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The answer is almost always “yes” when someone asks a Registered Tax Return Preparer if money received is taxable. Payments to a person are usually income, which rarely escapes tax. The only amounts that are safely relied upon as nontaxable are gifts, loans, and returns of capital. Gifts are a complicated matter in tax preparer jobs because they must embody a particular nature in order to qualify. That is, a gift is freely given out of generosity alone. Just because a payment is an unexpected surprise doesn’t mean that it represents a gift. This is especially true of payments from an employer. For example, a bonus that is not anticipated and seems generous of the company is still a consequence of employment. Therefore, bonuses are taxable income. A loan from an employer is not taxable when granted, but it does add to income if the business later forgives repayment. Awards from an employer are sometimes nontaxable if they are part of a program that follows specific rules learned during tax preparer training. Income tax is not assessed on awards for length of service or safety if all awards during the year average less than $400. Awards of less than $50 are omitted from calculating the average. Nontaxable employer awards must comply with an established written plan and not discriminate in favor of highly compensated employees. Taxed bonuses and awards are added to an employee W-2. However, workers who operate as independent contractors face a different situation. These self-employed individuals should receive a Form 1099 for payment of bonuses and awards. A worker receiving an amount he considers a gift should receive a warning from someone with tax preparer certification. This precaution explains the fact that payments of money connected to a working relationship are always taxable income. Only a small gift of property is non-taxable. The normal IRS rule is that a small gifts must have less than $100 of value. Refusing to complete a W-9 – with which an independent contractor provides a tax ID number to a payer – does not avert a requirement of the contractor to report income received. The payer of funds to the contractor may still issue a 1099 and mark “REFUSED” in the tax ID box. The paying company is supposed to obtain the W-9 in advance of payment. But the IRS penalty assessed on the business is of no concern to the tax preparer or the payment recipient. Instead, the tax preparer must simply assure that the tax return of the worker reports all income from working. The key element from tax preparation courses about these cases is that payments received from a job are counted as taxable income. Consulting with a tax adviser is recommended before accepting any remuneration – even potential gifts. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The challenge of the certified public accountant examination confronts everyone seeking the CPA designation after obtaining a college degree. Fortunately, further educational avenues provide targeted learning to pass the exam. In fact, a superior course for CPA exam preparation includes an online community. This permits open exchange to better understand the application of accounting concepts. A CPA community provides exposure to individuals who work in accounting for individuals, small businesses, and large enterprises. In order to speak their language, a prospective CPA must have the proper education background. The entire process begins with a solid education in general accounting rules. That is the purpose behind the educational requirements established by each state for CPA candidates. A degree in accounting sets that standard. CPA examination classes then assure competency in applying basic accounting knowledge to provide services in auditing, tax, business accounting, and personal finance. When becoming a certified public accountant, a state board typically receives a license application followed by an application for the CPA exam. Education is also submitted to this body for approval. An accounting education program is generally registered with the accountancy board in its state. Meeting the CPA educational requirements of a state also opens the door to a rewarding use of CPA exam study guides. State accountancy boards usually accept accounting programs accredited by the Association for the Advancement of Collegiate Schools of Business. However, each state customarily deploys some latitude in accepting equivalent accounting programs. Accounting programs at every college are able to provide information about whether they are licensure qualifying for a particular state. Most states have adopted 150 semester hours as the minimum standard for CPA candidates while they obtain bachelor’s degrees or higher diplomas. A few states still allow a different option of fewer hours but demand more work experience under the supervision of a currently licensed CPA. In addition, some states give their accountancy boards discretion to substitute multiple years of experience in public accounting as satisfaction of education for admission to the CPA examination. Specific courses are also designated as a component of CPA educational requirements. A minimum of around 30 semester hours is commonly mandated for accounting principles. This includes advanced financial accounting, federal tax accounting, and auditing. About the same number of hours are necessary in general business electives. These subjects include statistics, business law, finance, economics, and computer science. An ethics component of the curriculum is also imposed. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

No matter how much a person values the work of becoming a tax preparer, one frustrating situation is certain to arise. This trouble is the complication that descends upon the tax preparer for a married couple that divorces. Several tax-changing events are likely when a couple gets divorced. This is especially true when the marriage involves children. The problems for their Registered Tax Return Preparer begin with the year of divorce. After preparing a joint tax return for several years, the tax professional now must deal separately with each former spouse. Suppose the ex-husband brings his tax information and describes the events of the past year. He explains that he has custody of the children. Based upon factors covered in tax preparation courses, he appears to qualify for filing status as Head of Household. He also classifies payments he made to his ex-wife as alimony. Plus, he lists all of the itemized deductions associated with the house he formerly maintained as a homestead with his ex-wife. Subsequently, the ex-wife arrives with her tax information. She presents a different scenario than the ex-husband. According to her story, she has custody of the kids. Maybe she is allowing her former spouse to claim the dependency exemption, but she alone qualifies for Head of Household status. Training for the tax preparer test reveals that both former spouses cannot qualify for Head of Household based upon the same children. The ex-wife also points out that she received no alimony – only nontaxable property settlement payments. She also conveys the same tax