With tax season underway, saw this AOL article on "Tax Preparer Doubles as a Sex Worker"
Any thoughts ??
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Tax Preparer Doubles as a Sex Worker at http://taxdomme.com/
She calls herself "Lori the Tax Domme" and for the past 11 tax seasons has helped keep adult entertainers such as phone sex workers, dominatrices and strippers from losing their pasties to the IRS.
"I fell into the specialty," she told AOL News. "I was already operating my own small seasonal tax business with a clientele that were mainly in the arts and entertainment industry."
After being laid off of work, St. Kitts began working as a phone sex operator and, as she became part of that industry, started answering tax and business questions.
"Before I knew it, people were e-mailing me, asking me to prepare their returns as they could not find a preparer with whom they felt comfortable or who understood the workings of the adult industry."
St. Kitts says the main challenge for her kinky clients is tax compliance.
"Most [sex workers] want to comply and pay their taxes, but the shame and stigma that society puts on them -- the same society that requests their services -- makes it difficult for them to easily come out to a tax preparer," she said. "This is precisely why I began working in this specialty. They often try to prepare their own taxes and miss valuable deductions and credits of which they well deserve."
What kind of deductions?
Well, according to the Tax Domme, phone sex workers can deduct things like whoopee cushions, which can be used to make realistic sex noises; lollipops -- especially those that spin (they soothe the throat and are good for sucking noises and throat soothing); and yogurt, which she says makes a lovely "squishy" noise.
"Of course," she added, "it has to be proven that these items are used in the course of the business only, such as on camera, in business photos and on the phone. Therefore, it is important to only include the exact amount of, say, yogurt that was used for work."
On the other hand, dancers and on-camera performers can deduct the cost of breast implants, but only if they meet a certain standard.
"Anything larger than 800 cc of silicone is considered a 'working breast' -- much too large for everyday wear," St. Kitts said. "Anything smaller would probably fall under what is referred to as the 'housewife rule,' as they would be everyday boobs."
Meanwhile, dominatrices who work in cities where dungeons and torture chambers are legal businesses can deduct things such as handcuffs, whips, chains, chastity belts and their racks.
Considering her client base, you might think St. Kitts has done it all. Well, no, she hasn't.
"I haven't been audited yet," she said. "However, I do prepare every return as if it were my own."
That doesn't mean the IRS isn't aware of what she does and who she does it for.
"I like to speak freely about the adult business to the IRS when I attend the yearly Las Vegas IRS Forum," she said. "It's fun to be the voice of the [sex] industry and share their comments and concerns as well as my own."
She always enjoys the reactions she gets from the agents.
"I do receive many tilted eyebrows accompanied by a smile and have detected a slight blush now and again," she said.
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There are a number of these folks who are unlicensed and unregulated tax preparers out there. And not only in the "adult entertainment fields".
However, IRS (and Congress) have enacted changes to the preparers out there with regards to licensure and ability to "sign" returns as the preparer, and to practice in front of the IRS.
Needless to say that she may indeed do a nice job...but there are licensed practitioners (CPA's come to mind) that have the skills to carefully prepare and advise, and have the credentials to prove it.
And FWIW...many of taxdomme's comments are erroneous...BTW!
And unfortunately she "admits" that she hasn't had a client (or herself I am assuming) audited. I suspect when that day arrives (and it will), she'll contact someone like me to bail her out. Not to mention that the IRS will undoubtedly pull all the returns she "signed" and audit those as well. Hopefully all of her clients understand this inherent "risk" having someone with NO certification, licensure or experience.
Hopefully she understands the documentation needed to prove up her "alleged" deductions that she is taking for "her clients"...and how they will indeed be "attacked" in an audit situation. But somehow, I don't think she has a clue!
The competancy test just started and those previously having a Preparer ID number have until 12/31/2013 to pass it which is probably the article person's situation.
The IRS expects testing to begin in November 2011. Those individuals required to take the Registered Tax Return Preparer competency test who already have a provisional PTIN will have until December 31, 2013, to pass the test.
In order to represent a client at an audit or before the tax court you have to be a CPA, Attorney or "Enrolled Agent."
I agree some of her ideas could be questionable .....
Centuries ago I was a tax supervisor for then one of the Big 8 - old Touch Rose.
