I love what I do! I get to be nosey; I get to delve into people’s lives, burrow around in other’s affairs, mess with their numbers, piece bits together, and take others apart. I’m a detective in search of fiscal truth, a psychoanalyst who placates a guilty conscience, a mediator who brings warring parties to the table and keeps others at bay. I change hats and gears at a moment’s notice. It’s never boring and always fun.
I’m a tax analyst, a tax preparer, a tax consultant and advisor, a tax specialist, a practitioner. It’s like they say, a rose by any other name… In short, I’m into tax so you don’t have to be. And I love it!
These pages are here for your enjoyment and for me to share the lighter side of the tax world – my world – with you. Maybe, just maybe, you’ll get the joke and understand why I’m having so much fun.
Come Prepared to Your Tax Appointment
“Colors. Wow! Rainbow colors. Awesome!”
Sitting across from my desk, Rory stared blankly over my shoulder and out the window. Seemingly dazzled by the sunlight outside, he repeatedly broadcast an imaginary kaleidoscope of colors dancing before his eyes. With slurred speech, he proclaimed “Red. Blue. Wow! Yellow. Neat! Purple!”
Rory’s arrival was no less worrisome. He had been referred to me by another client and when he arrived at my office, he came with one of those over-sized ice chests. Accustomed to seeing tax data transported in shoeboxes, grocery bags and even small furniture, I was not surprised by this filing system. In fact, I thought it was rather clever to store all important and flammable documentation in a metal Coleman.
I was, however, a bit shocked by Rory’s appearance. Standing before me in torn jeans, dirty T-shirt and waist-length, unkempt hair, I was hoping to usher him into my office, unnoticed by other clients and neighbors. Once seated, I tried to initiate some small talk, but had to fight Rory’s fascination with the light-play behind me. “Colors. Cool! Green. Nifty!”
Tiring of this spectral commentary, I suggested that Rory show me his tax data. He nodded absent-mindedly and then leaned down to open the ice chest. He raised the lid and reached in. I waited expectantly, ready to sort through his documents. Rory finally took his eyes from the window and focused on the task at hand and pulled out…
… a six-pack, and was now ready to work on his taxes.Top
Save Your Tax Data
Orlando was referred to me by his younger sister who had just turned 91. She gave me his address in Hollywood.
I parked my car in the seedy neighborhood and walked through the courtyard, past the pool, up a flight of stairs and rang the bell. A tiny old man dressed in a heavy woolen overcoat furtively opened the door and beckoned me inside. Worried that Orlando wore nothing beneath his trench coat on this warm spring day, I courageously ventured in.
Orlando asked me to sit at the Formica table which took up most of the shabby apartment. After the perfunctory small-talk, I asked Orlando to show me his tax papers since I had been called to help him prepare his returns. He nodded and disappeared behind a curtain. Eventually, I heard a big thunk and then the sound of heavy dragging. Orlando reappeared from behind the curtain and with tremendous effort, heaved an oversized leather suitcase upon the table. I watched as Orlando opened the travel case to reveal his paperwork. Filled to the brim with tightly wadded balls of paper, Orlando took out one paper ball. He carefully placed it in front of him and began to straighten the wrinkles. When he had flattened the document as much as he could, he picked it up and squinted through thick horn-rimmed glasses, trying to discern its significance. Once satisfied, he pushed the paper toward me for evaluation. I quickly recognized it as an expired bank statement for which I had no need and placed it aside. Orlando then reached into the suitcase, took out another wad, placed it on the table, straightened its wrinkles, picked it up for inspection, nodded and passed it on to me. And so the painful process repeated itself for over an hour until the suitcase had been emptied and I had collected the few pertinent documents that I needed.
