The Internet is the Best, and Worst, Thing That Happened to Tax Planning and Preparation


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08-27-2010-1

The access that the Internet provides has given all of us more information that we can possibly look at. That’s Information Overload. It’s also made it much cheaper to get information, but you’re not sure if it’s accurate or timely. Anything you get from the Internet should come with the warning that it’s reader beware.

Today’s blog post is a bit of a soap box from me as I’ve just spent interesting year sorting through the information on the Internet.

The Good, the Bad and the Ugly of Internet Information – Here’s the Good

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On one hand, Megan and I have almost immediate access to Bills as the wind their way through Congressional Committees, Congress, Senate Committees and the Senate Floor. Once a Bill passes Congress, then the Senate and finally gets signed into law, it’s still a long ways from being something we can implement for your tax return. The IRS now has to take that Bill and interpret it into IRS Code. The Coe tells us what to do.Then, we get Treasury Regulations that tell us how to do it. And still there is a lot more interpretation needed for specific circumstances. That comes from Revenue Rulings, Revenue Procedures, Tax Court cases and even the US Supreme Court.

This past year, we’ve had to create tax strategies based on what we think the eventual application will be. Thank goodness we had the committee reports to fall back on because this often tells us the intent behind what was passed. It’s what the IRS uses when they eventually come up with the Code and Regulations.

Here’s the Bad

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Unfortunately because anyone with a computer and Google can now see the various stages of the Bills, there is a lot of misinformation and just plain wrong and dangerous information floating around about bills.

Plus, the Internet has a long memory – as in, forever. So, things posted in 2004 might have been true then, but no longer are true. But that doesn’t stop search engines from pulling old articles and others from posting the articles on their website in an attempt to boost Google search rankings.

The morale of all of this: Make sure the person who wrote the article is the one publishing it. If they aren’t, check back to the source. When was it originally written and if it comes to taxes, is it written by a true expert?

Here’s the Ugly

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The biggest culprit when it comes to misinformation and just plain wrong information is the IRS website itself. The IRS has hundreds of links to outdated publications. If you rely on one of these publications, you have no recourse against the IRS.

Let me say that again.

If you go to the IRS website, pull up a publication that has specific instructions for what you want to do and you follow every single one of the instructions, YOU CAN GET A HUGE FINE!

You alone pay the tax.

You alone pay the penalty.

You alone pay the interest.

And, if it’s bad enough, you alone go to jail.

And it could all because you read something from the IRS that they themselves published and put at one time on their website.

Make sure the information you get is timely and accurate. Make sure the author has the credentials to stand behind what they write. Always, check with your own tax or legal advisor to make sure what you’ve read works for you.

The penalties have just gotten much bigger for filing incorrect information with the IRS. Don’t get caught!



2 Comments

  1. Diane Kennedy says:

    I think the IRS is the one that annoys me the most. I get clients who will argue that if the IRS says it, it must be true. Then I have to point out that it was written 5 years ago and on the first page they disclaim it’s out of date. (OK, then why have it so easy to find on their website then?)

  2. If I had a nickel for every four year old tax article someone printed out from the web and brought in to a planning appointment….

    There should also be a special place for web authors that write on tax or legislative topics and then don’t include a date of publication.

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