IRS Stuck with $153.3M in Undelivered Tax Refunds



The Internal Revenue Service said Wednesday that it has $153.3 million in undelivered tax refund checks waiting to be sent to 99,123 taxpayers across the country.

In what has turned into an annual ritual for the service, the IRS said it has a fortune waiting in its coffers that could not be delivered to taxpayers because of mailing address errors. Taxpayers can still claim their refunds, though, and can probably use a little help from their accountants. The average size of an undelivered refund check this year is $1,547, which makes a nice stocking stuffer for the holidays.

Taxpayers who believe their refund check may have been inadvertently returned to the IRS as undelivered should use the “Where’s My Refund?” tool on  The tool will provide the status of their refund and, in some cases, instructions on how to resolve the delivery problems with the IRS and the local post office.

Taxpayers checking on the status of their still-pending refunds over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-(800) 829-1954.

Only a small percentage of checks mailed by the IRS are returned as undelivered, the agency noted, but taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file their tax returns, either on paper or electronically. Last year, more than 78.4 million taxpayers chose to receive their refund through direct deposit. Taxpayers can receive refunds directly through their bank account, split a tax refund into two or three financial accounts, or more recently buy a savings bond with the money.

The IRS also strongly encourages taxpayers to file their tax returns electronically, because e-file is supposed to eliminate the risk of lost paper returns. The agency has also begun requiring most professional tax preparers to file electronically.

E-file also reduces errors on tax returns and speeds up refunds. Nearly eight out of 10 taxpayers chose e-file last year, the IRS noted. E-file, combined with direct deposit, should help most taxpayers and tax preparers avoid refund problems.

The IRS also warned the public that it does not contact taxpayers by email to alert them of pending refunds and does not ask for personal or financial information through email.  Such messages are common phishing scams, the IRS noted.

The agency urges taxpayers who receive such messages not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that can infect their computers.
The best way for an individual to verify if she or he has a pending refund is by going directly to the IRS’s Web site,, and using the “Where’s My Refund?” tool.

Obama Pushes for Extension of Payroll Tax Cut



President Barack Obama told an audience in New Hampshire on Tuesday that their taxes would go up an average of $1,000 to $1,500 unless the payroll tax cut were extended and expanded as part of his jobs bill.

Speaking at a high school in Manchester, N.H., the day after a congressional supercommittee failed to produce a deal to cut the budget deficit and pass an extension of unemployment insurance and his payroll tax cut, Obama pointed out that he had signed into law two tax breaks on Monday that had been part of his jobs package (see Obama Signs Veterans Hiring Tax Credit Law). However, he noted that the majority of his jobs bill has been blocked by Republicans in Congress and he urged the audience to contact their lawmakers and press for an extension of the payroll tax cut.

The tax cut, which was enacted last December as part of the deal to extend the Bush tax cuts, cut the Social Security withholding tax rate for employees by 2 percentage points from 6.2 to 4.2 percent (see Tax Extension Bill Wends Its Way to White House).

“Last year, both parties came together to cut payroll taxes for the typical household by $1,000 this year,” said Obama. “That’s been showing up in your paychecks each week. You may not know it, but it’s been showing up because of the action that we took.”

As part of his jobs package, Obama has proposed extending and expanding the payroll tax cut by cutting it in half for employees, providing a $1,500 tax cut to the average family. Obama has also proposed extending the tax cut to businesses, cutting in half the taxes they pay on their first $5 million in payroll, and completely eliminating payroll taxes for companies that increase their payrolls by either adding new workers or increasing the wages of their current workers, capped at the first $50 million in payroll increases.

“This payroll tax is set to expire at the end of next month,” said Obama. “If we allow that to happen—if Congress refuses to act—then middle-class families are going to get hit with a tax increase at the worst possible time. For the average family, your taxes will go up $1,000 if Congress does not act by the end of the month. Now, we can’t let that happen. Not right now. It would be bad for the economy. It would be bad for employment. That’s why my jobs bill extends that tax cut.  In fact, it does it one better—it expands the tax cut. Instead of a $1,000-a-year tax cut next year, the average working family would get a tax cut of more than $1,500. And that’s $1,500 that would have been taken out of your paycheck, would instead be going into your pocket.”

He noted that the money could also be going to small businesses. “The American Jobs Act would also cut payroll taxes in half for small business owners,” said Obama. “Say you have 50 employees making $50,000 apiece. You’d get a tax cut of nearly $80,000. That is real money that you can use to hire new workers or buy new equipment.”

