Drake Software

[Beersheba]

[I]
I haven't looked up the history of Section 1231 of the tax code, but I suspect the look-back provision was part of the original law, to block an obvious loophole. Sec 1231 is hugely favorable to the taxpayer, so it seems misplaced for you to frame it as a tax money grab by Congress. And yes, TurboTax tracks the Sec. 1231 look-back just like Drake, it does not "force" you to do anything but will automatically track it as you roll forward from year to year, no effort required.

Yes, Sec. 1231 is big-time favorable to business and has been for years. Seems like these benefits came from an era when the attempt was to encourage business rather than social engineering. I do remember when the look-back provision was passed, and I don't remember the year, but I believe in the last 10 years - it was not in the original drafting of sec. 1231. And TurboTax will track this just like any other software year-to-year, but for a new user how many taxpayers will have the expertise to populate it?

Losing business to TurboTax increases as we deal with extra complexity, CPE requirements, software increases, etc. And the self-preparing taxpayer doesn't have to put up with any of this. A perfect example was a client that I had for years. She wanted to claim her brother as an exemption - he moved into her house for 4 months after losing his job, and then moved out again. He had two jobs (i.e. W-2s) and was over 40 years old. There were no other relevant events, and her own income was less than $20K. I told her it wouldn't work. So she buys TurboTax, and tells me not to electronically file because TT allowed her to claim her brother. I refunded her money and don't expect to see her again.

I'm absolutely certain that TT questionnaire would not allow her brother if it were properly answered. She either lied or didn't know how to answer the questions.

[dtlee]

I have written about this for years. Our professional organizations stay mum while the IRS suggests freefile and never once mentions that a complex return might be better prepared by a tax professional.

This plus the requirements of Due Diligence which are not needed if you self-prepare really irk me.

I lost a client who wanted to lie an count unemployment somehow to get the Earned Income Credit. She figured out a way to do this in TurboTax and got it and demanded my fee back for the prior year because she proved I was incompetent.

[Rapid Robert]

"Our professional organizations stay mum while the IRS suggests freefile and never once mentions that a complex return might be better prepared by a tax professional."

I wonder if things would change if Congress gave the IRS authority to regulate paid tax preparers? Probably not, because the last thing they want is to give the impression that people who can afford to pay for return prep get kinder, gentler handling from the IRS. I mean we already know that rich folks can buy a lot of privilege beyond what is available to their fellow citizens, this (IRS endorsement of paid professionals) would go a long way toward proving that.

Anyway, don't believe anyone who tells you the lie that the American people want a simpler tax system. Many Americans love having the ability to get away with a low level of cheating, and when you look at our political situation over the last five years, the bar is now much higher for anything to be considered a high level of cheating.