The Master's Tax & Financial Services
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Tax Education at the 2007 NATP Conference

As tax professionals we are continuing taking education to enhance our skills. From time to time we are asked about what classes we take. Recently we attended training over 2 days in Fresno, California.

Dead of Alive (1 hour)
When a person dies the tax return process becomes much more complicated. Income the decedent receives must be separated according to before or after death. A new tax ID number must be obtained for the estate, and all accounts changed from the decedent's social security number to the new ID. Some income, and any income on accoutns that are not quicly moved to the new taxpayer ID number, must be prorated between two different tax returns, and some income must be nomineed to the new number by filing a 1099/1096 information reports with the IRS. Some outstanding tax issues die with the decedent, and others transfer to the estate. Even the filing status is not necessarily obvious, as are the signing rules.
California Update (1 hour)
Tax Professionals work to keep abrest of changes happening at tax agencies. This session dealt with updates on the FTB audit and appeal process. Also covered was an update on the withholding process on real estate, and how the responsibility on the buyer changes based on the terms of the sale. In some cases the seller may choose an alternate calculation method for the real estate withholding, and this included a review of thepotential differences in the two methods.
Registered Domestic Partnerships (1 hour)
California has a long history of changes to provide benefits for unmarried domestic partners, beginning in 1982. In 2006 Senate Bill 1827 was passed in an attempt to create equality between married couples and Registered Domestic Partners (RDP). This bill requires RDPs to file as married individuals - either as "married filing joint" or "married filing separate". This is in contrast to federal law which prohibits RDPs from filing using either of the two married filing statuses. However, in many cases this change in filing status has a negative impact on the taxpayers' taxes, and will thus cost the taxpayers more tax. There are also a number of other issues that many RDPs do not want, but these are equivalent to how the law applies to married copules, such as reducing the allowed mortgage interest deduction (as one example).
Dissolving a Corporation (1 hour)
Many times when an incorporated business ceases to do business, the owners simply assume that the business can be ignored. Unfortunately, this is not the case, and such inattention can lead to significat tax penalties and interest due on unpaid taxes. Corporations must pay taxes even if there is no operation and no income. Failure to file a tax return can result in the state suspending the corporation, which makes it illegal to do business, and no legal protection from unfair business practices. (For example, if a customer fails to pay a debt to the suspended coropration, the suspended corporation is not allowed to sue the other business for relief.) If an incorporated business is going to cease operating, it is important to shut it down properly. This session dealt with the process of shutting down the corporation, and avoiding growing back taxes, interest, and penalties.
Enterprise Zones (1 hour)
California establishes Enterprise Zones where there is a recognized special need for economic development. There are tax benefits to business that operate in these zones. But there are also a number of subtle rules that affect eligibility for these benefits. This session was designed to equip the Tax Professional to guide their clients through these issues so that they can receive those taxbenefits.
Ethics (2 hours)
Enrolled Agents are required 2 hours of ethics training each year. This session acknowleged that our ethics as Tax Professionals are a function of our personal value system, and no training can affect that. However, training can prepare us to perform with a high level of professionalism. Congress continues to update the law to provide more motivation for Tax Professionals to behave at a high ethical level. But in a practical world, the ethics we apply in different situations often depends on considering those situations in advance so that we are prepred to respond according to our personal values. This session reviewed a number of changes to the environment in which Tax Profesionals works, and case studies of situations where Tax Professionals made poor decisions.
Electronic Return Originator Responsibilities (1 hour)
Most Tax Professionals e-file tax returns. But there are a number of special requirements associated with e-filing, both in what is required to file a return and the record keeping required after the fact. This session reviewed those requirements plus how to address reject errors.
Foreclosures, Bankruptcy, and Debt Forgiveness (2 hours)
Currently foreclosures are a leading issue in the real estate market. The tax consequences are numerous, and this session reviewed those issues. (Details on this topic are collected on the Real Estate page.) Included in this session was when a taxpayer is or is not subject to additional income taxes based on the cancellation of debt. Bankruptcy may not impact some debts, and this was reviewed. There was a focus on deciphering the various tax information documents often associated with foreclosures and debt forgiveness. Treatment is different if a mortgage is forclosed on, or change, by the seller in seller-financed situations. This also results in changes to some statute of limitations associated with tax returns.
Head of Household (2 hours)
Recent changes in both the head-of-household and dependency rules has created considerable confusion as to when a person qualifies for this advantageous filing status. This session also addressed the audit process for this filing status used by the special division at the Franchise Tax Board that deals exclusively with Head of Household issues.
Aligning with IRS Audits (2 hours)
California law requires taxpayers to notify the Franchise Tax Board if their federal tax return is audited by the IRS and any chang is made. Failure to notify the FTB can result in penalties and removes any statute of limitations for California to take action against the taxpayer. This session highlighted the differences in the time allowed for the FTB to take action dependent on when the taxpayer notifies the FTB of the change on their federal return. It also dealt with specific processes used for the notification process and efficient resolution of these secondary audits by the FTB.
"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA