RONI DEUTCH SUED BY CALIFORNIA ATTORNEY GENERAL

I presume that you have seen the Roni Deutch commercial on TV claiming that she can negotiate with the IRS and you will only have to pay pennies on the dollar. These ads always infuriate me because, as a tax professional, I know that she cannot do what she claims and her claims confuse the public. According to the lawsuit, the claims made in the ads are false and the people actually still owe the money. She spends over $3,000,000 per year on advertising.

The thing that upsets me the most is that the people that she is preying on are having financial problems in the first place and working with her just makes their problems worse. Look at the lawsuits. The 45 people working for her are not tax experts, but actually salespeople.

Now she gets what is coming to her. Roni Deutch, the so-called “Tax Lady” has been slapped with a $34 million law suit by California Attorney General, Jerry Brown.

According to the Attorney General’s web site, “Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems. She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

Brown’s office says that rather than reducing tax bills, Deutch actually increases taxpayer’s debt by putting them “in an endless loop of requests.” Brown claims the reason for the requests are to boost her bottom line at the expense of the taxpayer.

Further, Brown says that Deutch’s TV ads are “misleading” and feature fictional testimonials promising impressive results, despite the fact that Deutch’s success rate is said to be about 10% in tax cases. The claim states that “most clients never obtain a tax debt resolution” from Deutch.

In the complaint, Brown specifically cites an ad called, “It’s Your Turn” which features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. According to Brown, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.

Deutch’s practices inside her firm are called to the carpet in the complaint, as well. Brown’s office claims that Deutch’s law firm is actually a high pressure “boiler room” where she belittles her employees. “She screams at and berates sales agents who are not performing adequately,” according to the complaint. The complaint alleges that Deutch requires her employees to promise callers results that the potential clients are likely to never see.

Brown’s complaint seeks nearly $34 million in restitution for clients, including funds to refund taxpayer retainers which Brown’s office alleges were improperly retained. The complaint also seeks to prevent Deutch from engaging in unfair business practices and false advertising. The State has also asked for a preliminary injunction to force Deutch to cease her “illegal practices” prior to the resolution of the complaint.

Deutch and her office had to see this coming. In March, Brown posted an alert for California taxpayers warning them to avoid “phony tax-relief companies” that charge exorbitant fees, but provide no actual relief. At the time, Brown advised taxpayers, “Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS. Taxpayers should be on high alert, avoid paying up-front fees to these companies and never ignore notices from the IRS.”

This isn’t Deutch’s first public complaint. In 2006, she agreed to pay $300,000 to settle a lawsuit filed by New York City’s Department of Consumer Affairs for similar complaints about her misleading commercials.

I’ve heard a number of complaints from taxpayers who have worked with so-called tax debt relief companies who promise big results. I’ll just say this… If it sounds too good to be true, it probably is. There’s a reason that you don’t see most tax attorneys on TV promising you “pennies on the dollar.” I can’t stress enough how important it is to work with a trustworthy tax professional – one that returns phone calls and letters, one that keeps you posted about the status of your matter – to resolve your tax obligations.

Take a look at Deutch's website at: www.ronideutch.com. Listen to the testimonials, and then listen to what the California attorney general is saying about her:
http://www.washingtonexaminer.com/breaking/california-ag-sues-tax-lady-roni-deutch-for-34-million-accuses-her-of-defrauding-customers-101323199.html.

p.s. She doesn't really look like the picture on her website.

Larry Kopsa CPA

USAIN BOLTS FOR TAXES

I don't know about you but I am a real fan of track and field. I am amazed at the speed of Usain Bolt, the Jamacain who is the worlds fastest man. Now it seems that tax policy may keep him out of the 2012 Olympics that will be held in Great Britian.

It seems that the fastest man in the world has finally found the one thing that will slow him down: Britain’s tax laws.

According to the BBC, Bolt may not compete in the UK until the 2012 Olympics. He told a news audience, “I am definitely not going to run [in London].”

Like the US, the UK attempts to tax on worldwide income. However, unlike the US, the UK prorates the amount of tax based on the number of events that the athlete competes in; the Telegraph points out that this is a departure from the old rules which calculated tax according to the number of days of competition in the UK, not appearances. This is in addition to a 50% tax rate on appearance fees.

As you can imagine, this doesn’t sit well with many athletes. Spanish golfer Sergio “El Nino” Garcia has admitted limiting appearances in the UK because of the country’s tax laws. Event promoters worry that other athletes will follow suit. There is one saving grace: in order to ensure that athletes actually show up for the 2012 Olympics, the British taxing authorities have agreed to a limited exemption to the rule.

