Friday, June 29, 2007

Bid To End Private Collection Dies

According to CBS News the United States House of Representatives attempted to essentially eliminate the IRS’s program that outsourcers part of its debt collection to private agencies by lower the programs fiscal budget to only $1 million. However defenders of the private debt collection program were able to use a procedural move remove the provision in the Treasury Department spending bill. Since the program began, the private agencies have worked on nearly 38,000 cases and have collected almost $20 million.

Slater To Retire From Surfing?

American surfing star Kelly Slater is rumored to be retiring from surfing after a poor performance in the Rip Curl Pro Search event in Arica, Chile. Slater holds the record as both the youngest and oldest world champion and won his first world title back in 1992. He’s won a record eight world titles in his career but lost to Dean Morrison during the fourth round on Tuesday. According to reports, Slater was extremely disappointed about the loss and booked himself on the next flight out of Chile to return the United States. For more information check out TheAge.

Advice On Being Audited

CNN Money has an article from Gerri Willis on what to do if you get an audit notice from the IRS. In October the IRS will begin reviewing over 13,000 tax returns form 2006 and will continue with similar audits throughout the next few years. The article give more details on what do if you are audited, but the main points are to hire a professional, get organized, and stay calm.

Giant’s Relief Pitcher Passes Over Weekend

Former Giant’s and Cubs pitcher Rod Beck tragically died over the weekend at the young age of 38. According the Daily Herald, Rod "gained initial fame as a member of the San Francisco Giants and was a three-time all-star who twice led the NL in saves." Though he was well respected by fans and players alike, Rod had dealt with some personal demons and had spent time in rehab to overcome his problems. "Tragedy," Cubs president John McDonough explained. "Colorful character. Great for baseball. Sad. He was a big part of the '98 team. Baseball needs more people like Rod Beck. I think all of us are very saddened." has a well written article on Rod and why he was so well respected, you can check out the article here.

Tuesday, June 26, 2007

Congress May Hang-Up on Private Debt Collectors

The IRS' use of private debt collectors has raised enough questions about collection techniques and privacy rights to be on the chopping block.

The House plans a vote this week on restricting the IRS's Private Debt Collection Program's funds. Representatives critical of the program since it was approved by Congress in 2004 included only $1 million for private debt collection in the 2008 budget for Treasury Department agencies. The IRS had said it would take more than $7 million to run the program in 2008.

Democrats have also introduced bills in both the House and Senate to revoke the IRS authority to hire private debt collectors.

Friday, June 22, 2007

The 612 Scaglietti Sessanta is revealed at Maranello

Sessanta, as in “60” in Italian, is a special version of the 612 Scaglietti made to honor Ferrari’s 60th Anniversary. It will be built in a limited series of 60 and available in black or grey.

Special features include the "electrochromic" glass roof with adjustable opacity, special color of underbody black in technical black, color treatment of the front headlight and rear bumper details in silver, a Bose media system with a TV tuner and a few more extra elements.

Thursday, June 21, 2007

New Tax Law Changes

On May 25th 2007, President Bush signed into law H.R. 2206 – the "U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007." The bill included a $120 billion emergency war supplemental funding bill for the current wars in Iraq and Afghanistan as well as numerous tax related law changes. Among the numerous provisions contained in H.R. 2206 are the "Fair Minimum Wage Act of 2007," and the "Small Business and Work Opportunity Tax Act of 2007" – a $4.84 billion small business tax relief package. Below are brief summaries of the important tax law changes.

IRS Liability Notices
The new law increases the time from 18 to 36 months in which the IRS has to notify individuals about a tax liability before interest and penalties are enforced. Therefore the IRS must cease charging interest and filing related penalties on a taxpayer’s liability if the IRS fails to notify the taxpayer about a liability within 36 months after the taxpayer filed the return.

Tax Return Preparer Penalties
This provision broadens and toughens tax return preparer penalties for returns prepared next year. It expands the scope of the penalty to include all types of tax returns and increases the penalty for irresponsible tax return preparation to a $1,000.00 fine or 50% of the income derived by the tax preparer for preparing the claim.

Levies to Collect Federal Employment Tax
The act provides that the rules requiring notice and a hearing opportunity before the IRS can issue a levy do not apply to disqualified employment tax levies, which are any levies to collect employment taxes for any period if the taxpayer requested a hearing for unpaid employment taxes.

Erroneous Refund Claims
The new law adopts a new penalty for filling erroneous refund claims and applies to all claims filed for the 2007 tax year. The act establishes a punishment for taxpayers claiming a refund for an excessive amount, and establishes a penalty of 20% of the excessive amount.

