxpayers $20 to 30 million which means the service isn

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The Geithner rule only applies to Geithner

Tuesday, June 22nd, 2010 by Joe Kristan

It’s not often you get a laboratory experiment in the tax law. The Tax Court gave us one yesterday.
Treasury Secretary Timothy Geithner famously underpaid his taxes on his income from his days working at the International Monetary Fund. IMF employees don’t have FICA and Medicare tax withheld from the paychecks, so they are supposed to treat the income as “self-employment” earnings, paying both employer and employee payroll taxes on the income.
Mr. Geithner’s copy of TurboTax failed to flag this, and when it came up during his nomination hearings, he blamed the software. He paid his old taxes without penalty, which leads one to wonder: did he get a special deal because he’s a big shot?
The scientists at the Tax Court have validated this hypothesis in a case involving IMF employee David Cameron Parker. From the Tax Court opinion:

The IMF sent, and petitioner received, Form W-2, Wage and Tax Statement (Form W-2), for his taxable year 2005. The IMF indicated in that form that it had not withheld Federal income tax or Social Security tax from the earnings that petitioner had received from the IMF during 2005.
Petitioner timely filed Form 1040A, U.S. Individual Income Tax Return, for his taxable year 2005 (2005 return). Petitioner used certain tax preparation software known as TurboTax in preparing that return.3 At all relevant times, including when he filed his 2005 return, petitioner was aware that the IMF had not withheld Federal income tax or Social Security tax from the earnings that he had received from the IMF during 2005 and that he had an obligation to report and to pay self-employment tax because the IMF had not withheld any Social Security tax for that year. Nonetheless, petitioner did not report any self-employment tax in his 2005 return.

Since blaming the software seems to have worked for Mr. Geithner, Mr. Parker gave it a go. The Tax Court didn’t buy it, assessing penalties. But what about Mr. Giethner?
We shall address briefly petitioner’s contention that the IRS granted “favorable treatment” in a case involving U.S. Secretary of the Treasury Timothy Geithner, which petitioner described as “incredibly similar” to the instant case. According to petitioner, “there should not be different, or favorable rules for the well-connected”. The record in this case does not establish any facts relating to the case to which petitioner refers involving U.S. Secretary of the Treasury Timothy Geithner. In any event, those facts would be irrelevant to our resolution of the issue presented here. Regardless of the facts and circumstances relating to the case to which petitioner refers involving U.S. Secretary of the Treasury Timothy Geithner, petitioner is required to establish on the basis of the facts and circumstances that are established by the record in his own case that there was reasonable cause for, and that he acted in good faith with respect to, the underpayment for each of his taxable years 2005 and 2006 that is attributable to his failure to report self-employment tax.

Shorter Tax Court: The accuracy-related penalties of Sec. 6664 are for little people.
Update: The TaxProf has more. So does Peter Pappas.
Update II More on Geithner and little people, in response to a comment.
Cite: David Cameron Parker, T.C. Summ. Op. 2010-78
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Garbage in, garbage out

Tuesday, April 20th, 2010 by Joe Kristan

TaxProf: Tax Court Rejects “Geithner Defense,” Says Reliance on TurboTax Does Not Excuse Taxpayer From Penalty for Errors on Tax Return
The money quote from the case:

Before the trial petitioners stipulated that they did not consult a tax professional or visit the IRS’ Web site for instructions on filing the Schedule C.
We do not accept petitioners’ misuse of TurboTax, even if unintentional or accidental, as a defense to the penalties on the basis of the facts presented. … At trial Ms. Lam did not attempt to show a reasonable cause for petitioners’ underpayment of taxes. Instead, she analogized her situation to that of the Secretary of the Treasury, Timothy Geithner. Citing a Wikipedia article, Ms. Lam essentially argues that, like Secretary Geithner, she used TurboTax, resulting in mistakes on her taxes. In short, it was not a flaw in the TurboTax software which caused petitioners’ tax deficiencies. “Tax preparation software is only as good as the information one inputs into it.” [Bunney v. Commissioner, 114 T.C. 259, 267 (2000).]

The Moral: just because TurboTax lets you put capital losses on Schedule C doesn’t make it right.
Cite: Lam, T.C. Memo 2010-82
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Got a tax filing horror story?

Friday, February 19th, 2010 by Joe Kristan

Share it with the TaxGrrrl; the’s giving away five copies of Turbotax Premier to those who take the trouble.

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Turbotax tweaks for Timmy

Wednesday, December 30th, 2009 by Joe Kristan

As a service for future Treasury Secretaries, Turbotax has updated its data entry screens. Mary O’Keeffe, proprietor of the Bed Buffaloes tax blog, provides screen shots.
Turbotax then:
20091230-1.jpg
Turbotax now:
20091230-2.jpg
Mr. Geithner famously blamed TurboTax for his skipping out on $35,000 of self-employment taxes on his foreign service income, which he finally paid without penalty to buy a ticket to his new job of running the tax system.
UPDATE: More from the TaxProf.

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