Wednesday, June 25, 2008
"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," claims IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."
The Center on Budget and Policy Priorities recently criticized legislation that the United States Senate is currently considering. Below is a snippet from the article, you can read the full text at CBPP.org.
Legislation that the Senate is considering in response to the ongoing foreclosure crisis (H.R. 3221) includes a provision that would allow non-itemizers to deduct property taxes up to an amount of $500 for an individual and $1,000 for a couple. It would deny the deduction, however, to residents of any locality that raises its property tax rate between the time of the enactment of the legislation and December 31 of this year. An exemption from this denial is granted to residents of some — but not all — localities that raise property tax rates, depending on how and why the rates are raised.
By preventing localities from raising tax rates to help compensate for shrinking property tax revenues resulting from declining home values, the provision could force many localities to cut police, schools, and other vital public services. It also would improperly interfere with local taxing powers and set a precedent of discriminating among localities on the basis of their method of enacting local property tax changes. Finally, it likely would be impossible for IRS to administer this complex provision.
Friday, June 20, 2008
“Anheuser-Busch, the brewer of Budweiser and Michelob, confirmed yesterday that it received a federal subpoena in connection to its charitable giving to Sharpton's National Action Network. ‘We have received a subpoena and are cooperating with the IRS,’ the company said in a statement.
Sharpton blasted the subpoena as a ‘fishing expedition’ and said his donors are proud of their financial support. The St. Louis-based corporation donated between $100,000 and $499,000 to NAN in 2007 alone, according to its Web site, but declined further comment about its relationship with Sharpton. A knowledgeable source said several other corporate donors received or would soon receive subpoenas.
Sharpton himself, his business entities and his nonprofit civil-advocacy group owe millions in back taxes, documents show. The IRS and the US Attorney's Office in Brooklyn have an ongoing probe into Sharpton's finances going back to his 2004 run for president and stewardship of NAN.
Last year, state Attorney General Andrew Cuomo began a probe of NAN because it failed to follow state financial-disclosure regulations for nonprofits. Cuomo's office has since turned over its NAN file to the US Attorney's Office. As of 2006, the most recent year that financial documents for the group are publicly available, it owed $1.9 million in payroll taxes and penalties.”
Many people in the professional sports industry refuse to comment on financial issues, and this case is no exception. However, the author does bring up a few interesting points. For example, Fielder recently turned down a new contract valued at around $60 million, so it seems likely that he will be able to repay the liability. However, there are no court records to support the idea that he has already settled the liability, meaning it could still be in IRS collections.
Thursday, June 19, 2008
Earlier in the day, the House of Representatives Ways & Means committee passed a new patch to the Alternative Minimum Tax (AMT). The final vote was 22-16, with mostly Democrats in favor of the patch designed to protect taxpayers from the unpopular tax.
"The measure would deliver this tax relief to middle-class families," claims committee chairman Charles Rangel, "without adding to the deficit and without forcing future generations to pay for the decisions we make today."
If the bill is fortunate enough to become legislation, it would provide $61.5 billion in AMT relief. The lost revenue would be made up in part by taxing carried interest at standard income rates instead of the 15% capital gains tax rate. For more information, check out House panel approves a paid-for AMT relief bill on Google news.
Tuesday, June 17, 2008
Recent coverage of presidential tax views.
When a tax statute needs fixing, who makes the repair?
Federal judge orders IRS to turn over data to TRAC.
Judge bars Wethersfield tax preparer from practicing.
Sometimes splurging is okay to do - it really is!
Debating the glass ceiling - is it a myth?
Q&A on self-employed health insurance.
Yet another payroll service in trouble.
10 Ways Gas Prices Affect Small Business Owners
“There are responsibilities that go along with owning such foreign bank and financial accounts,” notes IRS Commissioner Doug Shulman. “Foreign account owners must remember that they may have to report their accounts to the government, even if the accounts do not generate any taxable income.”
One of the biggest obstacles standing in the way of wider adoption of fuel-cell vehicles is the lack of hydrogen fuelling stations. Critics also point out that hydrogen is costly to produce and the most common way to produce hydrogen is still from fossil fuels.
Analysis of the environmental impact of different fuel technologies has shown that the overall carbon dioxide emissions from hydrogen powered cars can be higher than that from petrol or diesel-powered vehicles.
The first five customers are all based in southern California because of the proximity of hydrogen fuelling stations, Honda said. US actress Jamie Lee Curtis will be among the first to take delivery of the vehicle, the firm added.
The car will initially be available for lease rather than purchase in California, starting in July, and then in Japan later this year.
NTEU Leader Seeks Mid-Year Adjustment From IRS in Mileage Reimbursement Rate
Washington, D.C.—In the wake of record—and still rising—gas prices, the head of the nation’s largest independent union of federal employees has called on the Internal Revenue Service (IRS) commissioner to make a substantive mid-year adjustment in the reimbursement rate for personal use of a vehicle for business reasons.
