Thursday, October 19, 2017

Tax Preparers Beware: Cybercriminals Are Out to Get You

Cybercriminals are targeting a new group lately: tax preparers. Cybercrime has become serious business in the past few years as new, more sophisticated scams crop up. Cybercriminals have realized – why target one tax payer when you can breach an entire tax office or single tax preparer and hundreds of taxpayer identities?

Be wary of these top tax preparer scams.

Fake Insurance Tax Form Scam

The Insurance Tax Form Scam is the newest of the scams targeting tax preparers. This one is pretty complex. According to the IRS, here’s how the scam works:

“The cybercriminal, impersonating a legitimate cloud-based storage provider, entices a tax professional with a phishing email. The tax professional, thinking they are interacting with the legitimate cloud-based storage provider, provides their email credentials including username and password.”

Once they have access to your account, they steal your client’s email addresses and impersonate you by sending emails to your clients. In the email, they attach a fake IRS insurance form and request that the form be completed and returned.

The subject line and email is usually a variation of the following:

“urgent information”

Dear Life Insurance Policy Owner,

Kindly fill the form attached for your Life insurance or Annuity contract details and fax back to us for processing in order to avoid multiple (sic) tax bill (sic).

E-Services Scam

This phishing scam asks tax preparers to “sign a new e-Services user agreement.” The email will claim to be from the “e-Services Registration” and uses “Important Update about Your e-Services Account” in the subject line. It states that e-Services is rolling out a new user agreement that all users must accept. The tax preparer is directed to a fake website where they are prompted to review and accept the new agreement.

Software Scam

This scam involved impersonating popular software service providers. The subject line is everything from “Software update” to “account shutdown”. The body of the email is generally the same – the scammer wants you to “validate” or “re-authenticate” your login credentials but clicking on their phony link and entering in your username and password.

Scammers are getting very good at mirroring other company’s websites and emails. The email address, at a glance can look legitimate but if you look closer there’s usually something off about it. Maybe it’s there one letter that’s different or maybe the domain name is .net instead of .com.

Once your credentials are stolen, cybercriminals steal your client information to either file fraudulent returns or steal identities.

Taxpayer Impersonation

This scam is a two-step process. First, the tax preparer receives an email seemingly from a taxpayer looking for tax preparation services. Once you respond to the first message, a second email comes with an embedded web address or a PDF attachment that has an embedded web address. You think you’re downloading a potential client’s tax information when in reality your credentials are being stolen.

Be very careful when it comes to unsolicited emails seeking your services. Never respond to or click on a link in an unsolicited email or PDF attachment from an unknown sender.

There are just a few examples of the seemingly endless attempts at stealing taxpayer information. If you suspect a scam, be sure to contact

Cybersecurity Best Practices

Make cybersecurity an everyday practice by following these tips.

  • Be careful of email attachments and web links.
  • Use separate personal and business computers, mobile devices and accounts.
  • Do not connect personal or untrusted storage devices or hardware into computers, mobile devices or networks.
  • Be careful downloading software.
  • Watch out when providing personal or business information.
  • Watch for harmful pop-ups.
  • Use strong passwords.
  • Conduct online business more securely.

For more on cybersecurity in the tax industry, check out our IRS Don’t Take the Bait Series Recap. Also, be sure to follow our Tax Scam Roundup. We add to it as new scams pop-up.




IRS backs off Trump's Obamacare order, will enforce ACA coverage reporting rule

Thursday, October 12, 2017

IRS Don’t Take the Bait Recap

Tax subsidies for sports facilities under fire again

Tax Reform Issues

Speaker Ryan explaining tax reform at 10/4/17 Facebook Event,
holding the postcard form (see my comment below though)
There are a lot of uncertainties in trying to fully understand tax reform with a few pages of ideas where lots of important information is missing. Don't get me wrong, tax reform is needed as our system is too complex, inequitable, inefficient and doesn't collect all of the tax owed (leaves about $385 billion uncollected annually).

On 10/10, Speaker Ryan noted 5 ways that tax reform will save people taxes in 2018. Each seems correct, but each has uncertainty connected with it because we don't have legislative language yet or hides that the framework, despite suggestions of modernization, doesn't fully modernize our tax system. Here are his five items:

1. Bigger standard deductions - He says it will be "nearly doubled." The framework indicates, for example, that the standard deduction for a single person will be $12,000. It is $6,300 today. What he doesn't say though is that the personal and dependency exemptions go away. Today, that's $4,050 per person. While the child credit is supposed to increase and apply to more families, today, it only applies to children under age 17 while the dependency exemption can cover some children up to age 23. So, not enough details yet to indicate that any individual paying income tax today will see lower income taxes in 2018, particularly if they have a few children and lose itemized deductions that would have been larger than the new standard deduction.

2. Lower individual rates - The framework suggests rates of 12%, 25% and 35% and perhaps a higher rate for high income individuals. Today, the lowest rate is 10%.  Actually, the lowest rate today and under the plan is 0%. If someone today has income too low to pay income taxes, that should continue under the framework. These folks - about 45% of individual filers, won't see bigger paychecks. There is no talk of lowering the 15.3% payroll tax. Some of these zero bracket filers might be getting a larger refundable child credit, but they won't see that until they file their tax return. Also, we don't know where the rate brackets start and end so we don't know for sure if everyone drops income into lower rates.

3. Capped rate on small business of 25% - Leading up to the release of the framework, there was talk that this would not apply to all businesses and perhaps some personal services, such as accounting, would not get the cap. Again, depending on where the individual rates start and end, most small business owners should not be in the 35% rate because they are not today. [TaxProToday, 9/13/17]

4. Immediate write-offs for business investments - The framework suggests allowing expensing of capital investments. Ideally, this would also include intangibles and both acquisition of new and used depreciable property.  Details are missing.