deductions for mortgage interest and real estate taxes as the ex-husband. Regardless of which spouse is accurate, this is a complex issue for the person with a tax preparer career. A tax practitioner cannot simply tell one client what another client said. That betrays the confidentiality expected with tax information of separate individuals – even ones that were formerly married. But the tax preparer knows that preparing the returns using details as conveyed by the respective clients is certain to result in trouble. One of the former spouses must have presented inaccurate information. The tax preparer does not know which one. However, the tax preparation process doesn’t require auditing client records. Tax data is accepted at face value without a verification process. But a tax preparer should not report information on a return that he believes is inaccurate. This only occurs when the second spouse arrives with information that the tax preparer knows is inconsistent with details he already possesses. The tax preparer in the example above must decline to complete a return for the ex-wife. Tax preparation work does not require refereeing which spouse is truthful. But an obligation does exist to avoid tax reporting that conflicts with pre-existing information not disputed as fact. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The IRS has finally released results for the early participants in the registered tax return preparer examination process. The test was first available last November and some eager individuals enlisted right away. Tax professionals who received or renewed a Preparer Tax Identification Number (PTIN) by December 31, 2011, have until the end of 2013 to take the test. However, they cannot use the designation of Registered Tax Return Preparer until meeting all the requirements – including a passing score on the RTRP exam. According to the IRS, the tax preparer test was in a calibration phase following its implementation. This permitted validation of testing questions and setting a scoring system. This phase has established a perfect score of 500 for the 120-question exam. A passing score is 350 – which, of course, is 70 percent. Test takers recently received letters confirming whether they passed or failed the competency test. For those with passing scores, the only additional step toward obtaining tax preparer certification is the tax compliance check. This requires an individual to have filed all tax returns by the deadline and paid all tax due. The intended fingerprint process has been temporarily suspended. The IRS estimates completion of the tax compliance measures within a few weeks. Individuals who pass the competency exam and tax compliance check will receive an RTRP certificate by regular mail. Tax professionals must also complete 15 hours of tax CPE courses annually. This is mandatory for renewing a PTIN. The education requirement begins for 2011 – even for individuals with PTINs who have until then end of 2013 to pass the RTRP test.  Individuals who pass the exam in the registration year (2012) can prorate the hours they must take:  one hour per month they are registered, plus two hours of ethics. More than 260 Prometric testing sites are presently available. Tax practitioners with PTINs can register for the tax preparer exam using their online account and paying the $116 fee. Anyone taking the test after April 16, 2012, will receive immediate results upon completion. Testing is suspended for two weeks beginning April 1, 2012. Some individuals in the tax preparation industry are exempt from having to pass the tax preparer competency examination. Such professionals must possess credentials as Certified Public Accountants, licensed attorneys, or Enrolled Agents. Also exempt are workers who are supervised by these professionals and do not sign tax returns. The IRS has noted that the process to become an enrolled agent is unchanged. A different test is required for registration as an Enrolled Agent with the IRS. This Special Enrollment Examination has three parts. In addition, enrolled agents continue having a continuing education requirement of 72 hours every three years. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The demand for accountants is leading the way in a jobs recovery for the US economy. Despite limited positions in banking and finance, opportunities abound for becoming a certified public accountant. Driving the call for accounting professionals is the rising importance of accurate audit and tax work for businesses. The Big Four public accounting firms require individuals with expertise developed from CPA exam courses. New associates are needed to help deploy accounting principles that result in advice for companies about operational improvements. Audit staff members are commonly recruited upon graduation – while they are still CPA candidates engaged in CPA exam study. After passing the examination to gain CPA credentials, accountants are increasingly relied upon to manage audits or address tax matters. Corporations are also enlarging their in-house accounting staffs. The objective of better internal auditing is faster elimination of problems and implementation of cost-cutting measures. The Bureau of Labor Statistics estimates that accounting positions will increase by 22 percent from 2008 to 2018. As many as 500,000 new jobs are anticipated for people who have mastered CPA exam materials and attained the CPA designation. A survey recently conducted by Accounting Principals – a global staffing company that is a division of Adecco USA – discovered that half of the responding companies expect to hire accountants in 2012. Survey results also indicated that 74 percent of accounting firms are expecting to attract new clients this year. This translates to more jobs, including work for individuals engaged in CPA exam preparation. The Big Four accounting firms reduced jobs in 2008 and 2009. At the same time, they stopped aggressive college campus recruiting efforts for entry level accountants. Now, these firm are having to intensify their efforts to find new associates. In addition, companies are drawing talented accountants with experience to the corporate ranks. According to recruiting firm Robert Half, corporations are seeking assistant controllers with five years of experience while three years of experience is enough to attract applicants for staff accounting and financial analysis positions. Rising corporate profits mean more transactions for accountants to monitor and more income to implement staff additions. Regulatory changes are also guiding hiring decisions. Dodd-Frank financial reform regulations include mandates for greater accountant verification of transactions. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Procuring accurate tax work from someone who has become a certified public accountant ultimately incurs a lower cost than trying to cheat the taxman. When the IRS identifies a cheater, the penalties are severe. Some individuals attempt to involve their tax preparers in plans to deceive the IRS. Fortunately, anyone who has completed certified public accountant training is aware of the correct measures for tax return preparation. Identification of potential tax fraud is as easy for a CPA as an IRS agent. Preparing for a career in tax accounting entails more than simply understanding IRS rules in a CPA exam study guide. It also involves learning the importance of correctly applying laws to tax return preparation. Mistakes are an annoying inconvenience, but intentional inaccuracies are causes for stern punishment. A few taxpayers recently learned this lesson. Philip Butcher had a plan to evade income tax that included the tax preparation business PMDD Services. The former Arkansas resident’s 2008 tax return claimed a fraudulent refund of $672,781. PMDD prepared and electronically filed the return for Butcher. For its part in the scam, PMDD was paid 10 percent of the refund. The consequences for PMDD are uncertain. But, Butcher has been charged with tax fraud. His potential sentencing is up to five years in prison and a $250,000 fine. Compounding Butcher’s problem is the fact that he later filed an amended 2008 tax return claiming a refund of nearly $1,500,000. Apparently, PMDD was not involved in the amended return nor was any accountant with CPA courses. David Douglas Black is a Michigan attorney and owner of Black, Black and Black law firm. He diverted to personal use the cash payments his business received. Black also personally obtained funds from checks issued to him, his wife, and other businesses. Black used an accountant to prepare his 2004 tax return. Unfortunately, applying details from CPA study to the tax preparation was incomplete because Black failed to deliver records to his accountant about the diverted business income. The tax return claimed gross income of only $319,866. Black’s actual income was over $1,000,000. He was sentenced to 24 months in prison for tax evasion followed by 2 years of supervised release. Sue J. Taylor was convicted on four felony counts of tax evasion and sentenced to 78 months in prison. She apparently did not hire an accountant at all because her conviction also included 4 misdemeanor counts of willful failure to file tax returns. Trial records show that Taylor filed false income tax returns beginning in 1997 and later stopped filing any returns. She reportedly evaded more than $3,000,000 of income tax by hiding income from her real estate brokerage in numerous fictitious businesses. Taylor aggravated her situation by lying to IRS employees and structuring financial transactions to avoid bank reporting requirements. She had already served over 2 years in prison for contempt of court in a separate case for refusing to produce records demanded by the IRS. Such are the adverse consequences avoided by people who simply hire tax professionals with proper training to accurately complete their tax returns. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The unemployment rate is declining and corporate profits are rising but a weak economy continues to affect many people. They are still struggling with their mortgage payments and stagnant income. Plus, some are dealing with the burden of delinquent income tax. When this occurs, they turn to an enrolled agent tax preparer. A typical situation that calls for enrolled agent expertise is completion of a tax return this year whereupon some tax is owed. Such surprises are unfolding as a consequence of people receiving taxable retirement plan withdrawals or conducting a side business. Tax withholding on the extra income is often negligible or nonexistent, thus leaving a balance due with the tax return. These taxpayers consult with professionals from an enrolled agents list to obtain help. They seek assistance negotiating IRS installment plans and developing better records for capture of all eligible tax deductions. People who desperately need EA solutions owe taxes on a currently completed return and still have not entirely paid a liability from a prior year. Alternatively, they might have a refund calculated on the newly prepared tax return but not want it all held for payment toward a prior year balance. Professional representation before the IRS is essential for taxpayers faced with choosing between paying tax debt or mortgage payments. A rising number of taxpayers with dire financial conditions cause more enrolled agent job opportunities. This professional aid keeps economically troubled people filing tax returns instead of hiding from their problems. In addition, a last resort solution is available with the IRS – the Offer in Compromise. The Offer in Compromise document allows people with severe financial hardships to pay less than the tax amount they owe. The IRS calculates a determination of reasonable collection potential after examining taxpayer income, expenses, and equity in assets. Realistic cases for an Offer in Compromise entail unlikely ability to pay a tax debt in the next two years. Recipients of an Offer in Compromise pay only the amount offered by the IRS. In addition, the IRS retains all tax refunds the individual could have received during the year of the settlement and all refunds for periods preceding the offer. Preparing an Offer in Compromise demands a significant amount of documentation and following a bureaucratic process. IRS Form 433A and Form 656 are required to request an Offer in Compromise. Self-employed individuals must also complete Form 433B. Most important to the procedure is submission of a statement describing why an Offer in Compromise is reasonable. To avoid mistakes that delay the process, the assistance of an enrolled agent is recommended. The IRS approved only 16 percent of all offers it received in 2004 but accepted 24 percent in 2010. This indicates that more people are eligible for the program and are benefiting from hiring enrolled agents. After obtaining an Offer in Compromise for a taxpayer, ongoing EA work is also likely. The approved taxpayer must file returns and pay tax on time for the subsequent 5 years. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

A tax practitioner in Bakersfield, California, should have seriously considered the information covered in an enrolled agent ethics course. Instead, she engaged in efforts to obtain higher refunds for her clients by preparing tax returns with made up information. This endeavor did not escape the watchful eye of the IRS. The tax preparer claimed that one of her clients is a business owner of a day care center. Various tax deductions were listed that created a business loss. Problems ensued when the client revealed to the IRS that she was never a day care owner. The California Tax Education Council (CTEC) is responsible for oversight of all tax preparers in the state. But that doesn’t stop some people from becoming bad tax practitioners – until they are caught. California enrolled agents are exempted from state registration because they are regulated by federal mandates. An EA might have less opportunity to escape detection of illegal practices than a CETC registered preparer. So, taxpayers possibly increase their chances of honest tax service when choosing someone with an EA license. Enrolled agents learn the correct facts to gather for tax returns and they are certainly aware of the prohibitions against making up information. The woman who was falsely listed as a day care owner was