Having survived the ordeal, I was eager to leave, but Orlando politely asked if I might stay another moment. Obligingly, I waited as he disappeared behind the curtain again. Soon I heard a big thunk and then the sound of heavy dragging. And sure enough, Orlando reappeared with an identical travel bag. He hoisted it up onto the table, removed the leather straps, and ever so slowly began the unfolding and inspection process once more!Top
What Happens in my Office
It’s tax season and so you’ve wrestled with unruly W-2s and 1099s. You’ve sorted, collated, and stapled. You’ve added, subtracted, and re-calculated innumerable times with the best of intentions. And then you’ve succumbed to frustration, declared defeat, and crumpled up everything into a shoebox for your tax-guy.
Remember, I’m on the receiving end. Just this week alone, I’ve taken possession of a metal file box, an ice chest, and a nightstand! Responding to my obvious bewilderment, my client explained that she had religiously saved her receipts by her bedside so that she would be sure to have them when needed. Alas! The drawer would not open prior to our appointment and so she just brought the cabinet. Presented with the problem, I resolved it expertly by shoving it into my closet along with all the other client files. Determined to keep my desk pristine and my office bare of messy paperwork, I neatly stack unkempt wads of adding machine tape, torn envelopes that advertise “Important—Tax Documents,” and fragmented tax forms that don’t tear cooperatively along perforated edges behind my closet door and thus remain blissfully undisturbed by any disorder.
I head to bed in the early morning hours, but am soon at my desk again. I open the closet to retrieve a folder and to my horror, I discover that the files have multiplied exponentially in my brief absence. Birth control is clearly not practiced; whether as a matter of faith or unavailability.Top
Married Filing Jointly
Mary and Ed came for their appointment on Monday. They HATE each other. This is a couple that’s been married for over 50 years and absolutely HATES each other. In fact, when they came in to my office for the first time three or four years ago, they arrived in separate cars and sat at opposite ends of the couch and announced, “We HATE each other but we want to file jointly”. Curious, of course, as to why they would want to do that, I got the story: It seems they’ve HATED each other almost from the word “go”, but both love this quirky house they own together in the hills. Neither will ever move out of it, so both stay and stay and stay—she lives upstairs, he downstairs. But never the two shall meet, except once a year in my office to file their joint tax return. Why joint?, you ask. Well, most of the money is Mary’s and so it is beneficial for her to file jointly rather than separately to get the extra personal exemption and enjoy the more favorable rates. For him it’s also cheaper since she pays his taxes!Top
Sarah showed up with her two kids today: The boy is three years old, the girl is five. Knowing their names from the tax return, I was surprised when the mother introduced BOTH kids as boys. Neither could have been a friend along for the afternoon since the two kids looked almost like twins. I didn’t get it. Apparently, the girl (now a boy) assumes other’s identities for months at a time. Right now, she’s Justin from N’Sync. She was wearing a bright pink dress and when put on the spot by me, simply explained that although other boys don’t usually wear dresses, “this one does”. What could I say? I asked the little one if he preferred having a brother or sister and he succinctly answered that he had a brother. Unsure what this turn of events meant, I wondered if I might have to amend the previously filed returns claiming a child of each gender. And then the girl asked that I change her name listed on the tax return in the section reserved for dependents to “Pink”. She said she would stick with that name for the next six years and then would change it to “Orange”.Top
I always look forward to Mark’s appointment. Each year he comes laden with papers and enthusiastically outlines his latest business venture. Ostensibly he is employed as a phone technician, but really is an entrepreneur at heart who foments grandiose ideas. Once, he detailed his plan to establish a switching station in a third world country and channel long distance calls from there via satellite. When that failed, he purchased homes in foreclosure, remodeled and sold them. But then the real estate crunch hit and soon he went into the import/export business.
I live vicariously through his exploits. Needless to say, his tax returns are complicated and he continuously runs the risk that his unprofitable endeavors will be classified by the IRS as mere hobbies, which would mean that his losses would be disallowed. IRC §183 states that a business must show a profit in at least three out of every five years. For Mark, that is impossible and so he routinely “goes out of business” every other year and starts fresh.
