Rant: 1099's Sent to Preparers

[Burke]

It is amazing that people expect their brokers to email me these reams of 1099's which they are too lazy to bring with their tax papers or take the trouble to "find." ML comes with encryption, passwords, etc etc and I refuse to jump through these hoops plus print out 30 some pages using my paper and toner. From now on, they can either mail them to me or send to the client to print out. I just sent an email to the ML broker to that effect, and got an "out-of-office" reply that he will be back Dec. 18. Really? And I guess the whole world is on hold for spring break and we can just cool our heels until everybody comes back, which includes most of my clients that dropped off their stuff this week. There, I feel better already.

[JohnH]

I agree.
Answer to your dilemma---> Form 4868

[Burke]

You got that right. A quick run-through on the adding machine (yes, I still use one) shows they already owe $5K and I don't even have the investment income yet. These are the same ones who said last year in April that "we need to get together with you later and see if we are paying in enough for 2012" when I did his deceased parent's return (my client for years.)
They never bothered to call or come in. He inherited all the money, and immediately sold their house, bought a new one for cash, bought 3 cars, she quit work, and they have been having a ball all year. Do I have any sympathy? No.

[JohnH]

Funny thing is, for many of them when you say they may owe $5K, they will say "I don't have the money to pay it all right now".

Then when you tell them the FTP penalty and interest only runs about 1% per month, they will say "I don't want to pay any interest or penalties."

At that point I usually just tell them they have a decision to make, and let me know when they decide.

[FEDUKE404]

The truth!

Your rant is valid, but it also is somewhat of a double-edged sword we deal with.

I have some clients who now send EVERYTHING to me electronically, mostly via encrypted (not password protected) emails. The "hoops jumping" was minimal, and now I routinely open/view/print encrypted emails from several large firms whose names you would recognize. Works like a top!! For simple things, like looking at a property tax bill or a contribution receipt, I can use split screens and move on. For more complicated things (including those darn broker 1099 packets) I just add on a reasonable "printing" surcharge (I wish my lawyer understood that concept! ), keeping a pile of misprints/whatever around and then shredding the printouts when I am finished. About the only thing I will routinely print from an investment packet is the first page (DIV/INT/ETC) and generally the stock sales. The rest I just eyeball and keep a notepad nearby. Most common is tracking foreign tax/foreign income specifics (for IRS and NCDOR), and some off-the-wall investment fees lurking in the statements.

Quite frankly, in most cases I would rather deal with a computer than some clients who "find" some new documents, or need to see me to look over some new tax items (can you say "proxy votes"?). I will gladly swap a few keystrokes and some ink/paper to have to avoid those interruptions, especially late in the season.

ADDING MACHINE? They still make those?!? (also typewriters?) Last time I remember using one of those was when I worked at the now-green-box place and had to run those doggone check tapes! It was almost a minor crisis this week when I had to find my calculator to crunch a boatload of numbers.

But I am nearing my "It's April!" mode - incoming returns now will likely be responded to with "Cry Me A River!" as I tell them extensions are likely in order.

FE

[Roberts]

There, I feel better already.

Great rant. I don't mind some basic 1099 printing, I had a client with a 64 page 1099 and they wanted me to print off an extra copy for their attorney. ???? I just add $15 to the bill and call it even.

Client yesterday freaked out that he owed $6k in additional tax. He couldn't understand how that was possible. I showed him that he paid 90% of last years tax bill and this year it went up also. FREAK OUT.

When I print off the estimates he declares he only wants to pay 90% of this years tax bill because he isn't paying them earlier than he has to. When I mention the 90% was what caused him to freak out 20 minutes ago - can't comprehend what I'm trying to explain to him.

[ddoshan]

ADDING MACHINE? They still make those?!? (also typewriters?) Last time I remember using one of those was when I worked at the now-green-box place and had to run those doggone check tapes!

FEDUKE ... You did that also. After I got used to it I thought it was kind of fun unless things didn't zero out like they were supposed to. Of course I rarely had one that did not. As I recall weren't we still using those adding machines that had the crank? I know at one time they did.

[smithtax]

Burke,

You might consider a paperless system (I use Efile Cabinet 5.0). Many of my clients (and third parties) email pdf files (encrypted or not) and I simply 'print' to the paperless system or 'drag & drop'.

I also use 3 monitors to prepare a return. 1 for the prep program, 1 for the current years pdf documents, and 1 for the prior year pdf return. I also have a 4th for exit interviews, which is an exact mirror image of monitor #1, so the client can watch my mouse in action as I explain the return.

I have a good number of out-of-state and out-of-country clients (ex pats), and pdf email is a fantasy come true in my practice.

[Golden Rocket]

It is amazing that people expect their brokers to email me these reams of 1099's which they are too lazy to bring with their tax papers or take the trouble to "find."

Burke, yes that is bad enough but not nearly so bad as depending on the client to keep up with them. And it's getting worse these days when the brokerage house tells the client "We have wonderful news. Your 1099 package is now ONLINE."

[Yeh, wonderful for THEM. Brokerage house gets to bail out of postage, paper, printing, and stuffing the envelope.]

This situation has resulted in postponed appointments, etc. and all manner of trouble, not only for me but for the client.