Breasts are interesting:
Although a simple nose job or tummy tuck is more than likely not deductible, certain types of cosmetic surgery may be a legitimate tax write-off if you can show that it is a necessity for your job. This was proven in the case of exotic dancer Cynthia Hess (a.k.a. "Chesty Love"), who sued the IRS in order to take a $2,088 tax deduction for her breast augmentation that left her with a size 56FF chest. Hess was allowed to take the tax write-off because her 20 pound breasts were used for the purposes of making money at an Indiana strip club, and were essentially looked at as a "stage prop."
The article mentioned was written to inform, educate and entertain and that is why it was in the entertainment portion of AOL news. The writer balanced the entertainment and information factors well, exaggerating a bit here and there for humor purposes. Make no mistake, however, about the seriousness, professionalism and respect with which I approach both my job and those that I serve in the Adult Industry.
The poster, DAVEPHX, was correct about the IRS competency exam and I thank him for his post. I have been registered with an ID# since commencing my tax preparation career and will be taking the exam shortly. One need not be an Enrolled Agent or a CPA to be an excellent tax preparer. As a matter of fact, I have corrected and amended many erroneous tax returns prepared by CPAs that may have been proficient with accounting (their specialty), but did not have enough training in tax law to prepare a tax return beyond a basic 1040. I grew up in my mother's tax office, assisting as a teenager with gathering tax information from clients, collating that information, typing tax returns and putting the returns together before I obtained my formal tax education. I trained and worked under an Enrolled Agent who was a writer of H&R Block's tax training books while I worked for Block. I worked hard and was assisting with in-office training of new tax preparers in my second season. As a business owner I have also been an IRS Acceptance Agent for acquiring taxpayer ID numbers.
I do not take any deductions for which I am not absolutely certain and discuss them fully with my clients. I have actually discussed these types of deductions with IRS agents on the phone and at IRS conferences. I keep documented proof of my decisions with highlighted text from the IRS Publications in my "Save the Hiney" file as any deduction of any kind, including those that are vanilla, can be questioned. Understandably to those that are not closely familiar with the Adult Industry some deductions may seem questionable. As in any type of law, laws are meant for interpretation, for the most part, and can be interpreted in many ways by many people. However, one must remember that the tax law is for everyone and therefore, regardless of what the deduction is, if it fits within the tax code and is related to the taxpayer's income, then it is most likely a legitimate deduction to some extent. It is not up to anyone to decide on a social or moral basis who is allowed their legitimate deductions and who is not.
ChgoCPA, not having been audited is not a bad thing although it could happen to any of us. This is why we are to follow the tax code. Also, why do you put that I have "signed" my returns in quotes as if that is questionable? Of course I sign all of my returns as it is my legal and ethical obligation to do so. In answer to your comment about whether or not I would seek out someone with an additional designation if need be, the answer is a very loud, 'YES'. As a professional in any profession, the client comes first. It is impossible in any profession to know 100% about every topic, regardless of your level or status and it is irresponsible and dangerous to think that you do. I have sought out colleagues of many types for help and have been contacted by EAs, CPAs and other preparers for my help, not only with my specific expertise in the Adult Industry, but other tax topics as well. This is one reason that I belong to the National Association of Tax Professionals. So, yes, I would seek out a colleague when necessary, but I promise that it will never be you. I ask you this; would you have even dared to write such a post had I been a male tax preparer and/or had not worked in the Adult Industry myself? Given my past experience with people in the tax/accounting profession similar attitudes, I doubt it.
Forgive me for being so long-winded, but I am frustrated as it seems that there are many out there that would only like to exploit those in the Adult Industry. They will disrespect and discredit not only those that work within it, but also those that work to support it and therefore we find ourselves perpetually defending what we do and why we do it. I care about this industry and the people in it. Ask my clients or anyone on the message boards to which I post, at the organizations with whom I am associated or anyone that has come to me for help.
This is the one and only comment that I will make in reference to this post as I do not want to take away from what the original poster was asking the community.
I would have made the same comments if you were a male. I could care less about your gender...given that the "clients" you have don't see you either. From reading your text (on your site) you generally do everything via email. So you have no face time with your clients...correct? So why would it matter what gender you are...none to me.
You then make comments here that you have corrected other returns prepared by CPA's that YOU decided didn't do a good job (apparently). And then comment that the CPA's should stick to accounting. Do yourself a favor and take a gander at the AICPA website, the IRS website and all of the State CPA Society's websites. It sure seems pretty clear to me that CPA's are the "recognized" experts in this field. But I have heard from "part-time" preparers like yourself that they are as competent (and in your case you declare more competent) than practitioners (CPA's) who have spent considerable time on CPE EVERY year to maintain the Standards set forth by various taxing authorities.
If you want to solicit this business, good for you. And you may very well be good at preparation of a return. I would need to see your work to comment as to it's "correctness". And I may very well have already seen your work.
Where we absolutely agree is that the "entertainment" industry has certain nuances that other industries don't. And in particular, the Adult industry is a conundrum. However, given the nature of the "cash" component of this business, for you to simply be a "preparer" is, IMHO, NOT good enough. But that is only MY opinion. What do you actually do to "confirm" the reasonableness of a clients "stated" income? Based on your website (and your comments on this post)..nothing. If Suzycumsalot tells you she made $ 25,000...that is what you will show. Do you at least try and find out if Suzy has assets that would render her assertions of her income valueless? And you know damn well she has NOT received a 1099 from ANY John she screwed!! And then you will ask Suzy to list out her "expenses"...throw it on a Schedule C and work the numbers to best extract the EIC to it's full amount. Am I pretty close on this?
I have done more than my share of, not only Adult entertainers personal and Corporate returns, but those who are NOT in the Adult world as well. Perhaps I am not the typical CPA you were referring to...but somehow I get the impression anyone with that designation is an issue for you. And if you are in this business long enough, you will have clients audited. And rarely will the audit happen for other than "the ID number came up". Then you will find out just how "deductible" those non-vanilla expenses were. And more importantly, you will be introduced to a "full compliance audit". The purpose of that is to "seek unreported" and underreported income (hence the cash not being reported!). And as the "signer" of a tax return you might want to recognize (especially with cash clients) that there are rather "stiff" preparer penalties. How much are you carrying in your malpractice insurance? You do know that the number ONE suit for malpractice is "income tax preparation"!
You do seem like a professional...I am not questioning that, per se. But the preparation of this type of return is NOT for the feint of heart. And truthfully, very few of my peers would ever touch these types of returns. I do applaud that you have put yourself out there...I just encourage you to up your credentials so that when the day comes you can best serve your clientele. If a current client of mine asked about your "services", I would comment to them as I have in this post. You may indeed be a MUCH cheaper alternative than my fees...but you typically get what you pay for.
Go back to school...get your degree...pass the CPA exam...work for a CPA firm for a few years...take your CPE...and then:
Promote yourself as you are. But I suspect at that point you might see things in a slightly different light. No way to know unless you give it a shot.
Good luck to you in the future.
Good discussion but mostly agree with TaxDomme other than her thinking her gender was attacked.
I tax preparer CPA or not has no obligation to question the income other than warn that any 1099's are cross matched and should report full inocme. But no interogation is needed.
Just because one is a CPA does not mean they know anyting about taxes other than the small part of the CPA exam on taxes maybe learned long ago.
The primarly function of a CPA is audits (and reviews and compliations). Many did specialize in tax and most regional or national mid to larger CPA firms have separate tax departments since the audit guys may have to know how to do tax provisions for a corporate return but need little or know individual tax knowledge. I don't recall since long time since my Touche Ross days, but tax dept usually involved in the tax provision calculation for audited corporations etc.
Other than TaxDomme's gender comments seems very intelligent and professional.
And the "Big 8" doesn't exist..and hasn't for some time.
My discussion to taxdomme is predicated on the CPA's that I am associated with as well as the professional organizations that we are all members of. And in most cases, NONE of us are wasting time on audit work..I leave that to the firms that like to lose money. But to each their own.
The CPA today seems to be much more attuned to the "small business" and those practitioners that I "pal around with" are adept at that particular niche.
And to suggest that a CPA has no obligation to question the income is naive. This past fall many (if not all) practitioners (and the firms) received notification from IRS specifically addressing that topic. If one cares to ignore what is happening in this landscape...so be it. But the CPA professionals that I know heard the IRS position on Schedule C earners (and in particular cash type businesses) loud and clear. In my particular case it didn't alarm me, as I had always taken that approach. But if certain practitioners decide to "turn a blind eye"...this notice certainly is a "wake up call"!
I suspect if you had worked in small firms during your career you may indeed understand better the breadth of expertise that these CPA's need to have. Unlike the "specialties" within a large firm, the small practices need to have this type of expertise. And many of the mid-sized firms that I deal with have taken this position as well over the past 10 years or so.
But this is an important topic for anyone in a cash type business to understand. And as I posted earlier taxdomme is NOT the only one out there promoting themselves in this manner. But as I also posted, the landscape for this type of practitioner is changing...and very rapidly.
ChgoCPA, you do not know me, nor do have any idea about the way in which I practice my business, yet you continue to make wrong and wild assumptions about everything I do and think. When did I once say that I do not question my client's sources of income? Of course I do and have spreadsheets for myself and for them to keep track. I also educate my clients during the tax preparation process and arm them with tools to help them run their businesses properly. You should also know that I do turn away those would-be clients that I feel may not want to keep in compliance with the law, Vanilla and Adult.
I am far from naive about the nature of tax preparation and the Adult Industry. Had you actually read my post, you would have noticed that I too have regular contact with IRS, both virtually and in person. Therefore I am very well aware of where their minds are in regard to these topics and keep myself very well educated in the realm of tax law. My business is not, and has never been, solely Adult. I have dealt with cash businesses before, we all have as tax professionals since businesses take in income in a plethora of ways. For the record, I was not one of those practitioners that received a letter from the IRS. Not all practitioners were contacted.
You know, in yet another misinterpretation of my post you elude to the idea that I have an issue with CPAs and other designations. Again, if you had read my post you will find this to be absolutely not true. I have colleagues and friends in all designations. The only issue I had is with what you posted and the treatment by others with whom I have encountered with a similar attitude. I also take issue with much of what you posted as your first response to me. You not only continue your rampage of wrong assumptions, but you are completely disrespectful in your words and intent to the providers with whom you share this community.
Your experience may have very well been different than mine on the whole with providers, but it is not fair to assume that all are untrustworthy or that all are honest. They are simply clients (not "clients") and we need to remember to use the same discretion and respect that we do with all of our other clients, Vanilla or Adult.
The landscape is changing for all of us tax professionals. Remember that with tighter regulation and testing, the IRS has also stated that they are increasing the number of audits of CPAs and EAs. None of this gives any of us who are practicing correctly a reason to panic, however. We must simply nod our heads, read the tax updates, listen to the Tax Talk Today broadcasts, go to the IRS forums and have open dialog with IRS agents. I have found most to be very happy to talk to me and interested in my input and comments.
So, Mr. ChgoCPA, would you now like to interact as professional colleagues or do you want to continue your attack? If it is the latter, I will give a gentle, 'sigh' and not respond again.
And not you. I'm not sure why you need to get so defensive on this issue. This is only MY opinion on the subject matter...not the entire world's viewpoint.
However, my thoughts on these matters is in response to the materials that are on your website, and the comments that you have made thus far. It is not to be mean, or disrespectful. And I would venture to say that you may be considerably more proficient than a large number of practitioners out there. The only way I could know for sure is to actually review the work you have done...and that is not likely to happen. Hopefully you do have others reviewing the work however.
And your comment in this post (that I'm directly replying to) is typical of those who don't have the professional credentials that seem to weigh down their self-esteem. And again, don't take that as a criticism, rather an observation of seeing folks without those three letters after their name. I have seen many very competent and talented accountants passed over for partner only because they didn't have those letters. It didn't mean they weren't good...just that their credibility to the public was questioned.
That is why in my initial post to you was to take that initiative...get the letters...and put yourself on a different plane than not having these credentials.
As we both agree, this new landscape is becoming ever more challenging...and to NOT arm yourself with as much ammunition to win the battles is leaving your clients at risk. That is why I had commented in my earlier posts as to why I would tell any prospect that might be considering seeing you, why that indeed might be a problem. And again...your work may be impeccable. But the lack of certification will continue to haunt you.
And ask some of your CPA friends if indeed they had received this IRS letter. If they do any real amount of Schedule C work I suspect they did. Or take a gander at the IRS website where this topic was covered indepth last fall.
Hello Everyone,
I am new here, and like Tax Domme, providing tax and accounting services to individuals in the adult entertainment business. I am an Enrolled Agent and have been practicing since the early 1990's.
