Kudos to IRS for changing Allowable Living Expense Standards

Recently the IRS made some long overdue changes to the National Standards, which they use to determine taxpayers’ ability to pay delinquent tax debts. I say long overdue because the IRS has been using the same standards since February 1, 2006, and because the changes really were necessary.

I am very pleased with two of the changes in particular, the health care and transportation allowances. In the past at JK Harris, we have included $50 for out-of-pocket health care expenses in our clients’ allowable living expenses. It allowed for everyday things like Band-Aids, aspirin, cold medicine, etc.

Now, however, the IRS has added a category for out-of-pocket health care expenses. Taxpayers under the age of 65 can add $54 of out-of-pocket expenses, while those 65 and older can add $144. These dollar amounts are in addition to what the taxpayer is already paying for health insurance and medical bills.

The transportation expenses have changed as well. The IRS is now giving equal value of ownership costs for a taxpayer’s first and second car. They also added an allowance for public transportation while removing the allowance for the no car standard.

So now a taxpayer can earn credit for owning and driving his or her car, as well as for public transportation, if it applies. For instance, a taxpayer may drive his or her car from home to a maybe a train or subway, and use that public transportation the rest of the way to work.

These changes may seem minor, but it shows us that the IRS is heading in the right direction when it comes to giving taxpayers a fair shake.

Other changes to the standards included eliminating income ranges for food clothing and other items; eliminating separate tables for Alaska and Hawaii; expanding the number of household categories for housing and utilities; adding an allowance for cell phones in housing and utilities; and eliminating some of the Metropolitan Statistical Areas for vehicle operating costs.

For more information about the changes to the Allowable Living Expense Standards, visit http://www.irs.gov/newsroom/article/0,,id=174516,00.html.

It’s never too late to learn…

Teresa Bolton, Licensed Taxpayer Representative

Fall is here and classes are back in session everywhere. I thought this would be the perfect time to offer some helpful tax tips to college students and recent graduates.

When it comes to saving money on higher education, did you know you have several options? The amount of the available credits and deductions is based on the qualified education expenses, such as college or vocational school tuition and enrollment fees, that you paid during the year and may be limited to your modified adjusted gross income. It is important to remember room, board, transportation, insurance or personal living expenses are not considered qualified education expenses.

Evaluate the following credits and deductions to determine which might be applicable to you:

· The Hope Credit – Up to a $1,650 tax credit per student per year, the Hope Credit is available only for the first two years of college or vocational school. You can claim this credit if you are enrolled in a program that leads to a degree, certificate, or other educational credential. The Hope Credit also requires that you take at least a half time load of courses for your major in at least one academic period beginning during the calendar year. The Hope Credit can be used for school tuition and required fees, minus any tax-free grants or scholarships.

· The Lifetime Learning Credit – Up to a $2,000 tax credit per year, the Lifetime Learning Credit applies to undergraduate, graduate or professional courses. There is no limit on the number of years that you can take this credit.

· The Tuition and Fees Deduction – This deduction can reduce taxable income by up to $4,000. Qualifying expenses are the tuition and fees required for enrollment or attendance at an eligible college, university or vocational school. It is important to remember, this deduction cannot be used in the same year as either the Hope or Lifetime Learning Credits.

· Student Loan Interest Deduction – You may be able to deduct up to $2,500 in interest paid on student loans yearly. To qualify, you must have used the money from your student loans for qualified higher education expenses such as: room and board, tuition, fees, supplies, etc. This deduction can be claimed with any of the other credits or deductions.

I hope this information is helpful to as you head back to school this fall. If you would like to check out more information on this topic, there are some excellent resources on the web. Check out www.irs.gov or www.collegeanswer.com/paying/content/pay_tax_benefits.jsp.

Calling all servers, bartenders, & other tipped employees…here’s the best tip you may ever get!

Jack Grooms, Licensed Taxpayer Representative

Recently I was discussing the topic of tipped employees with the Marketing and Communications staff and I found that there are some misconceptions floating around about tips. The most surprising one was that many bartenders believe they do not have to claim any cash tips that they receive; only those that are charged to a credit card. Some businesses are actually telling their employees this, but it is false! The IRS considers those tips to be part of your income and that means you must report them to the IRS.

Believe me, it is better to report your tips than to be audited. I know of a case where a server who was audited and had no proof of her tipped income. An audit agent of the IRS came to the restaurant where she worked and observed her. He then averaged the daily tips she made to complete her audit. He was then able to use these averages to determine what she owed in back penalties and taxes.

Don’t let this happen to you! Keep a daily record of the tips you make – whether it’s a diary, photocopied receipts, or IRS Form 4070A. Any of these will act as proof of your tip income and assist you successfully through an audit.

Congratulations to Kelly Scott, CPLP!

It wasn’t so long ago that I added a blog entry about Kelly Scott and her promotion to Director of Training and Customer Service. Now, I’m happy to report that she has added to her growing list of accomplishments by completing the necessary training to become a Certified Professional in Learning and Performance through the American Society for Training and Development. This is quite an honor, as there are only 500 C.P.L.P.’s globally!

