Tax?is the price one pays for civilization. Man has to endure with taxes as long as civilization is in existence. And as long as taxes are in existence,? Tax preparers will be in existence (abundance?) who help tax payers compute their incomes & taxes and file the tax return.

Computation of tax involves gathering of sensitive information about a person like:
1. What was the marital status of the person during the year?
2. If the person is a widow, when did the spouse expire?
3. If the person is single, was he ever married? And if yes, when did the divorce come through?
4. How many dependent children does a person have and what is the expenditure on them?
5. What are the incomes of the person from various sources and what are the expenses during the year?

All these information are highly sensitive to any person and when that person wants the help of a tax preparer, the tax preparer has to have a very high degree of integrity and trust worthiness. With such kind of responsibility as regards data confidentiality reposed on the tax prepares, is it not necessary for Law makers to impose some kind of accountability on the tax preparers?
For long, the certified members of AICPA (referred as CPAs) have been in the forefront in helping tax payers with their tax computation and tax return filing. And since the code of ethics of AICPA (Ethics Ruling No 112 under Rule 120: Integrity and Objectivity) makes it mandatory for the members to take express permission of the tax payers before disclosing the confidential data pertaining to the tax payer, tax payers usually have been comfortable with the CPAs. However, off late, many other Tax Preparers have come up to help tax payers in filing their returns and these preparers are not essentially members of AICPA. Thus the code of ethics does not apply to such people. This meant that such tax preparer could use the services of a third party service provider in preparing the tax return, thereby disclosing the confidential data of the tax payer to the third party service provider, without the tax payer getting to know that his/her information has been shared with a person he/she does not even know!
To address this loophole, the IRS has updated Section 7216, rules for tax preparers on 18th Dec’08. These updated rules would be effective from 1st January’09. Per this rule, “any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns of the tax imposed by chapter 1, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly -
(1) discloses any information furnished to him for, or in connection with, the preparation of any such return, or
(2) uses any such information for any purpose other than to prepare, or assist in preparing, any such return, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution.

Thus any tax preparer now has to compulsorily take the express permission of the tax payer before the services of a third party service provider is utilized. It thus marks a new beginning in outsourcing business as well. Tax preparers who look at outsourcing some of their work would now have to take consent of the clients before doing so. This would make outsourcing a transparent and more acceptable service.

The tax preparer would have to be highly catious about partnering with outsourcing firms. An average tax payer would not entrust his information to a person who has no liablity pertaining to data confidentiality. But the moment, tax preparer partners with a CPA or Indian CAs, tax payers would have no problem about the sharing of the information because it is public knowledge that these professionals are governed by strict code of ethics which bars them from disclosing data. Thus, it makes sense for tax preparer looking out for outsourcing partners to opt for such outsourcing firms as are owned and managed by CPAs.

How do you find a tax preparer that is right for you?

First, not all tax preparers are the same. I wrote an article about this last year titled: Tax Returns: Are They All Created Equal?

HOW DO YOU FIND A TAX PREPARER THAT IS RIGHT FOR YOU?

First, not all tax preparers are the same. I previously wrote an article about this last year titled: “Tax Returns - Are they really all created equal”, and you may be as surprised as other readers about just how much tax return preparation can vary.

In fact, I calculated the average savings I typically find from annual tax savings, reducing professional fees and audit assessments. In total, the average savings are:

- $23,750 Annual tax savings

- $5,000 Audit defense savings

- $10,000 Reduced audit assessment savings

- $50,000 Reduced legal fees

- $3,000 Reduced tax return preparation fees

This is a total average potential savings of $91,750! Your tax preparer does make a difference! How much more could you do with these savings?

Second, the right tax preparer for you depends on what is important to you. Take a minute to answer this question:

WHAT MAKES YOUR TAX RETURN SUCCESSFUL?

How you answer this question will impact what type of tax preparer you need on your team. I’ve asked this questions to clients, prospects and colleagues. I have compiled the most popular answers and what it means to you as you find the tax preparer for your team.

ANSWER #1: Paying the least amount of tax legally

Your tax preparer needs to:

- Know the tax law very well and know how to be creative legally.

- Ask you a lot of questions about your situation in order to understand your situation and goals.

- Have a review process where at least one other person reviews your return solely for the purpose of how to reduce your taxes legally.