Bad Checks and Money Orders
The provision changes the penalty for bad checks and money orders and goes into effect for all checks and money orders received after May 25, 2007. The new penalty for passing bad checks or money orders less then $1,250.00 is a $25.00 fee or the amount of the check or money order whichever is less.

"Kiddie Tax" Changes
The new law expands the impact of the "kiddie tax" by raising the age for which it applies from under 18 to under 24 if a student.

Spouse Partnership May Elect Out of Partnership
The new rule allows unincorporated businesses owned jointly by a married couple to file their tax returns individually and not be treated as a partnership for tax purposes. All items in the taxpayer’s returns are divided between the spouses according to their respective interests in the venture, and each spouse’s share of income or loss from the business is taken into account in determining the spouse’s net earnings.

FICA Tip Credit
The new law modified the FICA Tip Credit so that the credit is determined based on a minimum wages of $5.15 per hour, allowing employers to receive the full tip credit despite of the Federal minimum wage increase. The provision also states that as the minimum wage increases, the amount of the credit will not be reduced.

Corporate Estimated Tax
The act increases the corporate estimated tax payment due in July, August, and September 2012 from 106.25% to 114.25% of the payment otherwise due.

Work Opportunity Credit
The passage of the new bill extends the credit by forty-four months. Now the credit is valid through August 31, 2011 for most targeted groups.

Disabled Veterans
There is an enhancement in the Work Opportunity Credit for employing certain disabled veterans who begin working for an employer after the passage of the bill.

WOTC and Tip Credit Offset by AMT
This new provision allows for use of the Work Opportunity Credit and the FICA Tip Credit to offset the Alternative Minimum Tax.

Section 179 Expensing
In addition to extending it through 2010, the provision increases the minimum amount a taxpayer can deduct annually as a Section 179 expense from $100,000.00 to $125,000.00. It also increases the $400,000.00 phase-out level to $500,000.00.

For more information on the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 you can read the Senate Finance Committee’s summary, the House of Representatives’ technical explanation, or the Senate’s legislative text.

H&R Block Reports $85.5 million 4Q loss

Earlier today the tax return preparation company reported a $85.5 million, or 26 cents per share, fourth-quarter loss. The company’s mortgage lending division continued to struggle and offsets higher revenue from it’s tax and financial services divisions. The February-April fourth-quarter is when the tax preparation company sees the majority of its revenue because of tax season. By comparison, the company earned $587.5 million, or $1.79 per share, gain during the same period a year ago. You can read the full article at Yahoo News.

Toyota To Slow Down U.S. Factory Expansion

According to Reuters, top executives at Toyota Motor Corporation are increasingly becoming concerned that the company has built too many United States factories. They are urging the company to cease their continued expansion of factories throughout the U.S. warning that sales may not keep pace with the company's recent capacity increases. As a result Toyota has scaled back plans for a $1.3 billion assembly plant to be built in Mississippi. The original plan called for the plant to have an annual production capacity of 200,000 units however it was revised to an planned capacity of only 150,000.

Tuesday, June 19, 2007

Paying Taxes May Make People Happy

As odd as it may seem, that is the conclusion being drawn from a new study from University of Oregon. "Paying taxes can make citizens happy," claimed Ulrich Mayr, a professor of psychology. The study found that two reward-related areas of the brain lit up during a taxation test. These areas typically are activated when some one experiences feelings of satisfaction, such as after having eaten a meal. "The fact that mandatory transfers to a charity elicit activity in reward-related areas suggests that even mandatory taxation can produce satisfaction for taxpayers," the study said. For more information on the study check out CBC News.

Couple Survive Plane Crash Off Hawaiian Coast

On Friday a South Carolina couple was rescued off the coast of Oahu after their small plane ran out of fuel and crashed into the ocean. They managed to escape from the rental plane and climb into a life raft which they were rescued from within an hour. The couple survived the crash without injuries and according to Hawaiian Officials the couple declined medical. You can see pictures from the rescue at

Friday, June 15, 2007

Fed Cut Tax Evaders Utilities

According to the Associated Press, the federal government has cut the utilities on convicted tax evaders Ed and Elaine Brown. The couple insists that federal income tax laws are invalid and were sentenced to 5 1/2 years in prison in April 2007. Authorities surrounded their property last week and cut their phone, power and Internet service in an effort to get the couple to report to prison. U.S. Marshal Steve Monier acknowledged that waiting out the couple could take months, but that time was on authorities' side. He said he hoped prison would seem like an agreeable option for the Browns after a summer without air conditioning and possibly a winter without heat.

