IRS

Does tax software prepare your returns?

I believe that if you go through the software’s interview process then the software is preparing your return.

However remember that the software is preparing your return based on what you told it. Therefore it’s important to review returns before you send them out just as you would if some tax professional was preparing your returns.

From what I’ve seen from IRS audits the software’s artificial intelligence is not the same as the intelligence of a thinking human being. For example it keeps on asking you questions and you keep on entering the same amounts at different places until the IRS finds them for you. That’s why it’s important to look over the tax return before you send it out or e-file it.

The Tax Court still looks at errors in self prepared returns as (GIGO) garbage in, garbage out. I believe however that as artificial intelligence evolves, in time, software developers will have to take the moral and ethical responsibilities for what they’re doing. You’re seeing this already with self driving cars and drones and robotics.

Even if eventually tax software developers will be penalized as preparers nevertheless you as a taxpayer still remain responsible for any taxes and penalties and interest.

The biggest hurdle in coming into tax compliance

It seems to me that the biggest hurdle in coming into tax compliance is readjusting our living expenses, balancing our budget, so that we are able to live off of net income versus gross income.  This is especially the case where we have not been filing tax returns or paying taxes for quite a while.

The IRS understands this somewhat and is willing sometimes to give us some time to readjust our living expenses.  It’s not exactly cold turkey but there will be some withdrawal pains in the process.

In the other extreme if we really can’t pay our ordinary living expenses, or we have extraordinary circumstances such as huge medical bills then the IRS will give us time to recuperate and put our accounts on currently not collectible status.

When looking for someone to represent you before the IRS make sure that they have some financial planning skills besides the skills necessary to deal with the IRS.  You still have to make the decision and the choices but it helps to have someone who understands how to guide you in the process.

Do you think the IRS should have additional funding?

Yes or no? Leave a comment and let us know what you think and why!

Ten Facts About Fighting IRS Tax Bills – Forbes

http://www.forbes.com/sites/robertwood/2015/04/27/ten-facts-about-fighting-irs-tax-bills/

Robert Wood is one of my favorite Forbes contributors.

NYTimes: Legal Marijuana Faces Another Federal Hurdle: Taxes

Legal Marijuana Faces Another Federal Hurdle: Taxes http://nyti.ms/1EqaJEB

When working these kinds of cases it’s important to know the difference between what are business expenses and what are costs of goods sold.