TOP TEN FUNKIEST ACCOUNTING MOMENTS By Peter G. Masullo, CPA December 16, 2000
Accountants have a reputation for being boring. I0080ve become accustomed to being the butt of everyone0080s jokes, such as:
What do accountants use for birth control? Answer: Their personalities!
Perhaps we deserve our reputation. I suppose you have to be a little weird to find the tax law interesting. But it0080s not all tedious number-crunching. Sometimes, we are overcome with excitement in our every day accounting practices, and some of us have even developed a keen sense of humor. To prove it, I have compiled the following list of 10 of the 0080funkiest0080 moments in my career as a tax accountant/attorney. I use the word 0080funk0080 because not all of the following are humorous. Some are embarrassing moments, and some are just plain weird. All are true stories, illustrating the old cliche about fact being stranger than fiction.
Scary Tax Moments
*The scariest tax moment of all time was when I was accused of harassing two IRS agents by use of what they called 0080abusive language.0080 In truth, I displayed the patience of a saint by exercising restraint. The real scary part was their abuse of power. I reiterate the fact that I said nothing abusive. I merely pointed to the door as I suggested their souls belonged in the company of Lucifer. The full story of this escapade appeared in the first issue of this newsletter. Let me know if you would like a copy.
*Many years ago, during the busiest part of tax season, I returned to my office in the early evening to find a stack of telephone messages. Three of them were from Mr. Robinson. It was late, and I was tired, so I put off the messages until the next day.
I don0080t remember exactly what I was working on, but I recall the next morning as being very hectic. By mid-morning, I had not yet returned Mr. Robinson0080s calls. My secretary at the time, Patty B. (one of the best and nicest people I have ever had the pleasure of working with) interrupted me in an abrupt manner, 0080Mr. Robinson is here to see you now.0080 I exclaimed, 0080I can0080t see Mr. Robinson now!0080 I started to complain and explain that I was under pressure and Mr. Robinson would just have to wait. In a voice unlike her usual soft-spoken tone, Patty again cut me off, 0080I think you better see Mr. Robinson right now!0080 I sensed trouble and immediately jumped away from my desk to greet Mr. Robinson.
I found him in the front office. He was thumbing through documents in his file with his left hand. In his right hand was a sawed-off shotgun. He greeted me with a smile and assured me the gun I was staring at was not meant to scare anyone. I couldn0080t imagine what else he could possibly be doing with this illegal weapon. Surely, he wasn0080t going hunting in the middle of NYC. So I wisely decided to show Mr. Robinson the utmost degree of respect.
Somehow, I managed to keep my cool on the outside, although I was trembling on the inside. I calmly explained the reason his tax returns were not completed was because he had not provided all of his W2 forms. With this understanding, Mr. Robinson left in peace. I also left because I had to change my underwear. Since then, I return all of my calls as promptly as I can.
Stupid Employee Moments
*In the old days, the most advanced piece of technology in my office was a color TV set. I liked to watch the news when working late, but I used it mainly to entertain my young daughters on their way to and from school. One morning, I returned to my office unexpectedly. There was my trusted assistant, Joe, lounging in my chair with his feet on my desk. He was so preoccupied with the TV that he didn0080t even notice my entry. I didn0080t know whether to laugh or cry when I heard him exclaim, 0080OOH! I love Fred duh Flintstone!0080
*After the incident with the 0080Flintstones, 0080 I decided I should be more selective in my hiring practices. Thus, I devised a form letter to test an applicant0080s dictation & typing skills. One applicant interpreted the heading, which was supposed to read 0080Mr./ Ms., 0080 as 0080Mr. Slashmiss.0080 To make matters worse, this applicant was angry with me because she thought this was a trick question.