HERE ARE SEVEN (7) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER TO DETERMINE IF IT’S A GOOD FIT:

Q1: Can you tell me about the other ___________ (your industry) you service?

A: Your tax preparer needs to know how the tax law applies to your situation. Having other clients in your industry or with similar investments indicates that the tax preparer is likely to be familiar with the tax laws that impact you.

Q2: Who will be working on my tax return?

A: It’s very common (and a good business practice) for tax preparers to have staff prepare your tax return. You want to make sure the other people working on your return have the same level of expertise.

Q3: What is your tax return review process?

A: Tax preparers who are focused on reducing your taxes will have this built into their review process. Usually it involves having another experienced tax preparer review the return solely for the purpose of finding ways to reduce your taxes.

Q4: What would you have done differently on my past tax return?

A: Show the tax preparer you are interviewing your prior year tax return. Creative tax preparers will be able to give you at least one idea of what you can do to reduce your taxes by looking at your tax return for just a few minutes. If it’s creativity you are after, this is a great question to ask! But don’t expect the tax preparer to give you all the details right then and there - that’s why you pay them!

Q5: How much can you save me in taxes?

A: While it’s difficult for any tax preparer to answer this in just a few minutes of looking at your past tax return, it is possible for them to know if they can save you taxes after spending 30 minutes with you.

Q6: What deadlines do you impose on clients?

A: This may seem like an odd question for minimizing your taxes but it has a direct impact. If your tax preparer allows you to provide your information a week before the tax return is due, it’s very unlikely that the tax preparer will have the time to focus on your return to truly minimize your taxes. Tax preparers that want to reduce your taxes want your tax return information early and will communicate that to you.

Q7: What recent tax law changes should I be aware of? A: To minimize your taxes, your tax preparer needs to know the tax law inside and out, which includes the latest changes. Your tax preparer needs to be able to answer this question without hesitation.

ANSWER #2: Minimizing tax return preparation fees Your tax preparer needs to:

- Focus on the tax work and recommend someone else for the non-tax work (such as bookkeeping).

- Request tax information in a certain format.

- Require you to input your information online.

HERE ARE TWO (2) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER REGARDING MINIMIZING RETURN PREPARATION FEES TO DETERMINE IF IT’S A GOOD FIT:

Q1: What can I do to reduce my tax return preparation fees?

A: To minimize your tax return preparation fees, your tax preparer always needs to have your fees in mind. Ask your tax preparer what you can do to reduce your fees. If you don’t get at least 2 suggestions, your tax preparer probably isn’t thinking about how to keep your fees low.

Common suggestions include:

- Have someone other than the tax preparer do your bookkeeping. I am always skeptical when a tax preparer does the bookkeeping. First, they either charge an arm and leg or if they reduce their rates to accommodate you, it means they don’t spend their time entirely on tax issues, which could indicate their tax skills aren’t up to par.

- Organize your information. Don’t bring your tax preparer a shoebox! A tax preparer that is really focused on keeping your fees down will have forms, spreadsheets and other tools available for you to use to organize your tax return information.

- Enter your information online. Many tax preparers now require clients to input their information online. Accurately entered information can help reduce fees. Caution: Information that is entered inaccurately can increase your fees!

Q2: What is your fee structure?

A: Your tax preparer needs to be able to answer this question with confidence. Any wavering could indicate that the tax preparer knows the fees are too high for you but just doesn’t want to tell you. Unfortunately in these situations, you find out too late!

ANSWER #3: Reducing audit risk Your tax preparer needs to:

- Know the tax law very well and how to properly report your activity.

- Understand the IRS’s current “hot buttons” or “red flags.”

- Offer an audit defense plan.

HERE ARE FOUR (4) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER IN REGARDS TO REDUCING AUDIT RISK TO DETERMINE IF IT’S A GOOD FIT:

Q1: How many audits have you been through and what triggered the audit?

A: The most important part of this question is what triggered the audit. If it was triggered by how something was reported, then that may be something the tax preparer had control over (and may be a bad sign for you).

Q2: What was the outcome of the audits you have been through?

A: A return can be randomly selected for audit or selected because of a certain activity (even though it was reported correctly). So it’s important to understand the outcome of the audits. Was additional tax assessed or were there no changes? Additional tax may indicate that something was not reported properly.

Q3: Do you offer an audit defense plan?

A: Tax preparers that are confident in their work will offer an “insurance” program that covers their professional fees to handle your audit if your return is selected for audit.

