4303 Portsmouth Blvd.
Portsmouth, VA 23701
(757) 488-7232 | Fax: (757) 488-1368
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Second IMPORTANT CHANGE!!

 

SECOND IMPORTANT CHANGE!!

How the Coronavirus will temporarily affect the way we work with our clients.

Like most businesses all across America, we at Heritage are taking great precautions to protect both our clients and our staff.  We made some important changes on March 19th, however, after Governor Northam’s announcement Monday, we feel we must make additional changes effective Wednesday, April 1st.

Here’s how these new changes will work:

First new change: Once you have dropped off your return and we have completed work, we will call you and discuss alternative ways to get your return back to you.  Some of the options we will discuss are as follows:

  1. For those of you who are computer savvy, the best alternative is to exchange documents using our secure portal. If you wish to use our secure portal, there are instructions at the end of this letter. We will discuss this option further when we call.
  2. We can mail the return to you using priority mail. There is an added cost to this, however, you will save on car expense and the need to get out of the house.  Most importantly, you will lower your exposure to the virus.  The U. S. Postal Service charges a flat fee of $7.75 for this service.
  3. Finally, since the deadline has been moved to July 15th, if you have no balance due, we can simply hold on to your return until all of this blows over and you can come pick it up in the normal way. We will discuss the pros and cons of that option when we call you.

Second new change:  We are changing our hours.  Since you can drop your paperwork through our mail slot 24 hours a day, 7 days a week, and since we will not be making any physical contact with you when you drop off nor when your return is complete, we are going to begin our normal “off season” hours immediately.  That way we can work extremely long days or extremely short days based on whatever the workload requires.  Believe me, we will be here far more than our published hours.

Our “off season” hours which will begin Thursday, April 1st, are as follows:

Sunday – Closed

Monday – 9 AM – 1PM

Tuesday – 9 AM – 1PM

Wednesday – 9 AM – 1PM

Thursday – 9 AM – 1PM

Friday – Closed

Saturday – Closed

As we said in the previous letter, as a result of this change, we will waive the $18 fee increase that we described in our letter we sent in January. That was scheduled to take place on April 1st, but will be waived for this year only.

We will greatly miss the opportunity to visit with you as we have done in the past and look forward to doing that once this historic virus situation has passed.  In the meanwhile, we hope you will understand why we feel the need to do this and will work with us as we implement this new policy.

THANKS! Len Boush, Michelle Dail, Frank Gerbus

HOW TO USE THE SECURE PORTAL – IMPORTANT INSTRUCTIONS:

  1. You will receive a separate e-mail from service@heritagetax.com that allows you to create your own password to access your files from our secure portal.
  2. Please note and remember the username and password.
  3. Both the username and the password ARE case sensitive.
  4. You only have 48 hours to create the password before that e-mail expires. If that happens, please give us a call and we will resend the e-mail.
  5. PLEASE closely follow all of the instructions on that e-mail.
  6. One very important thing to remember: You will create your own password, as mentioned in step #1 above, to access the secure portal.  You will use a different password that WE create to open any password protected documents.  The password WE create for opening documents will almost always be the first four (4) letters of first taxpayer’s last name followed by the last five (5) digits of the social security number of the taxpayer whose name appeared first on the tax return. For example, if the names on the return were George & Martha Washington and George’s Social security number was 123-45-6789, then your password would be wash56789. The password is all lower case with NO spaces.
  7. Don’t hesitate to call us for assistance!

TO ACCESS YOUR FILES FROM OUR SECURE PORTAL,

PLEASE READ THE FOLLOWING INSTRUCTIONS

  1. REMEMBER! The password you used to enter the portal is known only to you. If you have forgotten that password, please call us to ask us to send you instructions to reset your password.
  2. To access the portal, go to HeritageTax.com/
  3. Click on the box in the upper right hand corner that says “Secure Log-In”.
  4. Enter your username and the password you created and click the Sign In button.
  5. When the home page displays, notice the My Folder menu to the left.
  6. Click on “Documents from Preparer”.
  7. In the right column, your documents should appear. Click the Download link for a document.
  8. Select to open or save the file. IMPORTANT! A password may have been assigned to one or more of your files that is DIFFERENT from your log-in password. In most cases, this password will be the first four (4) letters of first taxpayer’s last name followed by the last Five (5) digits of the social security number of the taxpayer whose name appeared first on the tax return. For example, if the name was George & Martha Washington and George’s Social security number was 123-45-6789, then your password would be wash56789. The password is all lower case with NO spaces.
  9. You may need Adobe Reader to open the file. The program is already on most computers.  If you do not have this program, you can download it for free at http://get.adobe.com/reader/
  10. If you select Save, follow the normal procedure you use when saving a file to your computer.

