Tax season 2005 will be remembered for the inception of e-filing for our New York State clientele. This created new procedures for all. In addition, to further complicate our lives, we received tax information from more than 270 clients after March 15. This created a tremendous work load that my staff and I had to complete prior to April 15. I will be meeting with my staff in the coming months to decide if we have to move the March 31 deadline back to March 25 to process your returns timely.

In regard to questions that were raised during tax season about e-filing, please note that e-filing was mandated by New York State for all tax practitioners who prepare more than 200 tax returns. Effective January 1, 2007, e-filing is mandated for all tax practitioners who prepare more than 100 tax returns. As I previously advised you in my November 2005 letter, we were required to institute the e-filing process. This was not something we opted to do. Hopefully, next year the process will be easier now that we have all gone through e-filing.

To our new clients, I would like to welcome you to the firm. I hope that our relationship will be a mutually beneficial one. To those who have referred these clients, I would like to thank you for the confidence you have shown in us and I hope that your faith and confidence in us continue.

We all hope that Congress will enact reform for the Alternative Minimum Tax (AMT). More and more people fall into the AMT trap. The way the law is structured today, next year AMT will be more costly to taxpayers. AMT is a separate tax calculation that penalizes taxpayers who itemize their deductions and are located in metropolitan areas. AMT does not allow a deduction for taxes paid. Accordingly, both real estate taxes and State income taxes are not deductible under AMT. In addition, miscellaneous itemized deductions are also not deductible under AMT.

Once again, the number one question asked by our clients is how long to keep records. Please note that for our active clients, we keep your tax returns and information for at least nine years. I usually advise my clients to keep their records for five to seven years. Obviously, records of permanent nature such as home purchases and stocks and securities that you continue to own should be kept longer.

We are a full service firm, here to assist in all aspects of your business and individual tax planning needs. Before making any financial decisions, please contact us to review your situation.

To the more than 250 clients on extension, please do not wait until the last minute to provide us with your information. We have a September 25, 2006 deadline. This is the date that we must have your information in order to prepare your individual tax returns by the October 15, 2006 due date.

Please understand that we stay within the realm of our expertise. We utilize the knowledge and ability of other individuals on our team when the need arises. Over the years we have developed business relationships with many competent individuals who can assist you with your business and financial needs. These individuals include investment advisors, mortgage brokers, attorneys and insurance agents. By addressing your needs and giving you the service you require, we know that we have instilled in you a mutual sense of confidence and loyalty.

I would like to take this opportunity to thank Patty, Cathy, Jane and the rest of my staff for their efforts during this past tax season. We are actively searching for experienced accountants and bookkeepers who have prior CPA firm experience. If you know any candidates who would be interested in an employment opportunity at my firm, I would appreciate you contacting me or having the prospective candidate contact me.

For your information, I will be on vacation beginning May 8 and will return to the office on May 15.

Please remember that the key to financial planning is both communication with us along with you keeping detailed records of your income and deductions. We thank you for your continued support and look forward to serving you in the future.

Sincerely,

Eliot H. Lebenhart, CPA