apparently reluctant to go along with any scheme to commit fraud on her tax return. The tax preparer is accused of 29 counts of aiding and assisting in the preparation of false tax returns. Clients other than the alleged day care owner were either all too happy to go along with the tax preparation scams or signed their returns without question. Either way, the tax refunds created on the falsely prepared returns resulted in initially satisfied customers. Unfortunately, individuals are responsible for the accuracy of reporting on their tax returns. The taxpayers are required to remit any underpaid tax liability. They might wisely decide to find an enrolled agent for their future tax work. In addition, the tax practitioner could pay restitution as well as receive a sentence to federal prison. This is a black eye for the entire tax profession by fueling a public perception of tax preparers as often inaccurate and occasionally crooked. However, the situation is also an opportunity to explain the importance of correctly prepared tax returns. Price should not represent the primary consideration of tax clients. A tax professional with an enrolled agent certificate can point out the high standards of learning and ethics that accompany the designation. Plus, everyone engaged in tax preparation should offer to explain all deductions and tax credits. When doing so, they should note that scheming tax practitioners don’t provide any opportunity for clarification. Those unethical tax pros are certain to have trouble when the IRS catches them. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Most CPA candidates pursue two licensing objectives simultaneously following completion of their formal education requirements. While engaging in CPA exam study, they also satisfy the mandate for work experience under the supervision of a currently licensed CPA. Most state accountancy boards stipulate that two years of supervised employment in public accounting is required to obtain a CPA license. However, advanced education is normally substituted for one year. Completion of additional education typically provides the CPA candidate with a post-baccalaureate degree. Alternatively, some states allow less education allocated to specific subjects as a substitute for one year of supervised work experience. A typical CPA applicant obtains experience in auditing services. Accounting firms commonly hire CPA candidates to fulfill roles as staff auditors. Some states mandate that CPA candidates obtain a minimum amount of supervised experience in the areas of auditing and financial statement preparation. Applicants for CPA certification must present evidence of satisfactory work history. Documentation must support the objective that a CPA possesses the ability to independently conduct a small audit with minimum supervision. Therefore, in addition to mastering CPA exam study materials, a prospective certified public accountant must learn the application of accounting and audit standards. Although a combination of working plus studying for the CPA exam may entail long hours, the process is facilitated by the structure of a CPA examination study guide. A professionally designed training course is conducive to covering all the elements required to pass the CPA exam. In most cases, relevant experience obtained during CPA exam preparation is acquired by working with an independent accounting firm. However, state accountancy boards retain some latitude to substitute employment history as an internal auditor at a private company or government entity. Other types of general accounting work may also suffice if the endeavors are devoted principally to comprehensive application of accounting standards and field examination measures. In general, the audit work experience should culminate in reports about financial records and statements that a third party may rely upon. Someone with an existing CPA license attests to this employment background. The supervising professional is commonly permitted to possess licensing authority from any state. Hence, an applicant for CPA licensing in one state is usually allowed to present relevant work experience from another state. CPA candidates often complete their educations in one state and obtain work in whatever regions offer promising prospects. Enrolling in an online CPA examination course results in portability to different locations and self-paced study. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Individuals exploring a CPA career in California will soon follow the same path as most other states. Changes take place effective January 1, 2014. The new requirements only impact mandated education. Individuals already have to pass the certified public accountant examination and that standard will continue. Until the end of 2013, CPA candidates may still enter the profession by providing the California Board of Accountancy with evidence of a bachelor’s degree that entailed 24 semester hours of accounting courses and 24 additional hours of any business-related subjects. An ethics course is also required when becoming a certified public accountant. Starting in 2014, a total of 150 semester hours is required. The specific hours covering accounting and business – plus the ethics course – remain unchanged. In addition, of course, every CPA must have earned a bachelor’s degree. Passing CPA exams is also a necessity that every certified public accountant in California has in common with CPAs in other states. CPA candidates typically complete their education first and then begin meeting the other requirements. Until 2014, the option to have less than 150 semester hours means that two years of work experience supervised by a CPA with an active license is mandatory. When a CPA candidate has 150 semester hours – the only licensing avenue starting in 2014 – just one year of supervised general accounting experience is required. During the work experience phase, a CPA examination course is normally undertaken to prepare for passing the Uniform CPA Exam. Registration for this test is initiated when a CPA candidate submits to the state accountancy board a complete application. Official licensing occurs following the demonstration of both knowledge with a passing score on the CPA exam and competency from supervised work history. A majority of other states already have the 150-semester hour educational requirement. Hence, a California CPA who follows this licensing pathway and moves to practice in another state is unlikely to encounter difficulty in transferring official state recognition. The route to a license in public accounting continues to demand CPA exam study. But every CPA candidate must also investigate additional state requirements. Accounting departments at educational institutions are eager to help prospective CPAs understand and meet the course requirements within their state. As California now offers two education standards, each CPA candidate in that state should remember the upcoming change to a single pathway for licensure. The rewards of completing all CPA licensing requirements are substantial. Starting salaries for accounting majors are usually more than $45,000 and most have jobs arranged before they graduate. