Author Archives: c06675329

It’s Here! National Tax Security Awareness Week

Monday’s Tip: Eight Steps to Keep Online Data Safe

During the holiday shopping season, shoppers are looking for the perfect gifts. At the same time, criminals are looking for sensitive data. This data includes credit card numbers, financial accounts and Social Security numbers. Cybercriminals can use this information to file a fraudulent tax return.

This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.

Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:

  • Shop at familiar online retailers. Generally, sites with an “s” in “https” at the start of the URL are secure. Users can also look for the “lock” icon in your browser’s URL bar. That said, some criminals may get a security certificate, so the “s” may not always mean a site is legitimate.
  • Avoid unprotected Wi-Fi. Users should not do online financial transactions when using unprotected public Wi-Fi. Unprotected public Wi-Fi hotspots may allow thieves to view transactions.
  • Learn to recognize and avoid phishing emails that pose as a trusted source. These emails can come from a source that looks like a legitimate bank or even the IRS. These emails may include a link that takes the user to a fake website. From there, the thieves can steal usernames and passwords.
  • Keep a clean machine. This includes computers, phones and tablets. Users should install security software to protect against malware that may steal data. This software also protects against viruses that may damage files.
  • Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters. Use a combination of letters, numbers and special characters. Use a different password for each account.
  • Use multi-factor authentication when available. Some financial institutions, email providers and social media sites allow users to set their accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to their mobile phone, in addition to a username and password.
  • Sign up for account alerts. Some financial institutions will send email or text alerts to an account holder when there is a withdrawal or change to their accounts. Generally, people can check their account profile to see what added protections may be available.
  • Encrypt sensitive data and protect it with a password. People who keep financial records, tax returns or any personal information on their computer should protect this data. Users should also back up important data to an external source. When disposing of a computer, mobile phone or tablet, people should make sure they wipe the hard drive of all information before trashing.

Thank you for reading our post.  We will have tips every day this week for National Tax Security Awareness week.  Questions can be emailed to info@integrityintaxllc.com.

 

 

 

 

Community Events in Appleton this week. Enjoy!

As we celebrate Thanksgiving and the official start to the Christmas Holiday Season, we have listed some upcoming events this week.

Today: Appleton Christmas Parade! The largest nighttime parade in the Midwest with approximately 80,000 people attending! The Parade will begin at 6:55 p.m. at the corner of State St. and College Ave. It will head east on College Ave. to Drew St. To see the route of the parade, click  Parade Route.

 

Before the Parade – Santa Scamper Run! Race Start: 6:40 p.m. at corner of State Street & College Avenue. The 1-mile run starts about 1/2 hour prior to the 47th Annual Downtown Appleton Christmas Parade and proceeds down College to Drew St., finishing at City Park. No roller blades. No pets please. For more information click here Santa Scamper.

 

Thursday: Turkey Trot & Happy Thanksgiving! This year’s Appleton Turkey Trot starts at 8am with a 5-mile run, 2-mile walk, and dog jog.  The trot starts at the Radisson Paper Valley Hotel downtown Appleton.  After, the turkey trot, we wish everybody a fun-filled day with family and friends!  If you are one of the estimated 51 million traveling for the Holiday ~ Very Safe Travels!

 

 

Saturday: Small Business Saturday ® ~ A day to celebrate and support small businesses and all they do for the community. Please support our local small businesses!  Last year an estimated 112 million people shopped locally with small businesses generating $15.4 billion!  For more information click here Small Business Saturday.

 

 

Week of Nov. 27 – National Tax Security Awareness Week:  The IRS is partnering with state tax agencies, the tax industry and groups across the country to host the second annual National Tax Security Awareness Week. The goal is to encourage all taxpayers to take steps to protect their tax data and identities.

With the number of data breaches at record levels, these are issues that pose a threat to individuals and businesses.  This event is part of the ongoing collaborative effort to combat tax-related identity theft.  Throughout the week, we will offer simple steps you can take to protect yourself from cybercriminals on our Facebook page and this blog.

Thank you for reading our blog!  Have a Very Happy Thanksgiving Holiday!!