5. Increased child tax credit - Apparently, this is to adjust for repeal of the dependency exemption. The dependency exemption though can apply to more than your child. Also, the current child credit covers a narrower age range than the dependency exemption.

Speaker Ryan also notes that if compliance costs go down, that is also a tax cut. I'm not sure we'll see a significant drop in compliance costs. There are still complexities such as the child tax credit and hopefully, the Earned Income Tax Credit remains. Promotion of IRS VITA sites and other low-income tax preparation clinics would help keep compliance costs down for many.

Caution - A postcard size return doesn't say anything about the complexity level of a system. We could file on postcards today if the IRS would take less information on the components of our taxable income. The postcard in the Republican blueprint of June 2016 didn't have a place to sign or a penalty of perjury statement or information about the taxpayer or where to deposit any refund.  AND, why are we modernizing our tax system to fit on a postcard rather than to use today's technology to not even have to file for most people because the system already has enough information to just sent a bill or deposit the overpaid taxes in your account or send you a secure debit card?

There is a lot of good about tax reform and it would be good to hear more about that rather than claims that don't seem completely accurate or complete.  And there is a lot of information often missing such as the effect on the deficit and debt, distribution of the tax cuts among different income levels, transition, timing, and more. Speaker Ryan's 10/10 post includes a video of him explaining the tax system and notes many good ideas, we just need to be critical listeners and watch for missing pieces.


Thursday, October 5, 2017

IRS Nationwide Tax Forum Recap

Our team had such a great time this year attending the IRS Nationwide Tax Forums! We were in Orlando, Las Vegas, Dallas, National Harbor, and San Diego meeting with tax preparers and talking about tax education.

We love meeting new people, answering questions, and reconnecting with our “Road Family” – people we see year after year. Here are some highlights from our travels.

Outstanding Connections

In San Diego, Wally Michael (the exhibit contractor) had one of his employees set up our booth for us at no charge.  We have known Wally since the IRS Tax Forums began some 25 years ago. 

Marilyn and I had a nice conversation with Tabby of CTEC, several Intuit managers, the executive director of the National Society of Tax Professionals (NSTP), and the National Society of Tax Professionals (NATP).

Larry Gray, a highly-regarded speaker for the tax forum and tax professional groups came to our booth and bought a copy of my newly released book, Guide to Start and Grow Your Tax Business. In fact, there was a lot of interest to buy or carry my new book, which was very encouraging! 

I was also excited to meet Richard Marshall, Director of Sales for Tax Slayer, our new tax software provider.  

Our team connected with Canopy, HD Vest, the president of TaxAct, Plain Language Seminars, ERO Cyber Security and the team reps from Textellent.

Common Questions

We had a lot of questions about recruiting and training your own tax preparers. That’s something we offer for tax business owners looking to train their own preparers rather than hire experienced tax preparers. [See the video below]


We also had a lot of questions about becoming an Enrolled Agent. We told them all about how our CTP program is a pathway to Enrolled Agent

Overall, we got to reconnect with partners, meet with customers, and talk to companies about potential partnerships. We also met a number of tax professionals who had never heard of ITS. As always, we had a great time at the tax forums. How about you? What were your highlights?





Monopoly Man photobombs Equifax Senate hearing to protest proposed forced arbitration changes

Wednesday, October 4, 2017

Middle class tax relief will be major hurdle for tax reform

Who's in the middle class will determine in large part whether that group of Americans gets Republican-promised middle class tax relief.

Tax buzz chat middle class tax reform question

One of the big debates about any tax reform is whether or how much it will benefit the middle class. That was a question in today's #TaxBuzzChat about the recently released Republican framework for tax reform.

First, however, we need to decide what is and who is part of the United States middle class. There are several ways to define the middle class.

Some say it is based on income. Other define it by lifestyle. Still others say middle class is a state of mind.

Those different definitions also depend on who's using the term.

Economists, think tanks, federal agencies, politicians and the media, including me and my tax blogging colleagues who participated in today's tax reform chat, all have slightly different views on who is part of the almost mythical middle class.

Middle class dead, booming, taxed: Since middle class tax benefits will depend largely on how much money a taxpayer makes, let's go with the income definition for this blog post's purposes.

We're still waiting to see what amount of earnings will fall into which of the, for now, three proposed tax brackets. But some recent U.S. government data seems to indicate that America's middle class is far from dead.

Middle class is dead_donkeyhotey flickr CC
Depending on your definition of middle class and personal financial situation, you may or may not agree that the American middle-class is dead. (Photo by Donkey Hotey via Flickr)

A U.S. Census Bureau report released Sept. 12 shows that between 2015 and 2016, the country's median household income rose 3.2 percent from $57,230 to $59,039. 

This is the second consecutive annual increase in median household income.

It's also the highest income year on record, beating the previous high (when adjusted for inflation) of $58,655 in 1999.

Many middle classes: Since the median income means that half of Americans earn more and half earn less, then can we call $59,039 the middle class definition? Uh, no.

Why not? Because median incomes are different in different states and regions. What looks rich to some folks seems poor to those in other parts of the country.

Earlier this year, the Pew Research Center, which defines a middle class household income as two-thirds to double the national median, provided CNBC with data for all 50 states and Washington, D.C., for various household sizes.

That financial news outlet took that data and then broke it down state-by-state into how much money one-, three- and five-person families must earn to be considered middle class throughout the country.

Here in Texas, for example, CNBC says middle class income is:

  • $23,249 to $69,745 for one person,
  • $40,267 to $120,802 for a household of three and
  • $51,985 to $155,954 for a five-member household.

If we still lived in Maryland, we could make a bit more and still be considered middle class:

  • $26,663 to $79,987 for a one-person household,
  • $46,180 to $138,541 for a household of three and
  • $59,619 to $178,855 for a family of five.