Burke, when you get these 1099s from the brokerage houses, just put your arms around them, love them like a brother, and be glad you have them. Then be sure and charge client accordingly for all your extra trouble that they weren't willing to go through.

There are very few rants that charging the customer won't cure. The client will either pay you or quit you. Either way, you win.

[BOB W]

What about the client that wants to download the PDF on your computer when he comes in for their appointment. BILL, BILL, BILL

[FEDUKE404]

However

What about the client that wants to download the PDF on your computer when he comes in for their appointment. BILL, BILL, BILL

While I see you point, no client gets to use my computer.

At best I might let him type in a password, and then charge accordingly for time/paper/ink consumption.

FE

[Burke]

1. Nobody uses my computer for anything, under any circumstances, except me.
2. My summer project is learning the pdf thing. But I will never get rid of my paper copies. I do not trust the cloud.
3. I used to do those backward check-tapes too. Kinda neat getting to zero. It really worked. And I think we DID have the hand-crankers at one time.
4. I can do a summary of someone's tax liability on the adding machine in a minute or less if I have to. And figure out the taxable part of Social Security. And their SEPP contribution. And calculate the tax using capital gains + ord income, in another 30 seconds. (I used to do income averaging the same way when it was around.) And I have a tape to check if I need to reconcile later. It comes in handy this time of year; especially the last week, when I go into triage -- to see who owes and who needs to pay with the extension without actually inputting the return.

PS. I also have a typewriter (its electric.) Just typed a check on it, since I write too big to get everything on there sometimes. (No, I just do one every once in a while, when its something big or important.)

5. Don't even get me started on all these firms that proudly announce "we are going green" like its something I should applaud. They'll either print them and mail them, or I will wait until the client produces a printed copy for me to use. Like the Clergy Handbook. No, thank you, I have plenty already.

I actually have had a pretty productive day, with all these people going on va-cay and no one coming in and few phone calls. I am headed out for a glass of wine.

[Koss]

Electronic Forms 1099

I actually prefer PDFs. I do not recommend that clients e-mail me the PDF, because most clients do not have the resources to add any type of password protection. But if a client chooses to e-mail me the PDF, without asking first, or after being warned that it is not secure, I have no problem with it.

I also allow clients to log into their broker's platform from my PC. Then, with the client watching, I can download the Form 1099-B, in PDF format, and save it on my desktop. I then log out and close the browser, with the client watching.

I don't use cloud storage. We do manual backups to an external drive that is stored off-site.

I do try to do everything as paperless as possible.

So, you see, for me, it's actually the other way around. When a client walks in with a paper 1099-B that is 25 pages...

I don't photocopy it. I scan it. So if the client can send me a PDF, or log into their account from my PC, it saves the time and energy of scanning lengthy documents.

I also work with two monitors--one for the client documents, and one for the tax program. This makes working with PDFs very easy.

Someone is going to point out that the preparer is not required to keep a copy of Form 1099-B. I know that. We also aren't required to keep Forms 1098, or 1099-INT. Under the most narrow reading of the e-file regs, we only have to keep a copy of Form 8879, and those forms that would be attached if it were a paper return, i.e., Forms W-2, and Form 1099-R if it has tax withheld, etc.

That may put you in perfect compliance with e-file regs. But what about the broader question of due diligence? It is clear that we need to start keeping more records relating to Schedule C when EIC is involved.

I try to scan almost everything that the client gives me, within reason. If a client brings a box full of hundreds of odd-shaped cash register receipts, I am not going to scan all that stuff. But most of the 1040 returns that I do are based on 20 pages or less of client documents. We just scan everything, so that we have a permanent record of what we used to prepare the return.

Anything that comes to us in PDF is great because it means less time at the scanner.

Our fax is an internet-based service that delivers faxes to us as PDF attachments in our e-mail. That works great, too.

When I say paperless, I mean paperless.

I have some clients--local and out of town--who fax or e-mail everything to me. Then I deliver the client copy of the return as PDF, too. Either I send them a password-protected PDF by e-mail, or I hand them a disk in my office. Higher income clients with higher-priced returns sometimes get a flash drive.

I do a fair number of returns without ever printing or photocopying a single page--except for Form 8879.

BMK

[taxxcpa]

JPEG e-mail attachments

A few clients send JPEG copies of documents which are almost unreadable, so I have to convert them to PDF files. I didn't know how to convert them a few years ago, and would have them mail the forms or fax them. Now I copy the JPEG file and then open it with Adobe Acrobat.

[Koss]

Adding Machines

We just took over an established tax practice that still has some of these. And they are in fact useful for certain auditing operations, because when something doesn't match up, you can look back at the tape to see all of your entries. With that being said, I hardly ever use them. I do use a simple calculator, without a tape. For anything it can't handle, I usually use an Excel spreadsheet.

Adding machines with a paper tape are still in being made. In fact, the National Association of Tax Professionals actually sells two different models on their website, for $125 and $162. The higher-priced one has the ability to communicate with your PC... wirelessly. You can take a look at them here:

http://tinyurl.com/bqc8tyu

http://tinyurl.com/bqc7er3

An older, more traditional piece of equipment is available from ThinkGeek, for just $19.99:

http://tinyurl.com/bqc0gg2

But this vintage device is no longer made. It's a collector's item. In fact, it's hard to find anyone who still knows how to use it...

http://tinyurl.com/bqc9heb

BMK