What the IRS Doesn't Want You to Know: A CPA Reveals the Tricks of the Trade

Overview

With tax laws constantly changing and existing regulations hidden in volumes of tax code, nothing related to taxes is easy to figure out. Businesses and individuals in every income bracket need expert advice that cuts through the IRS bureaucracy and shows them how to work within the system. In What the IRS Doesn't Want You to Know: A CPA Reveals the Tricks of the Trade, tax expert Martin S. Kaplan reveals critical strategies that the best CPAs use for their clients to file ...

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Overview

With tax laws constantly changing and existing regulations hidden in volumes of tax code, nothing related to taxes is easy to figure out. Businesses and individuals in every income bracket need expert advice that cuts through the IRS bureaucracy and shows them how to work within the system. In What the IRS Doesn't Want You to Know: A CPA Reveals the Tricks of the Trade, tax expert Martin S. Kaplan reveals critical strategies that the best CPAs use for their clients to file shrewd, legal, money-saving returns.

Filled with in-depth insights and practical advice, this book will help you answer such questions as:
* How can you approach the "new" IRS to maximize your tax return success?
* What are the latest IRS weapons?
* What are the biggest taxpayer misconceptions?
* What are the most commonly overlooked credits and deductions?
* How will new tax legislation affect you?
* How can outdated IRS technology benefit you?
* What forms should you never fill out?

From deciphering the Jobs and Growth Tax Relief Reconciliation Act of 2003 to understanding the personality of the IRS, What the IRS Doesn't Want You to Know will help you shape your tax strategies and stay on top of your current financial situation.

Filled with sample tax forms, state-by-state hot-line phone numbers, and over 1,000 secrets about how the IRS really works, the 1996 edition of What the IRS Doesn't Want You to Know gives taxpayers indispensable tips that can save them money and time--and help them avoid being audited. Charts & graphs.

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Product Details

  • ISBN-13: 9780471449720
  • Publisher: Wiley
  • Publication date: 12/9/2003
  • Edition description: REV
  • Edition number: 9
  • Pages: 432
  • Sales rank: 992,143
  • Product dimensions: 6.00 (w) x 8.90 (h) x 1.30 (d)

Meet the Author

MARTIN S. KAPLAN has been a certified public accountant for more than thirty years. His extensive experience includes audit and accounting work, tax planning, and representing clients in IRS matters.
You can ask Mr. Kaplan tax questions at www.irsmaven.com.

