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Yes, you do. I know Mr. Kapp's cover letter gives you three options. Recognize option B, waiting until the 3 pending Tax Court decisions are published, is NOT an option. As mentioned in his letter addressed "Dear Clients and Friends" disadvantages with choosing this option states "Electing this option and IF the Tax Court later rules against my clients will also cause some additional accumulating interest and penalties." . If you go to our website; www.transport1040.com you will see a copy of the summary judgment; it clearly states on page 9 that Martin Kapp is not allowed in tax court. Option C that states do nothing, is also NOT an option. Again referencing his letter addressed "Dear Clients and Friends" Mr. Kapp states "The claiming of incurred meal expenses, just like any other deductions on your returns, may subject yourself to an audit". Do you want to put yourself in an audit situation where they will disallow all of your deductions? It is then up to you, the taxpayer, to prove time, place and business purpose of ALL of your deductions. Not to mention that the IRS can then scrutinize your whole return, not just your mariner deductions. Recognize the August 20, 2007 Judgment and Permanent injunction ordered Martin Kapp to provide the Department of Justice (DOJ) a list of names, social security numbers, and addresses of all clients from 2000 forward.
2. Other tax preparers are advising me that I do NOT have to file these amended returns. Why are you suggesting otherwise?
Recognize your deductions were overstated by including the so-called mariner tax deductions covering meals on your initially filed return. In most instances your meals were provided to you at no costs. This negates your ability to deduct fractious meal expenses and therefore creates a tax deficiency. My initial question would be if interest and penalties are assessed from the time the additional tax was due, would the preparer be willing to assume even just those costs for you should you elect not to file your amended return? But, more importantly, let's go back and reference the first question. Do you really want to go back and provide substantiation for all your other VALID deductions? Going through an audit is time consuming, I would prefer you utilize your vacation time doing things you enjoy.
3. Mr. Kapp told me he won both the Johnson and Westling case, I thought the meal deductions were valid?
Again, please reference the summary judgment available on our website. Pages 2, 5, 8, 9, 10, 11, 16, 18, 20, and 24 clearly show that Mr. Kapp did not win either case. Those cases validated only the INCIDENTIAL deductions that we have only taken on behalf of our clients. It spells out very clearly that meal deductions which were provided to the mariner at no cost are NOT valid deductions.
4. I'm upset that I now have to come up with substantial unexpected back taxes when I had my previous years returns prepared by Martin Kapp, a so called "Mariner Tax Specialist", who was knowingly taking illegal deductions all along. I'm further upset that as a result of this, all my contact information is currently in the hands of the IRS and under scrutiny. I would prefer to use another preparer who has my back, plays by the rules and won't put me in this situation again. I'm concerned, however, about switching preparers. My current preparer has all my prior years information and I don't want the hassle of switching, nor do I have the time to do so. What options do I have?
Switching preparers is not as complicated as you might think. By providing your new preparer "power of attorney" to speak on your behalf to the IRS, they can obtain copies of all your prior years information at a nominal cost. This power of attorney is simply limited to your chosen preparers ability to request information from the IRS on your behalf and nothing more.
TWTS has an extremely simple transition package which requires nothing more than your signature. This allows us to easily facilitate the process on your behalf. We are also willing to absorb any associated costs involved in switching as a way of thanking you for your business and welcoming you into the TWTS family of many satisfied and loyal customers. Simply call us at 1-866-777-TWTS (8987) and say "I WANT TO SWITCH". We will then need to collect some very basic information which should only take a few minutes. If you prefer to correspond by E-mail or fax, simply send an E-mail to CountMeIn@transport1040.com or fax to (410)860-8481 with a subject line of "I WANT TO SWITCH". You would then also need to fill out this new customer information page and include as an attachment. Regardless of which method you choose, your transition package will be on it's way and in your hands within 2 - 3 business days. We've even enclosed a pre-paid self addressed envelope for your convenience. Simply sign, seal, and drop it in the mail. It's that easy! We'll then process your subsequent years returns in a timely manor, maximize the lucrative VALID deductions available to your unique industry, and at the same time - maintain the highest ethical standards held by the Internal Revenue System.