Obama told the audience to push Congress for another opportunity to vote on the bill.

“Now, the Republicans in the Senate voted no on my jobs bill and those tax cuts,” he said. “But in the spirit of Thanksgiving, we are going to give them another chance. Next week, they’re going to get to take a simple vote. If they vote no again, the typical family’s taxes will go up $1,000 next year. If they vote yes, the typical working family will get a $1,500 tax cut.”

Obama noted that the White House has set up a tax calculator on its Web site where taxpayers can calculate how much they would save from the payroll tax cut. He also tweaked Republican lawmakers for the pledge many have signed with Grover Norquist’s lobbying group, Americans for Tax Reform.

“Now, I know Republicans like to talk about [how they’re] the party of tax cuts,” he said. “A lot of them have sworn an oath—we’re never going to raise taxes on anybody for as long as we live—even though they have already voted against these middle-class tax cuts once. But the question they’ll have to answer when they get back from Thanksgiving is this: Are they really willing to break their oath to never raise taxes, and raise taxes on the middle class just to play politics? I sure hope not. This isn’t about who wins or loses in Washington. This is about delivering a win for the American people. Now, a $1,500 tax cut for middle-class families—that isn’t a Band-Aid. That is a big deal for people. How many business owners could stand to see their customers taking $1,000 less next year? That’s $1,000 less that they can spend at a small business.”

Obama asked the audience how many of them could use an extra $1,000 or $1,500 in their pockets, especially around the holiday season, and was answered with applause. He noted that the money for the payroll tax cut would be offset by higher taxes on millionaires.

“Congress has a very simple choice next week,” he said. “Do you want to cut taxes for the middle class and those who are trying to get into the middle class? Or do you want to protect massive tax breaks for millionaires and billionaires, many of whom want to actually help? Do you want to help working families get back on solid ground and grow this economy for all of us? Or do you really want to vote to raise taxes on nearly 160 million Americans during the holidays? When push comes to shove, are you willing to fight as hard for working families as you are for the wealthiest Americans?  What’s it going to be? That’s the choice.”

He urged the audience to contact their representatives in Congress to push for the payroll tax cut. “Tell them, ‘Don’t be a Grinch.’ Don’t vote to raise taxes on working Americans during the holidays,” he said. “Put the country before party. Put money back in the pockets of working families. Do your job. Pass our jobs bill.”

IRS Could Send Balance-Due Notices Faster

Washington, D.C. (November 8, 2011)
By Michael Cohn, Accounting Today

The Internal Revenue Service may be able to collect more money by sending out balance-due notices on a more frequent basis to delinquent taxpayers, according to a new government report.

The report, by the Treasury Inspector General for Tax Administration, found that the IRS allows 35 days between notices to give taxpayers enough time to respond. The first notice sent out the IRS to taxpayers with unpaid tax liabilities appears to be the most effective by a wide margin. In most cases, the IRS was able to collect the greatest amount of money and receive the most responses from taxpayers. However, the probability of collection diminishes as time goes on. By reducing the time between sending notices by seven days, TIGTA estimated the notice stream could potentially collect an additional $363 million each year, although a study analyzing the impact of reducing the time would be needed to quantify the benefits. In addition, taxpayers could potentially save $1.8 million each year in interest payments.

TIGTA also found that the notice stream does not always treat taxpayers with more than one delinquency the same. As a result, the IRS may not use collection resources most effectively.

“The notice stream is the least costly of the IRS’s three-phase approach to collecting unpaid taxes,” said TIGTA Inspector General J. Russell George in a statement. “While the notice stream collects billions of dollars in delinquent taxes annually, reducing the time between notices could potentially result in the collection of millions more. Further, if the IRS does not effectively pursue collection of unpaid tax through the notice stream, it could create an unfair burden on the majority of taxpayers who fully pay their taxes on time.”

TIGTA recommended that the IRS consider reducing the time between each notice by seven days and establish a business rule to address taxpayers with multiple balance due modules entering the notice stream at the same time.

IRS officials agreed with the recommendations and said they are open to modifying the time between each notice, subject to budget constraints and programming issues. However, IRS officials also noted that 35 days between notices were necessary in order to process taxpayer inquiries and correspondence.

