What the IRS Doesn't Want You to Know : A CPA Reveals the Tricks of the Trade

by KAPLAN, MARTIN S. CPAWEISS, NAOMI

• ISBN13: 9780375759697
• ISBN10: 0375759697
• Edition: 8th
• Format: Trade Paper
• Copyright: 2002-01-01
• Publisher: Villard

Summary

Filled with important IRS websites, state hot lines, and more than a thousand insider secrets, this widely acclaimed book--aBusiness Weekbestseller--reveals critical strategies that the best CPAs use for their clients to file shrewd, legal, money-saving returns. With tax laws constantly changing and existing regulations hidden in voluminous tax codes, businesses and individuals in every income bracket need expert advice that cuts through IRS bureaucracy and prevents taxpayer horror stories. In this completely updated version, the authors explain the latest IRS targets and weapons, how to work with the IRS personality, and the biggest misconceptions taxpayers have about their returns, from IRAs, refunds, gifts, and inheritances to audit selection, and more. There's also everything you need to know about the Tax Act of 2001.

Author Biography

Martin S. Kaplan has been a certified public accountant for more than thirty years and is a member of Geller, Marzano & Company, CPAs, P.C. The firm performs audit and accounting work, represents clients in IRS matters, and focuses on financial and tax-planning opportunities.<br><br>As president of Naomi Weiss Communications, Naomi Weiss writes fiction and nonfiction on a broad range of subjects.

Table of Contents

Acknowledgments	vii
Why Every Taxpayer Must Read This Book	3	(11)
The IRS Personality: Playing It to Your Advantage	14	(30)
Who Runs the Show: What You're Up Against	44	(34)
IRS People:	78	(24)
Whom You Need to Know
What They're Really Like
How to Work with Them
Standard Operating Procedures
Neutralizing the IRS's Power	102	(20)
IRS Technology:	122	(27)
What Works
What Doesn't Work
IRS Targets and What to Do If You're One of Them	149	(35)
How to Completely Avoid an Audit	184	(34)
The Thirty-four Greatest Taxpayer Misconceptions	218	(21)
How to Hold On to More Money---Overlooked Credits and Deductions	239	(5)
Ten Ground Rules Never to Break to Win with the IRS	244	(38)
New Tax Legislation---The Tax Act of 2001: What to Watch Out For, How to Benefit	282	(52)
The New IRS	334	(16)
Where the IRS Is (or Isn't) Going and What to Do, or Not Do, About It	350	(35)
Appendix A: Most Important Tax Forms Discussed in This Book	385	(123)
Appendix B: Guide to Free Tax Services	508	(16)
Appendix C: State Filing Authority Telephone Numbers and Websites	524	(2)
Appendix D: Your Rights as a Taxpayer	526	(20)
Appendix E: Practitioner Hot Line Telephone Numbers	546	(3)
Appendix F: Useful Websites	549	(4)
Notes	553	(8)
Bibliography	561	(6)
Index	567

Excerpts

Why Every Taxpayer Must Read This Book

Welcome to the year 2000. The World Wide Web. Cell phones. E-mail. Eight point four gigabyte hard drives. Genetic engineering. Cloning. Viagra. Capabilities unheard of even one year ago abound.

There's a new IRS commissioner, and a fresh, spiffy vision for reorganizing the IRS has been set in motion. But when it comes to paying taxes and dealing with the IRS, what really has changed thus far?

Each year hundreds of reputable books are written about taxes, audits, and the Internal Revenue Service (IRS). No-nonsense, definitive, and powerful, the titles practically scream out ways that we can deal with the IRS: Fight, Win, Battle, Negotiate. Words such as The Only or The Best followed by Audit, Tax Forms, Small Business, or Corporate Tax Guide Book You'll Ever Need appear more than enough to guarantee results. Worried about the IRS, or in doubt about your personal tax situation? The confidence and warm cozy feelings titles such as these bring give a clear and unmistakable message to the taxpaying public: "Buy me," these books say, "and all of your tax problems will be resolved." So each year thousands buy these books, or select them off library shelves, hoping to discover the secret to keeping their tax payments low and their returns away from the scrutiny of the IRS.

Unfortunately, the information taxpayers really need to satisfy these goals rarely, if ever, surfaces. No matter how much information taxpayers read, hear, or research on the subject, they still remain easy targets for the IRS. In the IRS ballpark, despite living in a megatechnology environment, and with periodic promises about a more consumer-oriented IRS, some things have changed, but very little.


