Millions in tax advances returned
Tax Tip of the Week
Tax Tips and Facts (monthly)
IRS address update system
Certified?
Elective deferral catch-up contributions
Prevent thefts from checking accounts
Sell to Uncle Sam
529 Educational Plans
Nexus in another state
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The IRS is urging more than 390,000 taxpayers whose income tax refund or advance payment checks have been returned to the Service to act immediately so that their checks can be processed and mailed to them by the end of December. Currently, there are more than 295,000 undelivered advance payment checks since the IRS started issuing the rebates in July. Taxpayers should contact the IRS prior to December 5, 2001, in order to allow for reprocessing of the checks. If eligible taxpayers do not act by that date, they will not receive advance payment checks. Instead, they can claim the advance payment as a credit on their 2001 tax returns. The IRS noted that the urgency in ensuring the receipt of the advance payments is attributable to the Economic Growth and Tax Relief Reconciliation Act of 2001, which bars the issuance of the checks after December 31, 2001.

The IRS also pointed out that checks frequently do not reach taxpayers because of a move or because of a marriage or name change. Although nearly 34 million taxpayers chose direct deposit for their refunds during the 2001 filing season, the direct deposit option was not available for the advance payment checks.

Taxpayers who believe that they may be missing a refund or an advance payment check should first examine their records or contact their tax preparers and then contact the IRS at 1-800-829-1040. To ensure that the IRS has their correct addresses, taxpayers who have moved since filing their last tax return should file a Form 8822, "Change of Address," with the IRS. The form can be downloaded from the IRS website at www.irs.gov, or can be requested by calling 1-800-829-3676.

I am now writing TAX TIP OF THE WEEK that is distributed over the Internet to a select list of people each week. Items may also appear in the printed monthly version. If you would like to be included in the weekly electronic distribution, just send me your e-mail address with the subject of: "TTW subscribe" and include your name, city, and state of residence in the content of the message.

We are developing an e-mail mailing list of people that would like to be notified when each monthly edition of TAX TIPS AND FACTS is available on our web site, making it one less piece of "snail" mail to arrive at your home or business. Send us your e-mail address with the subject of: "TT&FM subscribe" and include your name, city, and state of residence in the content of the message.

Taxpayers who move after filing their tax returns should receive future IRS correspondence more timely, thanks to a licensing agreement between the Service and the U.S. Postal Service. Under this arrangement, the IRS will use the Postal Service's National Change of Address (NCOA) database to update the addresses in its own Master File of taxpayer data. This address updating process should also provide quicker resolution of undelivered refund problems.

Generally, taxpayers give written notification of a new address when they file a tax return or send Form 8822, "Change of Address," to the IRS. The IRS also accepts a verbal notification if an IRS employee has contacted a taxpayer about his or her account. To prevent unauthorized changes, the IRS does not accept new addresses from taxpayer-initiated calls.
The IRS will generally use the most recent address given by the taxpayer - to the IRS or to the Postal Service - as the taxpayer's last known address.

Taxpayers who want to directly inform the IRS of their new address may still file Form 8822. Those who establish a new mailing address but don't want the IRS to use this new address may notify the IRS in writing.

Your doctor is certified.
Your lawyer is certified.
Is your accountant certified?

If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

If your accountant isn't a CPA, it's time to seek professional help.

The IRS has advised employers regarding how to report elective deferral catch- up contributions beginning after December 31, 2001. For 2002, employers are required to report participants' elective pension deferrals on Form W-2 in box 12 using Codes D through H and S. For employees' qualified catch-up contributions after 2001, employers must report the elective deferral catch-up contributions in the totals reported for Codes D through H and S.

The Economic Growth and Tax Relief Reconciliation Act of 2001 added Code Sec. 414(v), which provides that, for 2002, applicable employer plans may allow eligible participants age 50 or over to make additional elective deferrals, i.e., "catch-up" contributions.

In addition, the reporting of catch-up contributions will be addressed in the 2002 Instructions for Forms 1099-R and 5498. The IRS states that no major changes are anticipated.

It's not what you make that counts, it's what you keep!

Planning for the future is a lot like planting a tree. You've got to do it today if you want your family to enjoy it tomorrow.

Are you leaving yourself open to larceny by being careless with your checking account? Here are some hints-some obvious and some not-on how to protect your checking account from forgers and other larcenous individuals:\

• Never write checks with an erasable ballpoint pen. Under humid conditions, the ink can take hours, sometimes days, to dry fully. In the meanwhile, a forger can change what you've written.
• In writing a check, leave no blank spaces, such as (1) before or after the name of the payee, (2) before or after the spelled-out amount of the check and (3) between the dollar symbol and the numerical amount. Cross out the blank areas so a thief can't add information.
• If you mail a deposit or put it into an automatic teller machine or night depository slot, write "For Deposit Only" above your endorsement signature on the back of the check. That way, your check can't be cashed if it falls into the wrong hands.
• Don't keep a record of your checking account number and your automatic teller machine (ATM) personal identification number (PIN) in the same place (for example, in your wallet). Together, these numbers make it relatively easy for a thief to steal from your account-even without a check.
• If you stop payment on a check, do it in writing and do it as soon as possible. While a bank will usually issue a stop-order on your verbal instructions, you may have a problem if the bank inadvertently pays the check. To stop payment on a certified or teller's check, the bank might require, depending on the circumstances, a bond from you for as much as twice the check's amount.

The federal government is the world's largest purchaser of goods and services, so why not become a part of it? Turn your browser to the Federal Marketplace at www.fedmarket.com, a site rich with information on how to sell products and services to the US Government.

529 account owners can transfer assets from one plan to another. Once every 12 months, you can now transfer account assets from one 529 plan to another - which may offer a more flexible way for you to participate in 529 plans available through my affiliated investment firm. Call me for more information about this excellent tax savings and estate tax planning tool.

Call me for more information about this excellent tax savings and estate tax planning tool.

If you have nexus, or "substantial physical presence" in another state, they will expect you to pay income and sales/use taxes on revenue generated there.

Definitions of "substantial" vary, and some states are more aggressive than others to find and levy taxes on businesses with nexus within their boundaries. Some major considerations are:

1. Do you have a sales office within another state?
2. Do you provide service (other than just delivery of product or basic sales assistance) to customers in another state?
   This is only a guide to show how some states have ruled. Call me for more information.

If someone is promoting a tax savings plan that sounds too good to be true, it probably is. The plan may be an abusive tax shelter. Be careful if the promoter says:
you will never pay taxes again
the IRS didn't want you to find out about this
this is a new promotion so your CPA doesn't know about it yet
you can get a full deduction of your initial investment in the early years
you can deduct the cost of your child's education
the plan involves multiple trusts, partnerships, or other entities
you can deduct the cost of your personal residence
some of the entities involved in the plan are foreign