EMPLOYERS ~ Federal & WI January 31, 2018 Filing Due Date!

Federal:

The Protecting Americans from Tax Hikes (PATH) Act includes a requirement for employers to file their copies of Forms W-2 and W-3 with the Social Security Administration by Jan. 31, 2018. This deadline also applies to Form 1099-misc which is filed with IRS to report non-employee compensation to independent contractors. Such payments are reported in box 7 of this form.

This deadline makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties. As always, the IRS urges employers and other businesses to take advantage of the accuracy, speed and convenience of filing these forms electronically.

An extension of time to file Forms W-2 is no longer automatic. The IRS will only grant extensions for very specific reasons. Details can be found on the instructions for Form 8809.

Wisconsin:

The State of Wisconsin Department of Revenue has 2 new important changes that begin Jan. 1, 2018. First, no refund will be issued to a taxpayer before March 1, unless both the employer and employee have filed all required returns and forms. Failure of employers to file Forms W-2 & 1099-Misc could result in a delayed tax refund of the taxpayer.

Second, the Department of Revenue is requiring all employers filing 10 or more Forms W-2 & 1099-Misc to file electronically.

Compliance:

To ensure your W-2’s and 1099-Misc are filed by the Jan. 31, 2018 due date and issued to your employees and independent contractors, we can process and file your W-2’s and 1099-Misc on your behalf! Early registration is open until December 20, 2017. Call us at 920-277-2991 or email at tinak@integrityintaxllc.com to sign up for our year-end payroll service.

Plan Ahead for 2018 Filing Season to Avoid Refund Delays

The IRS advises taxpayers about steps they can take now to ensure smooth processing of their 2017 tax return and avoid a delay in getting their refund next year.  Additionally, the IRS has a special page on its website with steps to take now for the 2018 tax filing season.

Gather Documents:

The IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the documents before they file their return, including their 2016 tax return. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. Doing so will help avoid refund delays and the need to file an amended return later. Confirm that each employer, bank or other payer has a current mailing address.

Typically, these forms start arriving by mail in January. Check them over carefully, and if any of the information shown is inaccurate, contact the payer right away for a correction.

Taxpayers should keep a copy of their 2016 tax return and all supporting documents for a minimum of three years. Doing so will make it easier to fill out a 2017 return next year. In addition, taxpayers using a software product for the first time may need the Adjusted Gross Income (AGI) amount from their 2016 return to properly e-file their 2017 return. Learn more about verifying identity and electronically signing a return at Validating Your Electronically Filed Tax Return.

Refunds Held for Those Claiming EITC or ACTC Until Mid-Feb:

By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards starting on Feb. 27, 2018, if direct deposit was used and there are no other issues with the tax return. This additional period is due to several factors, including the Presidents Day holiday and banking and financial systems needing time to process deposits. This law change, which took effect at the beginning of 2017, helps ensure that taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.

As always, the IRS cautions taxpayers not to rely on getting a refund by a certain date, especially when making major purchases or paying bills. Though the IRS issues more than nine out of 10 refunds in less than 21 days, some returns require further review.

For a Faster Refund, Choose e-file:

Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Nearly 90 percent of all returns are electronically filed.

Use Direct Deposit:

Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account. There’s no reason to worry about a lost, stolen or undeliverable refund check. This is the same electronic transfer system now used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits. Nearly four out of five federal tax refunds are direct deposited.

Wisconsin Filers:

The Wisconsin Department of Revenue may not issue tax refunds before March 1, unless both employer and employee have filed all required returns and forms (W-2, 1099-Misc, etc).

Also, Wisconsin Department of Revenue will again be sending letters to random taxpayers for ID verification.  If you receive a request, you should timely take the quiz or provide necessary documents to confirm identity.  Failure to take the quiz or provide ID verification, will result in the Department of Revenue will denying the tax refund.  Fraud prevention by the Department of Revenue is expected to increase due to the Equifax and other recent data breaches.  Therefore, more individuals may receive the ID verification.