One time, he arrived at my office with his usual grocery bag of papers and… an egg. This was a rather large egg; about the size of a softball. As he gingerly handed it to me for inspection, I was of course perplexed. Mark eagerly explained that he had now decided to go into the ostrich business. Others had gone there before, but inconveniently had to ship, feed and house the oversized birds. Mark instead chose to import only the eggs, leaving the hatching to others.
Two years later, Mark moved on to a new scheme. As he sat in my office, inquiring about the deductibility of this and the taxability of that, he was displeased with my responses. He desperately wanted to minimize his tax liability. I patiently explained that he simply could not claim the deductions he wanted until he angrily proclaimed, “But that’s the least shady thing I’ve ever done!” Having signed his returns for so many years, my professional life flashed before me. If that was the least shady thing he’d done, then what about…?Top
I’ve often been asked to join the IRS Volunteer Income Tax Assistance program which offers free services to low-income taxpayers. Although my professional expertise would be put to good use, I prefer to do my community service in a less structured manner by helping one “little old lady” at a time.
There was Therese who fell into the clutches of an unscrupulous doctor who conspired with a nursing home to bilk the patient out of her life’s savings. And Paula, whose daughter kidnapped her invalid mother, drove into the desert, and killed her for unfettered access to the joint brokerage account. And Dolly, whose investments dwindled from $450K to a mere $35K under the “watchful” eye of her avaricious broker. It’s always about money. And always a story that tugs at my heart-strings. I bristle at the injustice. I strive to right these wrongs. And only sometimes do I succeed.
For countless years I helped Brian walk the straight and narrow. An obsessive gambler, my client often sought to play fast and loose with the Tax Code. Somehow, I succeeded in keeping him honest. And so it came as no surprise when he called to “talk.” Influenced by my preachings and a sudden pang of guilt, he confided in me that he had been embezzling from his mother! I advised that he seek legal counsel, disclose his transgressions, and take pro-active steps to reinstate the stolen funds. Then I didn’t hear from him for six months. At last week’s appointment, no longer suffering any remorse, Brian confessed that he had followed none of my advice and had instead decided to “take care of the matter in [his] own way.”
I fired him!Top
Big Brother is Watching
Conspiracy theorists will nod their heads with condescending indulgence and chuckle with self-satisfaction that my naiveté has been shattered and that I’ve finally come to realize that which they have always known: Our federal government is spying on us!
Ominously entitled “Carnivore,” they say it’s a network interface program that can oversee online activities such as website visits and e-mail communications. With a court order, the FBI can use this surveillance program to monitor the activities of suspected terrorists and child pornographers. Whew! I should have nothing to worry about. But recently my web history listed a number of suspicious destinations, including the U.S. Bureau of Prisons and the federal penitentiary at Leavenworth. [“They” might well question my sudden interest in our nation’s correctional system.] I next visited internet sites that detailed prison policies regarding contraband, misuse of telephone privileges, and inmate access to confidential information. [What is this gal planning?!] Soon I googled “tax fraud” and was directed to websites sponsored by the IRS, the U.S. Department of Justice, and the federal Tax Court, which described many creative schemes flourishing where enforcement is sporadic at best; lax and ineffective at worst! [She’s looking for an easy buck.] Targeting a particularly egregious scheme, I meandered from site to site until I landed upon a Congressional report and continued on to various state regulatory sites in search of legislative prohibitions against enforcement practices. [Now she’s looking for loopholes!] And finally I honed in on sites maintained on which prisoners provided step-by-step how-to’s for everything from filing appeals to intentional tax fraud methodologies. [Aha! It all makes sense now!]
As a licensed tax practitioner, I finally realized that my web history could easily be misconstrued. [Maybe she hopes to advise tax dodgers or maybe she wants to represent these criminals?] My telephone trail was no less suspect with calls placed to California prisons in Folsom, Chino, and San Quentin as I continued to research facts for a term paper. [Sure!] If sudden and frenetic activity does in fact arouse the interest of regulatory authorities, my web history and telephone trail certainly would reflect poorly on my professional integrity and credibility. I can only hope that Carnivore is a myth!Top
The Tax Code mandates the payment of taxes and yet some individuals purposefully fail to do so. Their reasons range from seemingly substantive claims of unconstitutionality to frivolous claims of inconvenience.
