Expanding Your Firm with Tax Resolution

  • Written by T. Steel Rose, CPA, ACS Editor

rose steelTax resolution is a fascinating way to expand your firm as long as you don’t overpromise expected results. CPAs are in a unique position along with attorneys and EAs. As CPA Dan Henn describes it, “Tax resolution is when they [taxpayers] haven’t filed or owe a lot or both.” There is a greater need for adequate client representation before the IRS because of the proliferation of correspondence audits and horror stories about dealing with an understaffed IRS.

“We deal with other issues first, file the unfiled returns, pay or get on payment plan, and then ask for penalty abatement,” Henn said. “Say, a client owes over $100,000 from 2006. After filing the financials, he may owe $300 a month, but will only owe for a maximum of 10 years from the date of the return. Then it is uncollectable.”

Gaining first-time penalty abatement (FTA) is determined by your client’s qualification. You need three good years. You write a letter asking for the abatement. It is a case-by-case basis. Some agents approve, some don’t. You need a really good excuse. There are reasons the IRS will allow due to reasonable cause, medical, gambling, bad advice.

“Another client may owe $250,000 from 2004 with no money to pay,” Henn said. “He may be put into ‘currently uncollectable status,’ which the IRS is supposed to check every year but doesn’t always.

“With a partial pay agreement they are supposed to review every two years, but may not, due to the staffing burden at the IRS. [Taxpayer] must file at least the last six years, unless a substitute for return is filed for them by the IRS. The clock starts ticking after you file the return and the liability is assessed. This establishes the clock ticking over the ten years. You could be audited and get a whole new clock based on the liability of the audit. The ‘substitute for return’ prepared by the IRS is almost never accurate. The clock on your ability to amend and the IRS ability to audit is three years.”

You file Form 433 and provide the income and expenses of the taxpayer. You then determine the value of assets and liabilities or judgments against the taxpayer. Software helps prepare these by providing a survey of the taxpayer’s financials and saves time by populating the form.

“It takes patience,” Henn said. “Even the practitioner hotline can keep you on the phone two hours and torture you with a polite disconnect. You can file an amendment. If agent is not cooperative then you can escalate to the manager. If no satisfaction can be found there then you can file an appeal. “It is rarely useful [for the taxpayer] to talk with the agent. Taxpayers get nervous and become chatty-Cathys. Then, the IRS asks more questions, and person becomes irritable and that doesn’t help his case.”

An Offer in compromise (OIC) is not the primary way to get satisfaction in tax resolution. Part of the engagement is to determine reasonable collection potential (RCP) which determines taxpayers’ ability to make a payment. “They [the IRS] give you a financial rectal exam,” Henn said. “They verify what you say is true from court records and could drive by your house to see the house and cars you drive. Once they establish liability then the IRS can come after you.” If a client can pay it all, and it’s guaranteed to be under $10,000, it can be done online without help and without financial statements. “If say you owe $50,000 and only have $15,000 you may be an offer in compromise candidate,” Henn said. You must stay compliant for five years going forward paying all taxes and filing all returns.

If you are close to the end of the statute of limitations, you may be better off waiting rather filing an OIC. “As an advisor you must ask everything, even ask if client is inheriting money,” Henn said. “The IRS is entitled to 80% of any asset you own, including your house and inheritance. The IRS would take the inheritance in a Vanguard account.” Therefore, an OIC may be the better alternative. “For the OIC the IRS must do their due diligence,” Henn said. “You submit an OIC, they review for documentation, ask for more and then give it to someone who does the analysis.”

“The IRS checks the Department of Motor Vehicles for cars you own and the county [courthouse] for real estate property owned,” Henn said. They may check patents and lawsuits determined in your favor.” It will generally take a year to two. If the IRS denies the OIC, the statute of limitations begins ticking again. The time did not deduct when the OIC was filed.