To be eligible for the Homestead Credit for tax year 2017, those under age 62 and not disabled must have earned income to claim this credit.  Earned income includes wages, salaries, tips, other employee compensation, and net earnings from self-employment. For those without earned income, either the taxpayer or spouse must be 62 or older or taxpayer must be disabled. If you are disabled, proof of disability must be submitted with the tax return.  This can be in the form of statement from VA, SSA, or Physician.

Thank you for reading my blog!

 

 

 

Proposed Tax Reform of 2017 “Tax Cut & Jobs Act”

President Trump unveiled his party’s tax reform plan last week, “We are giving them a big, beautiful Christmas present in the form of a tremendous tax cut, which will be the biggest cut in the history of our country.” Whether it is the biggest tax cut in history, it is certainly a present for some and a lump of coal for others. At the top of the Good-Little-Children list is corporations with high effective tax rates. The proposal would slash the corporate income tax rate from 35 to 20 percent, costing $1.4 trillion over 10 years. GOP leaders are gambling that this rate cut will spur significant job growth.

How it effects families will depend a lot on where they live and how reliant they are on specific deductions. Personal tax brackets will go from seven to four: 12 percent, 25 percent, 35 percent, and 39.6 percent. Standard deductions double for most taxpayers, but they repeal the personal exemption. On the other hand, they increase the child credit to $1,600 per child and extend the credit to those earning $230,000. The proposal eliminates the Alternative Minimum Tax but repeals most exclusions and itemized deductions. The exceptions are mortgage interest (capped at $500,000 and no second mortgages), state and local property taxes (capped at $10,000), and charitable contributions.

So, what is repealed?

  • Tax preparation
  • State and local income and sales taxes
  • Medical
  • Alimony
  • Moving
  • Casualty losses
  • Medical savings accounts
  • Employee expenses
  • Employer provided housing
  • Employee achievement awards
  • Dependent care
  • Adoption assistance
  • Some education related provisions

Coming down strongly in the pro-complexity column, the proposal creates a special 25 percent rate for pass-through entities, but applies it to either 30 percent of business income or more under a facts-and-circumstance standard.

Looking down the large list of repealed deductions, exclusions and credits, it seems GOP leadership could have a difficult time rounding up the necessary votes. Joining the members of Congress from high income tax states on the No-Vote-Naughty-List are members of Congress from expensive new homes districts. Yet to be determined are members with business interests such as timber, insurance, alternative energy and states using private activity bonds. And, the list goes on. If the Republican caucus stays disciplined, the President could be the one receiving a big, beautiful Christmas present. On the other hand, if this turns into a family Christmas dinner food fight, everyone supporting tax reform could go home empty-handed.

Source:  National Association of Enrolled Agents (NAEA), e@lert, November 3, 2017 edition.

Keep in mind the Tax Reform Act of 1986, which is the largest tax overhaul in history, took over 2 years to pass into law. The Tax Reform Act of 1986 shifted a large part of the tax burden from individuals to corporations; it also exempted millions of low-income households from federal income taxes. President Ronald Reagan called it “a sweeping victory for fairness” where “vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.”

Another great article if you are so intrigued to gather more information is 2017 Tax Reform: Proposed individual tax changes in the “Tax Cuts & Jobs Act” by Thomson Reuters and can be viewed at 2017 Tax Reform – Thomson Reuters.

Thank you for reading my blog!  If you haven’t already, check out my post from last week of pictures from doggies that sported their Halloween Costumes at our Dog Park Costume Contest.  It was a huge success with over 30 dogs participating.

Tina is an active member of NAEA & WSEA.

 

And the Winners Are…

Our Costume Contest at the dog park was a huge success with over 30 dogs sporting their Halloween attire! Judges were small business owners in the community (see below). Pictures were taken by Neil Geiger of Neil Geiger Studio. All participants received a Participant Certificate. Thank you to all who participated and enjoyed the event!  Pictures can be viewed at the Event page on FaceBook at Halloween Costume Contest.