To submit a document to your preparer:

  1. Follow instructions #1 – #5 above.
  2. Click the Documents to Preparer link under the My Folder section.
  3. In the right column, click the Upload
  4. Click the Browse Files button to search for the file you would like to upload.
  5. The file should display under the button. Click the Upload
  6. The file will display in the right column. You have the opportunity at this time to rename or delete the file if necessary.
  7. Your preparer will be automatically notified that a file is ready for downloading from you.
  8. If you have any questions, please contact your tax preparer.

IRS Filing Deadline Has NOT Been Extended

From Tax Guru – Ker$tetter Letter

IRS Filing Deadline Has Not Been Extended

Posted by taxguru on March 18, 2020

As is all too common, there is a lot of misinformation being reported by the media regarding the comments by the Treasury Secretary, Steven Mnuchin.  This has already led to widespread confusion among clients and the public at large.

For the past week, I was fully expecting to be able to write a headline that Tax Day was extended to July 15, which is what was widely speculated by the AICPA and other tax pros.

However, yesterday’s comments by Mnuchin were not as simple as giving everyone an additional 90 days (July 14) to file their 2019 income tax returns, or extensions.  What was actually announced was a 90 day grace period for paying taxes due for 2019, from the normal April 15 deadline to July 14, for up to one million dollars of taxes for individuals.  Tax returns or extensions still need to be submitted to IRS by April 15.

This interest free payment extension doesn’t give the level of stress reduction that was advertised.  Preparing tax returns and extensions is still a hassle that is added to the current extreme pressures from all of the closings, layoffs and cancelations around the country.  Idiotic is the word that comes to mind.

I am hopeful that there will be a great deal of push-back to this ridiculous plan and our rulers in DC do the right thing before April 15 and just set the filing date for 2019  tax returns and extensions as July 15.

CHANGE THAT IS IMPORTANT TO ALL OF OUR CLIENTS!

IMPORTANT CHANGE!!

How the Coronavirus will temporarily affect the way we work with our clients.

Like most businesses all across America, we at Heritage are taking great precautions to protect both our clients and our staff.  Here are some of the things we have already been doing as well as a very important change that we feel we must implement starting Thursday, March 19th.

Things we have already been doing:

  1. As difficult as it has been to do, we have already stopped shaking hands with each other and with our clients.
  2. We have been sanitizing door knobs, faucets, and other surfaces that multiple people may touch.
  3. We have been washing our hands between every client.
  4. We have been providing brand new pens for you to use when signing the paperwork. These pens have not been used and/or reused by previous clients and the pens are given to you to take home with you.

A very important change that we feel we must implement starting Thursday, March 19th:

In order to implement the “social distancing” recommended by the federal government, we are instituting a NEW policy that will require that you drop off your materials for us to work with rather than come into our office and risk exposure to yourself, other clients and our staff.  We regularly have more than 10 people in our office at the same time.  This new policy will protect both our clients and our staff.  We appreciate your understanding in this and look forward to the time when things will get back to normal.

Here’s how this new change will work:

  1. First, let me tell you that we have been preparing returns for approximately 20% of our clients this way for many years so this is not something that is new to us.
  2. Note that, due to this arrangement, an appointment will not be necessary. Just drop off your paperwork whenever it is convenient for you.
  3. Before leaving your home, please place your paperwork in an envelope or bag that can be secured so that the documents will not fall out.
  4. When you arrive at our office, please just drop your envelope or bag of paperwork through the large mail slot in our front door.
  5. As an alternative, if you need for us to do so, you can also call us on your cell phone to let us know you are there. If you don’t have a cell phone, you could just blow your horn.  Please be patient with us and we’ll come out to collect your paperwork as quickly as possible.
  6. We will work with your return as soon as possible, using a first come, first served basis. Although we will try to get your work completed more quickly, please allow at least five (5) business days for us to complete your work.
  7. When we have gone as far as we can with your return, we will call you or email you with questions and/or results.
  8. Once your return is completed, we will ask you to come by to pick up your returns. We will bring your completed returns out to you with a clipboard for you to sign the required forms.  We will provide you with a brand new pen that no one else has used before. You may keep the pen.

