Matt Smith
@SmithMatthewC
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Husband to @arianakukors . Wahoo➡️Longhorn➡️CPA. Proponent of Tax Simplification/Automation. Loather of PTPs.
Manhattan Beach, CA
Joined August 2010
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Last Seen Profiles
Why would we provide an EV credit but not a work from home credit? The latter clearly being ‘greener’ than the former.
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I'm at about 2.75 hours into a call with the IRS (~98% on hold) and finding that the best of use of the hold time is to reflect back on all the decisions in my life that led me to this call.
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Can someone explain to me why the hell a small business tax preparer needs to be an expert in some of the most complex areas of international taxation to file a f-ing 1065 or 1120S because one partner might have a little over $600 of 1099-source foreign tax credit?
#TaxTwitter
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The 150-hour could easily be replaced by a simple requirement that in order to sit for the CPA exam you must hold an accounting degree* from an accredited university. More kids would major in accounting from the onset, have stronger fundamentals, and make better CPAs.
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To all those on
#TaxTwitter
posting that you're done and relaxing, did you cross check for wash sales across brokerage statements? Yeah, didn't think so. Get back to work.
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Every year I miss the first weekend of Coachella because of Tax Day. Every. Single. Year.
I miss the second because I just don’t wanna go but that’s besides the point.
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Going to summarize my take on the K-2/K-3 filing requirements after an initial deep dive. Feel free to chime in
#TaxTwitter
For most 1065 and 1120S filings w/ non-foreign activities or owners, you would complete:
Item A - no
Item B - no
Item C - 2 - yes, 3 - yes, others - no
1/
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Me: What was your mileage for last year?
C: Is there a safe number we can use that's not too flagrant?
Me: Yes, of course.
*enters zero*
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I'm curious how the IRS could justify denying any reasonable cause abatement request relating to a period after March 2020 when the IRS itself hasn't managed to even get its own house in order since that time?
The late filing/payment penalties s/b auto-waived for 2019/2020 IMO.
8
6
81
Can the IRS please redesign the PPS as follows:
Call Practitioner Priority Line > Enter CAF > Choose Business or Individual > Authenticate SSN and DOB immediately > Go from there
One CAF per call. Make it the TSA-Precheck of calling the IRS.
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Another random idea: Move the 4/15 estimated tax payment to 5/15, eliminate the 6/15 installment, and have 3 clean 4-month periods instead of 4 installments of 3/2/3/4 month periods between.
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The big mistake was not burying these payments in Office Expense. Never would have found them there.
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Fresh off getting robbed blind for 2 years in plain sight by a bunch of crooked ERC companies that advertised NONSTOP EVERYWHERE, the IRS is now going to make sure you don't foot fault on that SE Health Insurance deduct with its new form 7206. Nice!
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Every single member of Congress should be mandated to self-prepare their tax returns each year by hand.
4
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Started the day off right with a ‘Here’s your return as is and you’re fired’ e-Mail to a client that was getting terminated anyway but got the special Tax Day firing treatment for being unresponsive after years of last minute BS. Not the year to ghost your tax preparer, people.
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1099-NEC should not have a due date of 1/31. That is an assbackwards way to look at it and almost certainly reduces compliance and enforcement by not allowing businesses sufficient time to properly prepare a form that’s primary user s/b the IRS rather than the recipient.
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PTPs should be eliminated as a structure. They’re a stupid, colossal waste of time and money and I loathe them.
Just needed to get that off my chest. Carry on.
#TaxTwitter
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Incoming hot take:
All tax deadlines should occur on a Friday at 5pm.
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This deadline is a total shitshow. WTAF did the IRS do to 9/15?
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I still have yet to come across a single client that is providing information via K-2/K-3 that will be of any material use to the recipient whatsoever. Nothing but wasted pages and prep time.
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Client's FA had them open Roths for their toddlers/infants and fully fund. Had client pose the earned income question to them and FA suggested they could just recharacterize their allowance since they'd be under the filing threshold anyway. Just wow on so many levels.
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The colossal amount of time our industry is wasting on the K-2/K-3 forms for fully domestic entities is insane. If the scope of this form isn't dramatically scaled back it's going be to the universal detriment of the IRS, preparers, and taxpayers.
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I could be wrong, but my read on the K-2/K-3 is that the IRS doesn’t want Partnerships or S Corporations to exist.
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My dad sends me his tax docs:
Strike 1 - Sends via text
Strike 2 - Mostly images (although also texted Excel file)
Strike 3 - Some were actually videos of the document
Strike 4 - Omits pages on brokerage 1099
Strike 5 - "I thought I was saving you time" when asked for 1099
🤦♂️
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It's official... the 3/15 deadline has been destroyed by a bunch of PTE taxes that amount to dumb shell games without an ounce substance.
