Paris Accounting Corp

Practice limited to business consulting and tax resolution

Phone: 718-281-0200
Email: [email protected]
PO Box 604993, Bayside, NY 11360
Profitability Consultant and CPA

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New Book: Fix the Tax Code Please!

A view of how to fix the tax laws by Harlan Kahn CPA.

Harlan Kahn CPA and Profitability Consultant“This book is a resource guide everyone should read regarding the posture the country should take regarding taxes”

  • What if Congress was subject to the same healthcare we have?
  • Can taxes help us regulate non-violent undocumented immigrants?
  • Why not just have a flat tax?
  • Why does it appear some corporations get large tax credits?
  • Sweeping tax changes to these sectors can hurt our economy

Buy the book or get a free preview at Amazon Books

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About the Author:

Harlan S. Kahn is a CPA.  His accounting degree is from CUNY Queens College.  He has lectured for the IRS, Queens LIBOR, National Allied Professionals Inc and others.  Harlan became self-employed in November 1989.

In 2012, a consultant pointed out that after 23 years in the accounting field, Harlan had become a problem solver, not just a CPA.

Harlan says, “Today, as a profitability consultant, I have a different approach to client relationships.”  Our different approach helps select clients make more money, improve their quality of life and increase the market value of their business.

“It is very rewarding to plug profit leaks for customers, bring in new lines of revenue and point our clients in a direction to achieve their goals and aspirations.

Oh, and we do taxes!”

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Filed Under: tax

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Why you should treat your personal budget like a diet?

Monthly budget plan
Monthly budget plan

I guess it’s rare that people actually sit down and make a personal budget.

Having done my own budget about two times a year I know that it is very confronting to see the truth head on.  The hardest part of making a budget is getting the client willing to discuss it (often amongst each other).

So many times I used to work up people’s taxes when I ran an H&R Block office and heard the regrettable question, “How much did we make this year?”

Not once do I remember a happy answer to the truth when I responded with their AGI [adjusted gross income].  Either it was, “How could it be that little,” or, “where did it all go?”  It seems to me people here are encouraged to live on 110% of their income.  In Japan, by contrast, people are taught to save 10% of their income.

Click here for a budget template that I usually work with clients in my office on a big tv screen, in Excel.

It’s important to make sure you get all ordinary expenses in a personal budget.  I also take note of all credit card balances and interest rates, as to suggest a payoff method that relieves the largest interest cards first.

The hardest item to pin down is often entertainment.  Can you imagine making a rule of just how much you can spend on Friday & Saturday night every week?  I turn this into a game so that you can budget for big events by not spending too much all the time.

Every notice other people who spend a large percentage of their paycheck on purchasing food/coffee daily from outside vendors?  My dad told me at age 9 when I worked in his dry-cleaning store, “You come to work to make your own money, you are not here to make it for the lunch guy” or the soda seller.

When it comes down to a personal budget, it’s a lot like a diet. On a diet, if you write down everything you eat every day for a few days, your own mind will tell you to eat better.  With a budget, if you write down all you spend every day for a week, you will become less frivolous with your money.

If you need help with this you can always contact us at [email protected].

Here’s to a more profitable year (and healthy too).

Harlan

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Filed Under: tax

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The IRS and tax problem resolution cases

If you owe the IRS back taxes, there are many possible tax problem resolution outcomes.

I find these days that the IRS is operating with a sub-par number of employees. Service is poor because of lack of staff and funding from congress.  Our office handles extreme cases of tax resolution and I’m going to share some strategies, cases, and outcomes.

Tax resolution outcomesAs background information, everyone should be aware that there is a statute of limitations.  This is the length of time the IRS has to challenge entries on your tax returns.  Most often it is 3 years from the date you filed (or 4/15) your return.  This statute protects you from many but not all later inquiries.  It does not protect you from tax fraud.

Do not ever write something on your return that would put you in tax fraud or even become suspected of tax fraud (wrongful or criminal deception intended to result in financial or personal gain).  Fraud is a crime and you will need an attorney in addition to a good CPA, if you are accused of fraud (which raises your costs considerably).