It is a professional opinion on whether to file for partial pay installment agreement on Form 433, OIC (433 OIC) or currently uncollectable status. The IRS has a wizard online. The IRS does not abate interest, but can be included in an OIC. When you pay you are reducing the principal. It all may go away after 10 years of currently uncollectable status.

“If a business goes bankrupt, the trust fund penalty for unpaid payroll taxes will be assessed to the owner of the firm, which may come later before the ten years can start,” Henn said. “The IRS says they want people in the system and does want to not put people out of business but it does happen.”

Liens and levies are the tools of the IRS as Henn describes it. “When they garnish they may take two-thirds of a paycheck,” Henn said. “They request you sell the personal property usually on the uncooperative. They no longer make you sell your primary residence and keep two cars. You can’t be forced out of your house in most cases.”

When asked about how he got into tax resolution and what he likes about it, Henn reminisced about the people. “I look for the best in people,” Henn said.” I help people with an issue; they are shameful, fearful and angry. It’s like bankruptcy; you help good people in a situation out of problems, even though it was bad money management.”

“So you can sleep better at night,” Henn said. I like it. It’s like taking the boa constrictor off of them so they can breathe again. It helps them start again.”

Publishing CPA Magazine since 2002, T. Steel Rose began his career with Price Waterhouse leading to the start of Rose & Cash, CPAs. He was a VP for Solomon Software, now owned by Microsoft, and launched CPA Software News in 1991.

Tax Resolutions, Scams and Scandals

  • Written by Steven V. Melnik, CPA, LLM

Melnick StevenTax scandals have plagued the United States in the last decade. Taxpayers and organizations have been victims of tax scams both by tax resolution firms as well as the IRS. In order to avoid being a victim of either, it is important tax payers understand their rights and what representatives and the IRS can and cannot do. Knowing and understanding them will set up safeguards to prevent being enveloped in a tax resolution scandal.

In the last decade, major tax resolution firms have been sued by taxpayers and state authorities for allegedly misrepresenting their ability to resolve IRS tax debt, and for some, this resulted in the company going out of business.

J.K. Harris & Co. was founded by CPA John K. Harris in 1997 and became the largest tax resolution firm in the United States. This firm has been sued several times by taxpayers. In fact, in 2007, it settled a class action suit filed in the South Carolina Circuit for approximately $6.2 million. Then in 2008, J.K. Harris also settled a suit with several Attorneys General of 18 different states for approximately $1.5 million.

Roni Lynn Deutch, a Professional Tax Corporation, was founded in 1991 by Tax Attorney Roni Lynn Deutch, LLM. In 2007, the New York City Department of Consumer Affairs brought suit against Deutch in which the firm settled by agreeing to pay $200,000 restitution to consumers and $100,000 in fines to the City of New York. Then in 2010, then California Attorney General Jerry Brown, and now Governor of California, filed suit against Deutch in California Superior Court in the County of Sacramento for $33.9 million in civil penalties and restitution to taxpayers, and a permanent injunction. Deutch then publicly announced that her firm would be closing in May of 2011.

TaxMasters Inc. was founded by CPA Patrick Cox in Houston, Texas. In 2010, it was sued by the Texas Attorney General on behalf of over 1,000 taxpayers. The Attorney General of Minnesota filed suit against TaxMasters for allegedly misleading Minnesota residents about its ability to reduce their tax debt and for making unrealistic promises.

Each of these firms had an “F” rating with the Better Business Bureau. Each was high-profiled within the media. Each did extensive promotional advertising. And each bamboozled many thousands of taxpayers.

Identifying and Selecting Competent Tax Resolution Professionals

It is important to remember that if something sounds too good to be true, it usually is. Prior to determining eligibility for a settlement, the firm must ask questions about income, expenses and assets. If these questions are not asked, the only eligibility would be for a Streamlined Installment Agreement assuming the taxpayer owes $50,000 or less.

