Tax Record Retention

Retaining and storing your income tax records is an important final step of your tax filing responsibility. We would like to remind you of the rules for keeping your tax records along with some information on storage options.

 When determining how long to keep most of your income tax records, we look at the time frame over which the IRS can audit a return and assess a tax deficiency or that you can file an amended return. For most taxpayers, this period is three years from the original due date of the return or the date the return is filed, if later. For example, if you file your 2009 Form 1040 on or before April 15, 2010, the IRS has until April 15, 2013 to audit the return and assess a deficiency. However, if a return includes a substantial understatement of income, which is defined as omitting income exceeding 25% of the amount reported on the return, the statute of limitations period is extended to six years. Read more

Loan Modification and Foreclosure Rescue Scams – Report from TIGTA

FOR IMMEDIATE RELEASE
June 17, 2010

FinCEN Analysis: Foreclosure Rescue Scam Reports Increase
Nature of Foreclosure Rescue Scams Shifts

VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today
released its first analysis of suspicious activity reports (SARs) containing
information about potential foreclosure rescue scams. The report,
<http://www.fincen.gov/news_room/rp/files/MLFLoanMODForeclosure.pdf> Loan
Modification and Foreclosure Rescue Scams – Evolving Trends and Patterns in
Bank Secrecy Act Reporting , involved an analysis of more than 3,500 SARs
filed from 2004 through 2009, of which the great majority, 3,000, were filed
last year. Additionally, FinCEN today also provided updated guidance
<http://www.fincen.gov/statutes_regs/guidance/html/fin-2010-a006.html> to
the financial industry concerning new scam techniques that financial
professionals should watch for and report. Read more

CA Estimated Tax Underpayment Penalty Assessments

Many of our clients have been receiving notices from the FTB assessing a penalty for underpayment of estimated tax. Many of these notices are unwarranted, and it seems the FTB is taking the stance that it is the taxpayer’s responsibility to prove they don’t owe a penalty that should never have been assessed! Read more

Gotcha – Use of TurboTax Is Not a Defense

The Tax Court rejected a taxpayer’s argument that their use of TurboTax to prepare their returns caused them to misstate their income, which resulted in an IRS assessment and an accuracy related penalty. In the case Aileen Yat Muk Lam , TC Memo 2010-82 (Tax Ct.) the wife argued that they consistently filled out their tax returns using TurboTax and she consistently confused capital gains and losses with ordinary income and expenses. The court rejected her argument noting that “tax preparation software is only as good as the information one inputs into it.” Just one more reason to use a professional tax preparer!

Forensic Accountants and Divorce

Divorce can be an uncomfortable topic to discuss, especially with your accountant, but forensic accountants can play a key role in a marital dissolution. Although not required for all marital dissolutions, many of the more complicated cases can greatly benefit from the services of a forensic accountant. Read more