Law Office of Camron Hoorfar, PC

The Internal Revenue Service announced a series of public forums at which individuals and representatives of diverse constituent groups will be able to provide input on the development of tax preparer performance standards.

The public forums, a crucial part of an effort launched in June by IRS Commissioner Doug Shulman to help ensure tax preparers are qualified, ethical and provide a high level of service, will kick off on July 30 in Washington, D.C.

“These public meetings will be an important part of the dialogue as we move toward a set of comprehensive recommendations by the end of this year,” Shulman said. “We want an open discussion on how to strengthen the overall integrity of our tax system.”

Two panels are scheduled for a forum on July 30. The first panel will give consumer groups an opportunity to provide recommendations. These groups include the AARP, Consumer Federation of America, Center on Budget and Policy Priorities, National Community Tax Coalition and Low Income Tax Clinics.

The second panel will be made up of tax professional groups, including the American Institute of Certified Public Accountants, the National Association of Enrolled Agents, the National Association of Tax Professionals and the National Society of Accountants.

The two panels will take place at the Ronald Reagan Building amphitheater in Washington starting at 9 a.m. on July 30. People interested in attending should confirm attendance by sending an e-mail message to: CL.NPL.Communications@irs.gov.

The IRS also plans to convene meetings with other constituent groups later this summer and fall. Input will be sought from:

• Federal and state organizations
• IRS advisory groups, including the Internal Revenue Service Advisory Committee (IRSAC), the Information Reporting Program Advisory Committee (IRPAC), the Electronic Tax Administration Advisory Committee (ETAAC), the Taxpayer Advocacy Panel (TAP) and the Advisory Committee on Tax Exempt and Government Entities (ACT)
• Unaffiliated and individual tax preparers and groups
• Private firms that support tax preparers

The dates and locations of these meetings will be announced as they become available. Small groups of tax preparers will also have the opportunity this summer to meet with IRS representatives to present their ideas at the IRS Nationwide Tax Forums.

The Nationwide Tax Forums this year include: Orlando, Aug. 4-6; New York, Aug. 25-27; Dallas, Sept. 8-10; and Atlanta, Sept. 22-24.

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

1. The cost of day camp can count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, check out IRS Publication 503, Child and Dependent Care Expenses.

Many taxpayers spend time during the summer months polishing their résumé and attending career fairs. If you are searching for a job this summer, you may be able to deduct some of your expenses on your tax return.

Here are the top six things the IRS wants you to know about deducting costs related to your job search.

1. In order to deduct job search costs, the expenses must be spent on a job search in your current occupation. You may not deduct expenses incurred while looking for a job in a new occupation.
2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.
3. You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers as long as you are looking for a new job in your present occupation.
4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
6. You cannot deduct job search expenses if you are looking for a job for the first time.

The IRS has an appeals system for people who do not agree with the results of an examination of their tax returns or with other adjustments to their tax liability.   Here are the top six things to know when it comes to your appeal rights.

1. When the IRS makes an adjustment to your tax return, they will send you a report or a letter explaining the proposed adjustments. This letter will alert you of your right to request a conference with an Appeals office and how to put in a request for such a conference.
2. In addition to examinations, many other things can be appealed.  You can also appeal penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies. 
3. If you request an Appeals conference, be prepared with records and documentation to support your position. 
4. Appeals conferences are informal meetings. You may represent yourself or have someone else represent you. Those allowed to represent taxpayers include attorneys, accountants or individual enrolled to practice before the IRS.
5. If you do not reach agreement with IRS Appeals or if you do not wish to appeal within the IRS, you may appeal certain actions through the courts. 
6. For further information on the appeals process, refer to Publication 5, Your Appeal Rights and How to Prepare a Protest if you Don’t Agree. This publication, along with more information about IRS appeals, is available on the IRS Web site at IRS.gov.

National Taxpayer Advocate Nina E. Olson delivered a report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. Among the key areas of focus will be working with the IRS to improve taxpayer services, enhancing IRS oversight of federal tax return preparers, improving the accessibility of the offer in compromise program, and working with the IRS to improve its ability to administer refundable tax credits effectively.The report notes that FY 2010 will mark the ten-year anniversary of the Taxpayer Advocate Service, which began operations in March of 2000. “As TAS enters its tenth year, both TAS and the IRS face a difficult environment for achieving what is, in essence, the same mission – ensuring that the IRS treats taxpayers fairly and identifying ways to increase voluntary compliance while addressing noncompliance,” Olson said. She identified the collection of tax revenue at a time when “increasing numbers of taxpayers have difficulty paying their daily living expenses” as a principal challenge.

The Advocate’s report, which is required by law, sets out the objectives of the Office of the Taxpayer Advocate for the upcoming fiscal year and provides substantive analysis of issues and statistical information. Among the areas the report identifies for particular emphasis in FY 2010 are the following:

1. Taxpayer Services. The report notes that the IRS created a five-year strategic plan for taxpayer service (known as the Taxpayer Assistance Blueprint, or “TAB”) in response to a directive from the House and Senate Appropriations Committees in FY 2006. The directive was originally motivated by concern that IRS taxpayer services were often ad hoc and not sufficiently coordinated or research-driven. The Advocate’s report expresses concern that the momentum to implement and refine the TAB recommendations has abated. It recommends that the IRS reinvigorate its efforts to pursue cross-functional, research-driven service improvements.