To become certified, a potential candidate must work in their career field for at least three years, although the ASTD recommends five years. The candidate must apply to the program and provide references to verify their employment role. Next, the candidate takes a knowledge-based exam consisting of 150 questions and covering 9 areas of expertise. According to Kelly, it takes about 8-12 weeks to study for the exam. Once she passed the exam, Kelly had 60 days to submit a work product for evaluation by a panel of experts. She then had to submit the answers to two essay questions, as well as a 20-page application discussing the work product she produced in detail. The work product took her about 40 hours to assemble. The entire process took Kelly about 7 months. To maintain her certification, Kelly will have to either pass another knowledge-based exam, or secure 60 re-certification points over a 3-year period.

Kelly’s hard work and dedication is evident in everything she does for the company; gaining this accreditation is yet another thing she has done that will benefit JK Harris and its customers. Her new knowledge should help JK Harris build better Training and Development programs for our employees. I am very proud of Kelly and her dedication to excellence. She sets a great example for all of our employees by modeling a desire for continued learning and excellence. Way to go, Kelly!

Customer Service takes “Center” stage

Scott Mcleod, Director – Call Center Operations

To me, the Call Center is a primary ingredient to Customer Service at JK Harris. Our first and foremost goal is to answer every call that comes in to the Call Center. We are the first contact for potential JK Harris clients and we want to make sure everyone that calls gets to talk live to one of our team members. We also strive to make a great first impression. When you call JK Harris, you should be greeted promptly, professionally and with compassion for whatever tax issues you may be facing.

In our Call Center, we help the people who cannot make it to one our 425 locations. If the client can’t meet in person with one of our Consultants in the field, our In-House Consultants work to assist these clients via the telephone. We have seen a substantial need for this service and the assistance these Consultants provide. Our In-House staff started off with just one Sales Consultant but in just six years has grown to 10.

At JK Harris, we continually strive for excellence in Customer Service and that certainly extends to the Call Center. To better serve our clients, we started our Quality Control department about four years ago to handle calls generally from contracted clients who had specific issues to discuss. This department has been a great addition to the Call Center, offering everything from directions for clients looking to meet up with their Sales Consultant to getting on three-way conference calls with the client and the Consultant to assist in resolving issues.

I am proud of our team here at the Call Center. Our team is fantastic and we look forward to answering your call, should you need the help of the JK Harris Tax Team!

Welcome Team Greets New Clients as Part of JK Harris Family

Suzanne Scott, Director of Special Tax Services

When conducting business with a new company, we all want a friendly greeting, a hearty hello, a cheery welcome, so to speak. We want someone to tell us they are happy to have us as a customer and let us know what to expect from them and what is expected of us.

Say hello to the JK Harris Welcome Team. The process in general is designed to be a positive experience for both our clients and our employees. In fact, the first thing we tell a new client is “Thank you for choosing JK Harris and Company as your tax representative, and welcome to the JK Harris Family.” It’s not surprising that when their tax problem has been settled, many clients comment on how their Case Specialist has actually become like a member of their very own family.

Unfortunately, in the beginning, most of our clients are under tremendous personal and financial stress, which can sometimes make for a communication barrier. We try to make people feel comfortable, let them know they are in good hands. We go over the contract with them, so they know specifically what services we will be providing and how the process goes. We act as a second set of eyes and ears.

I have a great group of employees. I don’t think a day goes by that there isn’t at least one in my group who has helped either a client or another employee. Currently, our group is working on trying to help and work with not only the clients, but also the other departments to make our clients’ experience and our work experience more pleasant for everyone.

Up to the point of the Welcome call, a customer’s only contact with the company has been calling to make their initial appointment and then the actual face-to-face meeting with the Consultant. If there are any discrepancies between the signed contract and the client’s understanding of the process, it can be discussed and reconciled quickly in the Welcome call. If we cannot accomplish that on the Welcome Team, we can let the Consultant know so he/she can work with the client directly on those issues.

For instance, we verify the client’s demographic and contact information. We advise them that this is a lengthy and complex process, one that requires cooperation, participation and patience from them. We tell them about the IRS’ documentation requirements and suggest how to make gathering and filing this documentation easier. They are also informed of the IRS requirement of being in compliance, meaning they must have all of their tax returns filed for at least the last six years or be prepared to make a statement as to why they were not required to file.

We then tell the client they will be assigned to a specific Case Specialist and they will be receiving a Welcome Letter from that person, whom they will be able to contact in regards to the more specific aspects of their case. And we provide them with a phone number they can call to reach their Case Specialist directly.

Throughout the entire call, the client is asked if they have any questions or concerns at this time. And we end all calls by thanking them for their time. We also, once again, welcome them to the JK Harris Family.

A JK Harris story I won’t forget

It really does my heart good to hear about the success stories we have for clients who truly have nowhere to turn, no light at the end of the tunnel when it comes to their tax situation with the IRS Take, for instance, Howard Frankel, a client of ours from Sarasota, Fla. This man had health issues, no income whatsoever and was living off of his savings from a retirement account. We were able to prepare his tax returns, get his bank levy released and get his $15,000 liability reduced to just $500 with an Offer in Compromise based on an Effective Tax Administration. We did this by proving the collection of the tax would create an economic hardship. It wasn’t a difficult case to make to the IRS. We presented all of his doctor bills and statements of his illness, as well as proof that he had no money coming into his household. Mr. Frankel went from receiving threatening letters from the IRS and having a levy on his life savings to having a clean slate to work with. Said Mr. Frankel, “I contacted JK Harris, and they immediately got the levy lifted and settled my case for thousands of dollars less. I would heartily recommend them to others.” Thank you, sir. We are glad we were able to help!