Tuesday, September 9, 2014

IRS Pays Taxpayer's Legal Bills - Tax Court Ruling

Chalk one up for the taxpayers.

Penalties—Taxpayer Awarded Attorneys' Fees after IRS Refuses to Abate Incorrect Assessment: A taxpayer, whose son lived with him most of the year, claimed Head of Household (HOH) filing status but did not claim his son as a dependent. (He and the child's mother had agreed that she could claim the dependency exemption.) The IRS issued a math error notice to the taxpayer, indicating that it had changed his filing status to single because the name of the dependent who qualified him for HOH status was not reported on the return. The taxpayer made a timely request for abatement and included the reasons for claiming HOH status. During a collection due process hearing, the IRS refused to abate the assessed tax, despite the taxpayer's support for filing as HOH (e.g., name and Social Security of his son). Upon filing a petition with the Tax Court, the IRS conceded to abate the assessment. The taxpayer requested reimbursement for his attorney's fees under IRC Sec. 7430(a), which the IRS challenged. The Court sided with the taxpayer because the taxpayer was the prevailing party, exhausted all administrative remedies available to him within the IRS, and did not unreasonably delay the proceedings. Michael Swiggart , TC Memo 2014-172 (Tax Ct.). 

Monday, July 21, 2014

IRS Phone Scam Alert

Our friends at Rea and Associates recently featured an article in their newsletter that sparked a lot of internal conversations here. One of our senior folks had received one of these phone calls (as had some of our clients). Rea and Associates kindly allowed us to share this with you as well.

Here is what Lance Jacob, EA has to say about his experience with one of these scam calls:

1.       The callers had foreign accents (not that there is anything wrong with that)
2.       They made it seem like they are working with a supervisor and will transfer your call when you start asking questions (the only mistake was that he transferred my call and I could tell it was the same person I had just spoken to).
3.       The area code was 202 making you think they were calling from IRS headquarters in DC

4.       Ask them for their badge number and a callback number because you want to speak with the IRS Taxpayer Advocate and call them back. They will probably hang up.


Be On Guard For IRS Phone Scams


Maribeth Wright | July 17th, 2014

You get a call from a man who said he was from the IRS and was informing you that criminal activity was found after the IRS performed an audit on your past taxes. Then he asks if you had a criminal lawyer to represent you. And as you tried to get a word in edgewise, he told you not to interrupt him because the IRS and local authorities were recording your phone call. Pretty unnerving, right?

Well, unfortunately, this phone call actually took place with a client. And these types of phone calls are happening constantly. Back in April, the IRS issued a warning for consumers about phone scams targeting taxpayers. During the 2013 tax filing season numerous phone scams occurred, but the IRS has seen an increase in these scams since then. Because the IRS believes that these incidents will continue to plague taxpayers, it’s important to be vigilant for these kinds of calls.

The 4-1-1 On These IRS Phone Scams

  • Some taxpayers who received these calls were told they’re entitled to a big tax refund, or that they owe a lot of money to the IRS that needs to be paid immediately. Don’t be fooled. The IRS won’t contact you via phone about these matters. If you ever owe the IRS money, you’ll be sent a written notification via mail.
  • The IRS will never ask you for personal financial information over the phone, such as your credit or debit card information. If you’re asked for this information from someone claiming they’re from the IRS, don’t give it and report the incident immediately to the IRS.
  • Some IRS scammers use fake names/surnames (most of the time these names are common) and IRS badge numbers when they identify themselves.
  • It’s possible that a scammer knows and can tell you the last four digits of your Social Security number.
  • The phone number that a scammer calls you from could look like it’s from the IRS toll-free number.
  • If you take one of these scam calls, you may receive a bogus follow-up email to make it look like it is a legitimate inquiry from the IRS.
  • You may be threatened with jail time or driver’s license suspension from one of these scammers. They may then hang up on you and then call back pretending to be the police or DMV, further trying to prove their claim to you.

What Should You Do If You Get One Of These Calls?