The winners are:

Small Dogs:

1st Place – Raemi as Loofa

2nd Place – Krackers as Poop Factory

3rd Place – Chloe as Ice Cream Sundae

Large Dogs:

1st Place – Copper as Martini

2nd Place – Bailey & Harlow as Flounder & Sebastian (& Mermaid)

3rd Place – Eleanor & Snopper as Snow White & Dopey

 

Judges:

Angela Kunz, A DeeVine Consign, Consignment shop at 3319 W. College Ave, Appleton

Bobi Mews, Mary Kay Consultant, Appleton

Cecelia Bos, Bos’ Optimal solutions, Appleton

Cathy Miller, Century 21 Acre Realty, Appleton

Jeremy Van Groll, Beside the Point Bookkeeping & Consulting, Appleton

Dawn Paradiso-Hansen, Compassionate Home Health Care, Appleton

 

Integrity in Tax & Accounting, LLC is located at 5733 W. Grande Market Drive, Appleton, WI 54913.  We are committed to making our community great for our four-legged family members!

HAPPY HALLOWEEN!

Tax Extensions Due: Tips for Procrastinators

Are you one of the many people that filed a tax extension way back in April? Well, that went fast, didn’t it? Yup, the time’s here. Following are some tips if you are one of these procrastinators.

  • Choose your tax preparer wisely. Read my blog from last week and be sure to safeguard your personal information.
  • Double check the spelling of your Name and Social Security Number are correct. IRS mismatch is a common reason for E-Filing rejection of tax returns. Your name should match the spelling of your first and last name that is on file with the Social Security Administration.
  • Review your tax return for all credits & deductions. Below are some commonly missed items that can increase your refund or decrease your tax amount due:
    • Earned Income Tax Credit, also known as EITC, can be available to families with earned income and primarily dependents. To see if you qualify, use the IRS EITC Assistant at this link – https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant.
    • Savors Credit, can be available to income earners who have contributed to a retirement IRA or 401(k). This credit is not available once your income is over certain amounts.
    • American Opportunity Tax Credit, also known as AOTC, is an education tax benefit for parents and students.
  • Know your Adjusted Gross Income, also known as AGI, from your 2015 tax return. This is line 37 on the 2015 Form 1040. This may be required when E-Filing your 2016 tax return.
  • File by Oct. 16 even if you owe taxes and can’t pay them right away. This will reduce penalties and interest that will accumulate on the unpaid amount you owe.
  • Keep a copy of your tax return for at least 3 years. Also, most likely when E-Filing next year, you will need the AGI amount from this year’s tax return.
  • FREE E-Filing, We provide FREE E-Filing of your tax return. This allows for fast, accurate, and secure filing to ensure your tax return is received and accepted by the IRS and State on or before Oct. 16.
  • Set up an Installment Agreement if you are not able to pay the full balance of your amount due. We provide fast, easy, and secure assistance in completing the application for installment agreements.

As always, please do not hesitate to contact me for assistance in completing your tax return.

Thank you for reading my blog!

Tina

“Why should my tax preparer be an EA?”

In today’s ever-changing world of tax and identity fraud, it is more important than ever that you, the taxpayer, know who is handling your personal information.  Your tax preparer knows everything the identity thieves want to know about you – your Social Security Number, Date of Birth, Bank Account Number, and possibly more. So what should you know about your tax preparer? Following is a list of 5 questions that you should ask your tax preparer, feel comfortable with their answers, and most of all trust them like you are handing them your checkbook or debit card – because, after all, that may exactly be what you are doing.

 

Question 1: Do you have a PTIN (Preparer Tax Identification Number)?

Answer 1: Yes. Everyone who prepares taxes for compensation is required to have a PTIN through the IRS. This should be the first and possibly most important question you can ask. If your tax preparer does not have a PTIN, they are not authorized to prepare your tax return. If you haven’t already, definitely DO NOT give them any further personal information. Rather run for the hills!

 

Question 2: Who will sign my tax return?

Answer 2: You, the taxpayer, will sign your tax return which is generally done by signing Form 8879 which authorizes the tax preparer to E-File your tax return. Also, as required by law, the tax preparer must sign and include their PTIN on your tax return.