Q4: What is your tax return review process?

A: Although tax returns can be selected randomly for audit, many are selected due to how items are reported on the tax return. Tax preparers who are focused on reducing audit risk will have a review process that includes another tax preparer reviewing your return solely for accuracy of reporting.

Be selective with the tax preparer you put on your team. The average savings I find for my clients is over $90,000! Your tax preparer makes a difference!

The Tax Governance Institute (TGI), a forum dedicated to the analysis of corporate issues relating to day-to-day and long-term tax risk management, recently hosted a live video-cast panel discussion to review the implications of the new, heightened tax return preparer penalties.

Moderated by TGI Director Hank Gutman, the panel included: Anita Soucy, Attorney-Advisor in the Office of Tax Policy, U.S. Department of Treasury, and one of the principal authors of the recently released Treasury guidance on the new tax return preparer penalties; Chris Rizek, a former Treasury associate legislative counsel and currently a member of the Washington, D.C. office of the law firm of Caplin & Drysdale; and Mike Dolan, a former deputy commissioner of the Internal Revenue Service and a member of the Washington National Tax practice of KPMG LLP.

This executive summary highlights the discussion of the heightened standards imposed on paid tax return preparers, and its influence on company policies:

Overview of the New Legislation

In May 2007 Congress approved a provision that extended the application of the income tax return preparer penalties to all tax return preparers, altered the level of confidence that must be met to avoid imposition of penalty for preparing a tax return that reflects an understatement of liability, and increased applicable preparer penalties.

Under the provision, the return preparation standard for undisclosed positions reported on any federal tax return was changed from ?realistic possibility of success on the merits? to ?reasonable belief that the position would more likely than not be sustained on its merits.? Effective for any tax return positions taken on tax returns due after December 31, 2007, the provision subjects to penalties return preparers who fail to meet the higher standard.

Though the new law affects only tax return preparers, uncertainty about a number of definitions, including the important question of who is a ?tax return preparer,? left its scope somewhat unclear and created uncertainty among many companies regarding the effect of the law on tax advice and tax return services provided by their tax advisers. On December 31, 2007, Treasury released interim guidance?Notices 2008-11, -12, and -13?that addresses this definition and related matters. But questions remain.

Treasury Guidance

Treasury guidance issued in June 2007 deferred the original effective date of the application of the new preparer penalties and has afforded many companies and advisers more time to contemplate the effect of the law change. However, the transitional relief also engendered a number of questions concerning the timing and scope of the relief for certain tax returns and for tax advice rendered by non-signing preparers. Notice 2008-11 clarifies previous guidance deferring the effective date of the new law. Notices 2008-12 and -13 clarify other questions arising from the new preparer penalty provisions.

Anita Soucy explained that Treasury and the IRS did not have time to rewrite the entire applicable regulatory regime. The interim guidance modifies existing regulations and must be read in conjunction with them. ?Folks who are not familiar with this regime need to read both the existing regulations and the notices. We [Treasury] point out where certain positions in the existing regulations are replaced with the interim guidance.?

Notice 2008-11 states that the transitional relief applies (1) to timely amended returns or claims for refund (other than 2007 employment and excise tax returns) filed on or before December31, 2007, and (2) to timely amended employment and excise tax returns or claims for refund filed on or before January 31, 2008. Notice 2008-11 also clarifies that the transitional relief applies to non-signing preparers for advice provided on or before December 31, 2007.

The new legislation also includes an amendment that imposes a penalty on a tax return preparer of any return or claim for refund who fails to sign a return when required by regulations. Notice 2008-12 provides interim guidance concerning the scope of the penalty provisions of the preparer signature requirement. The guidance identifies the return and refund-claim forms that must be signed by a tax return preparer to avoid preparer penalties under the current and contemplated regulations. Additionally, the notice states that if more than one tax return preparer is involved in the preparation of a return or claim for refund, the preparer with primary responsibility for the overall substantive accuracy of the return is the tax return preparer for purposes of the preparer signature penalty provisions. Notice 2008-13 provides guidance on several issues:

? Relevant categories of tax returns or claims for refund for purposes of section 6694

? The definition of tax return preparer for purposes of the return preparer penalties

? Standards of conduct applicable to tax return preparers for disclosed and undisclosed positions taken on tax returns

? Interim penalty compliance obligations applicable to tax return preparers

The ?More Likely Than Not? Standard

The recent legislation introduces a number of new issues and questions?chief among them is the heightened standard now imposed on tax return preparers only. Mike Dolan observed that the crucial element of the code change is the replacement of the original standard with ?more likely than not.? ?It?s easier to say than to know exactly what it means,? he said. ?The injection of the ?more likely than not? standard for the preparer is at the heart of the potential disconnect between the taxpayer and the preparer.?