*Jenise was my secretary for about a year and was thoroughly familiar with my clients and office procedures. To my knowledge, she had never worked in a doctor0080s office. One day, she must have been watching something on TV, or smoking something, or both. A young, attractive client came into the office to have her taxes done. Jenise told her, 0080Take your clothes off and have a seat in the waiting room. Mr. Masullo will be right with you.0080
Foot In Mouth Disease
*On March 7, 2000, I took a call from a gentleman in Springfield, MO who was very concerned because he hadn0080t filed his tax returns for the past 3 years. There is usually a reason why people fall behind in their taxes, so my first advice was to inform him about relief from penalties in the case of extreme hardship. He told me he suffered from clinical depression. In my exuberance I exclaimed, 0080That0080s great!0080
I immediately recognized my mistake. After a short pause, and a bit of stuttering I explained, 0080No, that0080s not really great that you suffer from depression. What I meant to say was that you have a great case for reduction of the penalties.0080 He understood and we both laughed.
*At the end of a lengthy session of setting up the books for a promising internet start-up company, I was dragged into a meeting with the company0080s management. They hit me with complicated legal and tax questions about agreements that would have taken me a day just to read. I was eager to impress my new clients but I didn0080t want to say anything stupid
TOP TEN FUNKIEST ACCOUNTING MOMENTS By Peter G. Masullo, CPA December 16, 2000 Page 2 of 2
about matters I was not prepared for. I explained, 0080I0080ll be glad to take a look at these agreements. However, right now, it0080s all Greek to me.0080 The young CFO pointed to the other officer sitting across the table and said, 0080He0080s Greek!0080 Again, I stuttered, 0080Oh! Ah! Um!... I meant Chinese!0080 They never called me back for my opinion on the contracts. In fact, I haven0080t heard from them since.
Dumb IRS Moments
*You might think there is nothing funny about falling behind on your taxes. That is usually true, for it can be a painful and nerve-racking experience. However, in order to maintain sanity (we can argue about my level of sanity at another time), it is helpful for me to find amusement in some of the daily situations that others might classify as tedium.
I once agreed to represent a small corporation that hadn0080t filed taxes in five or six years. IRS had just become aware of their existence and was pressing the owner for the back taxes. In those days, I was a bit more timid before IRS. As a newcomer to the field, I was inexperienced and gullible. When I first contacted the IRS agent I expected he would be sympathetic to my client0080s sad story. Instead, I was shocked when he showed no mercy and demanded that I complete all five years0080 returns by the end of the week. I tried to explain this would be an impossible feat. Even if I had all the required information I couldn0080t physically complete all five years within the next couple of days. The agent didn0080t want to hear it. 0080You0080ve had five years! I will not tolerate any further delay!0080 He further blasted, 0080You finish those returns by Friday or I0080ll hit you with a summons and make you finish them!0080 I was dumbfounded. Could he really do that?
For the next two days I labored tirelessly in an attempt to achieve the impossible. I didn0080t mind the work, but I resented not being able to sleep because of the unnecessary worry and pressure. It became clear that an army of accountants could not finish the project on time so I took a break. That0080s when it dawned on me. He can0080t subpoena me. What could I possibly have done to deserve a summons?
closer to the latter, and with a tear in my eye, I begged him to continue the conference anyway. We could use copies of documents from my files.
He must have seen the tears and felt sorry for me, because he reluctantly agreed to hear me out. The reason for much of the mix-up became clear as soon as I took out the audit report. It was prepared by Charles D. Green. However, I was talking with Charles C. Green. After all these months I was dealing with the wrong Mr. Green. Apparently, the real Mr. Green was transferred to another district.
We never were able to track down the case file, but this story had a happy ending. IRS was even more concerned with this botched up job than I was for my part in it. For whatever reason, we reached an amicable compromise that was very favorable for my client.
*I hope that by now, I0080ve become a little 0080jaded, 0080 but in those early days you could tell me anything and I0080d believe it. Remember the disco scene? I don0080t! I was too busy working, and besides, I don0080t dance. But I had a client who was a waiter in a very upscale Manhattan disco, akin to the infamous 0080Studio 54.0080 He boasted to me about the 0080Rolex0080 watch he was wearing. He claimed that a patron/friend had given it to him the night before as a tip. 0080Wow!0080 I thought to myself. The tips most waiters make in a year are less than the value of that watch. My immediate recommendation was to increase the amount of tip income being reported. Unbeknownst to me, my waiter friend was pushing something other than food, drink, and good times at the uptown disco.