 

Question 3: Will you E-File my tax return?

Answer 3: Yes. A paid tax preparer is required to E-File if preparing 11 or more tax returns in a calendar year. You, as a taxpayer, can opt out of E-Filing by requesting your tax preparer to complete Form 8948, Preparer Explanation for Not Filing Electronically.

Red Flag: Your tax preparer tells you to manually sign your tax return, take it home, and mail it. If this should happen to you the first question you should ask is why they are not completing the Paid Preparer Use Only section which is at the very bottom of page 1 (see above picture in answer 2). This is required by law (as stated in answer 2) & more than likely your tax preparer files over 11 tax returns in a year which requires them to E-file (as stated in answer 3).

 

Question 4: Are you available after tax season?

Answer 4: Ideally, you want your tax preparer to be available year-round to answer any questions that come up during the year or if you should be one of the lucky taxpayers to receive a letter from the IRS, you want to know your tax preparer is just a phone call away.

 

Question 5: What is your tax experience/background?

Answer 5: Ideally, you want your tax preparer to be an expert in the world of tax. However, I see many clients that are price shoppers. Your tax return is one area you definitely should not be shopping around for price. Your tax preparer knows all your personal identification, so make sure your tax preparer is someone you can TRUST!  Of course, I recommend you choose an Enrolled Agent such as myself. However, whoever you choose, be sure you are comfortable not only with their level of tax knowledge & experience but also protecting your personal information. Remember identity thieves are out there, day & night, 24/7, just waiting for an opportunity to get enough information about you to use it for their benefit.

Following is a list of professions that are sometimes taken for granted their level of tax knowledge & experience.

  • An Enrolled Agent (EA) has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test or through experience as a former IRS employee. EA status is the highest credential the IRS awards. EAs must adhere to ethical standards and complete 72 hours of continuing education courses every three years.

 

  • A Certified Public Accountants (CPA) is certified by the state to act as a public accountant. A CPA is the only licensed qualification in accounting. To be certified, candidates are required to pass an exam. Most states also require an ethics exam or course as well as continuing education credits. A CPA may specialize in tax but not necessarily: there’s a wide range of CPA services including accounting, auditing, financial planning, technology consulting and business valuation.

 

  • A Certified Financial Planner (CFP®) is a designation for financial planners given by the Certified Financial Planner Board of Standards. A CFP must meet certain education requirements, pass an exam, have experience in the field, pass fitness standards and pay a certification fee: the coursework and exam do have tax and tax planning components as determined by the Board. A CFP may have tax experience but tax may not necessarily be the focus of their practice.

 

  • A JD is a law degree. An LLM is a Masters in Law – it could be in taxation but other areas of the law also offer an LLM. As with a CPA, candidates are required to pass an exam, an ethics exam or course and take continuing education credits. Having a law degree or two doesn’t necessarily mean that an attorney prepares returns. Some lawyers might have very little in the way of tax experience. Avoid a lawyer who promises to do your taxes, get you out of that DUI, and help you with your divorce: it’s all too much.

You can search the IRS website for a Directory of Federal Tax Return Preparers with Credentials and Qualifications at https://irs.treasury.gov/rpo/rpo.jsf.

 

Upcoming Blogs:

Friday, Oct. 6 – Reminders & tips if you have not yet filed your 2016 tax return. Tax extensions are due Monday, Oct. 16.  Check out our specials at Local Saver.

Monday, Oct. 9 – I will answer the question of what is a Certifying Acceptance Agent (CAA) and the benefits of using one. Note: This applies to foreign individuals and those who are not eligible for a SSN but must file a tax return.

Friday, Oct. 13 – I will have our second Q&A Segment focusing on tax reporting for a loved one after they pass away.

 

Community Reminder:

Celebrate the Underdogs is Thursday, Oct. 12 from 5:30pm-9:30pm at the Grand Meridian. This is a fundraiser for Unforgettable Underdogs animal rescue. Check out the event on Facebook at Facebook Event.

 

Q&A Segment for September 29

As promised, I am posting some questions that I have recently received from current clients and random phone calls/emails and my answer to them.