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Tax preparation for most individuals with higher education costs renders a choice of two tax credits. Normally, the decision is fairly easy for enrolled agent work with these taxpayers. The American Opportunity Credit is typically more advantageous than the Lifetime Learning Credit. The maximum American Opportunity Credit is $2,500 compared to $2,000 for the Lifetime Learning Credit. In addition, a single tax return can claim the American Opportunity Credit for multiple students. The maximum for the Lifetime Learning Credit is per tax return. Another key fact to retain from enrolled agent exam review is that up to $1,000 of American Opportunity Credit is refundable. Some limits exist for the American Opportunity Credit. These restrictions reduce the incidences for using that tax credit as EA solutions with tax returns. Most importantly, the American Opportunity Credit is only available for students in their first four years of advanced education who are working toward a degree or similar certification. Therefore, graduate students are not allowed to claim this tax credit. Fortunately, the Lifetime Learning Credit is available to rescue some tax benefit for graduate students. A quick check of enrolled agent study material reveals that this credit phases out for tax returns with over $50,000 of income (or $100,000 for joint filers). The credit is eliminated when income exceeds $60,000 (or $120,000 if married filing joint). A parent for a dependent child takes all education credits. Anyone who is a full-time student under age 24 is eligible for a parent to claim as a dependency exemption under the qualifying child rules. Consequently, grad students still funded by their parents don’t capture any education tax credit if still claimed as dependents. Parents with a grad school dependent plus another child working toward a degree as an undergrad can claim the Lifetime Credit for the older student and the American Opportunity Credit for the younger child. Assurance of maximizing such arrangements is a valuable component of enrolled agent tax services. Both credits are prohibited for the same student in a single year. However, a tax return can allocate different credits among various students who are dependents on the same return. The Lifetime Learning Credit is available to several individuals named on a common tax return. The only restriction is the $2,000 ceiling for total expenditures on tuition, fees, and books. Also, this maximum credit is limited to the amount of tax calculated on the return. None of the credit is refundable. The student doesn’t have to pursue a degree to trigger eligibility for the Lifetime Learning Credit. So, simply taking some courses to improve or maintain skills is acceptable. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The tax circumstances of some individual cases are not often encountered, but do arise on enough occasions to demand proper action by alert tax professionals. One situation found during tax work is Social Security benefits paid to minor children. This occurs when children are entitled to payments associated with death or disability of a parent. Social Security benefits to children continue until they reach age 18. This means that a teenager may earn income from working part-time plus receive payments from the Social Security Administration. Issues addressed in tax CPE about these circumstances concern whether the Social Security payments are taxable, how the Social Security benefits affect the tax return of the teenager’s parents, and whether a tax return of the teenager is required. The first lesson from tax preparation classes is that Social Security payments representing benefits to children have no impact on the tax returns of parents. Such income belongs to the child and is not reported by a parent. That fact is not altered when the parent claims the child as a dependency exemption. Even when a parent receives the Social Security benefits as nominee for a minor child, the 1099 reporting the income will list the child’s tax identification number. Whether the child is taxed on this income depends upon the child’s other income. Taxability of Social Security benefits for a minor child is determined in the same way taxable Social Security is calculated for any taxpayer. This formula is taught in a basic tax preparer course by assessing whether half of Social Security plus other taxable income exceeds a statutory threshold. Teenagers are unlikely to earn sufficient income to encounter any tax on their Social Security payments. In fact, most teenagers don’t have enough income from any sources to require tax filing. The income minimums that mandate tax return filing comprise some questions for the tax preparer examination. These amounts are different for individuals claimed as dependents on the tax returns of parents. A dependent’s income threshold for filing a return is lower when considering unearned income from investments rather than only earned income from a job. Unearned income also considers annuities, distributions of investment income from trusts, and any taxable part of Social Security benefits. As long as one-half of Social Security payments plus all other income is less than $25,000 for an unmarried teenager, none of the Social Security benefits are counted as part of unearned income. However, the job of a Registered Tax Return Preparer could entail creating a return for a dependent teenager even if none of the Social Security is taxable. The teenager may still have a filing requirement. That is possible even when no income tax is due but self-employment tax is payable for work as an independent contractor. Or, the teen may simply want to file in order to obtain a refund. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Federal taxes are assessed in a variety of ways upon Americans and any one of them comprises a potential enrolled agent job. The public is generally aware of taxes on income and payroll; not so common is gift tax. The part of tax law addressing gifts is a component of the estate tax. People are not able to avoid estate tax by giving away their property before death. Circumstances where the gift tax is imposed plus applicable exemptions and reporting requirements are the subject of many enrolled agent exam questions. In addition, because individuals are so commonly uninformed about gift tax, this is one of the key areas where an EA renders valuable advice. The first gift tax fact from an enrolled agent course about which taxpayers usually lack knowledge is that the tax is paid by the gift giver instead of the recipient. When individuals having their income tax returns professionally prepared reveal gifts they received, an EA is possibly positioned to capture the gift giver as a new client. The gift has no income tax affect for the recipient but a giver often fails to recognize his tax responsibility. Donors of gifts to any one person during a calendar year that exceed the annual gift tax exclusion must file a gift tax return. They can avoid owing tax but cannot avert the requirement of reporting the gift. Completing the correct forms and addressing the tax impact are basic EA solutions needed by