The IRS noted that taxpayers could answer the notice in different ways too. “While a taxpayer may respond by simply making a payment, quite often taxpayers respond to balance due notices via telephone, correspondence or on-line to address other issues,” wrote Faris R. Fink, the commissioner of the IRS’s Small Business/Self-Employed Division. “In these instances, it may take additional time to respond dependent upon the issue and how the account is being resolved. The timeframe between notices needs to reflect all types of issues and responses, and allow the Service to respond appropriately before the next notice is issued to avoid causing undue burden on the taxpayer or the Service.”

TIGTA argued, however, that the IRS already has controls in place to prevent the next notice from being sent when taxpayers’ correspondence is being processed.

Massive Accounting Firm Merge

Clifton Gunderson and LarsonAllen to Merge

Milwaukee (November 1, 2011)
By Michael Cohn, Accounting Today

Clifton Gunderson and LarsonAllen have confirmed they plan to merge in the New Year into a combined firm known as CliftonLarsonAllen.

The two firms said Tuesday they would combine, effective January 2, to create one of the top 10 accounting firms in the U.S., with combined revenues of between $550 million and $560 million.

Milwaukee-based Clifton Gunderson ranked 15th on Accounting Today’s 2011 list of the Top 100 Firms, while Minneapolis-based LarsonAllen ranked 18th, but together they would have ranked in 8th place. The combination is expected to create a powerhouse, especially in serving privately held companies, not-for-profits and governmental clients. They plan to create a holding company that will include three specialty firms to handle professional services and accounting, outsourcing of finance and business processes, and wealth management.

The firms have worked together closely in the past, including on peer reviews. “Our two firms periodically meet,” said Clifton Gunderson CEO Kris McMasters in an interview. “We started talking and sharing strategy and saw that if we brought our firms together, we had a lot of synergies and cultural similarities. We felt like we could bring something unique to the marketplace.”

The two firms began discussions in the spring and made rapid progress.

“As often happens in our profession, firms get together to talk about what it might look like if they ever were to come together and how they might help each other,” said LarsonAllen CEO Gordy Viere. “Generally it doesn’t come to anything, but as we started to have conversations together, more and more it started to seem like we do look at the world going forward in a similar manner. We have a similar approach in how we want to help people with their careers, and in the markets we want to serve. As we continued to talk, it just started to feel more and more comfortable. The more difficult issues like the name of the firm and the management structure and those types of things, where most firms struggle, we just seemed to get through in a really comfortable manner, and so the longer we talked, the more it felt like we needed to do this. We thought the marketplace was looking for a different kind of firm, and we felt we could be that firm.”

The combined firm will have in the range of 80 to 85 offices, according to McMasters, with approximately 3,600 combined employees, including about 500 partners in 25 states and Washington, D.C.

All of the partners and principals in the two firms will become partners in the combined CliftonLarsonAllen and will essentially retain the same responsibilities that they currently have, according to McMasters. Some of the executive management will remain in Milwaukee and others in Minneapolis, in addition to the other offices across the country. McMasters will become CEO of the professional services and advisory firm, while Viere will become CEO of the holding company to focus on the wealth management and outsourcing pieces of the practice. The holding company will oversee the entire organization, including the new advisory, wealth management and outsourcing firms.

The two firms belong to different international alliances, Clifton Gunderson with HLB International and LarsonAllen with Nexia, but they have not decided in which alliance they will remain. They plan to continue concentrating on private company clients, along with not-for-profits and governmental clients, but at least one observer believes they may eventually expand to handling public company audits.

“Mergers and consolidations of firms are continuing to take place at a record pace, but now we are seeing more ‘super-sizing’ types of deals like these than ever before,” said Koltin Consulting Group CEO Allan D. Koltin, who has worked with both firms on previous mergers. “They will have combined niche expertise in banking, and LarsenAllen brings over a great health care practice, while Clifton brings over its very successful governmental and nonprofit practice. One now has to wonder if they will enter the Big Apple, and in doing so if they will also enter the world of SEC audits, an area both firms have stayed away from in the past.”

McMasters emphasized that the two firms plan to continue targeting private company clients.

“Both of our firms are uniquely focused on private companies and the owners of private companies,” she said. “We will be, we believe, the only top 10 firm with that focus. We will be the resource center, the champions, the trusted business advisors, for private companies and their owners.”

She noted that both firms have placed a high priority on growth through mergers and acquisitions. They are also deeply involved in several industries, including health care, financial institutions, manufacturing, public sector government and not-for-profits.

“We really believe that combined we can take our industry specializations to all new levels,” said McMasters. “This also allows us the opportunity to be fairly dominant in several metropolitan markets, which is important to us as a combined organization, but also continue with our non-metro strategy too. We are probably the two largest firms that focus on both metro and non-metro locations, and we’re going to continue that strategy going forward.”