Selecting a reputable tax professional can save from more than the stress of dealing with the IRS; it can save time and money. Below are tips for selecting a reputable tax professional:

1. Investigate the reputation of the tax resolution professional. If the tax resolution professional/company has derogatory remarks about it or has been sued before by taxpayers and has lost, this is an indication of a tax scam. A reputable tax resolution professional/company will have great rapport with clients as well as other tax resolution professionals/ companies. A starting point in your research may be the Internet, or the Better Business Bureau. On the Internet, do a Google search with the company’s name followed with: “complaint,” “con,” “lawsuit,” “problems,” “scam,” “fraud.” Read everything. It’s consumer beware.

2. Do not believe a tax resolution professional who makes promises or guarantees. The only thing a tax resolution professional/company can guarantee is that they will do their best or put forth the best effort on the case. Tax resolution professionals and companies cannot promise or guarantee an outcome because the final determination is made by the IRS. They cannot guarantee the taxpayer will qualify to settle debt for less, or that they can stop IRS collections.

3. Do not believe the success rates reported by tax resolution professionals without conducting independent research. Be fully aware that the success of one case does not guarantee the success of another. Reputable tax resolution professionals will not disclose their success rate or indicate that their success on another case guarantees the success on a new case.

4. Do not pay unreasonable fees. Most tax resolution professionals will charge a flat fee for their services. Typically, the cost may vary with the service. All fees should be reasonable. One way to tell if the fees are, in fact, reasonable is by researching how much other tax professionals charge for the same service. Discuss the case with other tax professionals prior to choosing one.

5. Make sure the tax resolution professional is responsive. A reputable tax resolution professional/company will understand client communication is the most important responsibility in representing taxpayers, its clients. Tax payers a right to know what is going on with their case, and have the right to contact the tax professional to ask any questions concerning their case.

If the tax resolution professional fails to respond to your calls within a reasonable time (usually 24 to 48 hours), consider hiring one who is able to do so. Allow the tax resolution professional a reasonable time to respond to requests.

6. Read the Retainer Agreement thoroughly. All tax resolution professionals should have a retainer agreement or contract to sign prior to retaining their services. The contract should explain what service/services are being provided, and what the taxpayer is paying for. Do not sign an agreement without reading and understanding every clause. Ask questions for any items that raise a concern. If there isn’t a retainer agreement or contract, this is a strong indication that it may be a scam.

IRS Tax Scandal of 2013

In general, the IRS handles cases professionally and follows the guidelines, policies and procedures of the Internal Revenue Manual (IRM). In 2013, however, a scandal erupted involving the IRS and its treatment of various 501(c)4 tax exempt organizations.

Donations given to 501(c)4 organizations are usually not tax deductible and donors are kept anonymous unless the donations are $5,000 or more. If they exceed $14,000, they may be subject to the gift tax.

While these organizations are prohibited from donating to the campaigns of political candidates, they are able to participate in lobbying and campaigning. The IRS experienced a rapid increase in applications for 501(c)4 status. Applications nearly doubled after the January 2010 Supreme Court decision that loosened campaign-finance rules.

It has been alleged that employees of the IRS inappropriately targeted conservative 501(c)4 organizations by applying more scrutiny than to those supporting liberal causes, and it deviated from the policies and procedures dictated by the Internal Revenue Manual (IRM). Tea Party groups investigated by the IRS reported the IRS made unusually extensive demands, such as asking them to provide social-media posts, books that members had read, and whether any members of the group planned to run for public office in the future.

In some cases, the questioning took almost three years, which prevented some groups from participating in the 2010 and 2012 elections. General Russell George, Treasury Inspector, investigated the scandal in order to determine whether the IRS has correctly applied the law to these 501(c)4 groups, or whether political influence was a contributing factor of the inappropriate targeting of conservative 501(c)4 groups.