Gifts:

I’ve been getting quite a few questions from current clients and phone calls regarding gifts. I suppose we are coming to that time of year again. So here is what you need to know about gifts.

Any one person can gift up to $14,000 in 2017 to any one person without needing to file or pay tax on the gift, this is known as the annual gift exclusion. Gifts apply to all gifts, not only those of money.

Every one of us has a lifetime gift exemption (exclusion) of $5.49 million! That means we can each give away $5,490,000 before we have to pay taxes on the gifts we give!

However, we still may be required to file a gift tax return, Form 709. This is required when any one gift to the same person is greater than $14,000 in 2017. The reason for reporting the gift amount is so the IRS can track our lifetime exemption and know when we have gifted over $5.49 million – and thus starting taxing us!

Since most of us will never exceed our lifetime gift exemption, we most likely will not pay tax on any gifts we give.

So why do people think they pay taxes on gifts? From my experience, as soon as a client hears they are required to file a gift tax return, Form 709, when the gift is over $14,000 to the same person, they equate this with paying tax. This is not the case. We are simply reporting any gifts we make to that one person over $14,000 in 2017 to track our lifetime gift exemption.

******

Question: How much can I contribute to my HSA (Health Savings Account)?

Answer: The annual contribution if you are in a High Deductible Health Insurance Plan is $3,350 if you are single, and $6,750 for families. If you are age 55 or over, the amount is increased by $1,000.

******

Question: I am self-employed working out of my home. Can I deduct any of my home expenses on my tax return?

Answer: Yes, however, the area of the home must be used exclusively and regularly for business purposes. The IRS now has a simplified method in which if you use less than 300 square feet of the home for business, you can multiply the square footage used by $5 for a maximum of $1,500 tax deduction.

******

Question: I am selling my house in November. Do I have a tax filing requirement?

Answer: Depends. If you sold the house for less than $250,000 if you are single or $500,000 if you are married (filing joint), you do not have a tax reporting requirement per Internal Revenue Code Section 121 and you meet the ownership, use, and one sale in two years requirement. If you do not meet this criteria, you may have to pay capital gains on the sale of your personal residence.

Next Q&A blog will be Friday, October 6. Questions can be submitted via our website at www.integrityintaxllc.om on the Contacts page or by emailing research@integrityintaxllc.com.

 

As always, Thank-You for taking the time to read my blog!

Tina M. Kleckner EA, CAA

 

What is an Enrolled Agent Anyway?

Enrolled Agents, abbreviated as EA, also known as America’s Tax Experts ®, specialize in U.S. tax law and the tax code.  The most common services provided by EA’s are preparing tax returns for individuals and businesses, advising clients of tax consequences to specific life events and/or situations, and representing clients before all administrative levels of the IRS and state taxing authority.  EA’s are equipped with the education, knowledge, and experience of all levels of taxation from the very basic scenarios to the most complex issues.

The first step in becoming an EA is to take a 3-part exam administered by the IRS called the Special Enrollment Examination (SEE).  Once the exam is successfully completed, an Application for Enrollment to Practice Before the Internal Revenue Service (Form 23) is submitted to the IRS.  At this time, the IRS performs background checks, may request fingerprints if not already obtained (usually by this stage, the IRS already has our fingerprints in their database), and determines suitability of the individual to Practice Before the IRS.  Once an individual is accepted and awarded the EA designation by the IRS, the individual must consent and adhere to U.S. Treasury Department Circular No. 230 Title 31 Code of Federal Regulations which is a set of regulations governing Practice Before the IRS. Circular 230 states duties and restrictions, as well as violations to the regulations and disciplinary proceedings.  EA’s are also held to a higher standard of ethics which is also detailed in Circular 230.  In addition, EA’s must take continuing education that is approved by the IRS.  Therefore, all continuing education of an EA is related to tax matters.  Following are frequently asked Q&A about EA’s.

Q: What does the term Enrolled Agent (EA) mean?

A: Enrolled” means to be licensed to practice by the federal government. “Agent” means authorized to appear in place of the taxpayer before the IRS. Only Enrolled Agents, attorneys, and CPA’s have unlimited rights to represent taxpayers before the IRS.