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Read an Excerpt

Why Every Taxpayer Must Read This BookWelcome to the year 2000. The World Wide Web. Cell phones. E-mail. Eight point four gigabyte hard drives. Genetic engineering. Cloning. Viagra. Capabilities unheard of even one year ago abound. There's a new IRS commissioner, and a fresh, spiffy vision for reorganizing the IRS has been set in motion. But when it comes to paying taxes and dealing with the IRS, what really has changed thus far? Each year hundreds of reputable books are written about taxes, audits, and the Internal Revenue Service (IRS). No-nonsense, definitive, and powerful, the titles practically scream out ways that we can deal with the IRS: Fight, Win, Battle, Negotiate. Words such as The Only or The Best followed by Audit, Tax Forms, Small Business, or Corporate Tax Guide Book You'll Ever Need appear more than enough to guarantee results. Worried about the IRS, or in doubt about your personal tax situation? The confidence and warm cozy feelings titles such as these bring give a clear and unmistakable message to the taxpaying public: "Buy me," these books say, "and all of your tax problems will be resolved." So each year thousands buy these books, or select them off library shelves, hoping to discover the secret to keeping their tax payments low and their returns away from the scrutiny of the IRS. Unfortunately, the information taxpayers really need to satisfy these goals rarely, if ever, surfaces. No matter how much information taxpayers read, hear, or research on the subject, they still remain easy targets for the IRS. In the IRS ballpark, despite living in a megatechnology environment, and with periodic promises about a moreconsumer-oriented IRS, some things have changed, but very little. Isn't anyone aware of the self-generating scam that keeps taxpayers in semidarkness and the IRS operating the way it always has? There is a very specific group of people who are aware. They just aren't talking. The time has come to deal with some clear-cut, shocking truths about what's behind the unsettling phenomenon that perpetually keeps blinders on the taxpaying public. This requires exploring the overall phenomenon, and then examining why those in the know have remained silent. First the scam. Let's face facts: the IRS has a reputation for being all-knowing, all-powerful, and ruthless (many would say vicious). It is seen to have extensive manpower and technological resources, and the law is on its side. Without actually knowing what the IRS is and how the organization really works-or, perhaps more important, how it doesn't work-the public remains in the no-holds-barred grip of the IRS's reputation as the Big Bad Wolf. Millions of taxpayers live with the fear that one day an IRS agent will single out an item from their tax return, decide an audit is in order, and come after them. Fingering alleged cheaters and exacting retribution is, after all, the acknowledgment IRS agents crave. In fact, the IRS is often referred to as an agency out of control-and with good reason. Once it selects its culprits, it chooses the punishment and proceeds to administer it with very little containment from any other governmental or nongovernmental agencies. So it's really not surprising that most taxpayers envision the IRS as harassing and abusive, using its power in an uncaring, even brutal way to possibly destroy their careers and families. Taxpayers are consistently so fearful of dealing with the IRS that they rank it as an event as traumatic as divorce or having their house burn down. This paranoia shows how enormously successful the IRS has been in creating its all-powerful-and-untouchable image. By sustaining these fears, the IRS maintains a status quo that actually prevents taxpayers from * Questioning how much of the IRS's reputation is actually true.* Considering why a never-ending body of information, designed by well-meaning authors and "tax experts" to help them pay less in taxes and better manage the demands of the IRS, never genuinely helps them accomplish those goals. Now let's talk about those who know exactly what is going on and find out why they aren't talking. Any good Certified Public Accountant (CPA) or tax professional knows how to beat the IRS at its own game. But an unwritten law among tax professionals has traditionally prevented this vital information from being revealed publicly. What is this law based on? It's based on tax professionals' healthy fear that the IRS will turn against them. When filling out their clients' tax returns, tax professionals use information they have gained as experts in their field. But these very same professionals do not traditionally disclose, in anything resembling a public forum, information in three crucial areas that can make a huge difference in the lives of the millions of taxpayers who aren't their clients: 1. What the IRS really is and how it thinks, responds, and operates, or, more precisely, doesn't operate. 2. Endless loopholes in our tax laws that can be used in the preparation of an individual tax return. 3. How both of these can be used consistently to benefit taxpayers. Tax professionals have made it a practice NOT to reveal such information-and with good reason: They've seen firsthand how people can be destroyed by both warranted and unwarranted IRS attacks. Why would CPAs, or any professionals in the tax field, put their lives, families, careers, and futures on the line? The answer to this question has traditionally prevented tax professionals from publicly explaining why the right kind of information never gets to the taxpaying public. It also keeps them from revealing that information on a broad scale. So, to prevent an all-out personal conflagration and probably endless repercussions, tax professionals continue to offer whitewashed material that promises to tell taxpayers how they can disappear from the IRS's view. In fact, much of this information is correct and does work. But it is not the whole story. Too much information is left out, and no one knows this better than the authors themselves. After almost 34 years as a CPA, I have consistently watched how the IRS can financially ruin all kinds of people: rich, middle-class, the average working family-people exactly like you. In mid-1997 a fascinating case involving IRS wrongdoing hit the newspapers. It had begun simply enough in 1993. Mrs. Carole Word accompanied her son to an audit of their family business, three children's clothing stores in Colorado Springs. Because the audit was going poorly, Mrs. Ward spoke up to the female IRS revenue agent, saying, "Honey, from what I can see of your accounting skills, the country would be better served if you were dishing up chicken-fried steak on the interstate in West Texas, with all that clunky jewelry and big hair." Four weeks later, IRS revenue agents raided the family's stores, padlocked all three of them, and posted notices in the windows that implied that Mrs. Ward, who was 49, was a drug smuggler. The IRS then imposed a tax bill in the amount of $324,000.


Copyright 2002 by Martin S. Kaplan, CPA, and Naomi Weiss
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Table of Contents

Acknowledgments.

1. Why Every Taxpayer Must Read This Book.

CPAs Grade Clients.

2. The IRS Personality: Playing It to Your Advantage.

Events That Shaped the IRS Personality.

Never Forget!

Acknowledging Dedicated IRS Personnel.

3. Who Runs the Show: What You’re Up Against.

The Image.

What It Looks Like from the Inside Out.

The Organization.

What You Need to Know about the Examination Division.

What You Need to Know about the Collection Division.

What You Need to Know about the Criminal Investigation Division.

What You Need to Know about the Taxpayer Services Division.

4. IRS People: Whom You Need to Know; What They’re Really Like; How to Work with Them; Standard Operating Procedures.

The IRS Chain of Command.

Who Runs the Show?

The Examination Division.

The Collection Division.

The Criminal Investigation Division.

The Upper Echelons.

Offering a Bribe—What Are the Consequences?

Standard Operating Procedures.

5. Neutralizing the IRS’s Power.

The IRS Power Base.

Power from Information Resources.

Power from the IRS’s Unique Legal Standing.

Power from Its Unique Role as a Law Enforcement Agency.

Power from Its Unique Legislation-Creating Authority.

Power to Make Mistakes without Consequences.

Power from the Freedom to Do What It Wants.

Why Does This Continue?

6. IRS Technology: What Works, What Doesn’t Work.

The Processing Pipeline.

The Nonprocessing Pipeline.

The Rest of the Process.

Where the IRS Technology Works.