The acting IRS Commissioner, Steven Miller, was fired by President Obama. Miller alleged that the targeting of conservative groups was the result of mismanagement, and not due to partisan politics. In the first hearing, Miller acknowledged that he was aware of the investigation for almost a year. He refused to release the names of the IRS employees that targeted the conservative groups, and Republicans learned that Deputy Treasury Secretary, Neal Wolin, was aware for almost a year that a government watchdog was looking into inappropriate targeting by the IRS.

If You Suspect Foul Play … What Should You Do?

The recent IRS scandal of 2013 was not the first time the IRS has been involved in a scandal. It has been accused of corruption ever since the institution of the income tax in order to raise funds for the Civil War. The IRS also faced similar scrutiny during the hearings of the 1990s that led to the Tax Reform and Restructuring Act of 1998, which changed the rules on how IRS employees identified themselves and conducted audits. It is important to understand the Internal Revenue Manual1 so you may be aware of what information the IRS employees are entitled to ask for and under what circumstances. It provides the procedures and guidelines for which IRS employees must act or conduct various tasks.

The IRS cannot arbitrarily select certain taxpayers or organizations for review. It must apply the same standard to all, a standard which would be outlined in the IRM.

Taxpayers have rights as outlined in the Taxpayer Bill of Rights.2 So take some time to read the Taxpayer Bill of Rights and know when those rights are violated by an IRS employee. Generally, the IRS may request any information that is related to the tax matter at hand. However, it must provide you with a reason for why the information is being requested and what it is to be used for.

Generally, the IRS cannot:

• Discriminate against taxpayers or organizations because of your color, race, sex, religion, national origin, disability, or age, or political party affiliation.

• Disclose your information to unauthorized third parties—your information should be kept private and confidential by the IRS.

• Be unprofessional—IRS must provide professional and courteous service.

There may be times when you encounter an IRS agent that is overzealous in their collection efforts, goes beyond the scope of their authority, or does not follow the Internal Revenue Manual. When this occurs, you should first contact the manager of the IRS employee. If you are unable to resolve the issue with the manager, you may then contact the Taxpayer Advocate Service (TAS) for assistance. If the TAS is not able to assist in the matter, you may then consider writing a letter to the IRS director for your area or the center where the return was filed. You also have the right to appeal the IRS decision, or file suit against the IRS in a court of law.



This is an excerpt from Tax Relief and Resolution by Steven Melnick, CPA. Melnick is a licensed attorney, LLM in Taxation. He is also a professor of tax law, and a Chairman of Continuing Education Programs for Tax Professionals at the City University of New York.

Tactics to Use When Preparing 1040s

  • Written by Julie Welch, CPA, CFP

welch julie 16Be Alert for Digital Documentation

Now that companies are going digital, many W-2s and Form 1099s are available digitally. This is a blessing since they may be more readily available when they are needed. However, it puts a bigger burden on you to assure you have all of the information when preparing a tax return since it may not be in the stack of information provided by your client. A good practice is to watch for documentation from payors listed on the prior year return and ask the client about any new bank and investment accounts.

Learn the Theory By Preparing Tax Forms By Hand

Does anyone really prepare tax returns without using tax software anymore? There are so many complexities and computational issues to consider when preparing tax returns, that using tax software is almost a necessity. However, to gain a real understanding of a concept, actually preparing a few of the forms “by hand” provides you more insight and a better understanding of the law in that area.

Take Form 8960 for the net investment income tax as an example. The tax software will plug numbers in for you. However, you really need to read the form and understand all of the adjustments and exclusions to calculate the proper tax and keep clients from paying unnecessary amounts. Even preparing a Schedule D for capital gains and losses manually helps you understand the netting process and how any capital loss carryovers work. Really understanding how the form works generally helps you understand the law. This in turn helps you to be able to understand planning issues and make recommendations to your clients for minimizing taxes. However, preparing the actual tax returns using tax software is highly desired, especially since many tax software packages will provide helpful hints and diagnostics of items needing more attention.