McMasters anticipates a smooth transition. “Luckily we’ve taken a look at the synergies in the ways that we go about the work that we do,” she said. “We use the same kind of software. The processes are very similar, so that’s certainly going to help the transition. We’re very familiar with what each other does. We’ve done the peer review of LarsonAllen the past couple of years, and we’re familiar with their methods, from an assurance standpoint for sure. We’ve been friendly firms for many years.”

Viere believes the new firm will be able to bring to the marketplace the capabilities of a large firm with the service attitude of a small firm with a competitive value. He foresees the combined firm providing a career path for aspiring accountants in different fields with industry expertise.

“We think this is a firm that could position themselves to be recognized as a career-building firm, in other words, the place where people would choose to come to determine what their career might be,” he said. “That would mean we would have multiple career opportunities within the firm, especially as we have agreed to build not only a public accounting advisory firm, but also a wealth advisory firm and an outsourcing firm, highly integrated, and we would bring our industry specializations to all three of those. Therefore, we could give opportunities for different career paths to people. In addition we would let it be known in the marketplace that if you come to CliftonLarsonAllen and you decide that someday you want to have a career in health care or banking or financial services, and you felt that career was better suited for you outside our firm, we would try to give you the experience and the learning and training within our firm to make you more valuable in the marketplace, so that we all win. You win, the firm wins while you’re here, and our clients win when you would leave us to join them. Obviously we believe that we’ll be a winner in that process, because the more people of talent who join us to see who we are, the odds of us keeping them are pretty good.”


A.D.O.B.E. Meeting in Gold Canyon, AZ


Some of my friends have taken the RMD’s from their retirement accounts, and others have told me that there is no need to take them this year.  Should I be taking the RMD’s this year?

Yes; If you are over 70 1/2 years old as of April 1, 2010, all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans , as well as traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs have an RMD for 2010.  A RMD is not required to be taken for 2009.  If an individual attained age 70 ½ in 2009 no distribution will be required to be made by April 1, 2010; however, the RMD for 2010 will be required to be made by December 31, 2010.

Will the IRS pay for me to play Golf?

Yes, well some of it; starting in 2009, the IRS has a special credit available for Qualified Plug-in Electric Drive Motor Vehicles on form 8936.  The credit ranges from $2500 to $7500 depending on the type of golf cart you buy.  Please check with the golf cart dealer and your tax accountant for more information on qualifying vehicles.

Will the IRS pay for my home improvements?

Yes, if the improvements qualify; there are many residential energy efficient improvements, such as A/C units, Windows, Doors, Water Heaters, etc that have credits up to $1500 on primary residences.  In addition, certain home improvements, like ramps, railings, even pools may be deductible as medical expenses.

How can I receive tax free money from the equity in my home?

You’ll need to set up a Reverse Mortgage, which is a way of tapping into home equity without creating monthly payments. Instead of making payments, the cash flow is reversed and you receive payments from the bank.  This money is Tax Free, creating ways to decrease other income items, such as Social Security Income, Pensions, etc., which in turn creates a huge tax savings.

I heard many times that the tax rates are increasing, but what can we expect for 2010-12?

On Dec 17, 2010, President Barack Obama extended the Bush Tax Cuts through 12/31/12.  This means that the long-term capital gains & qualified dividend tax rate will be 0% & 15%, which is the same as in the last few years.

Are the Real Estate & New Car Sales Taxes still deductible in excess of the standard deduction?

In 2008 & 2009, certain taxes paid added to the Standard Deduction.  So a married person was able to claim the new car sales tax and up to $1000 of RE taxes paid in 2009.  However, this will not continue in 2010, but amendments can be made to recoup the tax savings from prior years.

My grandson needs a new car so he can drive to school and impress his friends.  How do I give him a car and not suffer taxes on it?

The annual gift tax exclusion for 2010 & 2011 is $13,000, so make sure you buy him a Sentra.

How do I tell Arizona how to spend my taxes and earn interest as well?

Arizona Residents can donate money to certain charities & schools for an AZ credit.  Plus, they can also use the deduction if they itemize their deductions.  For example, a married person with a 15% Federal Tax Rate makes a $400 donation to AJ High.  AZ gives the client a $400 tax credit, plus he has a $60 savings on his Federal Return (i.e. he donates $400, and receives $460 back).

CPA, Taxes, Bookkeeping, Payroll, Accounting Services