Tag Archives: IRS

IRS Data Hacking Prompts New Refund Advice

June 2, 2015 | By: Darren L. Neuschwander CPA

As was widely reported over the last week, over 100,000 taxpayers’ personal information — including Social Security information, date of birth and street address — was hacked from the IRS Website. We have experienced identity theft for income tax purposes with several clients over the last couple of years, and it’s a very painful process. Usually, someone files a fraudulent return, trying to get a refund. The victim receives an IRS letter asking about a refund, when he has not filed a tax return yet.

The taxpayer has to fill out a new form with the IRS, file a paper tax return and likely wait up to six months (if he is lucky) to get the refund back.

Many taxpayers like to bank on a refund for vacations or other large anticipated expenses. Rising tax fraud is another reason why I would suggest never getting a refund; instead, set aside extra money from your paycheck each pay period.

Many of our trading clients have outside jobs and will get a decent refund due to trader status and MTM accounting. I suggest these clients change their withholding to get less of a refund and more cash throughout the year.

If you’re counting on that large tax refund, this latest case of stolen identity goes to show that it may happen much later than you would like, or not at all.

IRS And State Exam Controversy For Traders (Recording)

October 14, 2014 | By: Robert A. Green, CPA

Join Green NFH’s Robert A. Green CPA and Mark Feldman, tax attorney in this Webinar.

There’s been an increase in tax exams over trader tax status, cost-basis reporting and related issues. Recently, our CPA firm successfully represented a trader in tax court. State tax authorities are also challenging trader tax status and related Section 475 MTM ordinary loss treatment, trying to avoid issuance of large tax refunds. Learn the latest arguments raised by IRS and state tax authorities on the exam and appeals level, and how to mount a successful defense. In this Webinar, we will cover:

  • Highlights of our recent “small claims” petition filed in federal tax court with favorable outcome.
  • Highlights of recent state tax controversy over trader tax status.
  • IRS cost-basis reporting controversy including tax notices.
  • IRS attacks on weak segregation of investment positions vs. trading business positions and related implications for trader tax status and use of Section 475 MTM ordinary gain or loss treatment.
  • Review of trader tax status requirements.
  • Common mistakes traders and local tax preparers make that invite IRS and state controversy.
  • Questions and answers.

For traders involved with IRS or state tax controversy, we recommend our IRS & State Tax Exam Representation Service.

The Tax Court Was Right To Deny Endicott Trader Tax Status (Recording)

October 7, 2014 | By: Robert A. Green, CPA

Join CPAs Robert A. Green and Darren Neuschwander, Managing Members of Green NFH, LLC

Click here to read the related blog dated Aug. 30, 2013.

Description: In this Webinar, we review a Word file containing the actual tax court case. We read important sentences highlighted in yellow, and discuss several comments added by Green. All options traders and other traders who manage their investments and want to claim trader tax status need to watch this recording. We added this Word file as a PDF to Green’s Trader Tax Guide.

Star, I wanted to take a moment

October 3, 2014 | By: Robert A. Green, CPA

Star, I wanted to take a moment to say “Thank You” for staying on top of my filing and also working hard to complete my financials in time ….. Additionally, I greatly appreciate you sending me the links for the expenses – it provided a much clearer picture of how I should be categorizing these expenses going forward. I hope that I get to continue to work with you and that this is not just a one-time deal. I really want someone who takes the interest in my business that you have taken – demonstrated by your follow up emails and phone call today. Anyway, just wanted to let you know that your work is greatly appreciated.

IRS & State Tax Representation

September 4, 2014 | By: Robert A. Green, CPA

The heat has been turned up on traders, wealthy taxpayers, offshore accounts, cryptocurrencies, and more in IRS and state tax exams. Our CPAs and tax attorneys are the best people to have in your corner. Start with a 45-minute consultation with our IRS and state tax experts. If we agree to represent you in a notice, exam, appeal, or tax court petition, then purchase our IRS or state representation service.

Learn more and purchase now.

Traders open the door to IRS and state exams by messing up cost-basis reporting, trader tax compliance, and international matters. Start off by reading our Trader Tax Center page: Dealing with the IRS & States. We have the fewest traders examined, and the best record in dealing with the IRS. A minuscule number of our trader tax compliance clients have been audited by the IRS since Congress enacted new trader tax laws in 1997. To date, we’ve had very favorable results.