In the "old" days, if the client attested on an engagement letter/tax organizer that the truth, and nothing but the truth was reported on that organizer, unscrupulous or lazy preparers would turn a blind eye to a client reporting $20,000 in income, qualifying for the EIC, but living in a house on the water with two luxury cars in the garage.
Those days are indeed over. The Small Business Tax Act of 2007 instituted stiff new preparer penalties which basically shut the door on preparers doing sloppy or no due diligence, then hiding behind the signed engagement letter. The IRS has also recently sent letters out to CPAs and EAs whose tax returns (mostly Schedule C), showed a pattern of excessive or questionable deductions. They are going to get a very unpleasant site visit from IRS agents who are going to go through their records.
For that reason, we tax preparers who choose to provide professional tax and accounting services to individuals in an industry that is basically cash, do take on a lot of professional risk because often records are non-existent. I have many clients who have no records, no bank accounts, haven't filed tax returns for years, and want to get right with the IRS (not to mention buy a house or car, establish credit, open a retirement acount - try doing any of those things without having filed a tax return) . I have a process with these clients, starting with a "Lifestyle Assessment" (fancy term for a monthy budget worksheet), which gives us a starting point. How much does it cost you to live every month? Then, it stands to reason, you are netting at least that much, right? There is much more to the process when getting to a tax return. However it is entirely possible to "reverse engineer" a tax return that makes sense and will pass muster with the IRS.
Lee Miller
Mary Lee Miller, EA, LLC
Companion Tax & Accounting Services
I have had several clients (who are escorts) discuss you and your firm. I have read your site...and find it very concise...professional and topical. As I posted to taxdomme, there is certainly a place for you to provide your services. But just as I had suggested to taxdomme, why not get your CPA rather than the EA designation. There is a significant difference between those designations, at least in the professional circles. And as you said you have earned your BA in Accountancy, all you need do is sit and pass the exam...seems like that should be a breeze...at least at this point in time.
But regardless, what you have posted is correct. You call the ability to file old returns as "reverse engineering"...however with another credential you could easily call it "forensic accounting"...which is what this technique is. And one that the IRS will assert if someone's number is called and they have NO documentation to support a return. I spent many years testifying in an "expert witness" capacity in divorce and bankruptcy cases. Needless to say, it is fairly easy to spot trends and show a prospect (or judge or jury) why the taxpayer (or defendant) wasnt' living on $ 20k...especially with the fully paid houses in Palm Springs LOL!
Perhaps we might want to discuss opportunities as they arise. I know that many of the gals that I have consulted with in this business are "fearful" to start with...and having folks like you and taxdomme out there are positives for the gals. And as you comment, "regular" CPA firms may not want to touch this type of business. The funny part (actually tragic) is that they have NO problems representing folks who are willing to "bend the rules" alot more than most of the gals I've met. And those CPA's don't see the hypocrisy in that.
What I have learned is that there are quite a few other CPA's and CPA firms that are interested in working with the gals. And as in my case, have done so. However, I don't advertise this as you have, and really can't. But that is no reflection on the gals or what they do. It is a matter of "discretion" that I need to maintain with my "other practice". However, should that day come when I can devote my entire attention to this industry, I would not hesitate to promote my services in a similar manner as you and taxdomme.
And who knows what the future holds..perhaps our paths may indeed cross.
Although its been years I bet the CPA exam is still 80% audit/complilato/review related which is of no interest to tax preparers and geneal accounting.
An EA specilizes in taxes, not CPA audits, compliations and reviews. Unless a CPA has specilized in taxes in general an EA would have in my view far more tax expertise than a "general" CPA.
If someone wanted to concentrate in taxes and general advice, the CPA would be mostly a waste of time with little relevence other than "bragging rights" and ego. But of no practical use and waste of time to study for the non relevant parts of the CPA exam.
I've been doing taxes for H&R Block for a while.
One year I had a client who was doing lingerie and sex toy parties for women as a side business.
Preparing the return took two hours. It was difficult for me to treat this professionally, but I did. Especially when she came to the list of batteries she purchasesd
I've picked up a few providers as tax clients just from being on here. Most feel a lot more comfortable with someone who understands the business and who isn't shocked by what they do. Maybe we need a thread that identifies those of us around the country who could help meet this need. 