In a letter to IRS Commissioner Douglas Shulman—who has the policy authority to make such a mid-year adjustment, which would impact everyone in the country—President Colleen M. Kelley of the National Treasury Employees Union (NTEU) noted that record levels of gas prices are “placing an especially heavy burden on those who must travel to perform their work duties.”
These include a great many NTEU members employed by the IRS, as well as those at a number of financial regulatory bodies and other federal agencies. The NTEU leader made the request in the interest of all federal employees and others who use their personal vehicle for business travel.
The federal government’s reimbursement rate is set by the General Services Administration (GSA), but cannot exceed the amount set by the IRS as the maximum rate allowed as a business deduction. That rate currently is 50 ½ cents per mile.
“Given the extraordinary rise in gasoline prices,” currently averaging more than $4 a gallon across the nation, President Kelley wrote, “I would request that the IRS make a mid-year adjustment to the mileage reimbursement rate to accurately reflect the actual cost traveling employees pay.”
Pending legislation in the Senate would raise the rate to 70 cents per mile, she noted, but said that action by the IRS “would provide much more timely relief than depending on the slow pace of the legislative process.”
While unusual, this would not be the first time the IRS has made such a mid-year change in the rate; in 2005, then-IRS commissioner Mark Everson used his authority to honor a request from NTEU that the maximum rate be increased. Then, as now, gas prices were rising rapidly and with little prospect they would moderate.
“The needed relief his action provided to private and federal sector employees,” Kelley wrote of the Everson decision, “helped save many employees from having to pay work-related traveling expenses out of their own pockets.”
As the largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.
Monday, June 16, 2008
People always ask me what advice I would give to new entrepreneurs looking to achieve success. Although everyone is different, and every business will require it’s own plan, below are the top 10 tips I have found helpful in my entrepreneurial experiences.
1. Do something you are passionate about
When you are deciding on the type and style of business you aspire to run, make sure it is something you are truly passionate about. Starting up a company can require long hours, 7-day workweeks, and a ton of energy. If you are not passionate about it then you can lose your drive quickly.
2. Always be original
Do something that will set your business apart from the competitors. There is no use in competing against a well-established competitor with a carbon copy of their products or services. In order to get interest in your business you need to set it apart from the competition and offer additional benefits.
3. Prepare a business plan & write it down
Even if you do not plan to get a business loan, you should still prepare a well-written business plan. Think about it – would you want to invest your hard-earned money in a new company that does not even have a written business plan?
4. Triple your anticipated startup costs
One of the biggest problems new entrepreneurs encounter is not properly anticipating start-up costs. It can take weeks, even months to begin generating revenue and you need to make sure you have ample funds to establish your company.
5. Do not even think about profits
When you think about opening a business, do not even begin to think about profits. When you prepare your business plan you obviously want to create a structure that produces a profit, but it should not be the main reason you open a business. You need to focus on generating capital for your business, not adding money to your personal bank account.
6. Live & learn, live & lean
Everyone makes mistakes, but it is important turn these into opportunities to learn. Do not spend time being depressed because your business is slow to take off, or you lose your first major client. Learn your lesson and move on.
7. Set goals and work towards them
It is one of my strongest opinions that in order to achieve success you need to have goals. You need to look forward to the future, and envision where you want your business to be in 3, 5, or even 10 years. Then you will have something to work towards.
8. Build professional relationships
Networking with other business owners is important as it can help your form professional relationships that can generate business for both parties. These alliances, such as exchanges of work or services, client referral systems, etc., can be highly valuable to new business owners with a tight budget.
9. Get help from others
You cannot try to do everything on your own. There are only 24 hours in a day, and only so much work you can complete in that time. If you have too much business then you should consider hiring employees to help or seeking help from a professional service.
10. Continue to educate yourself
You can never know everything about running a business, so continually educate yourself by reading books or business blogs. You may even consider writing a blog of your own, as writing entries on topics you are not familiar with can present excellent learning opportunities.
“The state-owned New Light of Myanmar newspaper said foreign radio broadcasts had wrongly accused the government of deducting the tax from donations deposited in the Myanmar Foreign Trade Bank.
The state bank, which usually deducts 10 percent from all foreign currency deposits, has opened special accounts to accept U.S. dollars, euros and Singapore dollars from which all donations would be fully channeled to cyclone survivors, the newspaper said.
Organizations and individuals that have misused relief funds sent from abroad will be punished, it said.
The United Nations estimates Cyclone Nargis affected 2.4 million people and that more than 1 million of them, mostly in the hardest-hit Irrawaddy delta, still need help. The cyclone, which struck May 2-3, killed more than 78,000, according to the government.