Many years ago a tax attorney sent us a married couple who needed to refile a couple of years of returns.  The husband was a self-employed painter and the wife an attorney.  The wife came to realize the husband had committed tax fraud on his self-employment form (his entire painting career).  Since a joint return holds both people liable, the attorney had inadvertently committed tax fraud.  Thus the couple went to a tax attorney which lead to ‘voluntary disclosure’ and me reworking 2 years of returns.

We had 2 cases of taxpayers coming to our office who haven’t filed tax returns in more than 10 years!  This kind of deliberate act is actually criminal.  Fortunately, the IRS is more gentle and kind than merely taking you to court immediately.  In 1 case the collection agent went to the taxpayer’s house after the taxpayer ignored a dozen threatening letters.  In the other case the IRS garnished 60% of the taxpayer’s salary.  Both of these acts motivated the taxpayers to come in and bring their returns up to date.

I’d like to point out that even after we filed all the missing returns, there were ‘substitute returns’ filed for several years for each of these two taxpayers.  A substitute return is a return the IRS prepares (often  creating more tax than the actual tax the taxpayer owes) and is hard to get removed!  The other important point is that the IRS (and NYS) do NOT have the same collection laws as a delinquent bill collector.  The IRS can garnish most of your wages!!!

Lottery

One woman came to us after winning $100,000 in lotto.  She withdrew $60,000 from her retirement funds and bought herself a house for $240,000 on Long Island.  This was at the advice of her friends who suggested she invest in real estate with her winnings.  The advice was very poor for this taxpayer.  This woman never earned more than $30,000/year.  No one mentioned the $100,000 was taxable or that the retirement withdrawal was taxable.  Combine her $30,000 salary, $100k of winnings and $60k of retirement withdrawal this woman was looking at $190,000 of earned income as a single person.  Taxes were about $60,000 federal and about $30,000 to NYS.  She of course had spent every dime she had on the property and had to pay a mortgage too.  The IRS garnished most from her $300 weekly salary.  We were able to get that number down to $100/month and later $50/month.  They say winning the lottery makes some people poorer; this case supports that notion.

The single most successful device NYS has been using to get deadbeat taxpayers to pay is preventing a driver’s license from being renewed.  If you owe $10,000 or more to NYS you will be surprised if you want to drive.  Although you can work with a temporary license, it is restricted and prevents you from driving for entertainment (some cases no driving at night) and certainly is not useful if you have to drive to buy food in the supermarket.

Generally, the IRS & NYS do not call you on the phone.  The number of fraudulent phone calls claiming to be the IRS (and about to sue you) are high; they are false calls and the IRS never threatens over the phone (they do it in writing many times before they act).

Lessons learned: Pay your taxes, file your taxes timely and avoid getting in the cross hairs of the government.  You will find the government’s requirements to ruin your life are merely sending certified letters of tax bills.  From there the government is allowed to lien, levy and garnish your money.  Don’t ignore the tax letters you get in the mail; seek out professional advice to counter them.

Harlan Kahn CPA

If you are in deep tax trouble, don’t delay and make matters even worse – apply for a free consultation and let’s get your tax issue resolved.

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It’s a new year and it’s tax time

In this blog I’d like to cover what tax documents to take to your accountant and also a little update about fraud identity.

IDtheftIdentity theft is a growing crime with no limit in sight in the future.  There are so many ways to illegally obtain someone’s personal information.  There is dumpster diving, pick pocketing wallets and purses, unauthorized release of personal data from computer hackers and phone solicitations that obtain data illegally.

We can’t protect ourselves from data breaches when large companies like Athene in California or even the US government offices are breached by computer hackers.  We can at least be aware of some important basics.