Gross vs. taxable income: CNBC apparently used gross income in its median income calculations.

Since it's just me and the hubby, I shaved a few dollars off the three-person household amounts. And being a tax geek, I like to look at what's taxable income.

Based on that taxable amount under current tax laws, we're solidly middle-class.

Some in our families, however, think we're rich. So it again comes down to definitions and perceptions.

These are the kind of calculations that members of Congress and their constituents are going to have to deal with in the crafting of any substantial tax reform package. Good luck to us all!

Are you a middle-class resident of your state based on CNBC's income calculations? Do you feel like those or the correct income ranges? Or do you consider yourself middle-class even if you make more or less than the ranges shown by CNBC?

You also might find these items of interest:




Saturday, September 30, 2017

7 money shows to listen to on International Podcast Day

Tax Reform Framework Observations

Press conference on release of tax reform framework on 9/27/17
On September 27, the "Big 6"* released their tax reform framework. It doesn't add much more than we have known for the past 16 months other than:
  • Top corporate rate is 20% rather than President Trump's 15%. The 20% rate should help us be more competitive internationally, particularly along with a shift from a worldwide system to a territorial one (15% would be better, other than for the budget effect).
  • The individual brackets will be 12%, 25% and 35% and perhaps something higher than 35%. In April, President Trump suggested 10%, 25% and 35% while last June the House Republicans suggested 12%, 25% and 33%. Today's lowest bracket (other than zero) is 10%. Seems odd to try to sell tax cuts with a higher lowest rate, but the effect also depends on where the brackets start and end and a few other provisions.
There are lots of cautions to exercise in dealing with this brief framework:
  • There is a lot missing such as where individual tax brackets start and end, whether the head-of-household filing status will be repealed (it is not mentioned in the framework), what "additional tax relief" will be provided "during the committee process," the rate that applies to capital gains and other investment income, and whether interest expense of businesses operating as other than C corporations will be limited.
  • While the standard deduction will be doubled, the personal exemptions and additional standard deduction (for age and blind) are removed. So, for example, today, a single person has a personal exemption of $4,050 and standard deduction of $6,300 for a total of $10,350. Doubling the standard deduction to $12,000 and removing the exemption means an increased deduction of $1,650 rather than $6,300.
  • The dependency exemption is removed and replaced with a "significantly" larger child tax credit but it doesn't say how much higher.  Also, the child tax credit is for children under age 17 while the dependency exemption covers up to age 23 and perhaps even higher in some instances.
  • A more accurate measure of inflation will be used to adjust brackets, the standard deduction and phase-outs. This makes sense but does mean that future adjustments will be less than we have today (this is a revenue raising provision).
  • Will repeal of the estate tax also include repeal of the step-up (or down) in basis at date of death or similar measure to ensure that gains at death don't escape both the estate tax and the income tax which would be a tremendous benefit to wealthy individuals?
Another big caution - don't believe everything you hear. For example, when President Trump announced the framework while in Indiana, he noted that it would not help him, implying that it helps the middle class (see Washington Post article of 9/27/17).  Not true at all.  The rate cut helps him. Also, he likely holds his vast business operations in many different types of entities including partnerships and S corporations and will benefit from the top rate of 25% on such income even after paying himself reasonable compensation. Also, if he is still carrying forward a net operating loss, repeal of the AMT helps him. And repeal of the estate tax is a tremendous tax cut for him. The Tax Policy Center's analysis of the framework indicates that about 75% of the tax benefits of the framework go to the top 25% of income earners in 2018 and 87% by 2027, with the top 1% benefiting the most. Of course, due to missing details, they had to make some assumptions, such as where the individual brackets start and end.

Speaker Ryan says many individuals will have a postcard size tax return - unlikely but perhaps shorter. But why are we talking about fitting a 21st century tax system on a postcard return rather than having a just-in-time filing system?

And, we don't have a cost estimate - will the plan raise or lower revenue. Most likely it will lose revenue (the framework is almost all tax cuts rather than noting many revenue raisers). The Senate budget plan includes $1.5 trillion over the next ten years for tax reform - meaning that it is okay to lose $1.5 trillion. The Committee for a Responsible Federal Budget estimates that that framework might lose $2.2 trillion over ten years ($2.7 trillion when interest on the new borrowing is included).

And, when will we see details? Speaker Ryan has suggested we'll have a new tax system before 2018.  Let's see. There is still a lot of work to figure out the details, draft the legislative language, hold hearings, and gain support of both parties (the framework indicates that bipartisan support and participation is encouraged).

What do you think?

*Mnuchin, Cohn, Brady, Hatch, McConnell and Ryan


Monday, September 25, 2017

Who should get a rate cut in tax reform?

For the past few years, the focus of federal tax reform has been on reducing the corporate statutory rate from 35% down to 25% (H.R. 1 (113rd Congress, Camp)), 20% (House Republican blueprint of June 2016) or 15% (Trump 1-pager). The rationale for a corporate rate cut is that ever since we last reduced the top corporate rate from 46% to 34% with the Tax Reform Act of 1986, other industrialized countries did the same (in 1993 the rate was increased to 35%). You can see from this OECD data that most countries have a lower rate, although France is at 34.43%.

Most businesses don't operate as C corporations. Instead, they operate as sole proprietors, partnerships, LLCs and S corporations. For these entities, the income mostly is taxed at the individual tax rates where the top rate is 39.6% although less than half of one percent of individuals are in that top bracket. According to a recent report from the Joint Committee on Taxation (JCT), for 2016, it is estimated that only 6% of individual returns report income of $200,000 or more. For married taxpayers filing jointly, at $200,000 of taxable income, about $45,000 of that income is taxed at 28%. They would need to have over $233,350 in 2016 to get to a 33% marginal tax rate, over $415,700 to get to a 35% marginal rate and over $470,700 to reach a 39.6% marginal rate.  If their income consists of capital gain income, it is taxed at 0% and 15% and doesn't reach 20% until income exceeds $470,700. Basically, very few individuals are at today's top individual rates although many who are have a lot of income.