For those of you who are computer savvy, an even better alternative is to exchange documents using our secure portal.  If you wish to use our secure portal, there are instructions at the end of this letter.

Of course, you can also always use the good old U. S. Mail if you prefer.

As a result of this change, we will waive the $18 fee increase that we described in our letter we sent in January. That was scheduled to take place on April 1st, but will be waived for this year only.

We will greatly miss the opportunity to visit with you as we have done in the past and look forward to doing that once this historic virus situation has passed.  In the meanwhile, we hope you will understand why we feel the need to do this and will work with us as we implement this new policy.

THANKS! Len Boush, Michelle Dail, Frank Gerbus

HOW TO USE THE SECURE PORTAL – IMPORTANT INSTRUCTIONS:

  1. You will receive a separate e-mail from service@heritagetax.com that allows you to create your own password to access your files from our secure portal.
  2. Please note and remember the username and password.
  3. Both the username and the password ARE case sensitive.
  4. You only have 48 hours to create the password before that e-mail expires. If that happens, please give us a call and we will resend the e-mail.
  5. PLEASE closely follow all of the instructions on that e-mail.
  6. One very important thing to remember: You will create your own password, as mentioned in step #1 above, to access the secure portal.  You will use a different password that WE create to open any password protected documents.  The password WE create for opening documents will almost always be the first four (4) letters of first taxpayer’s last name followed by the last five (5) digits of the social security number of the taxpayer whose name appeared first on the tax return. For example, if the names on the return were George & Martha Washington and George’s Social security number was 123-45-6789, then your password would be wash56789. The password is all lower case with NO spaces.
  7. Don’t hesitate to call us for assistance!

TO ACCESS YOUR FILES FROM OUR SECURE PORTAL,

PLEASE READ THE FOLLOWING INSTRUCTIONS

  1. REMEMBER! The password you used to enter the portal is known only to you. If you have forgotten that password, please call us to ask us to send you instructions to reset your password.
  2. To access the portal, go to HeritageTax.com/
  3. Click on the box in the upper right hand corner that says “Secure Log-In”.
  4. Enter your username and the password you created and click the Sign In button.
  5. When the home page displays, notice the My Folder menu to the left.
  6. Click on “Documents from Preparer”.
  7. In the right column, your documents should appear. Click the Download link for a document.
  8. Select to open or save the file. IMPORTANT! A password may have been assigned to one or more of your files that is DIFFERENT from your log-in password. In most cases, this password will be the first four (4) letters of first taxpayer’s last name followed by the last Five (5) digits of the social security number of the taxpayer whose name appeared first on the tax return. For example, if the name was George & Martha Washington and George’s Social security number was 123-45-6789, then your password would be wash56789. The password is all lower case with NO spaces.
  9. You may need Adobe Reader to open the file. The program is already on most computers.  If you do not have this program, you can download it for free at http://get.adobe.com/reader/
  10. If you select Save, follow the normal procedure you use when saving a file to your computer.

To submit a document to your preparer:

  1. Follow instructions #1 – #5 above.
  2. Click the Documents to Preparer link under the My Folder section.
  3. In the right column, click the Upload
  4. Click the Browse Files button to search for the file you would like to upload.
  5. The file should display under the button. Click the Upload
  6. The file will display in the right column. You have the opportunity at this time to rename or delete the file if necessary.
  7. Your preparer will be automatically notified that a file is ready for downloading from you.
  8. If you have any questions, please contact your tax preparer.

IRS Reports ‘Steep Upswing’ In Taxpayer Data Thefts From Tax Preparer Offices

IRS Reports ‘Steep Upswing’ In Taxpayer Data Thefts From Tax Preparer Offices

We’d appreciate your vote!

We would greatly appreciate it if you would consider voting for us for Best of Portsmouth.  There are two ways to vote:

1.  Text CTKK to 21333, OR

2.  Vote online at http://bestof.hamptonroads.com/

Better yet, do both!

MANY THANKS!

Tax Preparer Penalties

Many times folks ask us why we ask so many questions or require so much documentation.  Of course, the biggest reason is that we want to be sure to prepare a totally accurate tax return.  But we’re also wanting to make sure we don’t incur any of the many penalties that we could get hit with if we accidentally omit something.  Take a look at what potential penalties we could face.