The majority of IRS refund and identity hacks have happened through threatening phone calls.  So far in 2016, our small accounting firm received 3 clients calling about a threatening IRS over the phone.  So let’s be clear, the IRS doesn’t threaten.  They also never call before sending notices in the mail.  So if your first contact with an outstanding IRS tax bill is from the phone, chances are it’s an attempt to fraudulently obtain identity information.  The IRS doesn’t use email either.  The IRS staff don’t threaten people.  Anyone telling you to pay now with a credit card or suffer an ill fate in the future is likely to be a hacker.  An IRS agent can direct you to website to pay on line with a credit card.  No agent will take your credit card data to pay a bill over the phone, to my knowledge.  Any time you get a call from the IRS have them send you a letter with payment directions in writing.  Then take that notice to your tax advisor.

Tax TimeOn the topic of seeing your tax advisor, what documents do you need to bring?

Every year our office sends out a welcoming letter advising our clients about what documents they need to bring or send to our office.

If you are prior year client, I don’t need last year’s tax return.  That copy is for you, we keep a copy of every return we file.  The most overlooked item in our office is estimated tax payments by our clients to IRS and NYS [and other states].  If you don’t pay tax estimated taxes, you can ignore this.  If you do pay estimated taxes be sure to bring complete records of your payments amounts and dates.  Not everyone pays their estimates timely; so dates paid count.

Our welcome letter a list of potential income items for you to examine.  Whichever items pertain to you, bring to your tax preparer.  Another important area people forget to include are new births [and the medical costs associated with it].  Children are in fact a small tax deduction.  Also, in the year of birth, extreme medical payments could amount to an itemized deduction for some taxpayers.

Recently the IRS has been enforcing foreign bank account reporting.  There is a tax form called schedule B for interest and dividends, and also includes an area about foreign bank accounts.  Failure to include foreign bank authorization in your taxes is an omission.  Deliberate omissions are a FELONY.  So don’t forget to include the fact that you may sign on an older relative’s bank account or brokerage account in another country.

This year the IRS made 2 major changes:

The first is reporting of foreign bank account amounts in excess of $10,000 US dollars in the prior year [reported on a treasury form we call an FBAR].  It used to be due by June 30th every year [with no extensions].  It is now filed with the 1040 return making it due 4/15 [and can be extended].  Failure to report FBARS timely carry a whopping $10,000 or 50% of largest balance penalty.  This is for foreign bank accounts and foreign brokerage accounts.  So don’t forget to file your FBAR timely.

The other significant change is partnership reporting.  Used to be partnership tax returns were due 4/15.  This lead to many taxpayers unable to file their taxes timely, as receiving an k-1 from a partnership on the due date does very little to producing the tax return on the same day.  The IRS probably thought this lead to more extensions.  So partnerships, like corporation tax returns are now due 3/15.  With extensions, all entity returns are due by 9/15 [if an extension is filed by 3/15].

One last point on extensions.  An extension is the right to file your paperwork later on.  It does not excuse full payment by the 4/15 [or 3/15 for entities] due date.  You are required to settle up financially on time.  You have the right to request and extension to submit your tax paperwork.  The extension for filing paperwork has no change to paying your taxes timely.

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Obamacare Update

This week I just want to touch on one of the complexities of the Obamacare health insurance

(aka, Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or colloquially #Obamacare).

Everyone employed needs to have health insurance.  The penalty for not having health insurance during 2015 is 1% additional income tax.

obamacareWhat I found interesting is that you can’t just get health insurance any more.  Most people, individuals and the self employed business of 1, must apply during the enrollment period.  The enrollment period opens November 15, 2015 for the year 2016.  So, if you don’t have health insurance at this point, chances are you can’t get it until next year. 

The only exception to not being able to get insurance is if you are a new business applying.  Businesses need to have more than just an owner or husband and wife, they need to have two individuals or families on the policy to start during 2015.

This provision is to stop the false use of health insurance of only applying when you have a known malady and then removing yourself from insurance after treatment; then going on again when a new malady irrupts down the road.

I was able to ask an expert,

Which is better, a small business of single people, or each finding insurance on the web in NYS?

Although I expected the group to have greater benefits, the expert said there may be little difference at this point in time.  Individual health insurance may be have the same benefits or better than a group.   That’s new to this industry, until now, groups always were better off.

Harlan S. Kahn CPA
Paris Accounting Corp
www.parisac.com

 

ParisAC-whitepaper

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