JCT, JCX-42-17 (9/15/17)
Should only C corporations get a rate cut? I don't think so.  If the goal of lowering rates is to improve competitiveness, than it makes sense to lower rates for all entities. Also, if only the C corporation rate is lowered, some other types of entities might find it advantageous to convert to the C corp form despite double taxation of corporate income (once by the corporation and again by the shareholders when a dividend it issued).

Recently, Treasury Secretary Mnuchin stated that accounting firms would not get a lower rate even if the rate is reduced for non-C corp entities. He implied that only firms creating manufacturing jobs would justify a rate cut. (Bloomberg, "Trump Officials Temper Expectation of 15% Corporate Tax Rate," by Mohsin and Sink, 9/12/17.) Wow! The government produces lots of data, but I'm concerned that not many policy makers look at it.  According to the Bureau of Labor Statistics, accounting jobs are growing faster than for other industries - at an 11% rate. And these are good paying, interesting jobs that are key to business growth overall. In contrast, jobs for fabricators and assemblers are declining by 1%.

Barry Melancon, President and CEO, has a blog post on Secretary Mnuchin's comments and the justification for lowering all business tax rates as part of reform - check it out. Also see this AICPA testimony for the Senate Finance Committee's hearing of 9/19/17 on business tax reform.

Note: For the rate cut for non-C corporations, the owners must first pay themselves reasonable compensation to be taxed at individual rates + payroll taxes. The remaining income would be taxed at a lower top rate than other individual income though.

What do you think?


Will tax reform 'Rothify' tax-deferred 401(k) plans?

Wednesday, September 20, 2017

Free Resources for Tax Preparers

At The Income Tax School, our mission is to empower people with a professional career to fulfill their dreams and serve others as industry leaders. That’s why, along with all of the materials and support we provide to students, we also strive to write informational blog posts and other free sources of information.

Did you know that we have a ton of free, downloadable white papers? We just updated all of our Free White Papers, so we thought we’d take the time to tell you about them!

White Papers to Share with Clients

Communicating with clients is extremely important. It’s helps them stay informed, it encourages them to be proactive, and makes you look like a superstar! Here are some white papers to share with your clients.

Top Ten Causes of Taxpayer Pain

To help taxpayers understand and cope with the frustration caused by our tax system, I’ve compiled the following “Top Ten Causes of Taxpayer Pain” and my thoughts on how to alleviate the pain.

Why Your Tax Return Should Be Prepared Early

Getting clients to come in early during tax season can be extremely difficult. This white paper might help convince them.

Choosing the Right Tax Preparer For You

A great marketing tool to use for prospective clients.

Signs It’s Time to Call a Bookkeeper 

If you offer bookkeeping services to business clients, this is a great tool to help bring more business in.

White Papers for People Interested In Tax Preparation

Thinking about becoming a tax preparer? We’ve got some things for you to read.

Tax Preparation Can Be A Stop Gap for Unemployed Workers

12 Advantages of a Career as a Tax Professional 

White Papers for Tax Pros

Getting Hired as a Tax Preparer

You’ve got the education, now it’s time to land the job. These tips will help.

10 Reasons to Earn CE and Tax Pro Credentials

Never stop learning. Here’s why.

White Papers for Tax Business Owners

Leveling the Playing Field – How to Compete with National Tax Firms

Learn the strategies of the big firms.

Free Guide to Recruit and Train Tax Preparers

Looking to hire? In this paper we lay out how to choose people who would be great tax preparers and then teach tax preparation.

Top 3 Strategies for Successful Tax Business Marketing

These tried and true marketing strategies constitute best practices for any independent tax business to attract and retain clients.

12 Low Cost Ways to Recruit Tax School Students

We’ve found that the best way to recruit and train tax preparers for your business, is to run a tax school in the off season.

Tips for Training Staff Before Tax Season

Are you being thorough enough when you bring new staff on board? These tips will help.

4 Game Changer Internet Marketing Tips

These 4 internet marketing strategies are more cost effective (and more effective) than “traditional” advertising.

We hope you find these white papers insightful! Want more resources? Check out our Resources Page and join our LinkedIn Group, Tax Business Owners of America.



U.S. tax rules for international donation deductions

Saturday, September 16, 2017

Corporate tax contributions to the states

One of the major drivers of the latest federal tax reform effort is the corporate tax rate.

The Trump Administration is still pushing for a 15 percent corporate tax rate, the White House's budget director, Mick Mulvaney, told CNBC last week.

However, just the day before Treasury Secretary Steven Mnuchin conceded a 15 percent rate would be difficult to attain.

Meanwhile, one Washington, D.C.-based tax policy group has looked at how much corporate taxes contribute per capita to state coffers.

That analysis by The Tax Foundation earns this week's Shout Out Saturday honors.

Not a major tax matter: "The corporate income tax is one of the smallest sources of state tax revenue," writes Morgan Scarboro, a policy analyst at The Tax Foundation. "According to Census data, in FY 2015, the corporate income tax only comprised 5.3 percent of state tax collections."

The corporate income tax also often is mistakenly seen as the only taxes businesses face. Wrong, notes, Scarboro. Companies also pay sales tax, property tax, excise tax and payroll tax.

In fact, the corporate income tax makes up only 9.5 percent of total business taxes.

The Tax Foundation's map below shows how much state governments collect in corporate income taxes per capita.

Corporate Income Tax by State PerCapita_Tax Foundation map

Where it does count: New Hampshire collects the most at $433 per capita, with Delaware shortly behind at $424 per capita.