Many traders who don’t use our tax compliance services have engaged us for tax representation services after they messed up their tax return filings. We can’t believe all the poor work we have seen. Watch These Tax Errors Will Cost Professional Traders Dearly.

Non-Traders: We’ve successfully defended all sorts of clients before the IRS and state since our founding in 1983.

If you have any questions about our IRS and state tax controversy services, please contact us.

We look forward to working with you soon.

Managing Members Robert A. Green, CPA and Darren L. Neuschwander, CPA

 

Dealing With The IRS And States

September 1, 2014 | By: Robert A. Green, CPA

The IRS and states have processes for inquiries (notices), exams (audits), appeals and tax court.

Tax notices and exams

When a tax notice arrives, don’t panic and rush to reply to an IRS agent. Understand where the IRS is coming from; it may just be a computer-generated notice asking for a few simple open items. If the IRS is getting ready to challenge TTS and Section 475 MTM, it’s important to step back and make sure you have a strong case for TTS qualification, and that you elected Section 475 correctly by the deadline.

Don’t expect the IRS to get it right the first time around. The IRS notice may have a hobby-loss business or passive-loss activity questionnaire, and a trading business is exempt from those rules. Agents often calculate volume, frequency, and other metrics on your trading activity to determine TTS qualification in ways that are favorable to them and wrong in our view, so do the calculations right.

If you made an error on your tax return but you clearly qualify for TTS and elected Section 475 MTM on time, you may be able to fix things quickly. On the other hand, if you’re a close call on TTS and potentially messed up your Section 475 MTM election or other matters, you should consider help from a trader tax expert to be your formal representative.

Appeals

Expect the IRS agent to deny TTS unless you have a clear-cut case. Agree to disagree with the agent and go to the appeals level. Show the appeals officer how you are prepared to go to tax court to win based on the application of trader tax court cases. It’s best to have a trader tax expert CPA or attorney in your corner to present your TTS qualification, explain trader tax law and prepare the appeals letter. Like most tax preparers, most IRS agents and appeals officers are not well versed in trader tax law, and many misapply trader tax court cases. Be prepared to negotiate in appeals but hang tough to win a favorable outcome. The appeals letter should be in a professional style that serves as a precursor to the petition to file for tax court. That will earn respect from the appeals officer, and he or she will take you more seriously.

Transfer the exam or appeals

If you work with a CPA firm well-versed in trader tax and IRS exams, it’s wise to transfer the work to your CPA office and its local IRS office. If your CPA has reviewed prior exams with local IRS agents, she probably has educated the agents on TTS, trader tax treatment, and Section 475 elections. This helps avoid problems with less informed agents on trader tax.

Tax court

If appeals deny TTS and Section 475 MTM, and your trader tax expert thinks you have a good case, with a lot of money on the line, then file a petition in tax court. We usually suggest a “small case” filing. Engage the trader tax expert to write the tax court petition — preferably a tax attorney well versed in trader tax law.

Excerpt from Green’s 2019 Trader Tax Guide Chapter 10 Dealing with the IRS and States. 

Green’s 2020 Trader Tax Guide

August 12, 2014 | By: jparasole

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Update Dec. 8, 2019: We plan to publish our 2020 guide on Dec.14, 2019. You are welcome to download our 2019 guide until we email you a link to the 2020 version on the release date. All new paperback orders will ship with the 2020 version when ready. 

Purchase guide

Green’s 2020 Trader Tax Guide focuses on traders’ unique tax needs and is updated to include the latest tax strategies, pitfalls, tweaks, warnings, and benefits. Whether you self-prepare your tax returns or engage a CPA firm, this guide can help you through the process, resulting in tax savings. The 17 chapters cover: trader tax status, Section 475 MTM, tax treatment (equities, 1256 contracts, options, ETFs, ETNs, forex, precious metals, cryptocurrencies, etc.), accounting for trading gains and losses, trading business expenses, tips for preparing tax returns, tax planning, entity solutions, retirement plan strategies, IRS and state tax controversy, traders in tax court, proprietary trading, investment management, international tax, Obamacare taxes, short selling, and Tax Cuts and Jobs Act. Green’s Trader Tax Guide has been published every year since 1997 and remains the gold standard in trader tax.

Sincerely,
Robert A. Green, CPA
Author, Green’s 2020 Trader Tax Guide