LARGEST TAX HIKES IN HISTORY

Only six months to go until we see some of the largest tax hikes in history. See the following article: http://www.atr.org/sixmonths.html?content=5171

THE PRESIDENT'S RETURN

Do you want to see President Obama’s tax return? Open the link below.

Barack Obama's Tax Return

TAX CREDITS

Over the years the government has put so many tax credits in the tax law that it is hard to keep track of all of them. Here is a cool tool that you can use to make sure that you have not missed any credits. http://www.whitehouse.gov/recovery/tax-saving-tool

APRIL 15TH IS FAST APPROACHING – HERE IS THE SCOOP ON THE IRS PENALTIES

The tax filing deadline is approaching. If you don’t file your return and pay your tax by the due date you may have to pay a penalty. Here are nine things the IRS wants you to know about the two different penalties you may face if you do not pay or file on time.

1. If you do not file by the deadline, you might face a failure-to-file penalty.

2. If you do not pay by the due date, you could face a failure-to-pay penalty.

3. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.

4. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.

5. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

6. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

7. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty if the remaining balance is paid by the extended due date.

8. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

9. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

ARE GIFTS TAXABLE?

I Hope You Can Help Me Out-

I had a person help me prepare my tax return this year and they told me that the $3,000 gift that I received from my Aunt is taxable. Usually I get a refund and because of this $3,000 I owe taxes. Is this right?

Heather

Heather, I suggest that you run from that tax preparer. True gifts that you receive from individuals are not taxable events. There might be some circumstances that I don’t understand. For example, if the person gave you something that you sold, there might be some tax ramifications but a true gift is not taxable. Can you imagine the havoc that Santa Clause would cause when he made Christmas gifts? Run from that preparer and find someone competent to prepare your tax return.

Larry Kopsa CPA

I DON’T HAVE THE MONEY TO PAY MY TAXES

Help!!!! I just found out that I owe over $4,000 to the IRS. I don’t have that kind of money. Should I just not file till I can get the money together or should I just leave the country?

Owen

Owen, I have some fairly good news for you. First of all, you should file your return. There is a severe penalty for failure to file your return by the due date. As a matter of fact, if you don’t pay you will get hit with a double penalty. Along with the failure to file you will get a failure to pay penalty. You could extend your return to October 15th but this is just an extension of time to file, not to pay so there still would be some penalties.

The fairly good news is that you can apply for an installment agreement. Since you owe less than $25,000 it is automatically accepted by the IRS. Pay what you can and then the installment agreement will allow you to pay any remaining balance in monthly installments. Since you owe less than $25,000 you may apply for a payment plan using the Online Payment Agreement application or just attach Form 9465, Installment Agreement Request, to the front of your return. You’ll need to list the amount of your proposed monthly payment and the date you wish to make your payment each month. The IRS charges $105 for setting up the agreement, or $52 if the payments are deducted directly from your bank account.

You will be required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month after the due date that the tax is not paid, but at least you will not have to leave the country.

Remember that you also need to start planning for 2010 taxes.

Larry Kopsa CPA

NEW TAX REFUND

The following is an important message regarding tax refunds from the Internal Revenue Service.

NEW TAX REFUND

MIDDLE CLASS FACING HIGHER TAXES IN 2010

Millions of middle-class households may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy -- the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

READ MY LIPS – WHAT HAPPENED TO NO TAX INCREASES FOR THE MIDDLE CLASS?

The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families. In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases. The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.

TAX INFORMATION CHEAT SHEET

We have created our very own Tax Information Cheat Sheet. It includes information on:

• Deduction Limits
• Tax Brackets
• Standard Deductions
• Mileage Allowances
• Auto Depreciation Limits
• Self-employed Health Insurance
• Earnings Ceiling for Social Security
• Long-term Care
• Day Care Deductions
• And more...

Check it out. It's conveniently located under Tax Information Cheat Sheet on our website at www.kopsaotte.com.

SMALL BUSINESS TAX CALENDAR

Do you own a small business or are you self-employed? Make sure you don't miss out on an important IRS due date. Link to the Small Business Tax Calendar for due dates, tax topics, forms and publications, and tips from the IRS.

IMPORTANT TAX DEVELOPMENTS

The following is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.

