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Tax Blog
“Taxing” is a word synonymous with “onerous” and “wearing.”  Bond Beebe, Accountants & Advisors, have created a user friendly blog called “It’s Taxing” to inform and educate our clients and business associates on timely topics related to tax, estates, accounting and finance.  We hope our blog answers your questions and alleviates the heavy burden and anxiety related to understanding complicated tax laws and related matters. 


How to Choose a Tax Preparer

If you need help with your tax returns, the best time to choose a preparer is before the end of the year. That way you have time to find someone with the appropriate skill level for your situation and time to get on their schedule. Having a preparer with advance knowledge and understanding of your life can make your tax return preparation more efficient for the preparer and less stressful for you. Waiting until March can leave you at the mercy of the market. The most competent firms and preparers may not have time to do anything for you except file an extension at that point.

Starting early will give you time to sit down with a preparer and discuss your particular circumstances so the preparer can understand what services you will need and so you can understand the preparer’s knowledge level for your situation. There is also time to accomplish any tax planning that might be beneficial to you. After the end of the year there’s not much planning ability left.

What should you look for in a preparer?

The IRS issued a news release (IR2015-124) that lists some of the things to look for, and to watch out for. Here are some tips and information to consider:

  • Be aware of the preparer’s credentials. The most knowledgeable, trained preparers will generally be Certified Public Accountants (CPAs), Attorneys, or Enrolled Agents (EAs). These designations require extra education, testing and licensing.
  • Select an ethical preparer. Taxpayers entrust some of their most vital personal data with the person preparing their tax return, including income, investments and Social Security numbers. CPAs and Attorneys are licensed by their states and bound by a code of ethics. EAs are credentialed by the IRS and bound by a code of ethics. Many states and the IRS have an annual ethics class requirement for their license-holders as well.
  • Ask about fees. Avoid preparers who base their fee on a percentage of the refund or those who say they can get larger refunds than others. Taxpayers need to ensure that any refund due is sent to them or deposited into their bank account, not into a preparer's account. You are paying for a preparer’s use of their knowledge and experience to prepare your returns so the low bidder may not be the best choice if you have a more complex tax situation.
  • Be sure to use a preparer with a preparer tax identification number (PTIN). Paid tax return preparers must have a current PTIN to prepare a tax return. It is also a good idea to ask the preparer if they belong to a professional organization and attend continuing education classes. CPAs are generally required to attend 40 hours of continuing education per year (VA is 120 hours every 3 years, DC & MD are 80 every 2 years), EAs require 72 hours every 3 years.
  • Research the preparer's history. Check with the Better Business Bureau to see if the preparer has a questionable history. For the status of an enrolled agent's license, check with the IRS Office of Enrollment (enrolled agents are licensed by the IRS and are specifically trained in federal tax planning, preparation and representation). For certified public accountants, verify with the state board of accountancy; for attorneys, check with the state bar association.
  • Ask for e-file. It is faster, more secure and more accurate than filing a paper return. Generally any paid preparer must file the returns electronically
  • Provide tax records. Discuss your situation with your preparer ahead of time. Make sure they are experienced in your particular field or industry if you have a business or specific kinds of investments. A good preparer will ask to see records and receipts. Do not use a preparer who is willing to e-file a return using the latest pay stub instead of the Form W-2. This is against IRS e-file rules.
  • Make sure the preparer is available after the filing due date. This may be helpful if questions come up about the tax return. Taxpayers can designate their paid tax return preparer or another third party to speak to the IRS concerning the preparation of their return, payment/refund issues and mathematical errors.
  • Review the tax return and ask questions before signing. Taxpayers are legally responsible for what's on their return, regardless of whether someone else prepared it. Make sure it's accurate before signing it.
  • Never sign a blank tax return. If a taxpayer signs a blank return the preparer could then put anything they want on the return — even their own bank account number for the tax refund.
  • Representation rights: CPAs, EAs and attorneys have unlimited representation rights before the IRS. This may be important to you if you are audited or have payment or collection issues.

No More Estate Closing Letters Unless Requested

As an executor/personal representative, you are responsible for carrying out the terms of the decedent’s will or Trust, which includes ensuring all debts are paid and each beneficiary receives his or her designated property from the estate. The estate administration process may include estate tax filings with the IRS and state jurisdictions, probate court filings, in addition to the funeral proceedings and wrapping up any outstanding personal matters of the decedent. Often times this is not a quick process despite adequate and appropriate estate planning.

When an estate is subject to tax at the federal or state level, a return is required nine (9) months (in most cases) following the date of death. Historically, the IRS would issue an estate tax closing letter upon completed review of the estate tax return. This closing letter would take an additional four to six months of processing time by the IRS to confirm the estate tax filing is accepted. Also, this estate tax closing letter is a final piece needed to close an estate with the probate court in some jurisdictions. The estate administration period can take longer than one year before the beneficiaries receive the residual estate property. If you are the one inheriting property from an estate, time ticks away ever so slowly.