Inez Morin arrived in court without any documentation and claimed, “It’s just a lot of paperwork.” Like the taxpayer, the court could not be bothered with this excuse and assessed a negligence penalty (T.C. Summ. Op. 2001-134). Similarly, Christopher McCann’s blatantly false assertion that “personal and business expenses…are one and the same” in conjunction with his unwillingness to separately account for them, did not endear him to the court (81 T.C.M. (CCH) 1819, 2001).
These arguments seem both irrational and impudent on their face and it is surprising that these taxpayers were even granted their day in court. On the other hand, some tax protesters argue issues that they believe to have genuine merit. Kenneth Tedder alleged that the federal tax system was based on voluntary compliance. However, his contention was flatly rejected since “Congress gave the Secretary of Treasury the power to enforce the income tax laws through involuntary collection” (787 F.2d 540, 1986). Straining the limits of credulity even further, other protesters argue that the 16th Amendment did not give Congress the power to tax despite its expressly ratified language.
These allegations may sound ludicrous to compliant taxpayers, but are nevertheless employed by those who wish to parse words or (mis)interpret statutory and judicial language. Despite the improbability of success, recalcitrant taxpayers may bring these contentions into a courtroom where they may engage in such pedantic discourse as did President Clinton when he said, “It depends on what the meaning of the word ‘is’ is” (Grand Jury Transcr. 58:5, 1998). Although Clinton may have truly believed that such linguistic analysis could excuse his previously uttered misstatements, his response was later often quoted in derogatory or humorous fashion.
Many tax protest cases are sources of hilarity, beginning with the outlandish premises of the lawsuits and ending with the judicial pronouncements chastising taxpayers for their folly. Doomed to fail, if only because “the ability of the Government to function [w]ould be impaired if persons could refuse to pay taxes because they disagreed” with our system of taxation (7 F. Supp. 2d 143, 1998), Tax Court cases yield an amusing study of language and law.Top
“B2, B4, B5, B7, B8, and B10 through B16 for the Department.” The Board expeditiously ruled on 12 of 13 cases previously heard and was now ready to proceed.
Comprised of five members, California’s Board of Equalization (BOE) is the nation’s only elected tax commission. Created in 1879, the Board was initially responsible simply for ensuring that property tax assessments were uniform. Today, however, the BOE also provides an appeals forum for sales and income taxes. Open to the public, I watched as taxpayers were given 10 minutes to present their cases. Their arguments were often creative, but mostly ineffectual.
An interior designer compared his services to those of an architect whose renderings are not subject to sales tax, but conveniently disregarded that he had failed a prior audit on the same issue. An operator of a cogeneration plant alleged that he was not producing a tangible (and thus, taxable) product since he was only extracting energy already inside the coal. This “Michelangelo defense”—the sculptor claimed that he merely released his creations from the stone in which they were entrapped—left the Board unimpressed.
Even the tax authorities’ dysfunctional recordkeeping which often caused lengthy assessment delays did not sway the BOE in the taxpayers’ favor. Sales tax was levied 6 years in arrears on a boat-owner who bought from an unlicensed broker and 8 (!) years in arrears on a floundering telecommunications company which could not afford the software to properly determine assessments on long distance calls. Illness, on the other hand, seemed to evoke sympathy. A jeweler who claimed that he was “really a good guy” by hiring “two handicapped employees,” was granted a 5% tax reduction; a mentally disabled tenant was given a $347 tax credit; and a restaurant owner diagnosed with cancer received a 15% decrease based on the assumption that he must have done less business while undergoing chemo.