****

Q: What is an Enrolled Agent (EA)?

A: EA’s are America’s Tax Experts ® that have earned the privilege of representing taxpayers before the IRS. Enrolled Agent status is the highest credential the IRS awards. There are currently less than 50,000 EA’s practicing in the US.

****

Q:  What is the history of Enrolled Agents?

A: The Enrolled Agent status was created as a reaction to fraudulent war loss claims in the wake of the American Civil War with roots tracing back to the Enabling Act of 1884, or General Deficiency Appropriation Bill (H.R. 2735), also known as the “Horse Act of 1884,” which was signed into law by President Chester A. Arthur on July 7, 1884. After the Civil War, many citizens faced difficulties in settling claims with the government for property confiscated for use in the war effort. As a result, Congress endowed enrolled agents with the power of advocacy to prepare claims against the government. From 1884 through the early 20th century, this statute remained largely unchanged.

When the Revenue Act of 1913 was passed, signed into law by President Woodrow Wilson on October 3, 1913, the scope of the enrolled agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable. As income, estate, gift and other sources of tax collections became more complex, the role of the enrolled agent increased to include the preparation of the many tax forms that were required. As a result of this complexity, audits became more prevalent and the enrolled agent role evolved into taxpayer representation, promulgating a series of statutes which were combined into a single Treasury Department Circular in February 19, 1921, known as Circular 230, to address “the laws and regulations governing the recognition of agents, attorneys, and other persons representing claimants before the Treasury Department and offices thereof.”

****

Q: How can an Enrolled Agent help me?

A: Enrolled Agents specialize in taxation unlike attorneys and CPA;s. Throughout the year, EA’s advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax reporting requirements. The EA’s expertise in the field of taxation enables them to represent taxpayer’s at all administrative levels within the IRS.

****

Q:  How do Enrolled Agents differ from other tax experts?

A: EA’s are the only practitioners who have demonstrated technical competence to the IRS specifically in matters of taxation. Also, they are the only representatives for taxpayers who receive that credential directly from the U.S. government (CPA’s and attorneys are licensed by the states).

An individual may become an Enrolled Agent in one of two ways: The primary way is to pass a difficult three-part Exam known as the Special Enrollment Exam administered by the IRS. The test covers taxation of individuals, corporations, partnerships, estates and trusts, as well as procedure and ethics.

Less than one-third of individuals taking the examination have passed, allowing them to apply for enrollment and subject themselves to a background investigation by the FBI.

The other way is to have been an employee of the Internal Revenue Service for five years, regularly applying and interpreting the provisions of the Internal Revenue Code and regulations.

****

Q: Are there any other requirements?

A: In addition to the stringent testing and application process, Enrolled Agents are required to earn 72 hours of continuing professional education, reported every three years, to maintain their status.

Because of the difficulty in becoming enrolled and maintaining that enrollment, there are fewer than 50,000 Enrolled Agents in the United States.

Enrolled Agents are the only professional tax practitioners who specialize in tax.

An applicant must pass a three-part IRS Special Enrollment Exam which covers many aspects of the Internal Revenue Code.

An applicant must pass a criminal and civil background check including a review of the applicants personal and business tax compliance.

****

Q: How can I find an Enrolled Agent?

A: Contact Tina by phone 920-277-2991 or email tinak@integrityintaxllc.com. We are available on Facebook at https://www.facebook.com/Integrityintax/. Our website is www.integrityintaxllc.com.

Specific questions can be emailed to research@integrityintaxllc.com.

Upcoming Blogs:

Friday, Sept. 29 ~ I will post some commonly asked Q&A from clients or emails I have received.

Monday, Oct. 2 ~ I will answer the question “Why should my tax preparer be an EA?”  In today’s ever-changing world of tax and identity fraud, it is more important than ever that you, the taxpayer, know who is handling your personal information.  Your tax preparer knows everything the identity thieves want to know about you – your Social Security Number, Date of Birth, Bank Account Number, and much, much more.