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Can we please add a box on the W-9 to input an e-mail address and then a checkbox indicating we're opting into paperless 1099 issuance?
#TaxTwitter
@IRStaxpros
Enough of the stack of 1099s in the mail already. What a waste of paper and time.
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Imagine paying a company that has zero tax personnel or expertise a 25% contingent fee to file a tax form for you. That's the ERC.
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Behind every $43B offer to buy Twitter is an accountant pleading with their client to use their available cash on the $10B in taxes they owe instead.
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Filed a BOI report just for fun (old entity of my own that's inactive). Outside of reminding clients to do it, not sure why tax pros need to be involved. Name, address, pic of form of identification for BOs. Biggest hassle is rounding up ID pics.
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Crazy idea for future tax legislation:
Let's not write tax law to incentivize a bunch of married couples to file 2 separate returns when they would have preferred to simply file a single joint return.
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Filing date should be 10/15. Estimated tax payment date at 100% should be 4/15. Not that hard. 5/15 is just as pointless as 4/15 from a filing standpoint.
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Well, this would be a huge deal.
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Here's a quick PTET cheat sheet I put together ahead of the 3/15 deadline,
#TaxTwitter
. If anyone sees any discrepancies, input would be appreciated. 1/5
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This tax bill should have a provision that all partnership and S Corp returns originally due 3/15/2024 shall be treated as having been extended irrespective of whether a Form 7004 was filed. Will in particular save people a lot of headaches on already filed BBA p'ship returns.
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Can we label the RBC brokerage 1099s as an act of foreign aggression?
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I'm sure the $125/250k cliff on student loan forgiveness will be fun for
#TaxTwitter
. We may well be looking at a situation where $1 in income on a client's return being the difference between $10/20k and $0.
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I think I have figured out the correct terminology for the worst trait a client can exhibit:
Entitled Helplessness
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Does anyone remember the good old days when there wasn’t something you had to research for every single client? Those were the best.
#TaxTwitter
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Lesson from helping an elderly person close to our family: take their damned checkbooks from them and make sure their checking accounts have only enough to cover recurring expenses. The amount of fraudsters out there preying on the elderly is just incredible when seen firsthand.
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Got off the phone with IRS TPS and the agent told me they are currently processing mail from June/July. Just FYI
#TaxTwitter
On a semi-related note, folks answering the phones at the IRS lately have all been super friendly and helpful. Has been quite pleasant calling in lately.
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Peer reviews for compilation-only practices have got to be the biggest waste of everyone's time imaginable.
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I’m going to throw a controversial hot take out there:
If Congress wants to move towards a form-free tax administration system, then… don’t give people a $250 tax credit for replacing a door on their house.
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Cheers on making it through another tax season,
#TaxTwitter
. I appreciate you all more than my incessant ramblings may seem to indicate. Hope you all get a chance to rest and recharge.
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BOI is UPL when accountants screw it up and not UPL when they don’t.
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So did anyone ever actually end up using that employee payroll tax deferral or did we all waste like 6-8 hours trying to figure it out and discussing it for no reason?
#TaxTwitter
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Don Jr: "That's what I have CPAs for."
99.9% chance Don Jr complained about the bills from the same CPAs that he's presently using as his scapegoats because they weren't "aggressive" enough. Probably being conservative on the percentage.
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Hot take: QBO would simply be better off removing transfers as a banking screen option altogether.
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@MarcGoldwein
Even absent a 0.2% payroll tax, imagine trying to sell voters that paid their loans off that they're getting nothing plus higher tuition costs for their kids.
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Who else on
#TaxTwitter
is still stuck waiting on at least one K-1 in order to complete a partnership/S Corp due on Thursday?
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My
#TaxTwitter
Tax Day hot take is that effectively no one should be using an “in by” date in the current environment. It’s impossible to gauge and is only likely to lead to massive amounts of stress and unforced errors.
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As we head into filing season, one way the IRS could avoid a bunch of unnecessary mail to process (not that they aren't "current" on mail) would be to eliminate 7004s for at least forms 1065 and 1120S. Completely pointless filings.
@JanetYellen
@USTreasury
#SimplifyingTaxes
1/2
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So here's the IRS' list of cars that qualify for the EV credit (16 in total if you count the Leaf 5 times):
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If people only one useful thing out of all my largely incoherent Twitter ramblings let it be this:
EXTENSIONS ARE GOOD. Do not fear them. They are your friend. They are your client's friend.
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While the idea of simplified tax filings is routinely floated on both sides of the aisle (FreeFile, postcards, auto-filing, etc), little focus is ever paid to the many complications that a
#SimpleFile
return faces mechanically. Here are some of the key ones I see:
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Dear
@MerrillLynch
, can you just go ahead and add up all the foreign dividends for me like
@MorganStanley
does? Just do it. It's fine. Now, Morgan if you could add in the wash sales to the net gain/loss like Merrill does that would be great. Ready, break!