NBC To Launch Live Golf Webcast

Yesterday NBC Universal announced plans for live webcast coverage of the U.S. Open golf tournament (one of professional golf’s four major tournaments) later this week along with the launch of a new mobile sports channel. will stream a live webcast of NBC’s coverage of the U.S. today and tomorrow in an effort to capture golf fans while at the office or away from home. The site will also showcase a highlight show – the Lexus U.S. Open Wrapup - along with video interviews from the event.

Tuesday, June 12, 2007

Careers In Tax Industry Are Indestructible

MSN Career Builder has an interesting article on the top twelve indestructible careers, one of which is a tax collector. According to the article the career is everlasting because, "In this world nothing is certain but death and taxes." There will always be a form of collection to aid government programs and there is always going to be a need for people to do that collecting. This translates into many other indestructible careers in the tax industry. As long as there are people collect on behalf of the government, there will be a need for professionals to represent the taxpayers.

Meet The Tax Lady Sac Bee Article

My law firm and I were recently featured in a Sac Bee business article. The article appeared in the Sunday June 10th edition of the Sacramento Bee, and there was even a picture of me on the front page! Click here to read the full article: Meet the "tax lady" Roni Deutch.

Friday, June 08, 2007

IBM Saves 1.6 Billion In Now Closed Tax Loop Hole

According to, IBM saved approximately $1.6 billion in the month of May 2007 by using a corporate tax loophole that has since been closed by the IRS. IBM participated in a $12.5 billion stock repurchase that took advantage of funds earned overseas that were not subject to U.S. taxes. IBM was able to save $1.6 billion in the transaction. Although the IRS would not comment on IBM’s recent activity, two days after IBM’s repurchase the IRS announced plans to issue regulations making companies pay U.S. taxes when they buy back their stock. The new regulations would treat funds used for buybacks as repatriated earnings.

Bonds Sits Out Second Game In A Row Due To Injury

According to, Barry Bonds was out of the lineup for the second game in a row but vowed not to go on the disabled list. "I'm not going on the DL. Don't count on me seeing the DL at all," Bonds said. "I won't let myself. I'll work hard. I'll do what I have to do to make sure I don't go there ... unless I get hit by a truck. I'll play through it." He later claimed that he expects to return to the lineup for the series finale tonight. "I was sore (last week) in New York. This kept escalating," Bonds said. "Normally, I'd get through it. I'd never had shin splints. It started hurting in my knees, bad. ... Today, I feel good. I feel I can go out there and play."

Wednesday, June 06, 2007

Top 6 Types of Life Insurance

Here is an article that explains in depth different types of Life Insurance. The article also has links to a directory of different companies offering life insurance and more information about each type listed above.

read more digg story

What is your socioeconomic status?

From the New York Times. Check out this interactive chart where you can choose your occupation, education, income, and wealth and then displays your status level using these commonly used factors for gauging class. Where do you fall?

read more digg story

Monday, June 04, 2007

Arkansas Attorney Mishandles IRS Payments and Amended Returns

Hired to amend a return and submit the balance due, the Bentonville, Arkansas attorney asked that IRS payment be made out to him and he would forward the money. Rather than paying the IRS, the attorney cashed and spent the proceeds, and failed to file the amended return.The suit alleges legal malpractice, breach of fiduciary duty, and conversion.

read more digg story

Barry Bonds Mum About Playing in 2008

Barry Bonds isn't sure about his future or thinking about breaking Hank Aaron's home run record. Swarmed by a horde of reporters, an affable Bonds sat in the dugout and discussed various topics. Asked if he planned to play next season, Bonds said: "I don't know. Let me get through this one first."

read more digg story

IRS Tips for Preserving Financial Documents in face of Hurricane Season

“With forecasts calling for an active Atlantic hurricane season, the IRS encourages taxpayers to protect tax and financial documents that can be hard to replace,” IRS Acting Commissioner Kevin M. Brown said. “A little planning can help safeguard valuable information in case a hurricane or other disaster strikes.”

Listed below are tips for individuals and businesses on maintaining financial and tax records:
  • Paperless Recordkeeping - scan paper records into electronic form, save a copy on a USB drive, place in a safe
  • Documenting Valuables - photograph or videotape the contents of his or her home, especially items of greater value. See the IRS's disaster loss workbook, Publication 584
  • Check on Fiduciary Bonds - bond could protect the employer in the event of default by the payroll service provider
  • Update Emergency Plans - annually

Friday, June 01, 2007

IRS Tax Fraud

According to the Internal Revenue Service (IRS), every person is responsible for filing his or her own tax return when required to do so through a duty known by the IRS as voluntary compliance. Fortunately the majority of Americans comply by determining and paying the correct amount of taxes to the government. However, there are many that willfully and intentionally violate their legal duty of voluntary compliance by failing to pay the correct amount of income, employment, or excise taxes. The IRS claims these individuals "pose a serious threat to tax administration and the American economy," and has teams dedicated to tracking down and prosecuting these violators.

