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Kevin Roberts, CPA

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- Self-Protection Through Knowing How Long To Keep Tax Records

- Identity Thieves Want YOUR Tax Return

- The Power of Specialized Knowledge

- Take A Test Drive Of Your Retirement Plans







New Taxpayer Bill of Rights + IRS Treatment of Victims + Exempt Organization Issues


On June 10, 2014, the IRS adopted a Taxpayer Bill of Rights (TBOR), a list of 10 rights that the National Taxpayer Advocate Nina Olson, has long recommended to help taxpayers and IRS employees alike gain a better understanding of the dozens of discrete taxpayer rights scattered throughout the multi-million word Internal Revenue Code.

A taxpayer survey conducted for the Taxpayer Advocate Service (TAS) in 2012 found that fewer than half of U.S. taxpayers believe they have rights before the IRS, and only 11 percent said they know what those rights are.

"Taxpayer knowledge and education is the best taxpayer protection there is," the report says. "A comprehensive public outreach campaign is crucial to overcome taxpayers’ lack of knowledge about their rights and inform them that the IRS has adopted a TBOR. These initiatives will require a variety of communication plans and tools, all with the goal of making taxpayer rights a part of every IRS communication with the taxpayer."

The IRS has already incorporated the TBOR into a revamped version of Publication 1, Your Rights as a Taxpayer, which is the main vehicle for explaining taxpayer rights to taxpayers. The IRS has also created special sections on its public website and its internal website to highlight the 10 taxpayer rights. In addition, TAS has created a webpage that links existing statutory and administrative remedies to each of the 10 rights.

  Last month I hosted a live webinar on Social Security Strategies and Secrets you should understand and use as you contribute and eventually take distributions from this program.  If you are interested in watching the VIDEO REPLAY you can click here.  Kevin


The TBOR, Olson wrote, "has the potential to be an important milestone in tax administration." She notes that some commentators have questioned the significance of a TBOR, given the lack of enforcement mechanisms. In response, she says that one benefit of articulating taxpayer rights clearly is that doing so will bring into focus areas where there are gaps between rights and remedies, notably with respect to the right to quality service.

"TAS will be very active in FY 2015 and years to come in advocating for and working with Congress and the IRS to fill those gaps, and educating taxpayers about those rights," Olson wrote. "This activity is central to our mission."


  IRS Treatment of Victims of Return Preparer Fraud

At the same time that hundreds of thousands of taxpayers have become victims of tax-related identify theft, a much smaller number of taxpayers have been victimized by unscrupulous preparers who have stolen their refunds by fraudulently altering information on their returns.


The IRS has been working hard to issue refunds to identity-theft victims quickly. By contrast, it has generally declined to issue refunds to victims of preparer fraud at all.

"As I discuss in the Area of Focus, Return Preparer Fraud: A Sad Story," Olson writes, "the IRS has consistently dragged its heels, making one excuse after another, because providing relief to these victims just is not a high enough priority, or more disturbingly, because the IRS simply does not want to provide relief."

In a typical preparer fraud case, a taxpayer visits a preparer to have his or her (or a joint) return prepared. The preparer completes the return. The taxpayer reviews it, authorizes the preparer to e-file it, and often pays the preparer’s fee. After the taxpayer leaves, the preparer alters the return, often by changing the bank account routing number so the refund is transmitted to the preparer’s own account.

Olson has covered this subject in three of her Annual Reports to Congress, issued two proposed Taxpayer Advocate Directives and two final Taxpayer Advocate Directives, and elevated 25 Taxpayer Assistance Orders involving specific cases to IRS Commissioners (both appointed and acting). Between 2000 and 2011, the IRS Office of Chief Counsel issued four opinions and other guidance that, read together, authorize the IRS to issue replacement refunds to victims of return preparer fraud. However, no refunds have been issued. The report states that some taxpayers have been waiting since the filing of their 2008 tax returns. "Nowhere has the IRS failed to abide by the [recently announced Taxpayer Bill of Rights] more than with respect to the issue of return preparer refund fraud," Olson wrote.

The report states that IRS Commissioner John A. Koskinen decided on March 14 that the IRS will issue refunds to victims of preparer fraud who have filed police reports with the appropriate law enforcement agencies and met certain other substantiation requirements. To date, the IRS has not implemented the decision, saying it must first resolve certain accounting issues and declining to provide a date certain by which it will issue the refunds.


Exempt Organization Issues

The report contains a detailed discussion of several issues relating to Exempt Organizations (EOs).

In 2013, the National Taxpayer Advocate delivered her mid-year Objectives Report to Congress the month after the disclosure that the EO unit was using questionable criteria to screen applicants for tax-exempt status.


The Advocate’s report contained a separate volume, Special Report: Political Activity and the Rights of Applicants for Tax-Exempt Status, that took a broad look at factors that contributed to the use of the questionable screening criteria and associated processing delays and offered 16 recommendations to address them.

The report released today provides a status update on those recommendations.

In this report, the Advocate outlines a proposal that could provide a clearer test to determine whether an organization seeking exempt status under IRC § 501(c)(4) is operating "primarily" for social welfare purposes. There is currently very little guidance to help make that determination. Among other unresolved issues, one could focus on the percentage of the entity’s expenditures, the percentage of the entity’s time allocations, the percentage of the entity’s advertisements or other factors.

The report says that an analogous issue arises for organizations seeking exempt status under IRC § 501(c)(3), because if they engage in lobbying activity, the amount of lobbying must be "insubstantial."

To provide (c)(3) organizations with a bright-line option, Congress enacted IRC § 501(h), which allows them to use a numeric test that focuses solely on expenditures. The same option could be made available to organizations applying under IRC § 501(c)(4).

"The National Taxpayer Advocate believes organizations requesting the right to receive contributions exempt from tax should be evaluated on how they expend those contributions," the report says. "Under this analysis, as with the 501(h) election, volunteer time and activity, which do not generate taxable income for which tax exemption would be available in the first instance, are irrelevant to this determination." The National Taxpayer Advocate plans to refine this proposal and include a legislative recommendation in her year-end report to Congress.

The report also expresses concern about the IRS’s recently announced decision to adopt a new EO application, Form 1023-EZ. Although the Advocate previously recommended development of a simplified Form 1023-EZ, she objects to the new form because it does not require organizations to describe their mission and activities or send in their formation documents for review.

TAS will attempt to monitor the effects of the streamlined standards and recommend modifications as needed.


IF you have comments or questions on the information in these articles. as usual feel free to call our offices at 502-426-0000.




Please Would You Give Us Your Feedback & a Testimonial on Our Hotline at 800-609-9006 ext. 9078


Hey it’s Kevin Roberts and I wanted to ask you a favor.  We’ve just installed a toll-free number that I would like for you to call and tell me how you think we are doing as your CPA firm.


Just dial 800-609-9006 ext. 9078 and follow the instructions, it only takes 1 minute.  If we’ve done a good job please let me know.


And if we can improve on anything, please mention that too. Thanks!  Kevin



Remember you can call our offices if you have any questions about these or any other bookkeeping, accounting, tax, financial planning or insurance related issues, at 502-426-0000. 


Regards, Kevin Roberts, CPA

President, Roberts CPA Group





Kevin Roberts, CPA | Roberts CPA Group | 12906 Shelbyville Rd #220
Louisville, KY 40243 | 502-426-0000 | Fax: -502805-0408
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