Chris Rizek agreed, ?That?s where a real problem is?Treasury is in a quandary [because] the standards now are higher for return preparers than they are for taxpayers.? He noted that, generally, unless the position involves a tax shelter, the taxpayer needs only substantial authority to avoid penalty, whereas the return preparer is now required to disclose that same position to avoid penalty.

?A lot of these issues were there in the prior statute, [but] people didn?t really pay a lot of attention to it,? said Rizek. ?The standards were in the right order: the taxpayer standards were higher than the tax return preparer standards, which I think is logical because the return preparer does not have full access to all the facts the way the taxpayer does, and it?s the tax-payer?s liability that is being reported, so [he or she] should bear the ultimate responsibility for the return.?

Rizek said many of the regulatory concepts had been lingering under the old statute: non-signing preparer, substantial portion of the return, the implications of information from third parties. ?These issues have been in there for a long time, but they weren?t as critical because the standard was less stringent.?

Increased Penalty

?And then there?s the penalty,? Dolan said. The penalty under the old regime was USD250for an undisclosed tax position if an income tax preparer knew, or reasonably should have known, of an understatement of liability on a return or refund claim due to a position that did not have a realistic possibility of being sustained on its merits. Under the new law, the heightened standard for undisclosed tax positions is complemented with an increased penalty. Tax return preparers are now subject to a penalty of the greater of USD1,000 or 50 percent of the preparer?s fees for undisclosed tax positions failing to meet the ?more likely than not? standard.

Rizek said, ??while we don?t like to think people make their determinations based on the amount at risk, nonetheless because the fine was small and because the IRS rarely enforced it? these kinds of issues were sort of glossed over.? Now, Rizek said, ?Suddenly people really went back and refocused on these things, and that?s the source of a lot of the angst that Treasury and the IRS have heard from taxpayers.?

?You?d like to think that, as a responsible practitioner, the amount of a penalty does not influence behavior. Well, the government thought it might influence behavior,? said Dolan.

Penalty Exceptions

Soucy pointed out that Notice 2008-13 contains four exceptions to the requirement that a tax return preparer should possess a reasonable belief that a tax position would ?more likely than not? be sustained on the merits.

Until further guidance is issued, Notice 2008-13 states that a signing tax return preparer shall be deemed to meet the requirements of the heightened preparer penalty standards with respect to a position for which there is a reasonable basis but for which the signing tax return preparer does not have a reasonable belief that a tax position would ?more likely than not? be sustained on the merits, if one of the following four conditions is met:

? The taxpayer discloses the position

? The preparer provides the taxpayer with a return that includes disclosure

? Where the position is supported by substantial authority, the preparer advises the taxpayer (and documents the advice) of the difference between the taxpayer penalty standards and the preparer standards

? In the case of a potential tax shelter transaction, the preparer advises the taxpayer (and documents the advice) of penalty standards for tax shelters and their difference, if any, from those of the preparer standards.

The fourth case would protect the preparer who was not in a position to know whether a transaction has a significant purpose of avoidance or evasion of federal income tax, Soucy said. ?They may suspect a transaction has significant purpose, but ultimately the preparer cannot in all instances get into the taxpayer?s head.?

Soucy noted that Treasury and the IRS requested comments in Notice 2008-13. Treasury intends to overhaul the entire regime. In particular, it is working to clarify the rules for non-signing preparers. She said Treasury also would review the ?more likely than not? standard, which was derived from the section 6662 regulations regarding the ?more likely than not? requirement applicable to taxpayers for tax shelter positions.

Non-signing Preparers

Another significant question that has emerged from the new law and resulting increased focus on tax return preparer penalties is the definition of and the application of the new standards to a ?non-signing preparer.?

Non-signing preparers are a problem, Rizek said. ?[It] is sort of a creature of the regulations? Congress really didn?t know there was a concept of a non-signing preparer.? If law firms are caught by the rules, ?it?s usually as a non-signing preparer.?

