February 2008
 

The Rodman Report
February 2008
Hello Clients and Friends,
 
Tax season is in full swing here at Rodman and Rodman. There were a number of important issues we wanted you to be aware of this month.  First, it appears that scams involving false use of the IRS to steal identities is expanding. See our article for the appropriate cautions.  If you have unfiled  tax returns, or know someone who hasn't filed required returns, the news item below will hopefully give you a path out of that problem. A number of our clients belong to various clubs and associations. Some of those clubs charge dues that aren't deductible while others remain deductible. See below for some clarity on the issue.  Last, a guest writer, Brian Butler of Skyline Displays in Peabody gives some advice about training those who represent your business at trade shows.
 
Please enjoy your February edition of The Rodman Report!
In The February Issue...
IRS email and phone scams
Help for nonfilers
Deducting club dues
Trade show advice
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Phone/Email Scams Using IRS Expand - Beware!
                      
We notified you back in October about an increasing incidence of scams using communications that purport to be from the Internal Revenue Service (IRS).

The goal of the scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft.

Typically, identity thieves use a victim's personal and financial data to empty the victim's financial accounts, run up charges on the victim's existing credit cards, apply for new loans, credit cards, services or benefits in the victim's name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows scammers to act quickly and cover their tracks before the victim becomes aware of the theft.

The most recent scams brought to IRS attention are the rebate phone call, in which a bogus IRS employee tells the consumer he is eligible for a sizable rebate for filing his taxes early; a link for a refund that is e-mailed to tax-exempt organizations bearing the supposed signature of the IRS Exempt Organizations business division; and an e-mail inviting recipients to click on a series of links to download information on changes in the tax law, but which downloads malware onto the recipient's computer.

A new scam, not seen before by the IRS, notifies the recipient by e-mail that his or her tax return will be audited. The e-mail instructs the recipient to click on links to complete forms with personal and account information that the scammers will use to commit identity theft.

The IRS typically contacts taxpayers via mail. It never does so via email and rarely will you receive a phone call without some prior written notice that the phone call is coming.  The best advice is to call us if you receive any communication from the IRS that you aren't expecting or seems unusual. You should never feel compelled to answer any request for information, regardless of the circumstances, without seeking professional counsel first. Rodman and Rodman can quickly evaluate the communication and help you determine its legitimacy before doing anything else.

Nonfilers - What to do if you haven't filed on time

If anyone you know has failed to file tax returns when due, it's important that they be aware of the ways to resolve such a problem.  Many nonfilers missed a year for one reason or another, and now are afraid to re-enter the tax system.  But in fact, taxpayers who file overdue returns on their own are often treated reasonably well, much better than those who are caught.

 
For taxpayers who can't pay their entire tax bill at once, there's an installment payment option.  IRS will also consider an offer-in-compromise on any of the following grounds: (1) where a taxpayer is unable to pay the tax, (2) where there is doubt as to the taxpayer's liability for the tax, (3) where collection of the full amount would cause economic hardship for the taxpayer, or (4) where compelling public policy or equity considerations exist that provide a sufficient basis for compromise.
 
An offer to compromise hasn't been rejected until IRS issues a written notice to the taxpayer or his representative, advising of the rejection, the reason(s) for the rejection, and the taxpayer's right to an appeal of the rejection.  IRS can't notify a taxpayer or taxpayer's representative of the rejection of an offer to compromise until an independent administrative review of the proposed rejection is completed.  The taxpayer may administratively appeal a rejection of an offer to compromise to the IRS Office of Appeals if, within the 30-day period commencing the day after the date on the letter of rejection, the taxpayer requests such an administrative review in the manner provided by IRS.
 
IRS has an independent procedure to review its own proposed rejection of requests for an installment agreement.  This internal IRS review must occur before IRS notifies the taxpayer of actual rejection of the installment agreement request.  IRS also has a procedure to allow taxpayers to appeal - to the IRS Office of Appeals - IRS's rejection of any request for an installment agreement. 
 