On the other end of the business tax spectrum, six states don't levy a corporate income tax at all. They are Nevada, Ohio, South Dakota, Texas, Washington and Wyoming.

Just some more tax data to keep in mind as the 2017 Internal Revenue Code rewrite effort continues.

You also might find these items of interest:




Friday, September 15, 2017

Disaster Relief Tax Links

Recent Hurricanes Harvey and Irma left many in distress. In addition to the need for resources to help in the recovery, tax considerations exist. For example, is aid taxable, what about insurance recovery, what if you pull money from your retirement account, what if employees give up leave so their employers can donate it to relief efforts? Tax returns and taxes are due, but most are extended to January 31, 2018. Some taxpayers might not be directly affected, but have records lost in the disaster.

The IRS has lots of information to help - here  +  Pub 547.

COST and the AICPA have a list of information from state tax agencies about state relief.

The AICPA has information for tax practitioners:
And here is information from Consumer Reports on how to help victims of the hurricanes.


Hurricane Jose is back; Eastern Seaboard could be affected

I know it's peak Atlantic hurricane season, but this has to stop. If only my pleas were that powerful.

Instead, all I can do is let you know that Jose, who's been meandering the Atlantic for weeks, has reformed and is back at hurricane force.

Hurricane Jose is back NHC radar 091517
That's Hurricane Jose, due east of Florida and the Bahamas, but those spots are OK. He's heading northwest, meaning others on the eastern U.S. coast could face some weather issues in the coming days. (NOAA GOES radar image)

The National Weather Service's National Hurricane Center announced in its 5 p.m. ET tropical alert that Jose's sustained winds were 75 miles per hour, making it a Category 1 hurricane.

Jose, which started on Aug. 31 as a tropical wave off the west coast of Africa, developed into the 10th named storm of the 2017 season, the fifth hurricane and the third major hurricane. It previously had reached Category 4 strength before losing momentum and becoming a tropical storm.

It's now about 640 miles southeast of North Carolina (or if you're a dedicated storm tracker the system is near latitude 27.1 North, longitude 70.3 West) and is slowly (10 mph) moving northwest. The National Hurricane Center (NHC) expects it to maintain that course today, then turn to the north-northwest by late Saturday, Sept. 16, and then go more northerly on Sunday, Sept. 17.

In addition, the NHC says Hurricane Jose should strengthen through Saturday, with weakening possibly beginning late Sunday.

Currently, hurricane-force winds extend about 35 miles from the center of Jose, with tropical-storm-force winds felt as far as 140 miles from its core.

In addition to winds, Hurricane Jose is producing ocean swells off of Bermuda, the Bahamas, the northern coasts of Hispaniola and Puerto Rico, and the southeastern U.S. coast. The more turbulent seas are expected to spread northward along the Mid-Atlantic coast during the next few days.

And the cone of uncertainty puts the upper East Coast of the U.S. in uncomfortable territory.

Hurricane Jose 5 day cone 091517

Since we've all watched in recent weeks as Harvey and Irma shifted before making landfall in Texas and Florida, respectively, all we can do is, as the saying goes, stay tuned.

Oh, and be/get prepared.

While I appreciate the readership, I'm really getting tired of referring y'all to my Storm Warnings page. But it is where you can find links to previous blog posts about getting ready for a storm (or any other natural disaster), recovering afterwards and helping those who were in a storm's path.

Finally, be careful. No piece of real estate or personal property is worth putting yourself in danger.




Countries' takes on Bitcoin and taxes vary widely

Wednesday, September 13, 2017

Protect Your Clients From Cybersecurity Threats

As a tax practitioner, you have a legal obligation to protect your client’s information. That means taking all the necessary measures to make sure that the information you’re given is safe from cybercriminals. The IRS recently sent out information on how to do so through their Don’t Take the Bait campaign, a 1o part series that provides security tips to tax preparers.

“More and more, we see the data held by tax professionals being targeted by national and international criminal syndicates that are highly sophisticated, well-funded and technologically adept. No tax practitioner today can afford to ignore cybersecurity threats or overlook putting in place strong safeguards.” – IRS Commissioner John Koskinen.

Your Legal Obligations 

If you handle taxpayer information, you may be subject to the Gramm-Leach Bliley Act (GLB Act) and the Federal Trade Commission (FTC) Financial Privacy and Safeguards Rules. That means you must take the following steps to protect taxpayer information.

  • Take responsibility or assign an individual or individuals to be responsible for safeguards.
  • Assess the risks to taxpayer information in your office, including your operations, physical environment, computer systems and employees, if applicable. Make a list of all the locations where you keep taxpayer information (computers, filing cabinets, bags, and boxes taxpayers may bring you).
  • Write a plan of how you will safeguard taxpayer information. Put appropriate safeguards in place.
  • Use only service providers who have policies in place to also maintain an adequate level of information protection defined by the Safeguards Rule.
  • Monitor, evaluate and adjust your security program as your business or circumstances change.

For more information, check out IRS Publication: Safeguarding Your Taxpayer Data.

IRS Tips

The IRS recommends reading up on Publication 4557 and NIST’s Small Business Information Security. Here are their tips for protecting clients and businesses from cybersecurity threats.


  • Identify and control who has access to business information
  • Conduct background checks
  • Require individual user computer accounts for each employee
  • Create policies and procedures for information security


  • Limit employee access to data and information
  • Install Surge Protectors and Uninterruptible Power Supplies (UPS)
  • Patch operating systems and applications
  • Install and activate software and hardware firewalls on business networks
  • Secure wireless access point and networks
  • Set up web and email filters
  • Use encryption for sensitive business information
  • Dispose of old computers and media safely
  • Train employees


  • Install and update anti-virus, spyware and other malware programs
  • Maintain and monitor logs


  • Develop a plan for disasters and information security incidents


  • Make full backups of important business data/information
  • Make incremental backups of important business data/information
  • Consider cyber insurance
  • Make improvements to processes, procedures and technologies

Now is a great time to look over your protocols before tax season. Protecting taxpayer information should be top of mind as cybersecurity threats continue to increase. In addition to protecting client information, you should also make sure you’re covered in the event of a data breach.