Is Your Trust Subject to State Income Taxes?

There are four (4) main questions to determine whether the Trust is subject to state income taxes as a resident trust.

  • Was the grantor domiciled within the state at the time of creation?
  • Where does the trust document or agreement indicate the trust is to be governed?
  • What state does the trustee(s) reside?
  • What state does the beneficiary(s) reside?

A Trust may be considered a non-resident trust. Generally, if a Trust is not considered a resident trust, then it is a non-resident trust which is subject to income tax to the extent the Trust generates state sourced income from an activity earning income within the state, such as a rental activities or business interests.

New Highway Act Changes Filing Deadlines for Certain Business Tax Returns

President Obama signed into law the “Surface Transportation and Veterans Health Care Choice Improvement Act at the end of July. The Act implements due date changes for business tax returns beginning with 2016 tax returns.

Currently, partnership tax returns are due April 15 (or 3 ½ months after year-end). Under the new rules partnerships will be required to file by March 15 (or 2 ½ months after the close of its tax year). This is the same due date already in place for S Corporations. A six-month extension will be available. The new deadline will apply to returns to taxable years beginning after December 31, 2015.

OPM Data Breach Victims vs. Tax-Related Identify Theft: What to do?

Unfortunately, it is not uncommon to read a headline on a routine basis highlighting a private data hack (see OPM, Target, Home Depot, IRS, etc.) impacting thousands, if not millions of individuals, with each instance. More and more personal and financial data is stored electronically and this identity theft epidemic is only growing. Perhaps this is an unintended consequence to the speed and accessibility of your digital record-keeping. Although words can barely express the sense of loss when your personal and financial information is compromised or stolen. It is a frustrating experience leaving victims feeling helpless and vulnerable.

A data breach, or cybersecurity incident, as described by the Office of Personnel Management (OPM), is a different type of crime compared to tax-related identity theft. The OPM cybersecurity incident resulted in the theft of sensitive, personal information such as names, addresses, birthdates, and Social Security numbers. Even though this data was stolen, OPM has stated “there is no information to suggest misuse of the information that was stolen from OPM’s systems.” Tax-related identity theft occurs when someone ‘uses’ your stolen Social Security number to file a false return claiming a fraudulent refund.

Amended Maryland Tax Return for Wynne Decision- What and When to File

As mentioned in our previous post, the Supreme Court recently ruled that Maryland’s tax law for income earned outside of the state is unconstitutional. Each year, Maryland residents pay a Maryland state income tax and a local income tax based on the county in which they reside. Prior to this decision, Maryland residents who earned income from states outside of Maryland were only allowed to claim a tax credit against the Maryland state tax. With the Supreme Court ruling, Maryland residents who pay taxes to other states for income earned from outside of Maryland will now be able to claim a tax credit against not only their Maryland state tax, but also the local county tax.

Should I file an amended return?
If you are a Maryland resident who has been paying taxes to states outside of Maryland, the first step to determining if you should file an amended return is to review the your previously filed returns and see if the tax credit was limited. This can be determined by looking at the Form 502CR filed for each state and comparing the allowed credit (Line 8) versus the total taxes paid to the other state (Line 7). If the allowed credit is equal to the taxes paid, your credit was not previously limited and no amended return needs to be filed. However, if the allowed credit is less than the actual taxes paid to the other state, then you may want to file an amended return as the credit will increase.


Each month, the IRS provides various prescribed rates for federal income tax purposes. These rates, known as Applicable Federal Rates (AFRs), are regularly published as revenue rulings.

The AFRs for August 2015 are as follows:

Annual Semi-Annual Quarterly Monthly
Short-Term: 1-3 years 0.48% 0.48% 0.48% 0.48%
Mid-Term: >3 & up to 9 years 1.77% 1.76% 1.76% 1.75%
Long-Term: >9 years 2.74% 2.72% 2.71% 2.70%

IRS Proposes Regulations that Would Allow Individuals with §83(b) Elections to e-File Tax Returns

BACKGROUND: Section 83 of the Internal Revenue Code states that you do not have to recognize income from owning equity in a company until that stock vests.

Section 83(b) refers to a special election you can make with the IRS to let them know that, despite the fact you have not yet vested your stock, you still want to recognize the income associated with ownership immediately.

If you file the 83(b) election before your stock has appreciated from it’s strike price there will be no income and therefore no tax owed. You have 30 days from the date of exercise to get your 83(b) election form to the IRS.

PROPOSED REGULATIONS: In order to remove obstacles to electronically filing individual tax returns, the IRS has issued proposed regulations which would eliminate the requirement that a copy of the §83(b) election be submitted with the taxpayer's tax return for the year the property is transferred.  

This change would apply as of January 1, 2016 and would apply to property transferred on or after that date.

This proposal does not eliminate the requirement to make the §83(b) election no later than 30 days after the date the property was transferred.  

We will keep you updated on any events related to this proposed regulation. Please call us at 301-272-6000 if you have any questions regarding this or any other tax matters.

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