Once a return is filed, IRS has three years in which to audit it.  After that, the return is final.  If no return is filed, there's no statute of limitations.  IRS can come after the taxpayer at any time, even many years later. 
 
Some nonfilers are actually entitled to refunds.  A return claiming a refund can be filed at any time, but only the tax paid within the three years before the return was filed can be recovered.  Tax withheld during a calendar year is considered paid on April 15 of the next year.  Estimated tax is considered paid on the return due date, which is generally also April 15.  Thus, a return filed more than three years late will likely be fruitless as a refund claim.
 
Rodman & Rodman can help nonfilers to file the necessary returns to take advantage of the available IRS programs. Please give us a call if you are in this situation or know someone who could use our assistance.

 

Can you Deduct Your Club Dues?

Like many other enterprises, your business may pay club dues to one or several types of organizations.  These dues may or may not be deductible, depending on the type of organization and its purpose. 

 
Your business generally cannot deduct dues paid to a club organized for business, pleasure, recreation or other social purposes.  This disallowance rule takes into account country clubs, golf clubs, business luncheon clubs, athletic clubs, and even airline and hotel clubs.  However, you can deduct 50% of the cost of otherwise allowable business entertainment at a club, even if the dues you pay to the club are nondeductible.  For example, if you have dinner with a client at your country club after a substantial and bona fide business discussion, 50% of the cost of the dinner is deductible as a business expense. 
 
The club-dues disallowance rule generally doesn't affect dues paid to professional organizations including bar associations and medical associations, or civic or public-service-type organizations, such as the Lions, Kiwanis or Rotary clubs.  The dues paid to local business leagues, chambers of commerce and boards of trade also aren't affected.  However, an organization isn't exempt from the disallowance rule if its principal purpose is to provide entertainment facilities to its members, or to conduct entertainment activities for them.
 
Finally, keep in mind that even if the general club-dues disallowance rule doesn't apply, there's no deduction for dues if you cannot show that the amount you pay is an ordinary and necessary business expense.
 
For more details on the club dues question, or on the status of your other business expenses, please feel free to give us a call at Rodman & Rodman.

Do You Train Your Trade Show Staff?
by Brian Butler, Skyline Displays of Massachusetts, Peabody, MA
 

One would think that a company spending thousands of dollars attending a show would certainly take the time to prepare the staff working the exhibit space.  But many companies ignore this critical preparation for various reasons:

 
 
 

  1. They don't think it's necessary. After all the technical staff is competent;

  2. They don't see the difference between field selling and trade show selling;

  3. They don't want to take the time; and

  4. They spend all their resources on exhibit property, giveaways and entertainment and have nothing left for staff preparation.

Staff preparation is important because the trade show environment is a person to person medium where quality communication is critical.  Everything in your exhibit space is a tool for your staff to use to engage, qualify and communicate with prospects.  Most sales personnel have their calls teed up for them via telemarketing or some other lead generating activity.  At a trade show, it is one cold call after another until you find a "prospect".  Statistics show that a staffer has less than 5 minutes with a prospect compared to 45 minutes in the field.  Training offers some thoughts on what to say and how to begin a dialog with someone you know nothing about.

 

Staff training sets the stage - it provides the needed information to the staff so they can perform in a confident manner.  Through proper training and preparation you can provide a comfort level for your staff that will ensure better performance and more importantly a bigger ROI.

 
Brian Butler is a sales executive for Skyline Displays of Massachusetts located in Peabody. Brian can be reached by email at bwb@skymass.com or by phone at 978.977.3200 x213
 

 
Thanks once again for reading The Rodman Report for February. We hope you found it to be useful information. Look for the next Rodman Report in May as we take 2 months off from The Rodman Report to focus our efforts on completing year end accounting and tax work. See you in the spring!
 
Best regards,
 
The Team at Rodman & Rodman