5. Is it still worth me tracking my expenses and taking any job expense deductions?
There are still many legitimate deductions! Union dues, uniforms, safety equipment, job search expense, many companies are now including your travel reimbursement to meet the ship in your W-2 wages (keep your wage pay-off sheets to track reimbursements), plus other out-of-pocket expenditures, again reference our website at www.transport1040.com. Do not forgo these legitimate deductions just because a few preparers included so called invalid "mariner tax deductions" covering meals that were provided to you at no costs. For 2007 your daily incidental expenses can be anywhere from $3/port for U.S. ports to as high as $36/day for certain foreign localities. Also, recognize, in order for your per diem deductions to be included in your return it does require you to file a paper return; your return can NOT be e-filed on your behalf.
6. What is the difference between DOT Meals and Non-DOT meals on your organizer?
DOT meals are incurred meal expenses while you are under your Certificate of Discharges or Letters of Service Time and are deductible at 75% and meal expenses incurred during job search; educational periods during Non-DOT hours are deductible at 50%.
7. I did not keep my receipts for many of my expenditures, can I still deduct them?
Although you are not required to have receipts for expenditures less then $75, we suggest you keep them. We have a daily expense log that we would be happy to provide you, just call us at 1-866-777-8987 or visit our website at www.transport1040.com.
8. I received a letter from my state assessing interest and penalties to my 2006 tax return, I paid and remitted my return upon receipt from you, do I have to pay the interest and penalties?
Since your employer does not withhold state income taxes you are required to pay state estimates. Estimates are due on April 15th, July 15th, October 15th and January 15th. Recognize all state estimate tax payments paid during the filing year are tax deductible on your Schedule A itemized deductions. We will provide estimated tax worksheets upon request.
We have form letters we will be happy to email you, however paying and remitting quarterly taxes are your responsibility and any additional correspondence required will need to be done by you.
We have stressed in our newsletters, seminars, website, and correspondence over the past eight years that the aforementioned 'mariner tax deductions' were NOT valid. Sadly, that has largely fallen on deaf ears and is now coming back to haunt some of you. Please don't continue to be misled. We will be more then happy to assist you in setting up a payment plan with the IRS, and/or review your amended returns.
We appreciate your interest in Transport Workers Tax Service, as you can imagine we have been inundated with similar inquires. In order to provide our new clients with the same exceptional service levels we are requesting that you remit a non-binding count-me-in new customer information page. This will allow us to adequately staff for the 2007 tax year. We will be accepting new registers on a first come first serve basis. We emphasize the importance of doing so in a timely fashion to ensure acceptance.
Please feel free to contact us at twts@transport1040.com or CountMeIn@transport1040.com should you have any questions that were not addressed in the above.
9. Are meals deductible while I am onboard the ship?
Rumors and misinformation continues to spread that mariners are allowed to deduct the full M&IE (Meals & Incidental) rate for each day they are onboard the vessel. THIS IS NOT VALID and can create an I.R.S. nightmare for you. Please recognize, although the Johnson Case legitimized the deductions of incidental expenses, it specifically limited the ALLOWABLE deductions to the portion of the M&IE rate attributed to incidental expenses.
We realize that you are busy and don’t have the time to read and decipher a 30 page court decision, so we’ve tried to highlight areas that are specific and attributable only to the rulings stating that meals are not deductible.
10. I recently found out that the tax preparer I have used for the past five years is under investigation by the Department of Justice (DOJ), should I be concerned?
If your returns were signed by a tax preparer that is on the IRS's list of "problem prepares" it will increase the likelihood of audit selection. "Problem preparers are those who have repeatedly violated the law, which a Department of Justice investigation clearly indicates.
The lawsuit also asks the court to order Marty Kapp to give the Justice Department a list of names, addresses, e-mail addresses, and social security numbers of clients dated from 2000 forward.
We have been in contact with both the DOJ and I.R.S. to try and have interest and penalties waived and have the tax payer only responsible for the tax deficiencies. This will be addressed on a case by case basis. If you believe your return(s) may have been prepared incorrectly, we strongly recommend you allow us to review, and if necessary, properly amend the previous years return(s) prior to a possible IRS audit. If you find yourself already in an audit situation, contact us and we can assist you through that process as well.
11. Are you and Marty Kapp of Sailor Tax the same company?
There is ABSOLUTELY NO AFFILIATION between Marty Kapp at sailortax.com and Transport Workers Tax Service
12. I don't own a home or pay state taxes, can you still help me?
Your Schedule A deductions include the following line items: |
- State Income Tax or State Sales Tax plus any Real Estate or Personal Property Taxes. For the 2006 tax year, sales tax will again be deductible. The sales tax deductions can be calculated based on your income level and exemption amount or your actual sales tax incurred. Recognize if you use the table amount based on your income level, you can also include any additional sales tax you may have paid on large ticket items such as cars, boats, major home improvements, etc.