Reconsider Filing Status and Exemption Deductions

Filing married, filing separately rather than jointly, filing as head of household rather than single, or letting a child claim the dependency exemptions may reduce the family’s overall taxes.

• If a married couple has significant medical expenses subject to the 10% of adjusted gross income (AGI) floor or unreimbursed employee business expenses subject to the 2% of AGI floor, filing separately may reduce the overall tax by lowering the floor for deductibility. A couple with $100,000 of AGI and medical expenses of $7,000 receives no tax benefit from their medical expenditures due to the $10,000 ($100,000 x 10%) floor. If the spouse who incurred the medical expenses had $30,000 of AGI, then that spouse could deduct $4,000 ($7,000 – ($30,000 x 10%)), saving the couple over $1,000 in tax.

• Head of household filing status does not require that one be a single parent. Providing over half the housing costs of a parent who does not live with the client or over half the costs of most dependent relatives who live with the client for more than six months is enough to obtain the increased deductions, lower tax rates and higher phaseouts allowed to head of household filers.

• If the AGI is over $155,650, a client may be receiving a reduced benefit from the exemption deduction for their children, and the client is receiving no benefit from the education credits the government allows. If the child provides over 50% of his or her support, allowing the client’s children to claim their exemptions, particularly if they are in college with over $15,000 of earned income, may increase the family’s overall cash flow. Additionally, this may help their higher education financial aid opportunities.

Taking advantage of these strategies requires thinking now about who should pay the medical or college costs, how much a child needs to earn and how much support needs to be provided to exceed the 50% requirement for the exemption deduction.

Look for special situations that might have beneficial tax treatment. Examples of special situations include the following:

• Ministers

• Self-employed individuals

• Real estate professionals Watch for things that aren’t on the tax return that should be.

• Required Minimum Distributions, - If a client is over age 70 1/2, be watching for Required Minimum Distributions or know why the client may not have any.

• Qualified Charitable Distributions – if someone over age 70 ½ made a qualified charitable distribution (QCD), be sure it is properly reported as a QCD and assure that no charitable deduction was taken for that amount.

• Energy credits – the residential energy credit of up to $500 in one’s lifetime was reinstated retroactively to the beginning of 2015 through 2016. Also, ask the client about remodeling or energy efficiencies they have made to their home.

Use available resources.

• has forms, guides, frequently asked questions (FAQs) on many topics.

• Many vendors have checklists available to help guide the tax return preparation to be sure all items have been considered

Protect Yourself From Identity Theft

One of the big issues facing the IRS right now is identity theft and the related scams. As tax return preparers, we need to be vigilant in watching for any signs of theft or fraud. The IRS recently issued a warning for tax return preparers regarding a new phishing scheme that mimics software providers and tries to trick recipients into clicking on a bogus link.

Remember to Renew (or get) Your PTIN

Preparer tax identification numbers (PTINs) are required for anyone who prepares or assists in preparing federal tax returns for compensation. The renewal and annual payment can be made online.

These tactics can help when preparing individual 1040s.

Julie Welch (Runtz) is the Owner of Meara Welch Browne, P.C. She graduated from William Jewell College with a BS in Accounting and obtained a Masters in Taxation from the University of Missouri-Kansas City. She serves as a discussion leader for the AICPA National Tax Education Program. She is co-author of 101 Tax Saving Ideas.

Checklist: 1040 Planning Idea

  • Written by Martin M. Shenkman, CPA, MBA, PFS, AEP, JD

mug martin shenkman√ MULTI-GENERATION CRT

Blended families are common, perhaps the norm (only about 20% of family units are comprised of traditional intact families). For many of these clients portability solves any estate tax concerns. The real issue is planning to protect children of a prior marriage, the current spouse and doing so when the primary estate asset is an IRA. A multi-life charitable remainder unitrust (CRUT) can provide an approach that addresses these planning challenges. The IRA can be bequeathed to a CRUT that initially benefits the surviving spouse and mandates a 5% payout. Following the death of the surviving spouse the CRUT continues for the named children of the prior marriage paying them 5% for life and on their demise the remainder passes to a qualified charity. Thus, the IRA provides for the spouse to support her for life, and then passes the benefits to the children after her death, all in an income tax efficient manner. Use of CRTs for IRAs of non-taxable estates was a concept probably many had not considered. This can provide a valuable and better approach than the traditional credit shelter trust when the primary asset is an IRA.


