Ohio CPA Dana Stahl brought up several good points in a recent email exchange we had and has graciously allowed me to post them here.

DS:

Mr Guru - as usual, I haven't been receiving your daily email blog updates, so I spent my lunch hour going back over the past few weeks & reading your blog.  Some thoughts:
 

KMK:

That email feature with Bloglet became so unreliable that I took the sign-up form off of my blog a few months back. You may want to try out subscribing to it via the rss feed, such as with a service like Bloglines.  That's how I keep up with hundreds of blogs.

 DS:

1.    On outsourcing, you really articulated points that Accountants/CPAs ought to consider when deciding whether to use this.  I had planned to use as a marketing campaign how my firm does NOT outsource, but instead keeps the work right here in the good ol' USofA.  May I pull a Senator Biden and plagiarize some of your points in my letter to clients, current & potential?

KMK:

1. Stressing that your firm does all of its work in-house is an excellent marketing angle that I would encourage you and everyone else who is resisting the outsourcing trend to highlight in your marketing efforts.  In fact, whenever this fact is not mentioned in a tax prep office's ads, I encourage potential clients to explicitly ask about it.

As always, you are welcome to excerpt from anything that I have posted on my web sites.

DS:

2.    On the 1040X/IRS audit issue, I'll have a really good test case coming up.  I just completed a 1040X for 2002 & 2003 with a client who says we overstated his business revenues.  When we first updated his books, we took all deposits shown on the bank statements and classified it all as income.  We explained what we were doing all along, but he finally got the idea that perhaps some of his deposits could have been money he put into the business to cover bills.  He compiled his own billings directly for each year and said we should use those figures for each year.  So, we made the change accordingly.  He'll have a combined overpayment of just under $16,000.  We advised him about the 1040X issue, in that he may be facing an audit since we are claiming a large amount of refund.  I hope we'll be able to get this through with no hassle, but I'll keep you posted on what happens.

KMK:

2.  Good luck with the 1040X.  I just finished up one of my audits last week.  This one actually went rather smoothly because everything was in QuickBooks and I just printed out a G/L for the auditor, who spot checked a few things and then allowed the full $15,000 refund claim.  The other audit is not going as well because the client's records aren't as organized, plus the auditors stumbled over a huge bad debt deduction that they are trying to disallow after failing to disqualify most of the actual changes we had made.  I may have to take that one to Appeals.

DS:

3.    As to the IRS "tax gap", there was an article in Accountants' World citing a $315B gap, according to an interview with IRS Comm Everson.  Nowhere in the article was there any challenge to this figure, but it appears to have been meekly accepted as the gospel truth by the author.  Since I deleted AW's email, I can't link you to it.  Just wanted to let you know that your comments on the tax gap were born out through this article.
 

KMK:

3.  It has always been SOP for the media and almost everyone else to blindly accept the IRS's tax gap figures as gospel because they do toss those figures around so confidently.  A number of years back, I attempted to track down their actual calculations, even speaking with some high level IRS execs in DC, who admitted that they guessed at the numbers since unreported income is something that can never be quantified with any real precision.

DS:

4.    Forgive me if I've already mentioned this, but I've been looking at dailyhowler.com for comments on Social Security from the leftist point of view.  The blogger of that site, Bob Somerby, really takes conservatives in general and Bush in particular for wanted to revise the structure of SS.  You should really give it a look if you want information on the arguments put forth by various leftists.

KMK:

 4.  As you have hopefully already read today, I have been enlisted to help with the Club For Growth's efforts to counter balance the leftist propaganda related to the current Social Security reform efforts through their new blog at SocialSecurityChoice.com.  We are addressing the left's bogus arguments head on, such as their idiotic claim that everything is hunky dory and that Bush is manufacturing this crisis.  You should monitor this new blog because there is a lot of excellent info being posted there.

DS:

5.    I still haven't heard from Edward Jones regarding the former IRS Commish's comments on how the 1997 anti-IRS testimony was false.  I'll keep pursuing this, as I contacted EJ again and demanded some type of response on this matter.

KMK:

 5.  Just like with the tax gap figures, nobody really challenges people who make claims about IRS issues; so that person was unprepared to document his claim that the IRS abuse stories were bogus.  As we all know, he was full of crap when he made that claim.

DS:

6.    I'm considering joining Dan Pilla's group Tax Freedom Institute.  He seems to have a lot of good insider knowledge on IRS procedures, etc.  However, he charges $995/year for membership.  I'm always looking for more contacts and resources in dealing with IRS, so what do you think?  Would it be worth it?

KMK:

 6.  Dan Pilla is very knowledgeable and current with his info; but I really have no idea what joining his group would entail.  I'm assuming that it would entitle you to be the first to learn of things he comes up with in order to help your clients deal with IRS.  While at first blush $995 seems like a lot of money, I've seen plenty of seminars and conferences costing many times that.  Since you are working on building up your practice, that seems like a pretty good investment for a year. As you know, it's a lot less than the other practice building services that often charge in the range of $20,000 or more for their "secret formulas" for success. 

DS:

7.    Finally, have you considered setting up a bulletin board for tax practitioners who regularly visit your site or even possibly starting some type of organization like Dan Pilla has?  It would be good to have contact with others across the country on tax matters.  I spoke to the one fellow from CA who had passed along his experiences with the 1040X/IRS audit issue, and he thought it might be a worthwhile enterprise.  Any thoughts?
 
Thanks for all your contributions to the tax discussions and for your great blog.  Who knows, perhaps you can be the next Andrew Sullivan, or even better, Powerline.

KMK:

7.  I'm not sure I have the time required to monitor an official discussion board.  I'm already stretching myself pretty thin with the limited amount of web activity I am currently doing. However, I have long dreamed of at least having a network of like minded tax pros to whom we could refer clients who are in need of good assistance.  Since we are actually trimming back on our client base, it is frustrating for us when someone asks us to take them on and we don't have anyone to whom we can refer them.

Speaking of discussion boards, I recently joined up with the Yahoo based one on LLCs.  They haven't gotten into the SE tax issue yet, but they have covered some interesting points.  They are at: http://groups.yahoo.com/group/lnet-llc
You may want to join up and see if the other members have more experience with the SE tax issues that will help you with your clients.

I hope this helps.  Good luck with tax season.

Kerry

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 1/29/2005 01:34:00 PM Send this post: