The Tax Factor was created to educate individuals and small-business owners about taxes. Let’s face it, nothing in life is guaranteed except death and taxes. Okay, maybe that sounded pretty depressing but the goal of this blog is to help you find the information to learn how to make taxes work for you. Taxes can be extremely complicated but knowing about deductions and credits can save you thousands of dollars per year.
The Internal Revenue Service is issuing a warning about a new tax scam that uses a website that mimics the IRS e-Services online registration page.
The actual IRS e-Services page offers web-based products for tax preparers and payers, not the general public. The phony web page looks almost identical to the real one.
The IRS gets many reports of fake websites like this. Criminals use these sites to lure people into providing personal and financial information that may be used to steal the victim’s money or identity.
The address of the official IRS website is www.irs.gov. Don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov.
If you find a suspicious website that claims to be the IRS, send the site’s URL by email to phishing@irs.gov. Use the subject line, 'Suspicious website'.
Be aware that the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
If you get an unsolicited email that appears to be from the IRS, report it by sending it to phishing@irs.gov.
The IRS has information at www.irs.gov that can help you protect yourself from tax scams of all kinds. Search the site using the term “phishing.”
The Internal Revenue Service could not provide documentation for $394,430 of the invoiced labor hours paid on an estimated $1 million in labor charges, according to a new report.
The report, released by the Treasury Inspector General for Tax Administration, found that the IRS received an appropriation of $203 million in funds from the American Recovery and Reinvestment Act of 2009. The IRS awarded $85.4 million in contracts using Recovery Act funds for work that included reprogramming IRS computer systems, updating related tax forms and publications, and providing customer services to assist taxpayers with the new tax law provisions included in the Recovery Act.
TIGTA initiated its audit because it is required to monitor the IRS’s implementation of Recovery Act provisions. The overall objective of TIGTA’s review was to assess the IRS’s controls over contract invoice review, approval, and payment processes and to identify improper payments of Recovery Act funds made to contractors.
The IRS responded: "Whatever we are the IRS, we do what we want!"
Of course, I'm joking about the IRS response. However, the IRS can do better than this.
An international hacker broke into the South Carolina Department of Revenue computer files and gained access to about 3.6 million tax returns, state and federal officials announced October 26th.
The Governor of South Carolina said the hacked files included state returns submitted since 1998 with unencrypted Social Security numbers. There also were about 387,000 credit and debit card numbers of which 16,000 were unencrypted.
Officials said people whose information has been compromised will get a free year of identity protection service provided by Experian and paid for by the state. It wasn't clear how much that would cost the state.
Anyone who filed a South Carolina tax from 1998 onward is being asked to call 1-866-578-5422. All taxpayers, whether they filed electronically or with paper returns are being urged to call the number.
In addition to working with the federal government, the state has hired Mandiant, a private information security company, to assist in the investigation.
Earlier this year, the personal information of 228,000 Medicaid patients was stolen in South Carolina and a former Department of Health and Human Services project manager was arrested.
Well, this sounds like another reason why I will never live in the great state of South Carolina.
A 44-year-old woman from Maryland has been charged with participating in a
conspiracy that resulted in federal and local governments paying out more than
$4 million in fraudulent tax refunds.
Kimberle Y. Davis was charged with aiding and abetting and first-degree
theft. A plea hearing has been set for Oct. 31, according to court dockets.
The charges against Davis came in a “criminal information,” a document that
can be filed only with the defendant’s consent and which signals that a plea
deal has been reached. Her attorney declined comment.
Federal prosecutors alleged that Davis worked for a woman identified only as
“S.D.” who ran a tax preparation service, 2FT Fast Facts Tax Service in the
District. Davis helped “S.D.” file false federal returns in 2009 and 2010 that
produced more than $3.7 million in fraudulent refunds, prosecutors said.
She also helped obtain more than $300,000 in fraudulent refunds from the
District. At the time, authorities say, Davis used her full-time position in the
D.C. Office of Tax and Revenue to access “DC OTR computer records concerning the
audit status” of the tax business’ clients.
Davis is the second person to be charged in the scheme. Last year, another
2FT tax preparer pleaded guilty to federal charges of filing of more than 3,000
fraudulent income tax returns from 2006 through 2011 that netted more than $14
million in refunds.
Well Ms. Davis, welcome to the Tax Preparers' Hall of Shame. Thank you for giving tax preparers a bad reputation.
A New York strip club can’t claim a tax exemption for entrance and performance fees on the grounds that it’s presenting “musical arts performances,” the state’s highest court ruled.
The New York Court of Appeals in Albany upheld a lower court’s ruling that Nite Moves, an adult “juice bar” in Latham, New York, didn’t prove its stage and couch dances merited a state arts exemption.
“It is not irrational for the tax tribunal to decline to extend a tax exemption to every act that declares itself a‘dance performance,’” the Court of Appeals said in a 4-3 decision.
While the state imposes a sales tax on any admission charge above 10 cents for the use of any “place of amusement,” the legislature created an exemption for “dramatic or musical arts performances,” according to the ruling.
Nite Moves, which calls itself an “upscale non-alcoholic juice bar,” had argued that lawmakers meant to give the adult-entertainment business a tax break because its performances qualify under the exemption, according to the ruling.
The club, which was required to show that its fees were admission charges for choreographed dance routines, failed to prove that performances in private rooms qualified for the exemption, the Court of Appeals said in its ruling.
Well, you can't knock them for trying. The only winners in this case are the lawyers!
The report, from the Treasury Inspector General for Tax Administration, noted that the Tax Code imposes penalties on taxpayers with a filing requirement who fail to file a tax return or fail to timely pay the full tax shown on any tax return. The IRS waives those penalties for taxpayers who have demonstrated full compliance over the prior three years, but only if the taxpayers request penalty relief. The IRS does not widely publicize the opportunity to request this waiver, known as a First-Time Abate.
The reason for granting the First-Time Abate is to reward past tax compliance and promote future tax compliance. However, most taxpayers with compliant tax histories are not offered and do not receive the waiver, TIGTA found. For tax year 2010, TIGTA estimated that approximately 250,000 taxpayers with failure-to-file penalties and 1.2 million taxpayers with failure-to-pay penalties did not receive penalty relief even though they qualified under First-Time Abate waiver criteria. TIGTA estimated the unabated penalties totaled more than $181 million.
“Penalty waivers should not be granted only to taxpayers or preparers with knowledge of IRS processes,” said TIGTA Inspector General J. Russell George in a statement. “If the IRS does not administer these and other penalties fairly and accurately, taxpayers’ confidence in the tax system will be jeopardized.”
In addition, TIGTA found that the First-Time Abate waiver is not used to its full potential as a compliance tool because when it is granted, it is granted before taxpayers demonstrate full compliance by paying their current tax liability.
TIGTA suggested that the First-Time Abate waiver would be better used as a compliance tool if the IRS ensured that taxpayers were aware of the potential to receive the waiver based on their past compliance history, while making receipt of the waiver contingent upon taxpayers paying their current tax liabilities.
In response to the report, IRS officials agreed with the recommendations and said they are taking appropriate corrective actions. The IRS plans to study how best to use the First-Time Abate waiver as a compliance tool. It also intends to review the current process for application of an FTA waiver prior to reasonable cause and its impact on taxpayers who qualify for reasonable cause, but instead are given an FTA waiver.
Well, I'm pretty sure that the Goodfellas of the IRS will figure something out. In the meantime, knowledge is power. Don't expect the IRS to hold your hand and tell you the rules.
“I now pronounce you man and wife.” These words are associated with great responsibility and commitment. Someone once said “I will remember always that marriage, like life, is a journey not a destination and that its treasures are found not just at the end but all along the way.” You promise to be with your significant other through the good and bad times. You have to deal with your life partner’s annoying habits like always leaving the toilet up or snoring. Man, that snoring habit is a killer! Well my friends, forming a business partnership is very similar to saying “I do.” Partnerships are not immune to life’s ups and downs. You can’t only like your business partner when you’re making a hefty profit. Just like some marriages, forming and ending a business partnership can be very complicated. Before you catch cold feet, we will explain the tax basics of forming a business partnership.
An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. However, a joint undertaking merely to share expenses is not a partnership. For example, co-ownership of a property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants.