gift givers. Even more important, some givers mistakenly believe that gifts to individuals are tax deductible. An enrolled agent can set the record straight for these taxpayers by explaining that only gifts to bona fide charities are eligible tax deductions. No matter how charitable a gift to an individual seems, there is no income tax impact. Among the duties in an enrolled agent career is helping taxpayers use the annual gift tax exclusion – currently $13,000 – which is indexed to the rate of inflation and adjusted in $1,000 increments. A person can give the exclusion amount every year to the same person and not incur any gift tax reporting. In addition, an individual has no gift tax when giving the annual exclusion amount to each of several people in a single year. Some giving is not considered a gift for tax purposes. Enrolled agents are trained to recognize these cases. One example is money given to support a member of the giver’s household. Two other important exceptions are amounts for someone’s college tuition or medical expenses that are paid directly to the third party providers. The EA exam plus work for actual clients both entail situations where a married couple can split gifts so that both use the annual exclusion. The couple can jointly exclude $26,000 of giving to one person in 2012. When a couple gives to another couple, the exclusion becomes $52,000. Helping with these annual exclusion calculations and reporting any excess giving is important EA work. A reportable gift exceeding the annual exclusion may still avoid tax by applying to a person’s $1,000,000 lifetime exemption from gift tax. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

As the IRS increasingly relies upon automated generation of tax notices, more enrolled agent jobs are certain to arise. Computers are used to match tax return input with payer reporting documents such as 1099s and W-2s. Illustrating the problem with allowing computers to render conclusions, the IRS not long ago sent a notice to Lord James Edward Herbrand Russell. Although Russell is married to former American model Dawn Alexander Russell, he is a citizen of the United Kingdom and the brother of the current Duke of Bedford. Russell was forced to file suit in US Tax Court pointing out that – contrary to the IRS notice – he does not owe $9.6 million of US income tax for 2009 because he has never been a US citizen or resident alien. An EA review course reveals that only the income of resident aliens is subject to the same tax as US citizens. The problem with the IRS computers apparently results from the fact that Russell previously obtained a US Social Security number while studying at Harvard and Stanford Business School. His present investments include several US entities. Apparently some of the partnership interests he holds incorrectly assumed that Russell is a US citizen because of his Social Security number. Consequently, 1099s were sent to the IRS indicating that Russell received $27.4 million of proceeds from securities sales, dividends, interest, and other income. The facts from enrolled agent classes define such amounts as unearned income. Citizens of other countries are not taxed on their investment income in the US as long as they are not resident aliens. Even if they live in the US but are classified as non-resident aliens, they pay US income tax only on earnings in the US. IRS computers sent Russell a proposed tax assessment that included penalties and interest. Later, Russell received a Notice of Deficiency. Professionals with income tax careers often refer to this second type of correspondence as a “90-day letter.” That is the length of time given for the recipient to seek relief in Tax Court. However, a person has 150 days when this notice is mailed to a foreign country. In fact, the mailing was addressed to Russell at the 3,000 acre estate his family has owned for over 400 years. Apparently no one at the IRS scrutinized the matter before sending the 90-day letter. But, according to some sources, the IRS customarily sends 90-day letters even after a taxpayer responds about erroneous statements in an original tax assessment. Human attention is required to quickly resolve mistaken communications. This is where the services of enrolled agents become particularly valuable. National Taxpayer Advocate Nina E. Olson recently conveyed how budget constraints at the IRS are forcing a greater reliance on automated computer enforcement. So the work of enrolled agents is needed to assure that responses to correspondence audits containing requested information are not ignored. According to Russell’s petition in Tax Court, the 1099s have been corrected by the issuers. But this may have occurred recently. The best advice for taxpayers is to immediately examine 1099s when received and quickly request corrections of any mistakes. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

As everyone with tax preparation careers knows, W-2s are sent to workers by the end of each January. That is the cause of the early rush for tax filing. Individuals are eager to submit tax returns after receiving W-2s because their withholding usually fails to account for eligible tax credits that create substantial refunds from the IRS. By now, some people who were waiting for arrival of a W-2 from a former job are aware that the deadline has long passed. They have been waiting to file tax returns because they must have W-2 wage statements first. One of the situations that arises when becoming a tax preparer is an individual with a missing W-2. Fortunately, a process exists to resolve this issue and file a tax return. When a W-2 has not arrived, a worker should first contact the employer. Sometimes a former employer simply lacks the taxpayer’s current mailing address. Companies that have gone out of business are more challenging matters. In these instances, tax preparer jobs recreate a missing W-2 using available information. First, however, a taxpayer should alert the IRS about a missing W-2. A toll-free number is provided on the IRS website. The same information needed to complete a W-2 substitute is gathered when contacting the IRS. Therefore, hiring someone with a tax preparer license is valuable at the beginning of the process. The IRS attempts to contact the person responsible for payroll at the taxpayer’s former place of employment. A copy of the IRS notice is sent to the taxpayer. As much data as an individuals can collect is beneficial to the IRS effort and the tax preparer recreation of a W-2. Some of the information is available on a final pay stub. This includes year-to-date wages paid, Social Security and Medicare taxes withheld, plus federal income tax withholding. Careful calculation of taxable income requires knowing if an employee deferred compensation into a retirement plan at work. Other relevant details are potentially discovered with prior year tax material. For example, a W-2 from an earlier year contains the exact company name and address along with the employer identification number. This number is not required to prepare a substitute W-2 and contact the IRS, but it definitely helps. Form 4852 is submitted with a tax return when a W-2 is missing. This form indicates expected figures a W-2 would contain if provided. The form contains a place to explain how the substitute numbers were derived and the effort undertaken to obtain the actual W-2. Tax preparers should warn their clients that using Form 4852 instead of a W-2 does delay a tax refund. In addition, tax preparer review is needed if an official W-2 arrives after filing a tax return. Any discrepancy between the W-2 and the estimates submitted on the original tax return necessitate filing an amended tax return. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Approximately 166.7 million people in the US reportedly watched Super Bowl XLVI this year. The game started with an unusual play. New England Patriots quarterback Tom Brady caused a safety by his intentional grounding penalty while in his team’s end zone. The result was two points for the eventually victorious New York Giants. But it also resulted in a big gambling win for one fortunate individual. Benjamin Lyons sent a photo on Twitter of the winning bet by his friend Jona Rechnitz. A $50,000 profit resulted from predicting a safety as the first play of the game. Actually, Rechnitz won $60,000 because of another bet that a safety would occur at any time during the game. The next step for Rechnitz is probably to obtain tax advice. If he consults with a professional possessing enrolled agent certification, he will likely find someone with extensive knowledge regarding gambling income. Most people who bet on games like the Super Bowl are not as fortunate as Rechnitz. That’s especially true of their tax consequences. Gambling winnings are taxable income. An enrolled agent course conveys that the amounts are reported as other income on Line 21 of Form 1040. Big winners like Rechnitz receive a Form W-2G from the gambling house. Since the IRS gets a copy, gamblers can’t escape reporting the income. Even casual gambling is added to a tax return. An EA hearing about these winnings applies enrolled agent ethics to assure that the figure is reported as other income. Since most people do not win after betting on sports, they are eager to obtain a tax deduction for their losses. But the tax rules learned during enrolled agent training are not very supportive for gambling losses. Gambling losses are never applied to reduce reportable gambling winnings. Instead, gambling losses are only deductible as a miscellaneous itemized deduction. This limits the deductible portion to the amount exceeding 2 percent of a taxpayer’s adjusted gross income. A gambler without enough deductions to itemize receives no advantage for gambling losses. Even if someone can benefit from deducting gambling losses, he must have records documenting the losses. Taxpayers with a journal of wins and losses must have the name and location of the gambling establishment. Unfortunately, having more losing bets than winners doesn’t help. Losses are only deductible up to the amount of reported winnings for any given year. In another twist on the Rechnitz tax situation, he intends to donate all the money to charity. An enrolled agent review of the details might help correctly assess this situation. A tax deduction for charitable contributions is limited based upon income. Assuming that the deduction for Rechnitz is not limited, his donation size is more than sufficient to itemize deductions. But higher AGI entitling him to the charity deduction creates a more severe 2 percent limit on his deduction of gambling losses. At least his itemized charitable gifts will offset the taxable income from his successful bet. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The IRS provides plenty of online tools for tax professionals. The e-Services suite of web products embodies a variety of ways for conducting enrolled agent employment activities electronically. The general public does not have access to e-Services. Only certain parties are allowed on the system. Electronic Return Originators are one group of professionals able to use e-Services. These are tax practitioners who have electronically filed five or more tax returns. They are eligible to use the Disclosure Authorization, Electronic Account Resolution, and the Transcript Delivery System. Unlimited access to these online services is available to anyone subject to Circular 230 regulations. A professional falling under the new rules for a Registered Tax Return Preparer designation applies for e-Services access. The other types of professionals who e-file and are subject to Circular 230 are certified public accountants, attorneys and IRS enrolled agents. They all use e-Services and can take advantage of enhancements to the Transcript Delivery System implemented in early 2012. Improvements entailed upgrades to equipment and software. The intended result is an improved process for retrieving taxpayer transcripts. By increasing the system’s capacity for handling transcript requests, this electronic avenue is expected to receive greater utilization. EA solutions requiring taxpayer transcripts are available on e-Services 24 hours per day, 7 days per week. Reporting agents are also eligible for acceptance to use e-Services. These are entities that electronically file their reporting documents. They can use e-Services for Electronic Account Resolution and the Transcript Delivery System. Transcript request options are accessed by simply logging in to e-Services with a username and password. This is the same online system used for electronic submission of EA registration and annual renewal information. The Transcript Delivery System now allows easily setting a year range. Submission of multiple forms is possible with a single request. Users can add and submit more than one taxpayer at the same time. Taxpayer and product information is combined on one page. Users will see some other e-Services changes. The new screens on e-Services improve navigation. The location of messages from the IRS is now simply called the “Secure Mailbox.” A checkbox provided to generate a cover letter is present when fax and US mail delivery options are necessary. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Few sources of income can create more tax problems than unemployment compensation. The trouble with this matter is initially noticed during enrolled agent exam preparation. Income from unemployment benefits is usually taxable, but exceptions do exist. Unemployment benefits received under US or state laws are safe to consider as taxable income. They are included in tax calculations on EA exams. Most unemployment payments are from a state fund or a state’s administration of benefits under the Federal Unemployment Trust Fund. Other types of taxable unemployment income are compensation paid for railroad worker unemployment, disability payments paid as a substitute for unemployment benefits, and trade readjustment allowances under the Trade Act of 1974. Further taxable income is unemployment assistance paid under the Disaster Relief and Emergency Assistance Act of 1974. However, enrolled agent education is careful to distinguish worker’s compensation from unemployment benefits. Payments from worker’s comp policies are not taxable income. Recipients of unemployment compensation receive Form 1099-G