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S Corp 2% Owner Health Insurance shouldn't go on the W-2. It makes a mess of both S Corp and non-S Corp payrolls alike due to common misunderstandings. Should go on the K-1 or treat it like any other employee's health insurance.
@RepJudyChu
@RepJohnJoyce
#SimplifyingTaxes
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It seems a bit disconcerting that an increasing portion of our tax code is passed (in part) by a bunch of 70/80 somethings deliriously voting at 3 in the morning.
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Is there anything more unnecessarily complex than tax depreciation? Let's pick 2 or 3 depreciable lives (which are already blatantly arbitrary, let's be real), 1 method, and 1 convention and that's it for regular tax, AMT, and ACE.
@SenWarren
@BenSasse
#SimplifyingTaxes
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As tax practitioners are feeling guilty about spending any time on anything other than tax filings, Senate is spending its tax season:
- On not tax items this week
- 2 weeks not in session
- On more not tax items for 2 more weeks
- Maybe taxes 1 week
- 2 weeks not in session
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I'll admit, I'm being a bit cynical perhaps, but the ERC seems like it might actually be the least effective and most wasteful tax credit ever created. Totally ineffective when needed, and now those that survived and didn't need it are coming for their handouts.
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Imagine a kind of utopia where you could compute a tax credit by hand without referencing 3 flowcharts and at least one random number that no normal person on this planet knows offhand. Wouldn’t that be something?
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So now that it is settled, PPP funded expenses are deductible, I think we can get back to other noble causes... For example, eliminating pass through treatment of PTPs. They are awful. Everyone hates them. I bet even their mothers hate them.
(Not letting this go)
#TaxTwitter
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Easiest 1065 I file. It has a bank account that had one transaction (paid me to file last year) and 2 partners (50/50). Nothing else. Partners both file 1116.
Pre-K-2/K-3 - 16 pages
Post-K-2/K-3 - 45 pages
Also, critical error b/c it wants a statement for a blank Section 4.
🤦♂️
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Had a client take my advice and download the Scanner Pro app to send me docs in clean PDFs that would have come in jpg format previously! Feeling prettttty good right about now.
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Does anyone else exhale a sigh of relief every time a client responds they haven't engaged in any crypto trading during 2020?
#TaxTwitter
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#TaxTwitter
can we start a new cathartic hashtag called something like
#TaxRants
where we just do nothing but vent about tax-related stuff? Thoughts?
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We need stable tax laws. Period. Just look at what was passed in Colorado this past week making their PTET retroactive to 2018! You can’t time budget, appropriately staff, right-size your client list, etc w/ the kind of erratic legislating we’ve seen since 2020. It has to stop.
#taxtwitter
long rant - this profession needs change. I truly don’t understand why I have to choose my family and mental health over staying in public accounting something I used to really enjoy and really thought I could do for my entire career.
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Took my first real look at a middle income 1040 for 2020 and this shit is a mess. It’s going to be very hard for a lot of firms to diligently prepare middle class tax returns at a reasonable price point.
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Had a convo with a friend in Houston yesterday. Works with a tax firm that's local there, maybe 200 people (probably less). Minimum individual tax prep fee = $5k.
Not Big4/regional. Not high CoL city (for its size). Are these extreme mins the new standard now? Or just a one off?
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This bill has some quite incredible (neutrally speaking) provisions:
- 1099 threshold goes from $600 to $5,000
- 1099-K goes from $600 to $20,000
- 179 goes from $1M to $2.5M
- 1202 (QSBS) goes from 5yr to 3-5yr step up + Con. Debt hold tack + S Corps
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As much of a relief as it is to have this nightmare filing season behind us, I don't think workload wise it's going to get much better just on its own. A few reasons why:
1 - The ERC. This shitshow of a credit will haunt us next year for a variety of reasons.
1/
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I think starting next year I'm simply going to start charging an additional fee to anyone sending me a QuickBooks Accountant's Copy equal to the amount of a QuickBooks Online annual subscription.
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If IRC 7216 penalties can *potentially* be brought against a tax preparer for blindly filing a well-intentioned extension, then why is the
@AICPA
not lobbying the IRS (or Congress) for form-free extensions to keep preparers out of a tight spot like that?
#TaxTwitter
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If anyone's paying attention, what the IRS is doing with the below form and 1040 - line 1, Schedule 1 - line 8, Form 7203, Schedules K-2/K-3, and so forth is using forms bloat to prevent common mistakes.
I look forward to every return being a minimum of 50 pages in 10 years.
