The Tax Attic with Jerry Coon — November 5, 2009

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

Security issues discussed

This summer we traveled to the Asheville, North Carolina area. It’s a wonderful part of the world. There seems to be plenty of wild animals living in the mountains surrounding Asheville and the scenery is outstanding.

Deb and I took the Blue Ridge Parkway on our way home and I was lucky enough to see a bear crossing the road. Deb had looked down for just a second and missed seeing the bear. She was extremely disappointed, because Deb has never a seen a bear in the wild. For me, I’m fortunate to go fishing in Canada, and most years I get to see bears both on the side of the road and, all too often, in or very near our campsite. This year was a particularly good year for bear sightseeing, but since Deb isn’t going fishing in Canada anytime soon, we have to find a different way for her to see a bear.

After reading the Sunday Grand Rapids Press, I’m beginning to think all we have to do to see a bear is take a drive up to Newaygo County. In case you missed it, Don Corrigan of Kent City killed a 500-pound bear near Woodville. Apparently, it will end up being the second largest bear ever killed in Michigan. Occasionally, we do read about a bear being sighted in Newaygo County, but the second largest bear ever killed in Michigan? That amazes me, but it didn’t amaze Mr. Corrigan. He said, “I stayed close to home to show people there are bears in Newaygo County.” That’s an understatement and thanks for showing us, Don. Now if I can just show Deb. I’m thinking she might be satisfied to see just a regular-size bear or even a cub.

Throughout the year, the Internal Revenue Service holds several conferences with tax professionals. These conferences keep tax professionals informed as to what is happening within the IRS and also what they are expecting of tax professionals. We all tend to think of the IRS as a big, non-personal bureaucracy, but in reality it is a large employer with employees trying to make a living just like you and me and trying to operate within an insanely complicated tax system.

Tax professionals have an important function within that tax system. We interact with both the IRS and the taxpayers of the United States. It’s important for us to be informed of what the IRS is thinking, expecting and encountering from tax professionals as a group so we can make decisions accordingly. Feedback is always good. Since the feeling within the IRS is that the majority of taxpayers do use a third party to help them through the tax preparation process, they are very much interested in working with tax professionals.

The items discussed at one of the latest conferences were very wide-ranging. For example, it was pointed out, with emphasis, that the IRS does not send e-mails to taxpayers. They have security concerns when it comes to e-mail, as do we all. Specifically, this means if you do get an e-mail from the “Internal Revenue Service,” it’s a scam no matter how official it looks. Delete it immediately. Furthermore, the IRS has no future plans to start contacting taxpayers by e-mail.

Along the same security issue theme, when taxpayers call the IRS about a collection issue and they call from a cell phone, the taxpayers are being instructed to call back on a land line. There are worries that the discussion may be overheard and, therefore, the taxpayer’s privacy is being compromised. We have all heard of “private” cell phone conversations that have ended up on a television news show or in a court proceeding as evidence, so I believe this is a valid worry.

Another subject that has surfaced in the last month few months concerns employers and the making of their federal tax deposits. Employers are required to pay to the federal government, on a timely basis, the taxes that they withhold from their employees’ paychecks. There are two ways to pay these taxes. The employer can choose to electronically make their deposits through the IRS’ Electronic Federal Tax Payment System (EFTPS), just like paying a utility bill online, or they can manually write out a check and take it along with a coupon to their bank for processing. The IRS encourages using the EFTPS manner of paying. It’s all electronic and there is no paper to process. We also encourage employers to go the EFTPS route. Lately, a few banks have announced they will no longer be accepting the manual check and coupon manner of making a federal tax deposit, and apparently they are blaming the federal government, specifically the IRS, for not accepting manual payments. The IRS wants us to know that while it does encourage using EFTPS to make deposits, they do not require its usage. Apparently the banks who are not accepting manual tax deposits are doing so on their own and should not be using the IRS as a crutch.

Finally, the IRS points out that many of their employees are baby boomers. That means they have either reached retirement age already or are going to reach that magic age in the near future. They will have to replace these veteran employees and train their replacements. Replacing might be the easy part. Training is the hard part. The tax preparation business itself is a difficult one to get a handle on. Training agents to monitor taxpayers and tax preparers is even more difficult and, judging by the constant passage of new tax laws, Congress doesn’t care one iota about making it easier. This is Jerry Coon signing off. 

Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
His telephone number is (616) 866-4704 and his
e-mail address is

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