Gutman commented, ?I?m sure you have a lot of tax directors who have taken advice from a lot of sources [and the tax directors] have not always seen that advice in the context of, ?Well wait a minute, this is a non-signing preparer and now under this new standard he is going to have an obligation to disclose.??

Part of the reason for this shift in focus, Rizek said, ??is that [preparers] used to be able to proceed relatively blithely if they were above the ?realistic possibility? standards.? Under the new standard, a taxpayer may have a variety of potential positions, each of which could have substantial authority but might fail under ?more likely than not.? ?That kind of opinion suddenly, at least theoretically, subjects the preparer to a section 6694 penalty if the position is not disclosed.?

That, Rizek explained, creates a conflict between the practitioner or the non-signing preparer and the taxpayer. To avoid penalty, the non-signing preparer would generally need the position to rise to a ?more likely than not? standard?or be disclosed. But the taxpayer would need the position to rise only to substantial authority.

Soucy agreed that it is important to define preparers who do not sign the return. A determination of whether a person has prepared a substantial portion and is thus considered a tax return preparer will depend on the relative size of the deficiency attributable to the portion prepared by the preparer. The government specifically has requested comments to help draw a brighter line, she said.

Soucy noted that the government drew a distinction between signing preparers and non-signing preparers in the interim penalty compliance standards as an attempt to bridge the change in the tax return preparer penalties and the regime governing the taxpayer penalties. However, she stated that ?[t]hese rules are interim in nature and we need to do a lot more thinking.?

Interplay with Circular 230 and FIN 48

Revisions to Circular 230, proposed in September 2007, incorporated the ?more likely than not? standard. According to Soucy, ?The existing rule in [Circular 230 section] 10.34 had incorporated the ?realistic possibility? standards that existed in section 6694, and we thought there is a policy reason for directly making these two provisions related.? But she noted that in-house practitioners not now subject to section 6694 would be subject to its standard ?via the back door of Circular 230, and that?s a very interesting question that I think we need to further consider.? Treasury may review the connection in those standards, particularly because other provisions could subject practitioners to overlapping penalties.

Gutman noted that FIN 48 introduced into the financial accounting world the notion of reaching a ?more likely than not? standard with respect to the financial reporting of uncertain tax positions, and he questioned the interplay between the analyses performed under FIN 48 and the work that may potentially need to be performed by tax return preparers to comply with the new preparer penalty standards.

?You can?t ignore that there are two delivery processes that are going at the same objective, which is trying to determine whether or not a tax position meets ?more likely than not,? and I don?t have any way of understanding how those could proceed on fundamentally different tracks,? said Dolan. ?They might produce a different level of transparency?a [disclosure form] 8275 or an inclusion in a footnote?but I don?t see how the process can be any different.?

Rizek said that the fact that a preparer may rely in good faith on information from a third party to believe that the position meets the ?more likely than not? standard, may also allow the ?tax side? to rely on analyses by the auditors, without incurring section 6694 exposure. But whether the auditors can rely on the tax practitioners is a different subject.

The question is whether the standards of the tax return preparer penalties and FIN 48 ?are truly the same? and are completely objective, Soucy said. ?I think in section 6694 [tax return preparer penalties] there is certainly a subjective element. So I think it certainly is questionable if people will interpret them exactly the same.?

?There may well be legitimate reasons to differentiate,? Dolan said, ?but?you kind of have to go down some parallel level of analysis, because you?re getting to roughly the same kind of result.?

On one hand, Rizek concluded, if the taxpayer standard is raised to ?more likely than not,? then it will be simpler for the preparer and for the external auditors. ?On the other hand, simplicity is going to come along with its own risks to all parties.?

About the Tax Governance Institute (TGI)

Established by the U.S. audit, tax and advisory firm KPMG LLP, the Tax Governance Institute is an open forum for corporate management, stakeholders and government representatives to share knowledge regarding issues relating to management of corporate tax risk, including transfer pricing risk, tax considerations when converting from U.S. GAAP to IFRS and accounting for tax uncertainties  http://www.taxgovernanceinstitute.com/ContentDetails.aspx?content_id=1389 in  current tax law.

Don?t let the upcoming tax season fill you with dread. With a little preparation, you can learn to navigate the tax return preparation maze with confidence. To get you started, here are the basics of what you need to know when filing your tax return:

There are two ways in which to file your tax return, by IRS e-file or by mailing a paper return to the IRS.