#TaxTwitter
We have a BRAND NEW DRAFT form - Form 7206 "Self-Employed Health Insurance Deduction"
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I propose a PTP strike where we just treat them as C Corps. Thoughts?
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If there was one thing the IRS could do to make this filing season less of a total disaster for everyone it would be to simply grant a blanket reasonable cause waiver on all late filing and payment penalties through the extension deadlines if filed/paid by then.
#TaxTwitter
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The IRS needs a site where you can enter the applicable Tax ID, upload correspondence or scanned/e-signed forms that otherwise would require mailing, and has tracking info so you can see received/processing/processed.
@USTreasury
@JanetYellen
#SimplifyingTaxes
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Glad to see the IRS is putting more effort into the taxability of the CA middle class tax refund payments that could be easily be tax-free in 2-3 ways than it ever did with the Pass-Through Entity Taxes that bleed tens of billions a year in blatant contradiction to the law.
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Close your eyes for a second
#TaxTwitter
and imagine a kind of utopia where the IRS instead repurposed all of the time it spent building out the K-2/K-3 that added prep time into enabling Wage and Income Transcripts to populate by April 2nd so as to subtract prep time.
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PPP forgiveness applications are about the biggest waste of time imaginable for a tax professional at present.
No proposed solution, just complaining.
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#TaxTwitter
I have decided that in line with my earlier tweet, this new year I’m going to try to post something each day I would like to see changed within the tax world and then tag a related government account.
I will devote no less than 1/mo towards PTPs, which totally suck.
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The proposed 1099 filing threshold bump from $600 to $1,000 is great, but the real elephant in the room is W-9 compliance. W-9s are a total shitshow and as best I’m aware IRS is essentially ignoring SMLLCs. We should rewire the EIN online application to also issue certified W-9s.
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The logistics of 199A compliance is dumb and needs to be fixed. What (person) decided it was a great idea to have K-1s with potentially dozens of separately stated underlying 199A info to be picked out and reported separately? If you’re on here, reveal yourself.
#TaxTwitter
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Staying on the topic of 1099s... if we’re going to exempt most S and C Corps from receiving 1099s, can we please also go ahead and exempt partnerships as well?
@RepRichardNeal
@RepKevinBrady
#SimplifyingTaxes
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The Employee Retention Credit (as revised in late 2020 and early 2021):
1- Didn't require employee retention.
2- Didn't explicitly require real financial harm due to the pandemic
3- Didn't require substantiation of qualifier
4- Relied on an arcane definition of related party
5-
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If PPP Forgiveness had simply been set to rely on quarterly amounts as per payroll filings rather than erratically strewn about 8-24 week covered periods and a hodgepodge of poorly formatted reports, we could have saved everyone years (decades?) of wasted time collectively.
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What would be an appropriate punishment for preparers who mask the partnership's EIN on an initial K-1 and make their colleagues waste time requesting it from them?
#TaxTwitter
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How does Goldman Sachs manage to turn a 1099 reporting nothing but $146 of interest income into 22 pages?
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PSA: If you're going to put something in Box 13, Code W, please don't be a jackass and not tell the recipient what it is.
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I have a sneaking suspicion that tax software is not in middle season form right now. Feels very early February-ish to me.
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If you're sick of all the ERC refunds ads, I've got good news, they'll be gone pretty soon... and replaced by a bunch of ERC class action lawsuit ads.
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Not possible without simplification of the code itself. Nice sound bite though I guess. Same thing with the postcard rhetoric on the other side of the aisle.
For years, I've been pushing for a system that allows the American people to file their taxes for free directly with the IRS, and not be forced to fork over money to the tax-prep industry. I won't stop fighting to streamline the tax filing process and make this a reality.
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Here’s the AICPA’s explanation of why the 150 hour rule is necessary:
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I'm not sure there's anything more soul-crushing right now in the tax prep biz than pick up a MFJ return and realizing they have $150-300k of income and unemployment comp.
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Are there any very knowledgeable International Tax experts on
#TaxTwitter
that might be able to help us all out in understanding which Parts of the K-2/K-3 a standard domestic partnership selling widgets from a single US location (in-store only) would need to actually complete?
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So assuming K-2/K-3 is required for most 1065s and 1120s, what’s the percentage bump in page volume with each of those returns for 2021? It’s got to be something like 2/3/4x. That’s insanity. So much for “Paperwork Reduction.”
#TaxTwitter
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Hey, does anybody remember the good old days when everyone was on vacation the week after Christmas and your inbox was pretty quiet. Those were the days. Oh to be 2019 again.
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Are the days of the “jack of all trades” or “general practitioner” category of tax professional coming to a close even on the smaller firm end of the spectrum? Or is it just me? And maybe that’s a good thing? 🤷🏻♂️
#TaxTwitter
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