More great reads:
Protect Yourself and Clients From Cybercrime

Tax Scam Roundup: Know What You’re Up Against

The Common Denominator in Most Tax Scams



Texas' top tax writer wants to make it less costly for hurricane victims to tap retirement accounts

Thursday, September 7, 2017

Are you ready for some football and taxable winning wagers?

Go Back to School this Fall and Win Big Next Tax Season

Want to earn more as a tax preparer this coming tax season? That means you need learn more. Gaining knowledge and experience as a tax preparer is the only way to earn more money in the industry. That means it’s time to hit the books and go back to school. Furthering your tax education could mean:

  • Offering more services to clients
  • Increasing your fees
  • Earning credentials and/or a higher status
  • Becoming your own boss

Here are 3 ways you can “Go Back to School” with the Income Tax School so that next tax season you can earn more money.

Learn Advanced Tax Preparation Tax-education-books

Comprehensive tax courses teach you how to prepare taxes for the general public. Advanced courses expand your services to business clients, corporate clients, or people with more complex tax situations. Increasing your knowledge will allow you to take on more lucrative clients. The Income Tax School offers a number of Advanced Tax Preparation Courses. You could also just expand your knowledge to specific situations (or forms) that you may not be experienced in. If that’s the case, check out our CE Course packages.

Earn Credentials

Another great way to advance your career and set you apart from unqualified tax preparers is by earning one of two credentials in the industry. The first is a Record of Completion through the IRS Annual Filing Season Program. This program is an annual voluntary IRS tax training program. It aims to recognize the efforts of non-credentialed preparers who aspire to a higher level of professionalism.

But why stop there? Your ultimate goal should be to earn the highest designation possible: Enrolled Agent. Enrolled Agents (EAs) have unlimited practice rights. This means Enrolled Agents are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and, which IRS offices they can represent clients before. Learn more about the Pathway to Becoming an Enrolled Agent.

Learn How to Start and Grow Your Own Tax Business 

You’ve got the education, why not be your own boss? Becoming a tax business owner is easier than you might imagine. The Income Tax School has lots of great resources for starting your own tax business. You could learn to build your business by diving into our Tax Practice Management Manuals, or check out my new book, Guide to Start and Grow Your Successful Tax Business.

Whatever you do to prepare for next season, make continuing education important and you will surely reap the benefits come January!



Thursday, August 31, 2017

IRS eases access to workplace retirement plan money for Hurricane Harvey's Texas victims

Introducing: Guide to Start and Grow Your Successful Tax Business

I’m excited to announce the release of my book, Guide to Start and Grow Your Successful Tax Business! This 289-page book is a go-to guide for anyone looking to start or grow a tax business. The guide covers everything from learning tax preparation, to establishing your tax office, marketing and pricing, recruiting and training employees, dealing with the IRS, and so much more!

I have spent much of my career helping others become independent tax professionals and have helped guide many to start their own tax businesses. One very important thing I’ve learned over the years is that there is no need to reinvent the wheel. This book is a practical, comprehensive guide that is beneficial for all entrepreneurs planning to operate as either a sole-tax practitioner or a tax business owner employing other tax preparers. Throughout this book, you will learn many best practices that will save you time and money, and help you grow a successful tax business.

I am honored to have the foreword of my book written by Roger Russell, Senior Editor for Accounting Today. According to Roger, “It is destined to become the bible for the tax preparation business.”


I would also like to thank Ce Ce Morken, Roger K. Burgess, and Nathaniel R. Causley for taking time to read and provide testimonials for my book.

“We know from talking to our customers how important it is for a tax professional to feel like a trusted advisor to their clients. This book has all the elements to set you up for success and to be that advisor from developing a business plan to diversifying for year-round revenue. We’ve worked with ITS on several projects their rich domain access is unequalled and Chuck’s breadth and depth of knowledge really shine through. His passion to help tax professionals grow and prosper equals our own and is inspiring.” – Ce Ce Morken, General Manager of Intuit ProConnect Group

“The Income Tax School invests significantly to ensure the very best curriculum development and content delivery. Feedback from participants has been excellent and truly supports The Income Tax School’s position that it sets the standard for tax preparer training and enabling ITS graduates to start successful independent tax businesses.” – Roger K. Burgess, former IRS Deputy Asst. Commissioner and District Director

“Reading the start-up business guide book has been a transforming experience to my business life. In 2015, after spending 10 years as a District General Manager with a national tax firm, I started up my own tax business, Global Tax Centers. Using The Income Tax School Tax Practice Manual as my guide, I grew from a one-man operation to 22 home-based Affiliate/Owners across the US. The ITS tax business operating principles are as sound as Mt. Everest and explained with great clarity for easy retention. Chuck McCabe’s insight into the tax industry is priceless, and provocative, and his manuals are required reading for every one of our Affiliate/Owners. Every person looking to start their own tax business could benefit from reading these manuals.” –  Nathaniel R. Causley, Jr., J.D., Founder, President & CEO, Global Tax Centers

At The Income Tax School, our mission is to empower people with a professional career to fulfill their dreams and serve others as industry leaders.

This book will help us fulfill our mission by enabling you to succeed as a tax entrepreneur! Whether you are a sole practitioner or a tax business owner employing others, this book will provide many best practices to save you time and money, and help you grow a successful tax business.