Real estate values have grown substantially in recent years so it is likely practitioners will see more clients considering donations of appreciated real estate. An issue many real estate donations raise is the donee charity’s concern about potential environmental risks. In some cases appropriate due diligence can be done before the donation is contemplated, but this is not always feasible. What can be done? The donee charitable organization may accept the contribution of donated property in the name of a single member LLC. This will enable the charity to insulate itself from any potential environmental liability associated with the property by confining that risk inside the single member LLC. This will not jeopardize the donor’s income tax deduction. Notice 2012-52, 2012-35 IRB.


Charitable contributions of inventory are only deductible up to the income tax basis of property. Clients, especially those with informally run closely held businesses, not realizing this limitation may donate unneeded business property and simply list it as another non-cash contribution. IRC Sec. 170(e).


Many clients do not face an estate tax so a bequest to charity will provide no tax benefit. Consider having the bequest paid in advance of death so that an income tax deduction may be realized. Be certain to have the charity sign a written acknowledgement that the gift is an “advancement” of the bequest to avoid the client being held responsible twice.


It has not been conventional to permit charitable gifts from a bypass trust, since the goal historically has been to maximize the assets outside the surviving spouse’s estate. Instead charitable bequests could be made by the surviving spouse or from the estate of the surviving spouse to garner an estate tax charitable deduction. However, the new tax paradigm might provide an incentive to rethink this traditional approach. If the family unit has charitable giving objectives, then selecting the optimal source from which to fund those charitable gifts could maximize the overall tax benefits of the contributions. The bypass trust might be in a higher income tax bracket than any family member so that distributions to charity may provide the biggest tax bang for the buck. Further, if the family unit will be making charitable donations in any event, using highly appreciated assets inside a bypass trust to fund charitable bequests may be a cost effective and simple means of avoiding future capital gains taxes without the risks associated with general powers or other approaches.


These have become common in estate planning for large estate planning transactions such as sales to grantor trusts, distributions in kind from GRATs, etc. When structuring such transactions the optimal spillover receptacle is a charity. If a charity is named it involves a third party that helps give support to the validity of the overall transaction. Public policy should also seem to favor protecting a potential gift to charity.


Contributions, reported on Form 1040 are deducted on Schedule A (below-theline deductions) and are subject to the 50%, 30%, or 20% of adjusted gross income (AGI) limitations. In contrast, however, on a Form 1041 for a complex (non-grantor) trust the charitable contribution deduction is reported abovethe- line and there are no percentage limitations. This is because the trust is governed by IRC 642(c) instead of IRC 170. So charitable trusts can provide a significant income tax advantage over individuals making a comparable donation. The deduction, on a complex trust, might shift net investment income (NII) for purposes of the 3.8% surtax from the trust to the tax-exempt charitable beneficiary. Practitioners should consider recommending that when clients are planning trusts, when appropriate, charitable beneficiaries or the right to make contributions, be included.


Interest in Residence and Farms Generally, a charitable deduction is not permitted for charitable gifts of less than a donor’s entire interest in property. IRC Sec. 170(a)(3). Donations of a remainder interest in a farm or residence is subject to special and favorable rules. A client can donate a remainder interest in a residence, live there for the rest his or her life, yet gain a current income tax deduction. Home sale prices have recently fully recovered since the recession. The current low interest rates, combined with high home prices, make this a particularly valuable technique now.