IRC § 6694 – Understatement of taxpayer’s liability by tax return preparer.

IRC § 6694(a) – Understatement due to unreasonable positions.  The penalty is the greater of $1,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.

IRC § 6694(b) – Understatement due to willful or reckless conduct.  The penalty is the greater of $5,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.

IRC § 6695 – Other assessable penalties with respect to the preparation of tax returns for other persons.

IRC § 6695(a) – Failure to furnish copy to taxpayer.  The penalty is $50 for each failure to comply with IRC § 6107 regarding furnishing a copy of a return or claim to a taxpayer. The maximum penalty imposed on any tax return preparer shall not exceed $25,500 in a calendar year.

IRC § 6695(b) – Failure to sign return.  The penalty is $50 for each failure to sign a return or claim for refund as required by regulations.  The maximum penalty imposed on any tax return preparer shall not exceed $25,500 in a calendar year.

IRC § 6695(c) – Failure to furnish identifying number.  The penalty is $50 for each failure to comply with IRC § 6109(a)(4) regarding furnishing an identifying number on a return or claim.  The maximum penalty imposed on any tax return preparer shall not exceed $25,500 in a calendar year.

IRC § 6695(d) – Failure to retain copy or list.  The penalty is $50 for each failure to comply with IRC § 6107(b) regarding retaining a copy or list of a return or claim.  The maximum penalty imposed on any tax return preparer shall not exceed $25,500 in a return period.

IRC § 6695(e) – Failure to file correct information returns.  The penalty is $50 for each failure to comply with IRC § 6060.  The maximum penalty imposed on any tax return preparer shall not exceed $25,500 in a return period.

IRC § 6695(f) – Negotiation of check.  The penalty is $510 for a tax return preparer who endorses or negotiates any check made in respect of taxes imposed by Title 26 which is issued to a taxpayer.

IRC § 6695(g) – Failure to be diligent in determining eligibility for earned income credit.  The penalty is $510 for each failure to comply with the EIC due diligence requirements imposed in regulations.

IRC § 6700 – Promoting abusive tax shelters

The penalty is for a promoter of an abusive tax shelter and is generally equal to $1,000 for each organization or sale of an abusive plan or arrangement  (or, if lesser, 100 percent of the income derived from the activity).

IRC § 6701 – Penalties for aiding and abetting understatement of tax liability.

The penalty is $1000 ($10,000 if the conduct relates to a corporation’s tax return) for aiding and abetting in an understatement of a tax liability.  Any person subject to the penalty shall be penalized only once for documents relating to the same taxpayer for a single tax period or event.

IRC § 6713 – Disclosure or use of information by preparers of returns.

The penalty is $250 for each unauthorized disclosure or use of information furnished for, or in connection with, the preparation of a return.  The maximum penalty on any person shall not exceed $10,000 in a calendar year.

IRC § 7206 – Fraud and false statements.

Guilty of a felony and, upon conviction, a fine of not more than $100,000 ($500,000 in the case of a corporation), imprisonment of not more than three years, or both (together with the costs of prosecution).

IRC § 7207 – Fraudulent returns, statements, or other documents.

Guilty of a misdemeanor and, upon conviction, a fine of not more than $10,000 ($50,000 in the case of a corporation), imprisonment of not more than one year, or both.

IRC § 7216 – Disclosure or use of information by preparers of returns.

Guilty of a misdemeanor for knowingly or recklessly disclosing information furnished in connection with a tax return or using such information for any purpose other than preparing or assisting in the preparation of such return.  Upon conviction, a fine of not more than $1,000, imprisonment for not more than 1 year, or both (together with the costs of prosecution).

IRC § 7407 – Action to enjoin tax return preparers.

A federal district court may enjoin a tax return preparer from engaging in certain proscribed conduct, or in extreme cases, from continuing to act as a tax return preparer altogether.  (My added comment – “In other words, we lose our livelihood since we lose our ability to prepare tax returns altogether.”)

IRC § 7408 – Action to enjoin specified conduct related to tax shelters and reportable transactions

A federal district court may enjoin a person from engaging in certain proscribed conduct (including any action, or failure to take action, which is in violation of Circular 230).  (My added comment – “In other words, we lose our livelihood since we lose our ability to prepare tax returns altogether.”)

Note:  Please see the Internal Revenue Code, corresponding Treasury Regulations, and other related published guidance for additional information on each penalty section.