But the taxpayer who claimed that the Department had “ruined [his] reputation just because [he] couldn’t manage a budget” was branded as a tax protester since he had not even filed a return for the $76K he had earned. Although the taxpayer claimed “there’s nothing I can do,” the BOE found that they could do something and assessed a $1000 frivolous appeals penalty!Top
Oh, those Quirky clients!
With the tax season coming to a close at 9 PM last Wednesday evening, allow me to explain just how boring, dry, and mundane my job as a number-crunching, pedantic, and anal accountant truly is…
“We live in Beverly Hills in a nice, quiet neighborhood, the kind where everyone knows and looks out for each other. So, when we heard loud screaming next door—it sounded like kids being madly beaten—we called the cops. They came, they investigated, and then they knocked on our door to report that our new Arabic neighbors were, thank goodness, not beating their children. They were merely slaughtering goats!”
Bryan apologized for his tardiness, "Due to a crazy intervention shoot where we were chasing a heroin addict around Pittsburgh, I was not able to get that FedEx to you” while Andrew attempted to explain his excessively large medical deduction by telling me, “Marijuana is my vice of choice.” Oscar told me that he recently entered into a same sex partnership. “Since I have a wife, three kids and now 6 grandkids, I guess I’m bisexual.” Recognized as a world expert on human psychosexual orientation, he doesn’t want to come ‘out’ for fear that his research may be deemed tainted [or at least, biased—as in “not straight”].
No, I don’t make this stuff up. Quoting my clients, I have no need to let my imagination run wild. After all, I have a client who claims to be filming a documentary about individuals [let’s call them loons] preparing for the apocalypse; another who is hounded by the US Department of Justice and the FBI because she once was married to a tax protestor who, for a fee, taught others that they need not file tax returns and then banked all of those fees in secret off-shore accounts; and still another who has his own star on Hollywood Boulevard.
John has been invited to the palatial Bel Air residence of Sumner Redstone to paint for Tony Bennett and Sydney Poitier [don’t ask, in some twisted way it does make sense]. Irene was the personal assistant to Mrs. Howard Ahmanson (of Home Savings fame). Beverly was an O.J. juror. Jaye used to baby-sit for Melanie Griffith “when she was still cute.” Sarah romps with rescued lions and hob-knobs with Tippi Hedron (Melanie’s mom). And Marco, when asked his job title, inexplicably answered “Hair and Cloth” [you figure it out].
But not all is fun and games. When I politely asked Alice, How are you?, she responded, "Well, I just had the worst case of diarrhea. I have my pants down around my legs. And I just got myself cleaned up." Roger explained, “Shortly after getting to Emergency my body fell apart. I vomited and excreted blood and I had to have assistance to breathe.” [More info than I needed—much more!] Never one to learn, I often proffer well-meaning compliments. When I told Jane that she didn’t look her age, she exclaimed, “And that's with my real face!" I suppose that should hardly come as a surprise since plastic surgery is the rage as Thomas [all 6’6” and 250 pounds] proved when he told me “the same guy who did Cher, did my eyelids.” Staying young is paramount. Hilda claims that she had been lying about her age so long, that now she’s depressed when she “found out” how old she really is.
On the other hand, Lucille seems unconcerned about her age and what may soon (?) come. For years, I’ve tried to encourage her to write a will, especially since she has a complicated family situation with no direct descendants, only nieces, nephews, grand-nieces and grand-nephews, step-nieces and step-nephews, foster-nieces and foster-nephews… [well, you get the picture]. This year, Lucille proudly told me she was 103 years old [102, but who was I to argue?]. When I once again suggested she draft a will, she calmly explained, “I have time. Scientists have determined that I’ll live until…
And all the nice ones
The 2010 tax season is over! For me, it ended two weeks ago; three days prior to the usual April 15th deadline but not before I learned just how nice my clients are.
