Here we go again! It is campaign season and some candidates just cannot wait to say how they are going to penalize business. Hillary Clinton is proposing a new scheme where businesses that manufactured things will be tax differently than businesses that are “trading” items. I am not exactly sure what this means but it sounds to me like a tax increase on service businesses and for people who invest in business.
Let us face it, manufacturing has been on a continual decline in this country for the past 60 years. The US is known for producing intellectual property and services that are the envy of the world. Hillary Clinton, as well as some of her tax and spenders just do not get it! If you increase taxes on something you will get less of it. Increase tax on business and you will have less business in the US. Read More
Today I received a frantic telephone call from the adult daughter of a senior citizen client for whom I prepared an estate plan 10 years ago. Unfortunately, the man, who is a widower, had a serious stroke. He is alive but is not communicative. The daughter called and asked if I had prepared a Durable Power Of Attorney. Even though I had prepared a Will and a Living Will, the client had insisted that he did not want a Power Of Attorney.
Specifically, this client is a very private person and wanted to be in complete control of all of his assets. I had suggested that we establish a Trust, with him being the Trustee and having one of his children as a Co-Trustee who could take over if he came incapacitated. That was rejected. Read More
Wake up and smell the coffee! Its political season again and unfortunately it appears most candidates for State Governors and Congress are advocating a “tax the other guy” approach.
• “We need more money for the schools!”-Tax the Rich.
• “We need more money for the poor!” – Tax the oil companies.
• “We need more money for the seniors!”-Increase sales tax.
• “We need to fight Ebola!”-Tax the pharmaceutical companies.
We need money for good causes so therefore we need to increase taxes? Does that really makes sense? When a politician advocates increasing taxes they always try to Read More
The IRS announced in IR 2014-99 increases to retirement plan contributions.
Highlights include the following:
• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.
• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000. Read More
Most of my clients from around the world make their initial contact by email. It is usually a result of my website, blog posts (published on Tax Connections) and Avvo. Usually, they need a lawyer to negotiate a contract or deal with the IRS or State Tax agencies.
When I get an email from a foreign business, even if the English is not perfect, I respond. Unfortunately, the scam artists love a response and try their version of the famous “Nigerian Scam.” The trick usually works that I need to review a simple contract, receive payment from the buyer, deposit it in my trust account and immediately send the money (minus an unusually hefty fee) to them. Of course the check is no good and they will sucker me. Read More
Let’s review the facts: Ray Rice is a star NFL player. He is not a role model. He is not a minister. They pay him to be a “bruiser” and arguably a star attraction to the Baltimore Ravens. Rice clobbered his (now) wife in a domestic fight. The NFL kicked him out of the game. This hurt Rice, his wife (the victim?), his child and the Team.
The NFL argues they had to do it to clean up football. This is an example for children!
Well, maybe not. They banished Ray Rice. He is gone; disappeared. The Ravens are even offering refunds for Rice jerseys. The game will move on and he will disappear from the news. Not really much of a lesson. No discussions of the benefits of therapy, or the need for domestic violence education. Read More
Today, a new client appeared in my office and explained he needed a consultation right away. This is very strange because most people call to set up an initial conference and we discuss the case on the telephone before meeting. This man was middle-aged, dressed nicely, said he was an IT analyst, but was sweating and extremely nervous. I asked him “what is wrong?” He told me “the IRS called and said they had audited my tax returns, I owe a lot of money, and unless I contact the Restitution Department they are coming to arrest me.”
I immediately told him this was a scam. He was still very concerned. So I asked him for the telephone number of the so called “IRS” and I called using my speaker phone. The person answered “IRS Department.” I immediately knew this was a scam because no Read More
Threat of an IRS Audit or State Tax Audit can justifiably strike fear into the potential audit victim. Business owners, professionals, corporations, partnerships and LLCs have more complicated business transactions than most W-2 wage earners. Fear of tax increases, tax penalties such as negligence penalties, late filing penalties and late payment penalties as well as interest on the tax increase and penalties, is real. Big increases in tax dollars owed and even claims of civil tax fraud are the potential result of a mishandled tax audit.
Do not let the audit start without Legal Representation
1. Engage a tax attorney, in addition to your accountant to represent you during the audit process. Read More
Hiding Receipts By Cash Is A Tax Issue
For many years, small restaurants, bars, pizza parlors, ice cream stands, and other food establishments have used all cash systems to hide their income and not pay sales tax and income tax on the full receipts. In New Jersey, the Division of Taxation has created a very aggressive system where they make up excessively high mark ons from food and liquor purchases, and absolutely slaughter businesses that don’t keep good records.
The way this tack works by the New Jersey division of taxation is they subpoena the records from the major food suppliers and liquor distributors. The tax authorities then compared the expenses listed on the tax return to what these third-party sellers reported. Read More
Attempt to get “Cash” businesses
The IRS has been pushing for many years to capture cash income of small businesses and force him to pay taxes. That is one of the reasons that the IRS is requiring credit card merchant service companies to report a 1099-K for businesses to the IRS. This form lists the amount of credit card payments made to the business by its customers. The IRS then takes this information, comparing it to the gross sales of the business. If the business has too high of a percentage of credit card sales, the IRS issues a letter 5043.
This letter starts out that “your gross receipts may be underreported.” This is the beginning of a long series of letters and correspondence which could eventually lead Read More
Congress is focusing, once again, on businesses that have used smart planning in order to avoid the excessive United States corporate and personal tax rates as well as the extremely complex compliance costs. Instead of focusing on how to lower US taxes and make tax compliance easier and less expensive, the US Senate is now picking on Caterpillar as a so-called “tax dodge”.
The US has extremely high corporate tax rates of 35%. This means if a corporation makes a $100 profit, it pays $35 federal tax (plus State tax which could be 10% or higher). The remaining money when distributed to the shareholders gets taxed again at the shareholders rate which could be up to 39 1/2% plus State tax. So for example $100 of earnings would be $35 of federal tax, $10 of State tax leaving $55. The $55 would be taxed Read More
Singer songwriter Lauryn Hill was thrown into jail for three months for tax evasion, with another three months of home confinement. This is all based upon her following some scheme by phony tax advisors claiming that she did not need to file and pay income taxes. Like many people, from physicians to celebrities, she fell prey to the tax protesters coaxes.
The IRS had a great time spending tens of millions of dollars prosecuting her but got incredible amounts of publicity to scare other people into filing their tax returns. That is the basis of our “voluntary” tax system. Without people being scared of being thrown in jail, the system would collapse.
Now, the IRS is using Lauryn Hill’s name to keep scaring taxpayers, just before the tax Read More