It is not uncommon for clients to make commitments to charity. While this can be noble, if it is not preceded by rationale financial planning and forecasts, a client might find themselves in an awkward financial position where they may not feel comfortable carrying out the pledge. Children, or other heirs, when they become aware of the pledge might also try to convince the parent/donor to cancel the pledge in order to enhance their future inheritance. The enforceability of a charitable pledge will depend on state law and the facts involved. Some states will permit a charity to enforce a pledge even if there was no consideration given and even if the charity did not take steps to rely on that pledge (e.g., begin construction of a building based on a large pledge). Some courts will enforce a charitable pledge simply because of the social desirability of assuring that donors meet pledges. More Game Birds in America, Inc. v. Boettger, 125 NJL 97, 101 (1942).


If a charity solicits donations to fund a particular projection, e.g., building a school, and if the condition of the solicitations is that the donations will be returned if the minimum funds are not received sufficient to fund the designated project, the client/donor cannot deduct the donated funds until it is assured that the condition will be met. Rev. Rul. 77-148, 1977-1 CB 63.


Donors will often negotiate as a condition of their donation that a building be named after them. This presents a house of issues that practitioners are likely to become more involved with over time. First, there must be a donor agreement that clearly addresses all aspects of the naming in writing. While counsel is likely to be involved in the drafting, CPA practitioners should still play an active role. Be certain the client’s concerns as well as practical issues are addressed. How long does the charity agree to use the client/donor’s name for? What if the building is renovated? Demolished? Repurposed? How will the donor’s name be displayed? There is another issue that could raise potentially significant tax issues. If a wealthy retired donor negotiates to have a town theater named for her, there may be no income tax implications and the full amount of the donation may be deductible (subject to the usual charitable giving limitations). But what if the client/donor is currently involved in and owns a family business that operates real estate in the same locale that the theater that is being named will be located. Will the value of that naming right provide economic benefit to the local family business? Depending on the circumstances it might well provide a significant benefit. Does the value of that economic benefit have to be applied to reduce the potential charitable gift for income tax deduction purposes? The law is not clear and these situations could be very fact sensitive. The donor agreement counsel negotiates to confirm the naming right itself might be the primary document the IRS uses to challenge the deduction.


If a charity makes a commitment to a client/donor to use the funds donated for a specific purpose but reneges on that application of the donated funds, the donor might be able to receive a refund of the donation. In one particular case the charity committed to build a modern animal welfare facility designed to serve a particular geographic region and to name seal rooms to be located in the new building for the donors. Instead, the charity unilaterally opted to build a smaller building without the separate rooms thereby negating the naming opportunity. The donors sued and received a refund of their donation. Adler v. SAVE, 432 N.J. Super. 101, 74 A.3d 41 App.Div. (2013).


Practitioners should exercise care to assure that when a client submits an appraisal to support a contribution that the appraisal meets all the criteria for a qualified appraisal if required or the donation may be denied. No charitable contribution deduction is permitted for donations exceeding $5,000 (excluding cash or marketable securities) unless the donor obtains a “qualified appraisal” by the due date of the return. Treasury Regulations Sec. 1.170A-13(c)-13 list the details of these requirements. In one case the taxpayers donated residential property but the appraisal report submitted with the return neglected to include several required items necessary to a qualified appraisal: the expected date of the property being contributed to the city, the terms of the agreement between taxpayers and the city as to the use/demolition of the property, the appraiser’s qualifications, and the required statement that the appraisal was prepared for income tax reporting purposes. JAMES HENDRIX, ET AL., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant Case No. 2:09-cv-132. The strict rules for what constitutes a qualified appraisal prohibit a party to the transaction from giving the appraisal. This can present a challenge when life insurance is donated because the insurance company who issued the policy, and likely would provide the Form 712 that is used to determine value, may not be able to be a qualified appraiser under these rules.