A few weeks later I received a surprise visit from three beautiful, scantily-clad women. Despite my gullible nature, I knew something was up when they started asking personal questions. In my profession, it is not a normal, every day occurrence to be interrogated by attractive women. In fact, I can count the number of times this has happened to me on one finger. In jest, I asked, 0080What are you, some kind of cop or something?0080 The leader replied in the affirmative and showed me her badge and ID. They were Special Agents from the Treasury Department. The leader then assured me, in a jovial, yet stern manner, that she had the wherewithal and weaponry to enforce my cooperation, should that become necessary. My confident 0080rap0080 turned into that familiar stutter. I was blindsided and intimidated by the fact that I was being interrogated as if I were guilty of something. It is unfair when the government uses all three of 0080Charlie0080s Angels0080 to elicit privileged information from ordinary accountants. The fact that they had to sneak up on me like this has left a lasting impact on my psyche. To this day, I cringe and become speechless every time an attractive woman comes into my office. It0080s bad enough being afraid of heights. Now, I have IRS to thank for this unhealthy fear of women.
HOME OFFICE: 505 LaGuardia Place Apt. 30C New York, NY 10012 (212) 243-1056
Specialized in tax return preparation, tax audits, back taxes & IRS problems in the NYC area since 1973.
UPSTATE NY OFFICE: 540 Miller Road - Box 244 New Kingston, NY 12459 (845) 586-3533
What I do:
Income Tax Returns. Preparation of income tax returns for individuals has been my specialty and main source of revenue for over 40 years.
IRS & NYS Income Tax Audits. Nowadays, most tax audits are conducted by "correspondence" (meaning by mail). The IRS computers spot something unusual on your tax return, so you get a letter asking for an explanation or proof. My primary job is to help you avoid an audit by preparing a complete and accurate income tax return. This is particularly important with regard to the reporting of your income because the majority of "audits" or IRS inquiries are initiated when the income reported on your tax returns does not match the income reported to IRS on 1099 and W-2 forms. Thus, the best way to avoid a tax audit is to make sure you report all your income. Fortunately, less than 2% of taxpayers get audited. If you should be one of the unlucky winners of the audit lottery I may be able to help you..
Tax Appeals. Almost everything IRS does can be appealed. The key is to exercise your rights in a timely manner. Many appeals must be filed within 30 days.
Back Taxes. I have been working with delinquent taxpayers for over 40 years. I suppose part of that is due to the rebellious spirit among many of my neighbors here in Greenwich Village, NY. As a result, it is unlikely that I will be surprised by your situation. I have the skills, experience, tax software, and tax libraries to resolve back taxes no matter how many years are in question.
Amended Tax Returns. Sometimes, I recommend filing amended tax returns for past years in order to save tax benefits for future tax years. Sometimes, a court decision changes the tax law retroactively, as was the case when IRS was forced to recognize same sex marriages. And sometimes, people and/or their tax return preparers make mistakes in the preparation of their tax returns. Whatever the case, filing amended tax returns is not as complicated as it sounds. Most times, it is easier to amend a tax return than it is to prepare an original tax return.
Tax Return Extensions. For whatever reason (including simple procrastination), you may need more time to file your income tax returns. If so, keep in mind the fact that a tax return extension gives you more time to get your paperwork together, but it does not extend your payment due date. If you don’t pay enough tax by April 15 (or April 18 as the case may be depending on DC and other local holidays) your tax return extension may be considered invalid and substantial penalties may be imposed.
The penalties start at an astounding 5% of the unpaid tax per month for the first 5 months. Interest is also added. Clearly, it is best not to owe IRS money under these usurious rates. You would pay a lot less and would probably be better off by borrowing from a high interest credit card to pay IRS.
If you are getting a refund there is no problem and filing for extensions is a relatively simple matter.
I like to have as much information as possible as early as possible in order to compute where you stand on April 15. Sometimes, even a guess as to how much you owe might save a substantial amount of tax penalties.
In my experience, filing for an extension does not increase your chances of being audited.