In separate reports, state media said there have been no outbreaks of contagious diseases in storm-hit areas and that 911 staffers from international aid organizations and neighboring countries were issued visas to enter the country between May 5 and June 5.
The junta has been criticized for dragging its feet on issuing visas and, until recently, not allowing foreign aid workers into the Irrawaddy delta, where most of the victims are.”
The Jason Furman Saga: has Obama fired his new economic adviser yet?
Economic conditions worsen, again.
CNN crunches Obama and McCain tax plans.
Second economic stimulus check: Obama’s economic plan.
4 ways to improve productivity when working from home.
Office attire - could Carrie make it in the boardroom?
Tuesday, June 10, 2008
According to the Wall Street Journal, the IRS is going after billionaire Philip Anschutz to him to pay owed back taxes totaling $143.6 million. It is part of their broad attempt to crack down on taxpayers that use confusing strategies to avoid paying capital gains taxes. Below is an excerpt of the article, but you can read the whole thing at IRS Targets Billionaire's Lucrative Tax Strategy on WSJ.com.
"The imbroglio stems from transactions that Mr. Anschutz entered into involving shares he owned in Union Pacific Corp. and Anadarko Petroleum Corp. in 2000 and 2001. The deals netted him cash, as well as a share of any future rise in the stock price, with a total value of roughly $429 million. The arrangement is also set up to protect him against losses if the stock price falls.
He contends the deals technically weren't completed sales for tax purposes, and thus didn't trigger tax obligations, according to filings in U.S. Tax Court in Washington. Consequently, he has not paid capital gains taxes on the transactions.
Mr. Anschutz -- an oil, railroad and media investor identified as the 41st-richest man in the U.S. by Forbes -- isn't the only person to use such an arrangement. Executives at companies including Starbucks Corp., Costco Wholesale Corp., Tyson Foods Inc., IAC/interactive Corp., Cablevision Systems Corp. and Apollo Group Inc. have all used similar "variable prepaid forward contracts" to cash in shares in these companies and related entities, according to securities filings.
The tax treatment of these executives' arrangements isn't public, so it isn't clear whether the transactions involved deferral of taxes of the type the IRS is targeting. Experts say tax deferral is a typical component of such arrangements."
According to the news release, the system will now permit:
- Individuals to revise their payment due dates and/or amounts on existing agreements.
Individuals to revise existing extensions to regular installment agreements and direct debit installment agreements.
- Individuals to revise existing regular installment agreements to a payroll deduction installment agreement or a direct debit installment agreement.
- Practitioners with valid authorizations to use the signature date found on their approved Form 2848, Power of Attorney and Declaration of Representative, or the caller ID as an alternate way to authenticate when requesting agreements for clients.
According to a new article on CNN money, the unemployment rate increased from 5% to 5.5% in May. This represents the highest increase since 1986, and another sign of the looming economic recession. To read the full article, click here, or enjoy the excerpt below.
"A spike in the unemployment rate - the biggest in more than two decades - raised new concerns Friday that a weak labor outlook, high oil prices and continuing woes in the housing and credit markets are leading the U.S. economy into a painful recession.
The government said Friday that the unemployment rate soared to 5.5% in May from 5% in April - much higher than economists had forecast.
The surge marked the biggest one-month jump in unemployment since February 1986, and the 5.5% rate is the highest level seen since October 2004. Unemployment is now a full percentage point higher than it was a year ago.
‘You're not going to have a lot of people arguing "no recession" with this data,’ said Lakshman Achuthan, managing director of the Economic Cycle Research Institute. The prolonged job loss and jump in unemployment are better indicators that the economy is in a downturn than is the traditional thumbnail rule of two quarters of falling gross domestic product, he said.
The jobs report came on the same day that oil prices soared to $134 as the dollar lost value against the euro and the yen. It also comes the day after the Mortgage Bankers Association reported that homes in foreclosure crossed the 1 million mark during the first quarter, a record high."
Tuesday, June 03, 2008
“Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.
One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues.
And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?
In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away.”
According to the IRS announcement, the bulletin also features articles on the following:
- Trends in non-cash charitable contributions, including a big drop in car donations in 2005 that was likely related to tax law changes.
- Statistics on cash flows and holdings of Individual Retirement Accounts (IRAs). For example, at the end of 2004, almost 51 million taxpayers held roughly $3.3 trillion in IRAs.
- Repatriation of funds by U.S. corporations due to the one-time received dividend deduction enacted in the American Jobs Creation Act of 2004.
- Statistics on federal estate tax returns with gross estates greater than $1.5 million.
- Growth in the number and assets of taxable Real Estate Investment Trust subsidiaries.
To see all the information presented in the bulletin, check out it’s page on IRS.gov.
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