Where Mistakes Are Made in the IRS Matching Program.

Where the IRS Technology Falls Short on the Income Side.

Where the IRS Technology Falls Short—Mortgage Interest and Real Estate Tax.

Where the IRS Technology Falls Short—Nonfilers and Underreporters.

Where the IRS Technology Falls Short—Lack of Reporting Requirements for Corporations.

Where the IRS Technology Falls Short—The Audit Level.

Technology Overhaul a Fiasco—Still.

7. IRS Targets and What to Do If You’re One of Them.

Are You in the Line of Fire?

Target: The Self-Employed.

Target: Cash-Intensive Businesses.

Target: Industries in the Market Segment Specialization Program.

Target: Nonfilers.

Target: Tax Cheaters—Omission of Income.

Target: Tax Delinquents and Tax Scam Artists.

8. How to Completely Avoid an Audit.

Don’t Fear Audit Statistics.

Audits at an All-Time Low.

“Live” Audits Are Aimed at Corporations.

Audits of Estate and Gift Tax Returns.

How to Prevent Audit Problems Before They Occur.

How Long Should Taxpayers Keep Records?

How to Completely Avoid an Audit.

Small Business Corporations (S Corporations).

Limited Liability Companies and Partnerships.

Partnerships.

Business Ventures and the Hobby Loss Rule.

Businesses That Include Merchandise Inventory.

Securing a Tax-Advantaged Life.

9. The Twenty Greatest Taxpayer Misconceptions.

10. How to Hold On to More Money: Overlooked Credits and Deductions.

Selling Securities from a Dividend Reinvestment Plan.

Identifying Specific Securities That Are Sold.

Unamortized Points on a Home Mortgage.

Deductible Interest on a Home Equity Loan.

Unused Losses, Expenses, and Credits.

Self-Employed Deduction for Health Insurance.

Charitable Donations—Securities.

Charitable Donations—Household Items.

Social Security Tax Overpayments.

Job-Hunting Expenses.

State Income Tax Deductions.

Parental or Grandparental Support.

Federal Income Tax Withheld on Form 1099.

Classroom Expenses for Teachers.

11. Ten Ground Rules Never to Break to Win with the IRS.

Rule 1. Always Report Income on Your Tax Return That Is Being Reported to the IRS by Third-Party Payers.

Rule 2. Never Include Other Forms That Are Not Required with Your Tax Return—Do Not Volunteer Additional Information.

Rule 3. If Any Information That You Are Putting on a Tax Return Is a Gray Area, Go for as Close to Full Deductibility as Possible.

Rule 4. File Your Personal Tax Return by April 15—Use an Extension Only If Absolutely Necessary.

Rule 5. Don’t Worry about Being Unable to Interpret or Decipher the Complex IRS Tax Forms—Many IRS Auditors Don’t Understand Them Either.

Rule 6. Strive to Be Neat.

Rule 7. When All Else Fails, Follow One or More of These Four Steps.

Rule 8. Make It Your Business to Know Which Tax Loopholes Apply to Your Personal Tax Situation.

Rule 9. Use to Your Advantage the Fact That the IRS System for Document Retrieval Is Archaic.

Rule 10. If You Are Involved with IRS Personnel in Any Way, Behave Decently.

12. The Latest Tax Legislation: What to Watch Out For, How to Benefit.

The Jobs and Growth Tax Relief Reconciliation Act of 2003.

2001 Tax Legislation.

The Tax Acts of 2001 and 2003: Conclusions.

Taxpayer Protections and Rights.

13. The New IRS: What Are Its Goals?

New IRS Mission.

Serving Four Groups of Taxpayers.

Obstacles to Overcome.

IRS on Track—Direction: Electronic Filing of Individual Returns.

Direction: E-Filing on Personal Computers.

Direction: Telephone Filing (TeleFiling).

Direction: Electronic Filing for Businesses—Electronic Federal Tax Payment System.

Direction: Increasing Compliance.

How to Pay What You Owe—You Choose.

Direction: Paying Taxes with Plastic.

Appendix A: Most Important Tax Forms Discussed in This Book.

Appendix B: State Filing Authority Telephone Numbers and Web Sites.

Appendix C: Your Rights as a Taxpayer.

Appendix D: Useful Web Sites.

Appendix E: Internal Revenue Service (Future Organization).

Notes.

Bibliography.

Index.

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Sort by: Showing all of 2 Customer Reviews
  • Anonymous

    Posted April 11, 2005

    Very Good Book

    Marty Kaplan has done a great job of compiling lots of useful information in this book. The info is presented in a well-organized fashion. It's an excellent tool to keep in any office. I highly recommend this book!

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  • Anonymous

    Posted January 13, 2005

    Good book to learn better Tax Filing

    Hey Its a Good book to learn more things on Tax Filing

    Was this review helpful? Yes  No   Report this review
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