So have you received one of these calls? If so, and you’re not sure the next step, here’s what you should do:
  • If you think you might owe taxes or there may be an issue with your taxes, call the IRS at 1.800.829.1040. Someone at the line can help you determine if you indeed have a payment due.
  • If you feel you received this call unexpectedly and know you have no IRS issues, call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
In light of these increasing incidents, be on the lookout and don’t fall prey to these scams. Hang up if you’re uncomfortable with the call. And know that the IRS would never ask for personal financial information over the phone or in an email. If you receive any suspicious emails, forward the email tophishing@irs.gov.

Ohio Tax Help


If you’re ever unsure about anything you received from the IRS, whether it be a letter, a phone call or email, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if the inquiry is legitimate, and assist you with responding.

Author: Maribeth Wright, CPA (Cambridge office)

Thursday, July 3, 2014

Why Become a Dentist?

Here is another guest post from Dr. Donald Lurie.

It seems to me that goals and aspirations upon entering dentistry have changed drastically over the years.  A few weeks ago, I was attending a conference and the subject arose as to "Why did you become a dentist?"  I thought this was a really easy question until I tried to write down the reasons that I entered this wonderful profession 50 years ago.  As I reflected upon the question, I realized that the dynamic had changed so dramatically over the years that it was now, for me, a most difficult question to answer and to update.  

I listed the reasons that started me on this journey:  to heal and to cure the sick, to maintain independence and be my "own boss", to have the ability to make a substantial income, to provide for my family, to obtain respect in the community were but a few of the immediate reasons for charting this path.  But now the dynamic has changed so much that I am not sure that I could compare those thoughts to a new student with aspirations.  You would have to interpret the ability to be "your own boss". I am not sure that, in these times, that is as possible as in the "old" days.  The time of solo practice, of studying, training, postgraduate degrees and residency and then entering practice on your own appear to be over.  

I remember going to the bank and asking for a loan to open my own office.  The banker (a classmate from college) advised me as to what he thought it would take, shook my hand and said there would be some paperwork to fill out.  He suggested that I go and find my location, lease the property and prepare to renovate the space for my needs.  He also suggested that I bring the information back to him so he could advise me.  Thus, with the help of my accountant who was already on my team----before I even had an office---the Team of Retirement (which I have talked about in earlier articles) was started.  This is actually a philosophical term of practice management that has served me well. It has served me well.  Can you imagine being able to do that in today's financial world?  And would you have the fortitude (guts) to do it.  In those early days, this was the norm.  There were very few group practices, especially in general dentistry.  Some of the specialty practices had small groups but there were fewer specialists in total.  I suspect that this was a means to keep the "market closed".  As time went on, more specialists opened on their own and over the years, many of them merged; and many of them dissolved.

The desire to heal the sick and to make people well and return them to function has never dissipated.  This is still a goal that has been with me my entire life and even in retirement I continue to give and to donate effort to this ideal.  However, I wonder if the freedom to exercise this is as easy as it was in my beginning.  There is so much litigation, so much inspection, so many bureaus to satisfy, that I wonder if I would have the courage to try some of the new techniques and projections that I did in those days.  If a doctor had an idea, he would suggest it to a patient and many times, it was accepted and tried.  Now I am not talking about moribund procedures, but rather a new technique or variation on a theme mixed with good common sense and based on good surgical knowledge and experience. And if the "experiment" went wrong, the social media that is now present would crucify me and the good that I had done over the course of my years in practice might disintegrate quickly.  These are just thoughts but it gives me pause as I look back on reasons why I became and Dentist and Oral Surgeon.  

I think that the opportunity to make a good income and to provide for one's family is still viable but I am not sure that it is as attractive as it once was possible.  The tax laws are so different and the age of insurance and government interference have also changed the dynamic.  The large groups are doing quite well and are able to diversify but the small solo practitioner may be another story.  I have to yield to the accountants for introspection on this, but it is something that I have heard many times recently. 

I mentioned above about the respect of the community and I think that is still true.  The doctors of today are TALL and WELL REGARDED.  I think that this has always been so and it is a tribute to the schools and to the profession that has nurtured us on our journey.  We feel discomfort when one of our group is challenged or if a bad report hits the news since we feel it reflects on all of us.  It is part of our heritage that we want to "do no harm."  I also feel that (especially in these times) our brothers and sisters do a fantastic job of carrying on the respect of the professions. 

