Broker Check

April 30, 2007

Save for your retirement.

Tax Quote

          The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.  Jean Baptiste Colbert

The Neverending Tax Season

          Just like the song, this tax season threatened to go on and on and on ....  First it was a two day extension to April 17 due to Patriot’s Day in Andover and then Emancipation Day in Washington D.C.  Then, another two day extension for Federal and New York State (but not New York City) due to the worst Nor’easter in 124 years.  Finally, an additional week extension by the Feds because they became a bunch of wimps and extended it for no good reason.
          However the season ended, it was slow in starting.  We urge you to come in to see us in February if you have 90% of your information.  If everyone waits until they have all their information and then they come in, there will not be enough time for everyone. (Besides, we are fresher, well rested and think better in the beginning of tax season).  If in doubt as to whether this will work for you, call us for our recommendation.

Some Financial Advisors Tied to Quotas

          Some insurers are taking away their advisors’ group health insurance benefits if proprietary mutual fund product quotas are not met.  What this means, is that the advisor must produce "X" amount of commissions or he will not have health insurance.  Lincoln Financial Advisors Corp. has a quota of  $50,000 gross direct commissions.  AXA Financial’s contract sets a "hurdle" of 40,000 production credits.  Also mentioned by advisors were Metlife, John Hancock Life Insurance Co., MassMutual Financial Group and Prudential Financial Inc.
          If you are being sold proprietary products by your financial advisor, ask if there is a quota involved.  Of course, we hope the only reason is consistent superior performance. 
          You should also note the FINRA rules on quotas as well as steering clients to certain products.  The rules apply to investment products, including variable annuities and variable life insurance.  Investment News Vol 11 No. 11 3/19/07 p.1

IRS Reacts to Telephone Tax Refund Abuse

          In reaction to a growing number of erroneous refund requests for the recently repealed long-distance federal telephone excise tax which had been on the books since the Spanish American War, the IRS is taking steps to prevent abuse by preparers.
          The IRS says it has been monitoring the refund requests and has seen some problems with returns that may indicate "criminal intent".  According to the agency, some tax return preparers are requesting thousands of dollars of refunds for their clients in instances where clients are entitled to only a fraction of that amount.
          The IRS took decisive action starting in February which included onsite visits from IRS Criminal Investigation special agents; search warrants were served at tax preparation businesses in seven cities where computers and documents were seized and the businesses temporarily closed.  The Trusted Professional, NYSSCPAs 3/15/07, p.4

Self Employed Can Use IRS Meal Per Diem

          The recent Tax Court case, Riley, TC Summary Opinion 2007-26, ruled, self-employed individuals can use IRS approved per diems for meals and incidentals without having to track actual expenditures.  But, the self-employed still must show the time, place and purpose of the travel in order to use the per diems which currently are $58 per day for high cost locales, and $45 a day elsewhere.
          But per diems cannot be used for lodging expenses.  Lodging must be substantiated.  Kiplinger Tax Letter Vol 82 No. 5 3/9/07

          If you have any questions about the foregoing or any other financial matters, please call us.
          Remember, We’re Here For You !!