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

by Kaplan, Martin S.

• ISBN13: 9780471449720
• ISBN10: 0471449725
• Edition: 9th
• Format: Paperback
• Copyright: 2003-12-09
• Publisher: WILEY

Summary

With tax laws constantly changing and existing regulations hidden in volumes of tax code, nothing related to taxes is easy to figure out. Businesses and individuals in every income bracket need expert advice that cuts through the IRS bureaucracy and shows them how to work within the system. In What the IRS Doesn't Want You to Know: A CPA Reveals the Tricks of the Trade, tax expert Martin S. Kaplan reveals critical strategies that the best CPAs use for their clients to file shrewd, legal, money-saving returns. Filled with in-depth insights and practical advice, this book will help you answer such questions as: How can you approach the "new" IRS to maximize your tax return success? What are the latest IRS weapons? What are the biggest taxpayer misconceptions? What are the most commonly overlooked credits and deductions? How will new tax legislation affect you? How can outdated IRS technology benefit you? What forms should you never fill out? From deciphering the Jobs and Growth Tax Relief Reconciliation Act of 2003 to understanding the personality of the IRS, What the IRS Doesn't Want You to Know will help you shape your tax strategies and stay on top of your current financial situation.

Author Biography

MARTIN S. KAPLAN has been a certified public accountant for more than thirty years. His extensive experience includes audit and accounting work, tax planning, and representing clients in IRS matters.<BR>

Table of Contents

Acknowledgments.

1. Why Every Taxpayer Must Read This Book.

CPAs Grade Clients.

2. The IRS Personality: Playing It to Your Advantage.

Events That Shaped the IRS Personality.

Never Forget!

Acknowledging Dedicated IRS Personnel.

3. Who Runs the Show: What You’re Up Against.

The Image.

What It Looks Like from the Inside Out.

The Organization.

What You Need to Know about the Examination Division.

What You Need to Know about the Collection Division.

What You Need to Know about the Criminal Investigation Division.

What You Need to Know about the Taxpayer Services Division.

4. IRS People: Whom You Need to Know; What They’re Really Like; How to Work with Them; Standard Operating Procedures.

The IRS Chain of Command.

Who Runs the Show?

The Examination Division.

The Collection Division.

The Criminal Investigation Division.

The Upper Echelons.

Offering a Bribe—What Are the Consequences?

Standard Operating Procedures.

5. Neutralizing the IRS’s Power.

The IRS Power Base.

Power from Information Resources.

Power from the IRS’s Unique Legal Standing.

Power from Its Unique Role as a Law Enforcement Agency.

Power from Its Unique Legislation-Creating Authority.

Power to Make Mistakes without Consequences.

Power from the Freedom to Do What It Wants.

Why Does This Continue?

6. IRS Technology: What Works, What Doesn’t Work.

The Processing Pipeline.

The Nonprocessing Pipeline.

The Rest of the Process.

Where the IRS Technology Works.

Where Mistakes Are Made in the IRS Matching Program.

Where the IRS Technology Falls Short on the Income Side.

Where the IRS Technology Falls Short—Mortgage Interest and Real Estate Tax.

Where the IRS Technology Falls Short—Nonfilers and Underreporters.

Where the IRS Technology Falls Short—Lack of Reporting Requirements for Corporations.

Where the IRS Technology Falls Short—The Audit Level.

Technology Overhaul a Fiasco—Still.

7. IRS Targets and What to Do If You’re One of Them.

Are You in the Line of Fire?

Target: The Self-Employed.

Target: Cash-Intensive Businesses.

Target: Industries in the Market Segment Specialization Program.

Target: Nonfilers.

Target: Tax Cheaters—Omission of Income.

Target: Tax Delinquents and Tax Scam Artists.

8. How to Completely Avoid an Audit.

Don’t Fear Audit Statistics.

Audits at an All-Time Low.

“Live” Audits Are Aimed at Corporations.

Audits of Estate and Gift Tax Returns.

How to Prevent Audit Problems Before They Occur.

How Long Should Taxpayers Keep Records?

How to Completely Avoid an Audit.

Small Business Corporations (S Corporations).

Limited Liability Companies and Partnerships.

Partnerships.

Business Ventures and the Hobby Loss Rule.

Businesses That Include Merchandise Inventory.

Securing a Tax-Advantaged Life.

9. The Twenty Greatest Taxpayer Misconceptions.

10. How to Hold On to More Money: Overlooked Credits and Deductions.

Selling Securities from a Dividend Reinvestment Plan.

Identifying Specific Securities That Are Sold.

Unamortized Points on a Home Mortgage.

Deductible Interest on a Home Equity Loan.

Unused Losses, Expenses, and Credits.

Self-Employed Deduction for Health Insurance.

Charitable Donations—Securities.

Charitable Donations—Household Items.

Social Security Tax Overpayments.

Job-Hunting Expenses.

State Income Tax Deductions.

Parental or Grandparental Support.

Federal Income Tax Withheld on Form 1099.

Classroom Expenses for Teachers.

11. Ten Ground Rules Never to Break to Win with the IRS.

Rule 1. Always Report Income on Your Tax Return That Is Being Reported to the IRS by Third-Party Payers.

Rule 2. Never Include Other Forms That Are Not Required with Your Tax Return—Do Not Volunteer Additional Information.

Rule 3. If Any Information That You Are Putting on a Tax Return Is a Gray Area, Go for as Close to Full Deductibility as Possible.

Rule 4. File Your Personal Tax Return by April 15—Use an Extension Only If Absolutely Necessary.

Rule 5. Don’t Worry about Being Unable to Interpret or Decipher the Complex IRS Tax Forms—Many IRS Auditors Don’t Understand Them Either.

Rule 6. Strive to Be Neat.

Rule 7. When All Else Fails, Follow One or More of These Four Steps.

Rule 8. Make It Your Business to Know Which Tax Loopholes Apply to Your Personal Tax Situation.

Rule 9. Use to Your Advantage the Fact That the IRS System for Document Retrieval Is Archaic.

Rule 10. If You Are Involved with IRS Personnel in Any Way, Behave Decently.

12. The Latest Tax Legislation: What to Watch Out For, How to Benefit.

The Jobs and Growth Tax Relief Reconciliation Act of 2003.

2001 Tax Legislation.

The Tax Acts of 2001 and 2003: Conclusions.

Taxpayer Protections and Rights.

13. The New IRS: What Are Its Goals?

New IRS Mission.

Serving Four Groups of Taxpayers.

Obstacles to Overcome.

IRS on Track—Direction: Electronic Filing of Individual Returns.

Direction: E-Filing on Personal Computers.

Direction: Telephone Filing (TeleFiling).

Direction: Electronic Filing for Businesses—Electronic Federal Tax Payment System.

Direction: Increasing Compliance.

How to Pay What You Owe—You Choose.

Direction: Paying Taxes with Plastic.

Appendix A: Most Important Tax Forms Discussed in This Book.

Appendix B: State Filing Authority Telephone Numbers and Web Sites.

Appendix C: Your Rights as a Taxpayer.

Appendix D: Useful Web Sites.

Appendix E: Internal Revenue Service (Future Organization).

Notes.

Bibliography.

Index.