A limit liability is an entity formed under state law by filing articles of organization as an LLC. Unlike a partnership, none of the members of an LLC are personally liable for the debits. An LLC may be classified for federal income tax purposes as a partnership.
I Love You But Please Sign This Pre-Nup!
In some marriages, it’s probably best to set up a pre-nuptial agreement. Hey, if your future spouse is on his/her third or fourth marriage, just maybe something’s up! You may want to protect your hard earned assets in the case of divorce. The same principle applies to a carefully planned business partnership. Generally, a partnership agreement determines a partner’s distributive share of any item or class of items of income, gain, loss, or credit. The allocations provided for the partnership agreement or any modification will be disregarded if they do not have substantial economic effect. An allocation has substantial economic effect if there is a possibility that the allocation will substantially affect the dollar amount of the partner’s shares of the partnership’s income/loss independently of tax consequences and the partner to whom the allocation is made actually receives the economic benefit or bears the economic burden corresponding to the allocation. Basically, you can’t agree to an allocation to simply to avoid paying taxes. The last thing you want is to explain a shady agreement with an IRS auditor. The auditors will exam your banking information, tax return, books and partnership agreement. It is possible that the auditor can readjust your partnership’s allocation along with penalties and interest.
If a partner’s distributive share of a partnership item cannot be determined under the partnership agreement, it is determined by his or her interest in the partnership. The partner’s interest is determined by taking into account the partner’s relative contributions to the partnership, the interests of all partners in economic profits and losses and the rights of the partners to distributions of capital upon liquidation.
A change in a partner’s interest during the partnership’s tax year requires the partner’s distributive share of partnership items to be determined by taking into account his or her varying interests in the partnership during the tax year. Partnership items are allocated to the partner only for the portion of the year in which he or she is a member of the partnership. If any partner’s interest in a partnership changes during the tax year, each partner’s share of interest, taxes, and payment for services or for the use of property must be determined by prorating the items on a daily basis.
Dealing with Your In-Laws aka “The IRS”
Some married people have the greatest in-laws that are both supporting and loving. However, some unfortunate soul mates wish they only see their in-laws no more than once a year. In a business partnership, I consider the IRS to be the “in-laws” to the business. If you know how to deal with the tax laws then you may have a fruitful relationship with the IRS. Those who fear and refuse to learn our tax system will dread the infamous April 15th deadline.
Partnerships as a business entity are not subject to the income tax. However, a partnership is required to file Form 1065 which reports the results of the partnership’s business activities. Most income and expense items are aggregated in computing the net profit of the partnership on Form 1065. Each partner will receive a Schedule K-1 and include their distributive share on their individual returns (Form 1040).
Each partner must figure his/her taxable income on an accounting period called a tax year. A tax year is adopted when the first income tax return is filed. A partnership must conform its tax year to its partners’ tax years unless the partnership can establish a business purpose for a different period or it makes a section 444 election. Form 1065 must be filed by April 15th following the close of the partnership’s tax year if its accounting period is the calendar year. A fiscal year partnership generally must file its return by the 15th day of the 4th month following the close of its fiscal year.
Did I scare you? Come on; don’t catch cold feet on me now! There’s more basic concept to go over with you.
You Don’t Love Me Like You Used Too!
“We don’t even talk anymore; we don’t even know what we argue about.” Uh oh, if this sound likes your marriage, it may be time to buy some nice red roses or a great divorce lawyer. Yes, just like some marriages, business partnerships must go their separate ways. Partnerships dissolve for various reasons like conflict of views or you just don’t trust the person. Whatever the reason may be, you should know the basics regarding dissolving a partnership. A partnership terminates when all of its operations are discontinued and no profit of any business, financial operations, or ventures in continued by any of its partners in a partnership. Also, a partnership can terminate when at least 50% of the total interest in partnership capital and profits is sold or exchanged within a 12 month period, including a sale or exchange to another partner.
The partnership’s tax year ends on the date of termination. The date of termination can be the date the partnership winds up its affair. In addition, the date of termination can be the date the partnership is sold or exchange that, of itself or together with other sales or exchanges in the preceding 12 months, transfers an interest of 50% or more in both partnership capital and profits.
Are You Ready To Take The Plunge?
Hopefully, I didn’t scare you away from forming a partnership. As I mentioned before, partnerships are very complex and this was just an overview of the basics. I would advise you to do your own research and seek a tax professional. The process is a lot easier when you’re well prepared. A partnership is a marriage between two or more business partners and it shouldn’t be taken lightly. The right partnership can lead to a potentially lucrative situation. You never know how far a business venture can take you unless you take the plunge. I wish you all the luck in your new endeavor.
For more information about partnerships, I suggest reading the following IRS publications located on www.irs.gov:
1. Publication 334 Tax Guide for Small Business
2. Publication 535 Business Expenses
3. Publication 541 Partnerships
4. Publication 583 Starting a Business and Keeping Records
The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2013. In general, many of the pension plan limitations will change for 2013 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include:
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 $17,000 to $17,500.
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 remains unchanged at $5,500.
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.
The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012. For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750.
If this is too much information to handle, don't be scared to call your tax accountant.
WARNING: Don't click on video if you hate rapper 50 Cent, cursing and rap music in general. Ok, you have been warned!
As Chicago struggles to quell gang violence that has contributed to a jump in
homicides, a top elected official wants to tax the sale of every bullet and
firearm — an effort even she acknowledges could spark a legal
challenge.
Cook County Board President Toni Preckwinkle will submit a
budget proposal that calls for a tax of a nickel for each bullet and
$25 for each firearm sold in the nation's second-largest county, which
encompasses Chicago.
Preckwinkle's office estimates the tax will generate
about $1 million a year, money that would be used for various county services,
including medical care for gunshot victims. Law enforcement officials would not
have to pay the tax, but the office said it would apply to 40 federally licensed
gun dealers in the county. Through last week, the city reported 409
homicides this year compared to 324 during the same period in 2011. Although the
violence still doesn't approach the nearly 900 homicides a year Chicago averaged
in the 1990s, officials say gang violence was largely to blame for a rash of
shootings earlier this year.
I'm sorry but a stupid bullet tax will not help deal with the violence. I hate guns but this proposal is DEAD ON ARRIVAL. What about proposing social programs to help get gang members off the streets? Most bullets that killed someone on the street were brought illegally. Therefore, this tax will hit mostly innocent gun owners.
Four Ohio residents have pleaded guilty in a tax fraud conspiracy case the U.S. Attorney says bilked the federal government out of more than $3 million.
Steven R. Hinz of Youngstown pleaded guilty in federal court in Cleveland to tax and mortgage fraud charges.
His plea followed guilty pleas by the other three defendants in the case, Patricia A. Polk and William E. Phillips III, both of Youngstown, and Heather L. English of Canfield.
U.S. District Judge Patricia A. Gaughan set their sentencings for January 2013.
Hinz promoted a scheme to defraud the government by filing false federal income tax returns claiming large tax refunds using the original issue discount process, the indictment said.
The scheme involved preparation of fictitious IRS forms that falsely reported that financial institutions, creditors and other entities had withheld large amounts of federal income tax on behalf of the defendants and other taxpayers with respect to non-existent income, the U.S. Attorney said.
The case was investigated by the IRS, the FBI and the U.S. Department of Housing and Urban Development.
Ok, the video has nothing to do with this post. However, it is my blog and I love "Married With Children" (lol)!
U.S. District Judge Catherine C. Blake sentenced Patrick McLaughlin, age 43, of Ocean City, Maryland to 10 months in prison, followed by one year of supervised release, for failing to file individual income tax returns and failing to report employment tax withholdings.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Rick A. Raven of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
"Corporations are required to file tax returns just like individuals," said Rick A. Raven, Special Agent in Charge, IRS Criminal Investigation, Washington, D.C., Field Office. "Mr. McLaughlin's willful actions of failing to file multiple corporate and individual tax returns violates federal tax law. IRS Criminal Investigation will continue to pursue corporations and individuals who willfully fail to file correct and accurate tax returns."
According to his guilty plea, McLaughlin operated several concession businesses in Ocean City including: photo companies Sunbeach Studios, Ltd. and United Beach Photo, Inc.; Arctic Inventions, Ltd., which operated a fleet of retail ice cream trucks; and 85 N Sunny, which provided beach equipment rentals to tourists.