New opportunity to convert to Roth IRA. This year is a pivotal one for retirement planning, as it is the first year in which taxpayers may convert funds in regular IRAs (as well as qualified plan funds) to Roth IRAs regardless of their income level. Such a conversion may be desirable because distributions from Roth IRAs may be tax-free if several conditions are met, and a Roth IRA owner does not have to commence lifetime required minimum distributions (RMDs) from Roth IRAs after he or she reaches age 70 1/2. However, even if Roth distributions are tax-free, a 10% penalty may apply. Plus, the conversion itself will be fully taxed, assuming the rollover is being made with pre-tax dollars (money that was deductible when contributed to an IRA, or money that wasn't taxed to an employee when contributed to the qualified employer sponsored retirement plan) and the earnings on those pre-tax dollars. For example, an individual in the 28% federal tax bracket who rolls over $100,000 from a regular IRA funded entirely with deductible dollars to a Roth IRA will owe $28,000 of tax. So the individual would be paying tax now for the future privilege of tax-free withdrawals, and freedom from the RMD rules.

New option to choose longer carryback period for net operating loss (NOL). A new law enacted last November makes it easier for most businesses to get immediate tax savings from NOLs. It does so by allowing certain NOLs to be carried back to earlier, more profitable years. In these tough economic times, that's good news for businesses who have suffered losses recently after better years when high taxes were paid. Specifically, the new law generally permits any business to increase the carryback period for an applicable NOL to 3, 4, or 5 years from 2 years (however, businesses getting certain federal bailout funds are not eligible). An applicable NOL is a business's NOL for any tax year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010. Generally, an election may be made for only one tax year. The amount of the NOL that can be carried back to the 5th tax year before the loss year can't be more than 50% of a business's taxable income for that 5th preceding tax year determined without taking into account any NOL for the loss year or for any tax year after the loss year.

Homebuyer credit extended and liberalized. A new law enacted last November extended and generally liberalized the tax credit for first-time homebuyers, making it a much more flexible tax-saving tool. Before the new law, the credit was to have expired for homes purchased after Nov. 30, 2009. The new law extended the credit to apply to a principal residence bought before May 1, 2010; it also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010. Also, effective for purchases after Nov. 6, 2009, the new law allows existing homeowners who meet certain conditions to qualify for a reduced credit of up to $6,500. For purchases after Nov. 6, 2009, the phaseout rules have been eased. These are the rules that cause the credit to be reduced or eliminated as modified adjusted gross income exceeds certain levels. Much higher income levels are now allowed before there is any reduction of the credit. On the negative side, a credit cannot be claimed for a home whose purchase price exceeds $800,000. In addition, the new law included some crackdowns designed to prevent abuse of the credit.

New lease on life for COBRA subsidy. In December of last year, the 65% COBRA premium subsidy that was enacted in February of 2009 got a new lease on life. Under the original provision, employees who were involuntarily terminated after Aug. 31, 2008 and before Jan. 1, 2010, and who elected COBRA health continuation coverage, became entitled to receive a 65% subsidy on their COBRA premiums. For periods of COBRA coverage beginning after Feb. 16, 2009, the involuntarily terminated employee was treated as having paid the required COBRA premium if the individual paid 35% of the premium amount. The employer (or, in some cases, multiemployer health plan or insurer) could recover the other 65% by taking the subsidy amount as a credit on its quarterly employment tax return. The December 2009 legislation added another six months to the maximum period that the COBRA subsidy can run (i.e., to a total of 15 months). In addition, it extended the up-to-15 month COBRA premium subsidy to workers (and their eligible family members) who lose their jobs during the first two months of 2010.

Standard mileage rates down for 2010. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 50¢ per mile for business travel after 2009. That's 5¢ less than the 55¢ allowance for business mileage during 2009. Further, the rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 16.5¢ per mile, down 7.5¢ from the 24¢ per mile allowance for 2009.

How small employers opt in or out of filing Form 944 for 2010. The IRS has explained how small employers eligible to file Form 944 (Employer's Annual Federal Tax Return), should request to file that form instead of Forms 941 (Employer's Quarterly Federal Tax Return), for tax years beginning on or after Jan. 1, 2010. In addition, the IRS explained how employers who previously were notified to file Form 944, may request to file Forms 941 instead for tax years beginning on or after Jan. 1, 2010. Employers whose estimated annual employment tax liability is $1,000 or less are eligible to file Form 944 rather than Form 941 (but not if they must file Form 943, Employer's Annual Federal Tax Return For Agricultural Employees, or Schedule H (Household Employment Taxes, Form 1040)). Beginning in tax year 2010, employers will be able to opt out of filing Form 944 for any reason if they follow certain procedures.

If you need information on any of the above please email.