And so I think that you can understand how difficult it was to list and compare the reasons that started me in this profession of dentistry and surgery.  The years of training were many (including dental and medical school and then residency), but they are even longer now.  I would challenge you to sit and reflect on your career and for the reasons that you are where you are at this time.  Reflect, meditate and make it better while you can.  And may this wonderful career bring peace and joy to you and to those you serve. 


We are all here to help one another.  Please do not hesitate to send me you thoughts, questions  or comments.  It would be an honor to help.  

Dr. Donald B. Lurie
email:  donald.lurie@att.net
Phone:     717-235-0764
Cell:         410-218-2228

Friday, June 20, 2014

Is a Letter of Intent (LOI) Necessary When Buying or Selling a Dental Practice?

Here is a repost from Tim Lott, CPA, CVA and Ellen Dorner of NL Transitions, a Dental Brokerage firm.


The easy answer is no, it is not necessarily needed.   In most states it is not a legally binding agreement anyway, so why go through the effort?

There are actually some very good reasons why having a LOI is crucial to every dental practice transaction, in spite of it not always being a legally binding agreement.  In my opinion, there really is no downside to having one.  Let’s discuss what a letter of intent is and what purposes it serves.

The primary purpose of the letter of intent is just as it’s titled, to lay out what one’s intent is as it relates to the transaction at hand. It should be a one or two page letter or memo detailing some of the major points of the transaction. In the case of a sale or purchase of a dental practice, some of these major points typically identify: what’s being purchased, the parties involved, the price, the timing of the payment, the structure of the transaction, exclusions, covenant details, seller’s compensation and general terms, buyer contingencies, time frames for acceptance of offer and due diligence, deposit requirements, etc.

As mentioned above, since the majority of these letters are NOT necessarily legally binding and may be somewhat boiler-plate, they shouldn’t cost too much in the way of professional fees to put one together. While you may not need to have an attorney involved to draft and submit a letter of intent, we do suggest you have attorney look over it before submitting it to the other party. If you can hammer out the meat of the transaction BEFORE engaging your attorney you may save money and a lot of headaches having your attorneys iron out these issues.

The letter should be a way for the parties to document what they believe has been discussed as it pertains to the major points. It serves as a way to let the seller know your intent to purchase the dental practice is serious enough to make a written offer and should give them some level of confidence that you’ll be committed to the transaction.

It is customary for the seller to require a deposit with the signed letter of intent. The amounts can vary, however, it’s usually in the range of $5,000. Many times the deposit is non-refundable so if the buyer walks away from the transaction, the seller is covered for any professional fees they’ve incurred to entertain the offer. If a seller requires a substantial deposit then the seller may also have to commit to a penalty if they walk away.


The drawback of NOT having a LOI is that without consensus on the main points, the two parties can wind up going back and forth, or worse, the attorneys or other professionals go back and forth on the main points and the parties wind up spending more in professional fees than they have to. Do yourself a favor and minimize your stress level, start with a LOI BEFORE jumping right to the legal agreements. 

For more information about your situation, email Ellen Dorner or call her at (800) 772-1065. Visit our website at www.NLTransitions.com .

Tuesday, June 3, 2014

Tax Court Rules that Horse Racing Losses Can Be Deducted

Here is one of those instances where meticulous record keeping paid off.

Income Tax—Horse Racing Activity Not Passive: The Section 469 Passive Activity Loss (PAL) rules limit losses from any trade or business in which the taxpayer does not materially participate. The Tax Court has recently held that a lawyer's losses from a side thoroughbred horse breeding and racing activity (thoroughbred activity) were not PALs and consequently were currently deductible. The lawyer presented a narrative summary (prepared using telephone records, credit card invoices, and other contemporaneous materials) at trial demonstrating for the three years at issue he had participated in the activity for more than 500 hours during each year. Stefan A. Tolin , TC Memo 2014-65 (Tax Ct.). 

For a review of you particular situation, contact us, in addition to specializing in dental accounting, we are widely respected for our equestrian accounting skills. (800) 772-1065