McLaughlin failed to file corporate tax returns for Sunbeach, Arctic and United for tax years 2003 to 2009. As a result, McLaughlin failed to pay $10,239 in corporate taxes for United alone, from 2007 to 2009.
McLaughlin also did not file individual income tax returns for tax years 2005 to 2009, thus failing to pay a total of $151,114 in federal income taxes earned from his businesses. When in December of 2010, IRS agents notified McLaughlin that he was under criminal investigation, McLaughlin submitted corporate and individual income tax returns for the missing years thereafter.
From 2006 to 2008, McLaughlin also failed to report and remit Social Security and Medicare taxes (employment taxes) withheld from his employees' wages, resulting in a total employment tax loss to the government of $135,348.46. For example, during 2007, McLaughlin and United withheld $29,381 from the United employees, which McLaughlin had to pay as an employment tax, along with an additional $14,355. Instead, McLaughlin did not report any withholdings nor make any employment tax payments. Similarly, in 2007 and 2008, McLaughlin and 85 N Sunny withheld more than $8,000 and $12,000 respectively in employment taxes, which he had a duty to pay, along with an additional $21,259. Instead, McLaughlin did not report any withholdings and made only a one-time payment of $230.
As a result of McLaughlin's failure to pay corporate, individual and employment taxes, the total tax loss to the government is $296,701.46.
In plain english.....dude owed the government alot of money! Now, it is time to pay the price of greed. Going to jail for taxes is not worth the risk.
First thing first.....the IRS does NOT send emails! Ok, here is a warning from the Goodfellas at the Better Business Bureau.
The Better Business Bureau (BBB) is warning taxpayers who filed electronically to keep an eye out for a tax scam that looks like an IRS e-mail but in reality it contains fake links that if clicked on can cause a virus. Here’s the BBB’s report of what this e-mail contains:
An official looking email that appears to come from the IRS with the subject line: your federal tax bank transfer failed.
The “From” line contains another email address.
Beware: Do Not Click on The Link. Here’s what happens if you do:
The link goes directly to a fake account number that urges you to click on a Word attachment with the details of the failed transfer.
The Word attachment is really a virus.
Some consumers reported receiving a follow up email with “SECOND NOTICE” Your IRS federal tax bank transfer is cancelled” in the subject line.
This type of email communication is called Phishing. Taxpayers can be approached either by e-mail, social media, text or through a fake IRS website and asked for personal and financial information. If you mistakenly reply and give out your personal/financial information, thieves usually use that information to commit identity theft crimes often resulting in your own financial nightmare.
Here are tax help tips the Better Business Bureau recommends to prevent this tax scam from going anywhere but the trash bin:
Don’t click any attachments or links. If you inadvertently click on the link and download the file, be sure to run a virus scan on your computer immediately
If you receive the above message or any suspicious email posing as the IRS, forward the message to Report-Phishing at the irs.gov website.
The District Attorney’s Office of Nassau County, New York, has issued a news release regarding the arrest of a Massapequa Man charged with stealing more than $200,000 in sales tax revenue.
Philip Shaw, the principal owner of a used car dealership in Elmont, NY, is accused of stealing “$203,778 in tax revenue by neglecting to file any withholding tax, corporation tax, federal income tax, or sales tax returns since 2006.” New York State Department of Taxation and Finance (NYSDTF) initiated the investigation that led to the arrest.
Nassau County District Attorney Kathleen Rice is quoted as saying, “When an unscrupulous business owner steals tax revenue, we are all victimized. … For Mr. Shaw to pocket this money while other businesses pay their fair share is outrageous.”
New York State Commissioner of Taxation and Finance Thomas H. Mattox addressed the theft from a more personal point of view, reminding that customers “pay sales tax with the trust that the business will remit the tax for state and local government purposes.”
Is it just me but $200,000 is not worth jail time? People, just pay the damn tax! Don't think that you are smarter than the average bear by stealing tax revenues. The government will bring the pain to you AND your family. Think about your family when the Judge sends you to prison.
For my non-hip hop fans, C.R.E.A.M means "Cash Rules Everything Around Me"
Now back to the regularly scheduled tax show......