The report also expresses concern about the impact on taxpayers of the IRS’s sharp decline in telephone service. The “Level of Service” on IRS toll-free assistor lines (which reflects the percentage of taxpayers who speak with a telephone assister among all callers seeking to do so), peaked at 87 percent in FY 2004 and remained at a relatively high level of 82 percent as recently as FY 2007. But it plummeted to 53 percent in FY 2008, and the IRS has now reduced its target goal for FY 2010 to 71.2 percent. While the IRS fairly attributes much of the decline in service last year to a sharp increase in calls about Economic Stimulus Payments, Olson said, “that is small comfort to taxpayers who need assistance and it does not bode well for taxpayer compliance.” TAS will continue to examine taxpayer service issues in the coming year.

2. Oversight of Tax Return Preparers. Tax return preparers complete about 62 percent of all individual income tax returns and therefore play a critical role in facilitating tax compliance. However, “shopping visits” conducted by the Government Accountability Office, the Treasury Inspector General for Tax Administration, and others suggest that a high percentage of preparers prepare inaccurate returns, fail to perform sufficient due diligence, and even take positions that they know are not supportable. This conduct usually results in understatements of tax (reducing federal tax revenue and potentially subjecting taxpayers to enforcement actions) and sometimes results in overstatements of tax (causing taxpayers to pay more than they owe).

The Advocate reiterates her longstanding recommendation that the government do more to protect taxpayers by regulating unenrolled federal tax return preparers, including by requiring initial testing and continuing professional education, and recommends that the IRS step up enforcement actions against preparers who fail to perform due diligence or consciously facilitate noncompliance. She further recommends that the IRS require preparers to use a unique Preparer Tax Identification Number (PTIN) on all returns. The use of PTINs would provide data concerning the number of return preparers, shield the Social Security numbers of return preparers from identity theft, and make it easier for the IRS to identify return preparers who submit unreasonably high numbers of inaccurate returns. TAS looks forward to working with the IRS on an initiative it announced earlier this month to develop a revised return preparer strategy by year-end.

3. Offers in Compromise. For the past nine years, the Advocate has expressed concern about the effectiveness of the IRS’s offer in compromise (OIC) program, a program designed to enable financially struggling taxpayers to pay what they can afford and make a fresh start. The Advocate believes the IRS requires taxpayers to provide too much information with the initial application, thereby deterring taxpayers who legitimately qualify for the program from applying for it. IRS data show that the number of accepted offers has declined by 72 percent over the past seven years, from 38,643 in FY 2001 to 10,677 in FY 2008.

In response to these concerns, the IRS recently announced the formation of an OIC Project Team, which includes TAS representation. As part of this project, the IRS has retained two contractors to take a closer look at the characteristics of applicants who submit acceptable offers and to increase the number of qualifying applicants within the existing process. During the coming year, TAS will continue to devote priority attention to improving the accessibility of the offer program for appropriate taxpayers.

4. Refundable Tax Credits. The American Recovery and Reinvestment Act of 2009 temporarily increased the refundable portions of the Earned Income Tax Credit (EITC) and the child tax credit and authorized several new refundable credits, including the “Making Work Pay” credit, the “American Opportunity” education tax credit (40 percent is refundable), the first-time home buyer credit (up to $8,000), and a credit for certain federal and state pensioners. While the decision to expand refundable credits is entirely reasonable from a policy standpoint, refundable credits present significant administrative challenges for the IRS.

For example, the report notes that refundable credits may present an increased risk of fraud and that the IRS therefore will need to balance fraud prevention with the timely delivery of refunds. “Refundable credits require the IRS to perform a delicate balancing act,” Olson said. “On the one hand, if the IRS does not do enough to detect and prevent fraud, it may pay out billions of dollars as a result of false and fraudulent claims. On the other hand, if the IRS clamps down too tightly, hundreds of thousands and potentially millions of predominantly low income taxpayers will not receive timely refunds.”

During FY 2010, TAS intends to study this and other issues the IRS will have to address in order to administer refundable tax credits effectively and without undermining its ability to perform its core tax-collection function.

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The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires these reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The first report is submitted mid-year and must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report, due on December 31 of each year, must identify at least 20 of the most serious problems encountered by taxpayers, discuss the 10 tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems.

About the Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. If you believe you are eligible for TAS assistance, you can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. For more information, go to www.irs.gov/advocate.

The Electronic Tax Administration Advisory Committee (ETAAC) presented its 2009 Annual Report to Congress. The ETAAC provides feedback on the development and implementation of the Internal Revenue Service’s electronic tax administration strategy.The report includes 10 recommendations to advance the use of electronic filing. For example, the report recommends the IRS require all tax preparers who file at least 200 returns a year to use e-file. The report also calls for continued modernization of IRS systems as well as collaboration between the IRS and industry regarding software standards.

“ETAAC plays a significant role in IRS efforts to improve the taxpayer’s experience via e-file and the Internet,” said David Williams, director of Electronic Tax Administration. “ETAAC feedback helps the IRS shift more returns from paper to e-file, which is a top priority.”

The 14-member panel provides an organized public forum for discussion of electronic tax administration issues and the overriding goal that paperless filing should be the preferred and most-convenient method of filing tax and information returns.

“The IRS is making great progress on its strategic planning efforts toward reaching not only the 80 percent e-file goal established by Congress but also toward providing the next generation of electronic services for taxpayers, tax preparers and other stakeholders,” said Chris Beach, ETAAC Chairman. “ETAAC looks forward to working with the IRS on helping to advance these important electronic tax administration opportunities.”

ETAAC submits an annual progress report to Congress each June. The IRS Electronic Tax Administration created the ETAAC in 1998 as required by the IRS Restructuring and Reform Act of 1998. The report is the result of research and analysis as well as meetings with senior IRS executives.

Public comments on the report will be solicited via the Federal Register in the fall.