Reminder for those of you who use your vehicle for business use

Reminder for those of you who use your vehicle for business use.  It is always a good idea to write down your mileage for the end of the year. And the beginning of the new year.  Then save the numbers with your other tax papers.

Important update related to new tax law

THIS IS BRAND NEW INFORMATION THAT REQUIRES

IMMEDIATE ACTION

FOR THOSE WHO WISH TO BENEFIT FROM THIS POSSIBLE TAX SAVINGS OPPORTUNITY!

 

The House and Senate just passed the biggest change in tax laws since the Tax Reform Act of 1986.  The president has already said he will sign it.  We’ll not discuss the politics of whether it is good or bad here but will explore a possible benefit for us on our 2017 tax return.

You may have already heard that these new tax laws for tax years 2018 and beyond will increase the standard deduction to $12,000 for a single person and $24,000 for a married couple filing jointly. This is approximately double the current levels. In addition to this, some itemized deductions that were available in previous years will no longer be deductible.  These two changes may mean that many people who have always itemized their deductions may find that they will no longer need to do so.  While they may have had enough deductions to reach the old lower threshold, they may not have enough to reach the new $12,000 / $24,000 threshold.

With that in mind, let’s talk to those who make sizable charitable contribution on a yearly basis.  While they will still benefit you in 2017, they may not benefit you in 2018 since you may not reach the new larger standard deduction levels.

Here is something you may wish to consider to save you some tax dollars in 2017 while not losing anything in 2018.

If you have access to the funds to do so, you might want to consider doubling your contributions in 2017 and then NOT making any contributions in 2018 (unless you wish to do so).  You still get to take the new larger standard deduction in 2018 while having gotten the benefit of the donation in 2017.

I know this may sound confusing so here is an example:

Let’s say a person normally gives $10,000 per year to charity.  (You can substitute whatever number you normally give to charity here.)  They have already done that throughout 2017. Now, right here at the end of the year, they decide to go ahead and donate another $10,000 which is what they normally would give in 2018. That would mean that they would not make any charitable contribution in 2018 because they already pre-gave it in 2017.  They could still give for something special in 2018 if they wished to. Their total contributions for 2017 would end up being $20,000 which they can fully deduct (in most cases) on their 2017 tax return. For 2018, they would still be able to take the $12,000 / $24,000 standard deduction which means they will still be getting a huge deduction, in many cases more than ever before.

Allow me to make two points related to this:

  1. This only works for those who have free funds available to do this.
  2. The contributor / taxpayer tax savings can be significant.  Using the example above of donating $20,000 instead of $10,000 in 2017, the additional $10,000 in contributions could mean the following savings.
    1. 20% tax bracket – $2000 savings
    2. 30% tax bracket – $3000 savings
    3. If they gave half that, the savings would be half.  If they gave twice that, the savings would be twice also.
    4. Please note that we have used round numbers here for illustration purposes, that every situation is different, and that there may be exceptions in certain situations.

Since your donations must be completed by December 31, 2017 and we are almost already there, it is important to move quickly on this if you desire to take advantage of this situation.

We would greatly appreciate it if you would consider voting for us for Best of Portsmouth.

We would greatly appreciate it if you would consider voting for us for Best of Portsmouth.  There are two ways to vote:

  1. Text CNRZ TO 21333, OR
  2. Vote online at http://bestof.hamptonroads.com/

Better yet, do both!

MANY THANKS!

HERITAGE INCOME TAX SERVICE INC

4303 PORTSMOUTH BLVD

PORTSMOUTH, VA 23701

(757) 488-7232

IRS Can Audit 6 Tax Years Not 3, So Be Careful

IRS Can Audit 6 Tax Years Not 3, So Be Careful

See this article from Forbes magazine – https://www.forbes.com/sites/robertwood/2017/02/09/irs-can-audit-6-tax-years-not-3-so-be-careful/#2e6101695994

2002-2019 Best of Portsmouth

Heritage Income Tax Service, Inc. | 4303 Portsmouth Blvd., Portsmouth, VA 23701
(757) 488-7232 | Fax (757) 488-1368

Heritage Income Tax offers a full range of tax preparation services. Located in Portsmouth, Virginia, we serve the entire Hampton Roads area including the cities of Chesapeake, Virginia Beach, Norfolk, Suffolk, Newport News and Hampton.