A tobacco distributor closely watched by federal agents for
a decade along with two relatives were charged in Kentucky with using phony
invoices to avoid paying taxes on millions of dollars' worth of cigarettes sold
in several states.
A federal grand jury in Louisville on October 4th charged 42-year-old Pedro
"Peter" Bello of Miami, his sister, Caridad Bello of St. Louis, and her husband,
Juan Hernandez of St. Louis, with conspiracy to commit wire fraud and money
laundering in an effort to avoid paying $2 million to Kentucky in taxes on
cigarettes.
Federal investigators have been tracking Pedro Bello since at least 2002,
when prosecutors in Texas sought to secretly listen to cellphone conversations
involving him. He was linked to several large-scale investigations and named in
a civil lawsuit brought by the city of New York over untaxed cigarettes. A
federal grand jury in Louisville initially charged him in October 2011, but
re-indicted him a year later with his sister and brother-in-law.
Authorities say he bought massive amounts of cigarettes in Kentucky but used
invoices written by GT Northeast in Missouri, a company he owned in St. Louis,
to avoid paying Kentucky sales taxes by making it appear that the sales
originated in Missouri. He then sold the cigarettes around the country while
pocketing bigger profits by avoiding the Kentucky tax.
The indictment says that Bello's Louisville-based company GT Northeast
avoided paying on $12 million worth of cigarettes it sold.
Prosecutors want Bello to forfeit $2 million if he's convicted.
The Internal Revenue Service has paid $2 million to a Wall Street
informant who more than a decade ago tipped off the government to tax-promotion
schemes that he claimed involved more than $10 billion in taxable income, the
man's lawyers said on October 4th.
It was the third straight award to the man, known only as "Mr. ABC" after the
identity he was assigned at a 2004 Senate Finance Committee hearing on abusive
tax shelters. During the hearing, the whistleblower had complained that the
government was disorganized and ill-equipped to deal with sophisticated tax
shelters.
The $2 million award was in connection with a tax strategy at Illinois Tool
Works Inc. A spokeswoman for the company declined immediate comment. The law
firm representing Mr. ABC, Phillips & Cohen LLP in Washington, said in a
statement that the alleged tax avoidance scheme at Illinois Tool Works cost
the U.S. Treasury hundreds of millions of dollars. The whisteblower had first
shared information with revenue agents in 1999, his lawyers said.
Last year, the same whistleblower received $1.1 million, his lawyers said. In
that case, the company involved was Enron Corp., which imploded in 2001 amid an
accounting scandal. The informant's lawyers said he had provided information
about abusive tax shelters that helped Enron avoid taxes on more than $600
million of taxable income.
The payout was provided under an earlier whistleblower program that generally
limited awards to $2 million. A new whistleblower program established in 2006
sets awards at between 15% and 30% of the total proceeds collected, as long as
the IRS moves ahead on the information provided.
New York City Public Advocate Bill de Blasio, a probable Democratic candidate for mayor next year, proposed an tax increase on residents earning more than $500,000 a year to pay for extended school hours.
De Blasio, 51, elected in 2009 to the watchdog post, told the Association for a Better New York that the surcharge would raise $532 million for all-day prekindergarten classes and extended hours in middle schools. He said the city needed to boost education funding to keep pace with emerging nations such as China and India.
The surcharge would run for five years, de Blasio said. Residents with more than $500,000 in income would pay a tax rate of 4.3 percent, up from 3.876 percent. Someone earning $750,000 a year would pay an additional $1,060; a $1 million earner would see a $2,120 increase; and those making $2 million would pay $6,360 more.
The tax would affect about 1 percent, or 44,200, of city taxpayers, with an average income of $2.7 million, de Blasio’s office said. To close budget deficits, the city imposed a surcharge on incomes above $150,000 per household from 2003 to 2005 and increased property taxes 18.5 percent.
If approved by the City Council and state legislature, the surcharge would provide $291 million for pre-K; $190 million for extended middle-school classes and $50 million for leased space and other expenses, de Blasio said.
My prediction...... this proposal will be DEAD ON ARRIVAL! I'm not for or against the proposal. However, I know that the politicians will not tax their friends and neighbors more in NYC.