Millions of Americans live in fear of the IRS because they owe back taxes to the IRS. However, there’s a big difference between owing a few hundred dollars because of mistakes on your previous tax return and committing tax fraud. In committing tax fraud you deliberately break the tax law by providing incorrect information on your tax returns for the purpose of some type of gain. Activities the IRS determines as breaking the tax laws include but are not limited to:

  • deliberately underreporting income
  • deliberately omitting income
  • overstating the amount of deductions
  • keeping two sets of books
  • making false entries in books and records
  • claiming personal expenses as business expenses
  • claiming false deductions
  • hiding assets or income
  • transferring assets or income
In order to combat these abuses the IRS created the Criminal Investigation Division. It strives to correct the issues of improper tax filing and payment. The Criminal Investigation Division of the IRS investigates a wide array of individuals and industries including business owners and self-employed wage earners. It is the main component of the IRS’s efforts to directly influence taxpayer compliance.

The Tax Fraud Program is the Criminal Investigation Division's largest enforcement program that covers a variety of tax fraud and tax and money laundering crimes. According to IRS statistics there were 1,863 investigations initiated by the Tax Fraud Program in 2006, leading to nearly 700 people being sentenced and incarcerated for breaking the tax law.

The Tax Fraud Program classifies tax fraud crimes into two basic programs, legal source tax crimes and illegal source financial crimes. Legal source tax crimes involve people who earn wages legally but choose to evade taxes by violation of tax laws. These cases involve behaviors that threaten the tax system, such as questionable claimed refunds, unscrupulous tax return preparers, and persons who challenge the legality of income taxes. The prosecution of these cases is essential in supporting the IRS’s overall compliance goals, encouraging voluntary compliance with the tax laws, and promoting fairness and equity in the American tax system.

The second program, illegal source financial crimes, focuses on money gained through illegal sources of income, such as illegal gambling. According to the IRS, these underground operations threaten our "voluntary tax compliance system and undermine the overall public confidence in our tax system." The IRS demands that taxes be paid on money earned through any means, therefore many recipients of illegal income attempt to legitimize their income. This process of "cleaning" the illegally obtained money is known as "money laundering." The IRS deems money laundering as "tax evasion in progress."

Nowadays, money launderers use various schemes and transactions to conceal income and assets. This includes manipulation of currency reporting requirements and the layering of transactions. Since money laundering and currency violations are often intertwined with tax violations, the illegal source financial crimes program encompasses many tax and tax related violations.

The punishments and penalties for tax fraud issues vary from cases to case. However, according to the US tax code (sections 18 and 26) some violations of tax law carry penalties of up to five years in prison with fines up to $250,000.00 for individuals and $500,000.00 for corporations. According to IRS statistics, the average incarceration sentence for tax fraud crimes in 2006 was 26 months.

Recently some tax fraud issues have been making headlines. On May 25th a federal grand jury in Fresno indicted 21 California residents for bank fraud and filing false federal income tax returns. The accused were involved in a tax scheme where they filed false tax returns with the IRS then obtained bank loans from those false tax returns. According to the indictments, the accused acquired false W-2 forms that listed their real name and Social Security number. What was false was the employer, wages, and withholdings. The accused then took their forms to a tax preparer where they had their tax returns filed claiming refunds based on the Earned Income Credit. "Tax refund schemes of this magnitude will not be tolerated and will be vigorously prosecuted," claimed U.S. Attorney McGregor Scott. "These schemes undermine the tax collection process for all of those who pay their taxes."

Earlier in May, a New Mexico resident pleaded guilty to defrauding the United States government of thousands of dollars through a tax refund scheme. Between February and April of 2007, the individual prepared tax returns for taxpayers brought to him/her by a recruiter who supplied taxpayers' names, Social Security numbers, bank account information, and W-2 Forms. The individual then falsely filed the returns claiming the Earned Income Credit. The individual then took a percent of the refund amount. Over the two-month period, the individual prepared approximately 39 tax returns, with a resulting in a loss to the United States of over $100,000. "The days of not being held accountable, for unscrupulous tax returns preparers who peddle false hopes and dreams in the form of fraudulent tax refunds, are numbered," said IRS special agent Kenneth Hines.

The important thing to remember is to be completely honest when preparing your income tax returns. Alternatively, you should seek a competent professional to prepare your returns for you. If you follow your legal duty of voluntary compliance and pay your taxes without hiding income then there is never a reason to worry.

Blog Archive