Articles
Rights to representation
No law requires the taxpayer to speak voluntarily to an I.R.S. employee. Section 7602 of the Internal Revenue code does authorize certain I.R.S. employees to summon proper persons to appear at a certain time and place to give material or relevant testimony under oath. The date fixed for appearance for the I.R.S. official may not be less than 10 days from the date of the summons.
If contacted by an I.R.S. employee, taxpayers should clearly state they want to consult with an EA, CPA or attorney before speaking as contemplated by the safeguards contained in seciton 7521 of the Internal Revenue code.
Problems confronting you:
- I don't have a lot of money.
- I want fast service.
- No baloney, just the facts.
- I'm doing my taxes and/or bookkeeping and I hate it!
- I need someone to respond to me, like yesterday, because now I'm in way over my head.
- I'm afraid of the I.R.S.
- I've probably been cheating myself for years and now I can't sleep at night.
- The last time I paid for tax preparation I paid too much (and felt like I'd gone through a production line).
- I'm frustrated because I think I should be able to figure this stuff out, but, my God, I've got a life and I feel like I'm wasting it doing this.
- I've got a small but growing business, but I won't yet commit to getting a paid, professional bookkeeper, so I have a mess to clean up. I watched the movie Dodgeball; that's how my records look.
- Now that I've finally started to take care of this mess, what's going to compel me to commit to a firm, this firm? What warm/fuzzy is going to put me over the top, force my hand, put me in the office with Mark or Allen?
- Why pay a tax person to do my taxes when I can use tax software for a fracton of the price?
The Expert Says... / Ask the Expert
Q: What is the general rule around whether it should be reported in a particular calendar year?
Say I bill a customer but they are slow? This sounds like an obvious no.
Say I receive a check but don't get it cashed until well into the new year? Debate here?
Submitted by bob m
A: The issue here is called "Constructive Receipt". You are a cash based taxpayer. You report income in the period it is received. It is received when you "constructively receive" payment. The day you receive payment, ie. the day the money is available to you without restriction is the date of receipt and therefore when you report the income. If some one sends you a post dated check, that money is not available to you until the date on the check, so the date on the check is the first day you could possibly have access to the funds and recognize the income. This can get interesting around the end of the year. Technically a payer could write and mail a check on Dec. 30th. That check might not be delivered until Jan. 2. In this case the payer gets to deduct the payment in the prior year and the reciepent records the income in the new year. Give me a call if this is not clear. Alan
Submitted by bob m
A: The issue here is called "Constructive Receipt". You are a cash based taxpayer. You report income in the period it is received. It is received when you "constructively receive" payment. The day you receive payment, ie. the day the money is available to you without restriction is the date of receipt and therefore when you report the income. If some one sends you a post dated check, that money is not available to you until the date on the check, so the date on the check is the first day you could possibly have access to the funds and recognize the income. This can get interesting around the end of the year. Technically a payer could write and mail a check on Dec. 30th. That check might not be delivered until Jan. 2. In this case the payer gets to deduct the payment in the prior year and the reciepent records the income in the new year. Give me a call if this is not clear. Alan