The book can be purchased on our website here: Guide to Start and Grow Your Successful Tax Business



Wednesday, August 23, 2017

The Benefits of Guest Blogging

Content marketing has become an important part of marketing for every business. Beyond sharing your expertise on your blog or creating white papers for download, there’s another great option – that could help get you in front of fresh eyeballs. It’s called guest blogging. Guest blogging is just what it sounds like. Creating original content for someone else’s website or blog.

The Benefits of Guest Blogging

Guest blogging can be a great way to extend your reach and get your name or business in front of a different audience. It also has the following advantages:

  • Shows off your expertise
  • Offers insight into your industry that another audience may not have been aware of
  • Allows you to link back to your website (this can help increase your SEO)
  • Is a way to promote your business and services
  • Adds credibility to your voice, and can be used as a promotional tool (as seen on X website)

Who to Reach Out To

Guest blogging is great, but you don’t want to just write for anybody. The partnership should benefit both you and the blog you’re writing for. Look for websites and blogs with high readership – the last thing you want to do is spend time crafting a blog post that no one will see. You should also make sure that the information you offer would be of value to the readers in the publication. Here are some ideas:

  • Blogs or websites that cover the tax industry
  • Companies in your area that offer complimentary services (banks, financial institutions, etc.)
  • Local business associations
  • Major online publications that cover tax topics
  • Local news publications
  • Organizations whose members could benefit from tax tips

What You Should Write About

Think about the audience and what they would find valuable. Overall, topics should offer insight and advice that readers could learn from or use in their own situations.

  • Tax industry news that might affect them.
  • Tax tips
  • Bookkeeping and payroll tips
  • Tips on choosing the right tax preparer

Now is the time to start researching possible places to guest blog. Reach out with an email, introduce yourself, and offer up some topics and a timeline. If they have an editorial calendar, they’ll appreciate the early planning and you may just land on their calendar. If not, just reaching out and building the relationship is a great first step.

Speaking of guest blogging… we often get emails from other businesses who are looking to guest blog. If you’re interested in doing a guest blog post on our Tax Talk blog, download our guidelines:

Guidelines for ITS Guest Blogs



Got a refund? Paid a big tax bill? Time to adjust withholding!

Friday, August 18, 2017

New Guidelines On Passwords


You know all that advice about making hard passwords? They must include at least one number and/or specialcharacter? You know how we’re told to change the password frequently and to never use the same one for different things?

Well there are new guidelines that basically say forget what you’ve been told. So, thanks to the National Institute of Standards and Technology, managing your passwords is about to get easier!

Paul Grassi, senior standards and technology adviser at NIST told NPR, “The traditional guidance is actually producing passwords that are easy for bad guys and hard for legitimate users.”

Here are some highlights on the new guidelines:

  • Keep passwords simple, long, and memorable.
  • Use phrases, lowercase letters, and typical English words.
  • There’s no need for special characters or a mix of upper and lowercase letters.
  • There’s no need for your password to expire.

That’s it! Easy peasy! You can read the full report here: NIST Special Publication 800-63B

You can also hear (and read) the full interview with Paul Grassi on NPR’s All Things Considered.



IRS rehiring of fired employees troubles tax watchdog and House Ways & Means members

Tuesday, August 15, 2017

Shopping trends and taxes

I like to look at trends because they are interesting and many have tax implications.* Trends may indicate a need to update or modernize tax rules or systems. I'm a bit behind on blogging on this, but several weeks ago, there was an article in Fortune - Phil Wahba, "Major Wall Street Firm Expects 25% of U.S. Malls to Close by 2022," 5/31/17. Reasons included bankruptcies and continuing growth in retail e-commerce sales.

I remember when the US Census Bureau first started reporting retail sales for e-commerce in the 1990s and it was less than 1%.  They just updated data for 2015 and report that e-commerce retail sales represent 7.2% of total sales for 2015 (it was 6.4% in 2014).  That doesn't seem like a lot to me. In contrast, the US Census Bureau reports that for 2015, e-commerce sales of merchant wholesalers represented 30.2% of total sales (it was 28.1% in 2014).

Are retail e-commerce sales going to increase to the point were 25% of US malls will close in the next five years? Seems high to me.  I expect re-purposing where, perhaps, we might do more online shopping while at the mall looking at samples of what we can buy, and getting a latte and recharging our smartphones.  That would use less retail space. Malls might add more ways for people to hang out - activities, fairs, etc.

Tax implications?  A few:
  • More online shopping can mean more uncollected use tax although I suspect a lot of the e-commerce growth will be with Amazon that collects tax in all states (at least on their direct sales).
  • If malls turn into abandoned buildings or vacant lots, property taxes will go down. Is there another need for them?  With an aging population, perhaps the space gets turned into living spaces for older folks - single level, close to public transportation and medical facilities, etc.
What do you think? Will we see 25% of malls close? What will happen to the space?

*For some nostalgia, see this June 2008 blog post on some trends relevant to tax reform.


17 states now impose some fees on electric autos

Thursday, August 10, 2017

Chicago-area soda tax angers consumers, while Philly's similar levy may be driving those folks to drink beer

The Path to Enrolled Agent

If you’re looking for a career in the tax industry, set your sights high! While it doesn’t take much to become a tax preparer and start preparing taxes for the general public, earning a credential as an Enrolled Agent should be the ultimate goal.

Enrolled Agents are the only credentialed tax preparer and thus have instant credibility, they also have unlimited representation rights and the knowledge to prepare complicated tax returns (thus they earn more money).

Benefits of Becoming an Enrolled Agent 

While it may seem like a long road, becoming an Enrolled Agent is an attainable goal that can easily be tackled with the help of The Income Tax School. Our nationally recognized Chartered Tax Professional Certificate Program will not only provide you with the education you need to prepare taxes, you’ll learn everything you need to know to pass the IRS EA Exam. Here’s a guide to your path as an EA.