A word from the Goodfellas at the Department of Justice
A federal judge in Boston sentenced Charles Adams in September to 48 months in prison for tax evasion, conspiring to defraud the United States and obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced. U.S. District Judge F. Dennis Saylor also ordered Adams to pay restitution in the amount of $401,000.
On April 2, 2012, a federal jury convicted Adams, of Norwood, Mass., as well as Catherine Floyd and William Scott Dion, both of Sanbornville, N.H., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion with respect to his own taxes.
On Sept. 6, 2012, Judge Saylor sentenced Dion to 84 months in prison and ordered him to pay $3 million in restitution. On Sept. 21, 2012, Judge Saylor sentenced Floyd to 60 months in prison and ordered her to pay $3 million in restitution.
According to the evidence presented at trial, Adams, Floyd and Dion ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. They ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.
As part of “Pulpit Freedom Sunday,” on Oct. 7, religious leaders across the
country will endorse political candidates — an act that flies in the face of
Internal Revenue Service rules about what tax-exempt organizations, such as
churches, can and cannot do.
The IRS says tax-exempt organizations, or what they refer to as a 501(c)(3),
are prohibited from participating in partisan campaigning for or against
political candidates. Yet, despite what’s in the rules, the agency continues to
struggle to do anything about those who defy the law.
Though the regulation has been in place since 1954, in 2009, the U.S.
District Court of Minnesota ruled the IRS no longer had the appropriate staff to
investigate places of worship after a reorganization changed who in the agency
had the authority to launch investigations.
New procedures for conducting church audits have been pending since 2009,
which has left the IRS virtually impotent in conducting any kind of new
investigations. The IRS did not respond to questions seeking comment.
Ok, my fellow tax preparers may hate me on this post however.....
Here is a word from the Goodfellas of the IRS:
The IRS also urged taxpayers to choose the speed and convenience of electronic filing. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. The tax agency verifies receipt of an e-filed return, and people who file electronically make fewer mistakes too.
Everyone can use Free File, either the brand-name software, offered by the IRS’s commercial partners to individuals and families with incomes of $57,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels.
Taxpayers who purchase their own software can also choose e-file, and most paid tax preparers are now required to file their clients’ returns electronically.
Anyone expecting a refund can get it sooner by choosing direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.
Don't tell anyone that I told you about this information. I'm just kidding, there is nothing wrong with saving money. However if you make over $57,001, please come see me to do your tax returns (lol)!
For unemployed workers who filed Form 1127-A and qualified to get an extension to pay their 2011 federal income tax, Oct. 15 is also the last day to pay what they owe, including interest at the rate of 3 percent per year, compounded daily. Doing so will avoid the late-payment penalty, normally 0.5 percent per month.
Taxpayers can e-pay what they owe, either online or by phone, through the Electronic Federal Tax Payment System, by electronic funds withdrawal or with a credit or debit card. There is no IRS fee for any of these services, but for debit and credit card payments only, the private-sector card processors do charge a convenience fee. For those who itemize their deductions, these fees can be claimed on Schedule A Line 23. Those who choose to pay by check or money order should make the payment out to the “United States Treasury.”
Taxpayers with extensions should file their returns by Oct. 15, even if they can’t pay the full amount due. Doing so will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 15. However, interest and late-payment penalties will continue to accrue.
You have no excuses about not sending the payments. Pay your dear old Uncle Sam!
In many cases, those struggling to pay taxes qualify for one of several relief programs, including those expanded earlier this year under the IRS "Fresh Start" initiative.
Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to six years or request a short-term extension to pay. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.
Taxpayers can also request a payment agreement by filing Form 9465-FS. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
Alternatively, some struggling taxpayers qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
Details on all filing and payment options are on IRS.gov.
Everybody (at least most people) deserves a second chance...Good luck!!!!
The Internal Revenue Service is reminding taxpayers (and their tax preparers) that the tax-filing and payment deadline runs out on Oct. 15.
Many of the more than 11 million taxpayers who requested an automatic six-month extension this year have yet to file. Though Oct. 15 is the last day for most people, some still have more time, including members of the military and others serving in Iraq, Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. People with extensions in parts of Louisiana and Mississippi affected by Hurricane Isaac also have more time, until Jan. 11, 2013, to file and pay.