Sure, I’ve always liked my clients [well, most of them] and consider many to be personal friends. For years, my clients have provided me with a steady source of income, gratitude and respect for my expertise, occasional moments of grief, and plenty of much-appreciated fodder for the tax season stories that I publish each year. This year’s gems include a nonagenarian who claimed she once “knew all the prostitutes in Silverton, CO” [don’t ask!]; a mother who was handed a lovely crystal vase by a snooty department store clerk with the comment, “Your son just urinated in this!”; and a former New York resident who personally knows Bruno (of Gambini Family fame) “who can do anything for you.”
Once again, there was no shortage of humor to break the monotony as I immersed myself in a world of complex tax elections, newly introduced Schedules, and the nitty-gritty of the ever-expanding Internal Revenue Code now in excess of 3.7 million words with regulatory changes amassing at the alarming rate of one per day, according to National Taxpayer Advocate Nina Olsen. While you may complain about this unrelenting pace of change, the ensuing complexity of the tax law and burden placed upon ordinary citizens, I applaud the efforts of our congressmen and hail each legislative change as insurance for continued employment.
But I digress…
I look forward to every season as an opportunity to re-enter—even if only briefly—the lives of the many people I have known and served for years. I’m eager to hear their stories and happy to help when they tell me, “My employer is bankrupt. I'm soon to be without health insurance of any kind (as well as out of work). Dad has dementia and Mom is moving into a senior facility.” I do my best to fix what I can, but there’s little I can do for the guy who didn’t know that the house he bought was bright pink inside and out because he was color-blind. [I don’t paint and I don’t do windows.]
In any case, this time around I discovered that the TLC I have lavished on my clients year after year would be graciously returned many times over. Faced with a family emergency overseas, I wrote the following to my clients:
While federal and state filing deadlines remain unchanged, I must finish serving you by midnight on April 12th. Allow me to explain…
I received a cry for help from two very dear friends in Zurich, Switzerland. In fact, they are more than friends; I consider them to be my adoptive parents to whom I owe a significant debt of gratitude for caring for me in a time of need when I was a young child. It’s time to return that favor!
Marianne and Walter—now in their eighties—temporarily disappeared from my radar screen earlier this year. When I finally located them from afar, I discovered that both had been hospitalized for nearly two months and, upon discharge, moved from their long-time residence to a nursing home. The move was unexpected and is permanent since both are gravely ill. Marianne is suffering from end-stage cancer and no longer able to tolerate chemo or other palliative treatments. She is heavily medicated, and while still lucid, may not be much longer. I’ve delayed my visit for the duration of this tax season but can do so no longer and ask for your understanding.
In response, I received innumerable kind wishes for my friends and many hearty bon voyage declarations (“Go!”). My clients were uniformly kind, caring, patient and understanding. And I was blown away!Top
My clients, as eccentric as they are, provide me with a never-ending chuckle. Each season, I collect the funniest or oddest they have shared with me and then, to prevent embarrassment, I change the names of protagonists and write up some of the doozies. Over the years, many have been published in the Fortune Quest newsletter under my byline "MOseying Along…" Some of you may recognize yourselves; others will wonder if I'm making stuff up; but everyone should get a chuckle (as I do).
Disclaimer: The information contained herein should not be used in any actual transaction without the advice and guidance of a professional tax advisor who is familiar with all of the relevant facts of your personal situation since the information is general in nature and not intended as legal, tax or investment advice but is merely educational. Furthermore, the information contained herein may not be applicable to or suitable for an individual's specific circumstances or needs and may require consideration of other matters. To ensure compliance with certain U.S. Treasury Regulations note that, unless expressly indicated otherwise, any advice in this website relating to any federal or state tax issue is not intended or written to be used and cannot be used by any person for the purpose of avoiding any federal tax penalties. Monica Haven assumes no obligation to inform any person of any changes in the tax law or other factors that could affect the information contained herein. And Monica Haven does not offer legal advice or services in any jurisdiction in which she is not licensed; nothing herein should be interpreted as the creation of a fiduciary or client/attorney relationship. This website is not intended for use by viewers in any state in which the site may fail to comply with the regulatory and ethical restrictions imposed by that state.