Tax Court Petitions. Due to the hazards and expenses involved in any type of litigation, it is best to avoid the Tax Court. The Tax Court Judges are sharp. So are the IRS attorneys, so don't play around with them. I have also found them to be very fair. Just like the rest of the system, the IRS attorneys are severely overburdened. And the Tax Court calender is extremely congested and backlogged. This often works to the taxpayer's advantage since everyone is eager to settle cases to reduce their workload. Due to the cost involved, I will try to settle your case with IRS before filing a petition in Tax Court. Litigation of any kind should only be used as a last resort. If you have a Tax Court case pending, I will be glad to review your file to render a second opinion and/or to make recommendations as needed.
Estate & Gift Taxes. While very wealthy taxpayers have armies of lawyers and accountants to plan for the protection and preservation of their estate assets, the rest of the population is often poorly advised, or not advised at all. In my practice, I have seen countless schemes, outdated plans, incomplete trusts, and sheer nonsense under the guise of “Estate Planning.” Nobody knows your needs better than your trusted CPA. So let me take a look at those expensive documents before you sign on the dotted line.
Most of the time, I frown upon extensive estate plans for the moderately wealthy person. There are too many potential pitfalls. Aside from technical mistakes there are sometimes unintended consequences. One of the most common errors is failure to periodically update the plan to comply with or take advantage of the ever changing tax laws. Some of these recent tax changes may require the complete overhaul of your estate plan.
You probably need my services if you haven’t reviewed your estate or retirement plans in the last two years. I can also advise you with regard to gift taxes and gift tax returns.
Keep in mind that taxes are not the only aspect of estate planning! Even if you will not be subject to any estate taxes you should still consider planning, not only for your survivors, but also for yourself. What if you become disabled? What if you die prematurely? What if you live “too long?” What about your survivors or the organizations you want your property to pass to? Do you have minor children?
I have been helping clients deal with these matters for many years. You can plan for the inevitable now, or you can leave these decisions up to state law.
What I don't do:
False Promises. I am very wary of the salespersons you see on tv who promise to magically wipe out your tax debt. Let's get real! Why would IRS settle your tax debt for pennies on the dollar if they thought they could collect more? I have no magic wand to make your tax debts disappear. I will not make such false and empty promises. My promise is to get you a fair hearing before IRS or in Tax Court. Instead of pie in the sky, I will give you an honest evaluation of your case and what you can do about it.
Offer in Compromise. One of the main reasons I rarely prepare these tax compromises is because of all the fine print IRS requires in the compromise agreement. Among other obligations, you have to agree to keep your current and future taxes up to date or IRS can rescind the entire agreement. In my experience, most people find it extremely difficult to pay their current taxes when they already owe a large amount of back taxes. This is a promise many clients will not be able to keep. If you owe IRS a lot of money, odds are you also owe NY State and City. Maybe you also owe sales tax and/or other debts? In these situations there is little margin for budgetary error. And often times, something goes wrong (like the discovery of an unanticipated state tax, imposition of a tax penalty, or additional tax resulting from a tax audit). It might be unrealistic to agree to pay all current and future taxes in this scenario. Furthermore, IRS only accepts a small number of the offers it receives. There is about a 4 out of 5 chance you can go through the lengthy and tedious process only to have your offer rejected by IRS. It may take the understaffed IRS 3 months before they read your offer. By that time your financial information will be out of date, so you will have to redo much of the original work all over again. And if you don't redo your financial statements quickly enough IRS can use that as an excuse to reject your offer. The Offer in Compromise program is not all it is cracked up to be. I use it only in rare and extreme cases.
Financial Statement Audits. I no longer prepare, compile, or audit financial statements. This is mainly due to size and scale.
Write up and bookkeeping services. I prefer to do as little of this work as possible. It is generally more economical for you to do your own bookkeeping chores, or for you to hire a bookkeeper.
Investment or Insurance Sales. I do not sell anything except my time and knowledge. I am not affiliated with any other firm or company. I do not accept referral fees or commissions of any kind. Our confidential relationship will never be used as a means of selling you any product, and your information will never be shared with anyone else (except as required by law).
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Peter Masullo, CPA-Attorney at Law Tax return preparation in New York