Isn't anyone aware of the self-generating scam that keeps taxpayers in semidarkness and the IRS operating the way it always has? There is a very specific group of people who are aware. They just aren't talking.

The time has come to deal with some clear-cut, shocking truths about what's behind the unsettling phenomenon that perpetually keeps blinders on the taxpaying public. This requires exploring the overall phenomenon, and then examining why those in the know have remained silent.

First the scam. Let's face facts: the IRS has a reputation for being all-knowing, all-powerful, and ruthless (many would say vicious). It is seen to have extensive manpower and technological resources, and the law is on its side. Without actually knowing what the IRS is and how the organization really works-or, perhaps more important, how it doesn't work-the public remains in the no-holds-barred grip of the IRS's reputation as the Big Bad Wolf.

Millions of taxpayers live with the fear that one day an IRS agent will single out an item from their tax return, decide an audit is in order, and come after them. Fingering alleged cheaters and exacting retribution is, after all, the acknowledgment IRS agents crave. In fact, the IRS is often referred to as an agency out of control-and with good reason. Once it selects its culprits, it chooses the punishment and proceeds to administer it with very little containment from any other governmental or nongovernmental agencies. So it's really not surprising that most taxpayers envision the IRS as harassing and abusive, using its power in an uncaring, even brutal way to possibly destroy their careers and families.

Taxpayers are consistently so fearful of dealing with the IRS that they rank it as an event as traumatic as divorce or having their house burn down. This paranoia shows how enormously successful the IRS has been in creating its all-powerful-and-untouchable image. By sustaining these fears, the IRS maintains a status quo that actually prevents taxpayers from

* Questioning how much of the IRS's reputation is actually true.

* Considering why a never-ending body of information, designed by well-meaning authors and "tax experts" to help them pay less in taxes and better manage the demands of the IRS, never genuinely helps them accomplish those goals.
Now let's talk about those who know exactly what is going on and find out why they aren't talking. Any good Certified Public Accountant (CPA) or tax professional knows how to beat the IRS at its own game. But an unwritten law among tax professionals has traditionally prevented this vital information from being revealed publicly.

What is this law based on? It's based on tax professionals' healthy fear that the IRS will turn against them.

When filling out their clients' tax returns, tax professionals use information they have gained as experts in their field. But these very same professionals do not traditionally disclose, in anything resembling a public forum, information in three crucial areas that can make a huge difference in the lives of the millions of taxpayers who aren't their clients:

1. What the IRS really is and how it thinks, responds, and operates, or, more precisely, doesn't operate.

2. Endless loopholes in our tax laws that can be used in the preparation of an individual tax return.

3. How both of these can be used consistently to benefit taxpayers.

Tax professionals have made it a practice NOT to reveal such information-and with good reason: They've seen firsthand how people can be destroyed by both warranted and unwarranted IRS attacks. Why would CPAs, or any professionals in the tax field, put their lives, families, careers, and futures on the line? The answer to this question has traditionally prevented tax professionals from publicly explaining why the right kind of information never gets to the taxpaying public. It also keeps them from revealing that information on a broad scale.

So, to prevent an all-out personal conflagration and probably endless repercussions, tax professionals continue to offer whitewashed material that promises to tell taxpayers how they can disappear from the IRS's view. In fact, much of this information is correct and does work. But it is not the whole story. Too much information is left out, and no one knows this better than the authors themselves.

After almost 34 years as a CPA, I have consistently watched how the IRS can financially ruin all kinds of people: rich, middle-class, the average working family-people exactly like you.

In mid-1997 a fascinating case involving IRS wrongdoing hit the newspapers. It had begun simply enough in 1993.

Mrs. Carole Word accompanied her son to an audit of their family business, three children's clothing stores in Colorado Springs. Because the audit was going poorly, Mrs. Ward spoke up to the female IRS revenue agent, saying, "Honey, from what I can see of your accounting skills, the country would be better served if you were dishing up chicken-fried steak on the interstate in West Texas, with all that clunky jewelry and big hair."

Four weeks later, IRS revenue agents raided the family's stores, padlocked all three of them, and posted notices in the windows that implied that Mrs. Ward, who was 49, was a drug smuggler. The IRS then imposed a tax bill in the amount of $324,000.

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Excerpted from What the IRS Doesn't Want You to Know: A CPA Reveals the Tricks of the Trade by Martin S. Kaplan, Naomi Weiss
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.