Step 1: Register for our Chartered Tax Professional Certificate Program Path to Enrolled Agent

Our Chartered Tax Professional Certificate program can be taken completely online. It includes a total of 60 lessons: 20 comprehensive lessons and 4 advanced courses (10 lessons each).

Step 2: Complete the Comprehensive Section

Once you’ve completed the 4 module comprehensive section, you will have the knowledge you need to start preparing individual tax returns for most U.S. taxpayers.

Step 3: Obtain a Preparer Tax Identification Number (PTIN) from the IRS

In order to prepare taxes for compensation, the IRS requires that you register with them and obtain a PTIN.

PTIN Requirements for Tax Return Preparers

Step 4: Take the 6 Hour AFTR Course

The IRS Annual Filing Season Program (AFSP) is an annual voluntary IRS tax training program for return preparers. It aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Those who pass earn a Record of Completion, are given limited representation rights, and are listed on the IRS Federal Tax Return Preparers Directory. This list is being marketed to taxpayers through a public education campaign that encourages taxpayers to select return preparers carefully and seek those with professional credentials or other select qualifications.

IRS Annual Filing Season Program (AFSP)

Step 5: Begin Preparing Taxes for Individual U.S. Taxpayers

You’re officially capable of preparing taxes for the general public! Seek employment with a tax firm in town or go out on your own!

Step 6: Continue Your Education

Keep working your way through our CTP course. You’ll take the Advanced 1 and Advanced 2 sections to learn how to prepare more complicated tax returns. Next, you’ll tackle the Small Business 1 and Small Business 2 and learn to help small businesses with their taxes.

Step 7: You’re a Tax Pro!


Once all courses are completed, you will have the knowledge you need to prepare taxes for anyone – and to start preparing for the EA Exam (called the Special Enrollment Examination). The entire CTP program can be completed in 8-16 months. As you work through the program, you can gain experience as a tax preparer. Once you’ve completed the program, you will receive a certificate from The Income Tax School that can be framed and displayed on the wall in your office.


Step 8: Take Our EA Exam Review

The Income Tax School offers an EA Exam Review through a partnership with ExamMatrix. ExamMatrix’s groundbreaking EA Exam Review Software has completely changed the landscape of EA Exam Review preparation. They offer an “Adaptive Learning” technology where students experience a personalized study program that accommodates your busy schedule.

Here are some study tips: How to Study for the Enrolled Agents Exam

Step 9: Register for and Take the SEE

Register for the SEE at You will need to create an account and then schedule your exam.

There are three parts to this exam:

  • Part 1 – Individuals
  • Part 2 – Businesses
  • Part 3 – Representation, Practices and Procedures

Step 10: Apply for Enrollment at

Once you pass all three sections of the SEE, you will need to register as an Enrolled Agent. The application can be found at

Step 11: Pass a Tax Compliance Check with the IRS

The Tax Compliance Check is basically a background check that begins once you submit your application (see Step 10). It takes up to 90 days.

Step 12: Spread the Word! You’ve become an Enrolled Agent! 

Congrats! You’ve gained the highest credential in the tax industry! Tell your clients and add that designation to everything: your desk placard, business cards, email signature, and LinkedIn profile.



Friday, August 4, 2017

Senate Democrats Tax Reform Principles

Don't fall for tax ID theft phishing scam from crooks impersonating tax software companies

Online Directories: A Great Way to Boost Your SEO

When you type in “tax preparer in [enter your city]”, does your firm come up? Is it at the top of search Online-Directoriesresults? There are a lot of things that factor into being on the first page of Google. Are you employing SEO tactics? Do you have a lot of competition? Is your site optimized with keywords? Is your competition using SEO tactics? Without getting into the details of SEO, we want to share with you one tactic that will help: submitting your information to online directories.

Every directory you submit to is another chance to get found online – and there are a TON of directories you could submit your business to. Some of these are free and some you have to pay for. Here are some of the best directories to be in.

Google My Business

Have you claimed your business on Google yet? This is one of the most important listings. Claiming your business on Google allows you to customize your Google listing, add pictures, respond to reviews, and control what people see when they search your business on Google. Google even has an app that allows you to make changes from your phone. Once you’ve claimed your business you’ll need to go through their verification process via postcard or phone.

Sign-up here


Yelp is a crowd-sourced review site that helps consumers make better decisions based on reviews by the community. You should make sure that you have your Yelp profile claimed and customized. Just like Google, you can add photos, respond to reviews, and customize your business listing. You can also run ads and submit events.

Sign-up here


Bing is an alternative search engine to Google and has its own business listing service. To get your business on Bing you’ll need to claim you profile, customize your listing, and then go through their verification process.

Sign-up here

Better Business Bureau

The Better Business Bureau is a nonprofit organization focused on advancing marketplace trust. They collect and provide free business reviews and serves as an intermediary between consumers and businesses. There is a local BBB chapter in every city.

Learn more here

Angie’s List

Much like Yelp, Angie’s list is an online directory that allows users to read and publish crowd-sourced reviews of local businesses and contractors. As a business, it’s free to claim your profile.

Claim your profile here

Social Media

Social media channels like Facebook and LinkedIn are just as much a directory as they are a social platform. Make sure you have a presence on the relevant and popular sites so that you are searchable. Facebook, LinkedIn, Nextdoor, Twitter, and Alignable are all important.

Other Directories

While this is not an exhaustive list, here are some other directories to spend time adding your business to.

  1. Merchant Circle
  3. Whitepages
  5. Yellowbook
  6. CitySearch
  7. MapQuest/Yext
  9. Manta

For any of these directories, make sure you go beyond adding your name and contact information. Fill out your profile completely, add categories, add images, add your business hours, etc.