Larry Kopsa CPA

WILL MY TAXES CREATE A RED FLAG WITH THE IRS?

Larry, I am wondering if the fact that we are going to be submitting something so entirely different this year in regards to taxes, if that will create a red flag to the IRS and make us that much more susceptible to auditing?

Tessa

Tessa, I hope all is well. You do not have to worry about creating a “red flag” due to the fact that things are different on your tax returns. Fortunately, the IRS does not have the computer sophistication to compare one year with the next. As a matter of fact, if you were chosen for an audit the auditor would not see the prior and/or succeeding year until you are selected for audit. And even at that the auditor normally asks us for copies of the return, he or she does not even retrieve the returns through the IRS system. Rest easy.

Let me know if there is anything else we can do to assist.

It is a pleasure serving you.

Larry Kopsa CPA

FIVE FILING FACTS FOR RECENTLY MARRIED OR DIVORCED TAXPAYERS

The IRS released some very good information for recently married or divorced taxpayers. If you do not follow their recommendations, it almost always causes problems with getting refunds and/or correspondence with the IRS.

If you were married or divorced recently, there are a couple of things you’ll want to do to ensure the name on your tax return matches the name registered with the Social Security Administration.

Here are five facts from the IRS for recently married or divorced taxpayers. Following these steps will help avoid problems when you file your tax return.

1. If you took your spouse’s last name or if both spouses hyphenate their last names, you may run into complications if you don’t notify the SSA. When newlyweds file a tax return using their new last names, IRS computers can’t match the new name with their Social Security Number.

2. If you were recently divorced and changed back to your previous last name, you’ll also need to notify the SSA of this name change.

3. Informing the SSA of a name change is a snap; you’ll just need to file a Form SS-5, Application for a Social Security Card at your local SSA office.

4. Form SS-5 is available on SSA’s Web site at http://www.socialsecurity.gov/, by calling 800-772-1213 or at local offices. It usually takes about two weeks to have the change verified.

5. If you adopted your spouse’s children after getting married, you’ll want to make sure the children have an SSN. Taxpayers must provide an SSN for each dependent claimed on a tax return. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number – or ATIN – by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. The W-7A is available on IRS.gov, or by calling 800-TAX-FORM (800-829-3676).

TAX OUTLOOK FOR 2010 AND BEYOND

2010 is here, and that means dozens of tax law changes. I want to make sure that you are updated on those changes and make sure you don't miss any opportunities to minimize your bill. Let's work together to make sure you don't pay any more in tax than you have to! As always, call us for more information at 402.362.6636 or email me directly at lkopsa@kopsaotte.com.

• Under current law, you pay employment tax of 6.2% up to the "Social Security wage base," which is $106,800 for 2010. You also pay Medicare tax of 1.45% on all your employment income. If you're self-employed, you pay double these amounts. The 2009 stimulus act created a new "Making Work Pay" credit to eliminate the first $400 of that tax ($800 for joint filers). President Obama has also proposed to add a new tax in the 2-4% range on earned income above $250,000. We will keep an eye on this for you and let you know if this becomes a possibility.

• Standard deductions for 2010 are $5,700 for singles and married couples filing separately, $8,400 for heads of households, and $11,400 for joint filers. Taxpayers who are blind or age 65 or older may claim an additional $1,100.

• Personal exemptions for 2010 are $3,650.

• President Obama has proposed to restore the 36% and 39.6% tax rates for individuals earning over $200,000 and families earning over $250,000. These rates would take effect beginning in 2011.

If you expect your 2011 income to be significantly more or less than in 2010 (as may be the case if you retire, buy or sell a business, or sell significant investments), consider timing income and deductions for maximum tax advantage.

If you expect your income to go DOWN in 2011, consider delaying income (to subject it to tax at next year's lower rate) and paying deductible expenses this year, to the extent possible.

If you expect your income to go UP in 2011, consider accelerating income from commissions, bonuses, and qualified plan withdrawals (to subject it to tax at this year's lower rate), and delaying deductible expenses until next year.

• President Obama has proposed creating tax credits to make healthcare more affordable. As the healthcare debate goes on in Washington, we'll keep you posted on the latest developments.

• Congress has not yet extended the Alternative Minimum Tax (AMT) "fix" to avoid a last-minute scramble, like the one that created havoc a couple of years ago, to prevent it from penalizing more middle-income taxpayers. The AMT exemption amount for the 2010 tax year is now $45,000 for joint filers; if it's "fixed" it will rise to $70,950.