reporting the total amount paid. This is the familiar form included in EA study materials. The amount on a 1099-G is included in an individual’s required filing of a personal income tax return. Unfortunately, many recipients of unemployment benefits fail to consider the tax impact. IRS penalties are applicable to underpayment of tax during the year. As a substitute for making quarterly estimated tax payments, a recipient of unemployment compensation may elect to incur federal income tax withholding from benefit payments. Form W-4V accomplishes the request for voluntary withholding. Occasionally, unemployed individuals receive benefits from a company-financed fund. These payments are considered wages rather than unemployment compensation. They are reported on a Form W-2 instead of a 1099-G. Supplemental unemployment already has tax withholding. A person receiving unemployment payments from a private fund is well advised to conduct an enrolled agent search. In many cases, the individual has made contributions to these funds. Some public funds also have voluntary contributions from the participants. The contributed amounts comprise money that was already taxed as income. Therefore, no tax is incurred to the extent that benefit payments are less than contributions. Payments from unemployment funds that exceed voluntary contributions are taxed. But the amount is not reported on a personal tax return as unemployment compensation. Instead, it is included on the line for “other income.” IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The special tax rules applying to compensation for ministers are addressed in several enrolled agent exam questions. Complexity usually arises because of housing provided by a church to its minister. Although the value of housing is included with wages for determination of self-employment tax, exclusion is permitted for regular income tax. When an enrolled agent job arises for the tax return of a minister, the initial step is examination of the W-2. This form should report the value of any parsonage provided. The amount is disclosed in Box 14 for informational purposes. To exclude the fair rental value of a residence from taxable income, wages should comprise a higher amount. Complete EA solutions for ministers should therefore compare the parsonage value to wages. Another matter to consider is the meaning of tax law reference to “a home” provided for a minister. This issue was tackled by the Tax Court in 2010 for a case involving a minister’s primary residence and a vacation home. The church provided both homes. The Tax Court ruled that the value of both homes was correctly excluded from taxable income by the minister. Apparently, the Court majority reasoned that “a home” extends to multiple locations. The IRS did not like the Tax Court opinion and appealed to the Eleventh Circuit. In 2012, the appellate court reversed the Tax Court and thereby added new information to enrolled agent study materials. Relying upon common usage of the article “a” when used in the English language, the Eleventh Circuit decided that “a home” refers to a single residence. This ruling rejects the argument that the Tax Code section relating to ministers is intended to apply to any home. The fact that other sections of the Code specify “principal residence” – while the section regarding minister parsonages refers only to “a home” – did not persuade the judges. This logic seems to imply that a “vacation home” is not really a home at all. Rather, anywhere that the phrase “a home” appears is now expected to mean only a principal residence and not merely any number of domiciles. The main warning to remember when taking tax CPE courses is that different sections of the Tax Code may use various terms for the same concept. Too many pages of tax laws exist for anyone writing a new section to consistently apply the vocabulary used throughout the Code for any given topic. Ambiguity is inevitable. This means that enrolled agents are frequently called upon to interpret the meaning of details about which little comprehensive agreement exists. More communication among the EA community is a sound strategy for developing a consensus. Plus, it presents forums for conveying the findings of recent court decisions. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Taxpayers do not always require an attorney for representation with the IRS. In fact, attorneys usually have higher cost than enrolled agents and are not a more secure choice as holders of respect for tax laws. Federal court records indicate that Manhattan attorney John J. O’Brien is an example. O’Brien was a partner at a Wall Street law firm and earned approximately $1,300,000 per year between 2001 and 2008 according to prosecutors. They claimed in a legal proceeding that O’Brien failed to pay $2,500,000 of federal income tax. Instead of consulting with a tax professional possessing enrolled agent certification, O’Brien was busy purchasing a weekend home and using $3,000,000 to acquire a rare book business. The allegations against O’Brien are that he actually never even filed tax returns for the years of 2001 through 2008. He pleaded guilty last summer and was recently sentenced to 28 months in federal prison. That is a considerable prison term for a misdemeanor tax case. It reflects the serious action delinquent tax filers should take to rectify their situations before having to face a judge. It’s never too late to find out what is an enrolled agent. These professionals are trained to uncover relevant tax reporting factors for prior years. They have access to IRS forms of past years and knowledge of the tax laws that have changed. Tax practitioners who find themselves with requests for creating returns of multiple past tax years can usually locate enrolled agent software to prepare the applicable forms. Versions of tax programs for prior years are often sold in the secondary market through reliable online vendors. Enrolled agents can even help prominent attorneys meet their tax filing obligations before the IRS pursues legal action. The costs to O’Brien include more than his prison time. He also was relieved of his partnership interest in the law practice. His income in the last year he worked there was $2,300,000. That is likely difficult to replace compensation when he looks for a job in two years as a convicted tax offender. Plus, O’Brien may lose his license to practice law. People often plan to skip just one year of filing a tax return until they can make enough money to pay the liability owed. While waiting for an improvement in their circumstances, they find that one year easily becomes second and third years. Soon, they stop even considering tax filing requirements because nothing adverse has happened to them. When the IRS finally does take aggressive action, the taxpayers have no recourse. Most defendants in tax cases never intended to defraud the IRS. Before letting matters get that severe, conducting an enrolled agent search is a vastly superior alternative. The IRS maintains a policy that anyone coming forward to address tax filing delinquencies before an indictment will typically escape prosecution. IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.