Electronic Filing
IRS e-file is the electronic transmission of your tax return to the IRS. As a result, the processing of IRS e-file returns is more accurate than the processing of paper returns. You must have a valid Social Security number for every person included on the return to qualify for electronic filing.

If you e-file, your return is considered filed on time if the authorized electronic return transmitter postmarks the transmission by the due date. The electronic postmark is a record of when the authorized electronic return transmitter received the transmission of your electronically filed return on its host system. The date and time in your time zone controls whether the electronically filed return is timely.

Paper Returns

If you do not e-file your tax return, you can mail your return in the envelope provided with your tax form package. If you do not have an addressed envelope or you moved during the year, mail your return to the appropriate Internal Revenue Service Center listed for your state in your IRS tax form package.

Your paper return is filed on time if it is mailed in an envelope that is properly addressed and postmarked by the due date. If you send your return by registered mail, the date of the registration is the postmark date. The registration is evidence that the return was delivered. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date. The postmarked certified mail receipt is evidence that the return was delivered.

If you use a private delivery service designated by the IRS to send your return, the postmark date generally is the date the private delivery service records in its database or marks on the mailing label. The private delivery service can tell you how to obtain written proof of this date. IRS designated private delivery services are listed below:

* Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service

* DHL Worldwide Express (DHL): DHL Same Day Service and DHL USA Overnight

* Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First

* United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express

Filing Late

If you do not file your return by the due date, you may be subject to a failure-to-file penalty and interest. To avoid penalties and interest, file for an extension by before this date. If you were due a refund, but you did not file a return, you must file within three years from the date the return was originally due to obtain that refund.

Filing an Extension

When you file an extension, you can postpone filing your return until October 15. However, if you do not pay any tax owed by the due date, you will accrue penalty and interest charges. Complete Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to file for a six-month extension. If you estimate that you have a balance due, include this payment with the form.

For example, James and Sally Gaylord are married and file a joint return. Their home was damaged by a tornado and they have contacted their investment company to resend them Forms 1099 so they can file their tax return. It does not appear that they will have this information by April 17, so they decide to ask for an extension by filing Form 4868. James and Sally estimate that their total tax liability for 2006 will be $1,843. Their Forms W-2 indicate that a total of $1,215 of federal income tax has been withheld. To avoid late payment penalty and interest, James and Sally must pay $628 with their Form 4868.

E-filing Extensions

The IRS offers e-filing of extension applications. The IRS will process Form 4868 through the original due date of your tax return. By filing an extension, you postpone the filing date of your return until October 15; however, any tax due on the return will be subject to interest and penalties if not paid by the due date.

Installment Agreement

If you are not in bankruptcy and have a balance due, but cannot pay your full tax liability by the due date, you should consider the IRS installment plan. To request an installment agreement, complete Form 9465, Installment Agreement Request, and attach it to the front of your tax return or include it with an e-filed return. You can also request an Installment Agreement after you file your tax return by filing Form 9465 by itself to the address shown in the form instructions or by e-filing Form 9465 by itself. If the IRS approves the request, you will be charged a fee and interest on any unpaid balance. The fee has been increased in 2007 to $52 for agreements to pay direct debit and to $105 for all others. Although you generally may have up to 60 months to pay, you should make the payments large enough so that the balance due will be paid off by the due date of your next return. Before requesting an Installment Agreement, you should consider less costly alternatives, such as a bank loan.

Record Keeping

It is a good idea to keep your previous tax returns, as well as other important documents that have affected your income and deductions, for at least three years. If you need a copy of a prior- year return, you can obtain it for a fee from the IRS by filing Form 4506, Request for Copy of Tax Return. This can take up to 60 calendar days.

Change of Address

Are you planning a move before the end of the year? The IRS has an official change-of- address form, Form 8822, Change of Address. If you complete and mail this form to the appropriate IRS Service Center, you should receive your tax booklet at your new address.

For more tax tips and information on tax preparation, please visit the Tax Resource Center at http://www.jacksonhewitt.com.

About the Author

R.L. Fielding has been a freelance writer for 10 years, offering her expertise and skills to a variety of major organizations in the education, pharmaceuticals and healthcare, financial services, and manufacturing industries. She lives in New Jersey with her dog and two cats and enjoys rock climbing and ornamental gardening.