• In 2000 the IRS audit odds for audit were 1 in 200. The latest numbers we now have are in 2008 and the odds have doubled to 1 in 100. But your chance of getting audited is still minimal. Don't take low audit rates as an invitation to cheat! But don't let fear of an audit stop you from taking every legitimate deduction you're entitled to.

• If you have withholding from your pay check, make sure to review your withholding any time your tax picture changes. Do this as soon as possible if you get married or divorced, have a baby, take a new job, get a significant raise, buy or sell your home, or you sell appreciated property.

• Remember that the IRS has tightened rules for substantiating charitable gifts. Now you'll need a canceled check, bank record, or other receipt listing the charity's name, the date of the donation, and amount of the contribution.

• The IRS has imposed new rules for charitable gifts of property. You can't claim deductions for used clothing and household items unless they're in "good" condition. You'll need a qualified appraisal for any item valued at $500 or more, and there are new restrictions on automobile donations. Don't let the new rules stop you from giving! But be aware that you'll need the right substantiation to sustain your deduction.

OPINION: 'TAX BURDEN LINKED TO LEVEL OF HAPPINESS'

(Tax Foundation Blog) -- A posting at the Tax Foundation's policy blog highlights a recent editorial from The Wall Street Journal, which cites a new study in Science magazine finding "New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second, followed by Michigan, Indiana, New Jersey, California, and Illinois." According to a Tax Foundation analysis, "three of the top five unhappiest states — New York, Connecticut and New Jersey — have the highest state-local tax burdens. On the other hand, four of the top five happiest states —Louisiana, Florida, Tennessee and Arizona — are among the states with the lowest state-local tax burdens." See the blog post at <http://www.taxfoundation.org/blog/show/25667.html>

DO I HAVE TO PAY TAXES ON BACK CHILD SUPPORT?

I am a single mom. My ex-husband did not pay support for his daughter for more than 5 years. He just came into some money and has recently paid almost all of his back support to me. Now I’m worried because my mom says I have to pay taxes on that money. I was hoping to use it to pay bills but I don’t want to use it if I need to save some for taxes.

Thank you for taking the time to answer my question.

Mandy

Good for you Mandy, plus I have some good news for you. My mom used to say, “moms are always right,” but fortunately for you, that’s not the case here.

For federal purposes, child support is tax neutral, meaning that you don’t claim it as income and your ex-husband does not get to take a deduction for paying it.

Note that my answer would be different if this was back payment of alimony.

Larry Kopsa CPA

NEW RULES FOR DISCLOSING TAX RETURN INFORMATION TO THIRD PARTIES

Federal law already strictly prohibited the IRS from making disclosures of taxpayer return information within its control to third parties except with taxpayer consent. Now there are new rules that apply only to tax return information held by income tax return preparers.

So, if you would like your income tax preparer to send copies of your tax return to a third party, i.e.-your bank, your attorney..., a specific form will need to be completed, signed and returned to your tax preparer's office. This form will be held on file for one year unless specified otherwise.

You may access the Kopsa Otte consent form on our website at www.kopsaotte.com. Here's a direct link to our Third Party Consent Form for your convenience.

Below is an explanation of the rules. Please be sure to contact us if you have any questions. (800-975-4829)

Among the new rules:

• Generally, preparers must obtain taxpayer consent, either by paper or electronically depending on how the return is being filed, before tax return information can be disclosed to any third party or used for any purpose other than filing the return.


• If the taxpayer consents to the disclosure and use of his information, the consent must identify the intended purpose of the disclosure, identify the recipients and describe the particular authorized disclosure or use of the information.


• Mandatory language informs individual taxpayers that they are not required to sign the consent; that if they sign the consent, federal law may not protect their information from further disclosure; and that if they sign the consent, they can set a time period for the duration of that consent. If taxpayers fail to set a time period, the consent is valid for a maximum of one year.


• To prevent consent requests from individual taxpayers from being buried in fine print, the rules require the paper consent documents to be in 12-point type on 81/2 by 11 inch paper and require electronic consent requests to be in the same type as the Web site’s standard text, all to prevent consent requests from being too difficult to read for individual taxpayers.


• If a taxpayer declines to provide consent for an unrelated tax preparation disclosure or use request, the preparer cannot make a similar consent request. The intent is to protect taxpayers from being pressured with repeated consent requests regarding the same issue.


• Mandatory consent from taxpayers also is required if the tax information is going to be disclosed to a tax preparer located outside the United States. This provision is intended to ensure taxpayers are informed if their tax information is being sent off-shore for return preparation. The individual taxpayer’s Social Security Number also must be redacted.