Martin M. Shenkman is the author of 42 books and more than 1,000 tax related articles. He has been quoted in The Wall Street Journal, Fortune, and The New York Times. He received his BS from the Wharton School of Pennsylvania, his MBA from the University of Michigan, and his law degree from Fordham University.

Finding and Maintaining New Clients

  • Written by Joshua Fluegel

Sang EmilyIndividuals and businesses put great thought into what must be done to preserve income from the government. Lest the world forget, tax professionals are making sure citizens are receiving their share of their income and defending them from the often-intimidating IRS. This issue of CPA Magazine we shine the CPA Spotlight on Emily Sang, CPA. On top of 1040s, 1120s and trusts, Sang’s practice works with real estate and not-for-profit. CPA Magazine talked with Sang about how her firm navigates tax season and what she recommends fellow tax professionals do to expand their client base.

How did you get into accounting/becoming a CPA?

It was because my mom was a CPA. She worked in the accounting field for many years and she taught me when I was growing up the basics of debit and credit.

What is a technology that helps you a great deal during tax season?

I actually use the Google Calendar scheduler. There is a document manager I use where I scan documents and it automatically loads into the document manager under a specific folder that I create. A lot of times email has a hang out function. We will collaborate using Google Hangouts and do group teaching.

What is a tip you would give for marketing your CPA services?

I think everything goes with marketing. I love meeting new clients. I love meeting new people. For example, during tax season I get evites from different groups, either community events or some kind of association; and they need someone to give a presentation on tax basics to their members. I would say any time you get an invitation to those events, participate in them and provide the attendees upfront value and do not sell them anything. Usually I will gain clients organically.

I don’t do much internet marketing although I am working on increasing my business’ online presence. I do get a lot of referrals from clients and I do enjoy working with them because the best clients you can get are people who already know who you are. When you work with them they are very open to your advice.

I would say just focus on meeting people, number one. And number two, focus on providing excellent service to clients.

sang event
Sang at a Hollywood event.

What if you are a new CPA? How do you get invited to events?

Actually there are lot of events hosted by CalCPA, for example, and also there are non-cpa related events. I go to a lot of non-business related events like charitable events. That way you can join a cause that does a lot of good things for the community and the people remember you. You get your good deeds done and potentially have more people who like to refer you. I think any event would be very beneficial. If I get an invitation I make time and really try to go.

Entertainment events like birthday parties or hiking events also work. I don’t really have to advertise that I am a CPA. It’s very funny, people always consider you for themselves or refer you to a potential client. I think it’s because CPA is a very practical profession.

What is something that would guarantee failure during tax season and how do you prevent it?

I would say most CPAs are probably good with their professional expertise of helping clients. However, number one would be not getting back with your clients on time or at the time you promised you would. I know I have my share of difficulty getting back with clients in a timely manner but my number one pet peeve is not getting back with my clients when I wanted to.

You have to put your clients on the calendar. Set a date for next time you can meet or deliver the returns. Also, try to help your clients right away to avoid creating a backlog. If for any reason you cannot get to them, have another person help on a contract basis. The person needs to be someone you can trust and you must review their work to make sure it is done to your satisfaction. At the end of the day it’s your name on the signature line, right?

Number two is not being organized with all your clients regarding billing, progress and who’s working on what. If you do not have a really good way of tracking your clients’ progress then some people are going to eventually be left out and that could eventually backfire on you. I would say get on top of your administration. It is ideal if you can hire someone to handle administration, even on a part-time basis.

What would you say was one of the most influential moments in tax in the past 15 years?

Based on my personal experience I just love the idea of being able to be anywhere and at any time be able to help your client using technology. One year I was in Costa Rica and I was helping my clients up until the deadline, April 15. The convenience created by technology has made my life much, much easier.

What do you like to do in your free time?

I truly say I really enjoy what I am doing. I don’t feel like I’m working, I feel like I’m constantly doing things I love. I travel, of course I’m sure everyone loves to travel.