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- Charitable Contributions,
both cash and non-cash
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- Job Expenses; including
both your per diem expenses (that vary based on the vessel's
location and are calculated using the OCONUS/CONUS rates), Out-of-Pocket
expenses, job search and qualifying work related educational
expenses.
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- Investment Expenses, includes
publications, internet access for the percentage of time used
for investment research, annual fees for financial services,
safety deposit box and tax preparation fees.
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We find that we are still able to save clients
a considerable amount of money by including their job expenses and other
Schedule A deductions. We need to point out, that in the rare occasion
we find that the standard deduction is more advantageous, we offer the
client the option of electronically filing their return for a fee of
$200, or returning their package to them.
13. I will be on a ship in April, how do I get
an extension?
On April 10th we automatically file extensions for prior year clients
that we have not received information from. We will be happy to file
Form 4868 giving you until October 15th if you provide us with your name(s),
and social security number(s) at no cost. You are still responsible
for making any necessary estimated payments by April 16, 2007 to avoid
interest and penalties.
14. If I don't have my ships schedule can I still
use TWTS?
Yes. We track numerous vessels in our extensive database. We may already
have your ships schedule or you may be able to obtain it from your employer.
However, if at all possible, please try to keep copies of your ships
schedule throughout the year and enclose copies with your tax documents.
15. What shipping companies do you have in your data base?
We track Horizon Lines, Crowley, Matson, Maersk Sealand, Military Sealift Command (MSC), American Ship Management (ASM), APL, Central Gulf, Interocean Ugland Management, Totem, Forest Lines, Liberty Maritime, Lykes, NCL, Alaskan Ferries, Overseas, Patriot, Polar Tankers, Waterman, and Sealift.
16. What business expenses do not require a receipt?
No receipts are required for expenditures less than $75, however, you
should have a Travel Expense Log which records the Time/Place/Amount/Business
Nature of each expenditure. Receipts ARE required for lodging and transportation (air/rail/bus),
regardless of the amount. Receipts ARE required for expenditures of
$75 or more for travel, entertainment, gift or tip. We suggest that you keep all receipts and track your expenses in an expense log, contact us for a complementary one. You may find it easier to use a separate credit card to track all of you business expenses. BE SURE to save your wage pay-off sheets. Many companies include your travel reimbursements as part of your taxable income
17. Is a receipt required for a meal which cost
$80, including a $10 tip?
No. Receipts are not required because a tip is a separate expenditure.
The meal cost was $70 and the tip was $10, both expenditures were less
than $75 and therefore no receipts are required.
18. Is the "Less than $75 - No receipt required" a DAILY LIMIT?
No. A person can have numerous "separate expenditures" in
a single day that may total several hundred dollars. As long as each
"separate expenditure" was less than $75, no receipts are
required.
19. Does TWTS process State Tax returns?
Yes. Our fee includes both the Federal and State Income Tax Returns.
20. Does TWTS file my return electronically?
No. Due to the extensive amount of documentation that accompanies each
return, we file all returns by U.S. Postal Mail.
21. How do I receive a complimentary Travel Expense Log?
Just send an email to us at: twts@transport1040.com or twts@comcast.net and request the
Travel Expense Log. Be sure to include your return mailing address.
22. What miscellaneous items are often overlooked?
Most mariners are not aware that many shipping companies, including Maersk Sealand, include their travel reimbursement as part of their taxable income. Be certain to retain your wage pay-off sheets so that you can deduct those expenses. Other frequently overlooked items include boots used in employment, calling card expenses, job required physical
exams, luggage used in employment, charitable cash and non cash contributions,
auto registration tax, and small change expenses (tolls, meals at airport,
etc).
23. Do I need to enclose my business expense receipts
in my package?
No. Just make sure you complete the Merchant Seaman Union Hall/Education
sheet, and the Merchant Mariner Seaman Job Expenses sheets. Please note:
if you are missing items from your package, our starting fee will be
$499, and will delay the processing of your return!
24. Do I need to make copies of the paperwork I send you?
No. Everything that you mail us, outside of our organizer will be returned
to you. Should you want a copy of the organizer returned to you as well,
just advise.
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