10 Ways to Avoid Back Taxes this Tax Season

Follow these 10 simple steps to make sure you do not owe IRS back taxes after you file your tax returns this tax season.

1. Claim the right filing status

Make sure that you claim the correct filing status. Do not claim something different in order to get a bigger refund such as claiming "Head of Household" when you really should file as "Single". Alternatively, if you are married you should consider filing jointly to lower your total liability.

2. Make sure your math is correct

Always triple check the math in your income tax returns, even if you have them professionally prepared. For the most part the IRS will fix all simple math errors, but problems can arise if you have the wrong numbers listed for income or deductions that lead to an artificially inflated refund.

3. Include income from ALL sources

Make sure that you include income from all sources on your tax return. This includes regular wages, self-employment earnings, tips, independent contract work, child support, alimony, etc. Trying to hide income from the IRS is a big mistake as they have access to mass amounts of information and can determine your exact earnings for each year.

4. Remember winnings from gambling

All the money you win from gambling must be treated as income. However, you can deduct any money you lost at gambling from your total. For more information on taxes and gambling, check out “How to Accurately Reporting Gambling Profits & Losses To The IRS” on the RDTC Tax Help Blog.

5. Do not over exaggerate charitable contributions

In recent years, the IRS has been cracking down on taxpayers that abuse the charitable contribution deductions. Make sure that you only claim contributions that you can document with some type of proof. Also, do not over inflate the donation amount as excessive donations send a huge red flag to the IRS’s audit department.

6. Mail to the correct address, or e-file

Before popping your tax return in the mailbox, make sure that you are sending it to the correct address. If you mail your return to the wrong address it can get lost and result in unnecessary IRS fees or penalties. Fortunately you can avoid this potential problem completely by e-filing your return.

7. File on time, or request an extension

It is essential that you file your tax return on time or at least request an extension from the IRS. If you just ignore tax day then you will be unhappy when you realize what it will cost you. If you cannot file on time, visit “Need More Time to File?” on IRS.gov.

8. Forgetting to pay taxes on time

If you do owe money to the IRS then you must pay it before the April 15 deadline. Not paying does not mean your debt will magically go away. Instead it will begin accruing fees and penalties. To pay your taxes enclose a check with your tax return and write your Social Security number, tax form number and tax year on it.

9. If you notice any errors, re-file immediately!

If you notice an error on your tax return, you should file an amended return as soon as possible. If you wait for the IRS to catch your error then you will likely be faced with fees and penalties in addition to the owed back taxes.

10. Make immediate adjustments to withholding or estimated tax payments

Okay, okay, I will admit, this has more to do with 2008 than this year. However, after preparing, filing, and paying your 2007 federal income taxes, you need to take the information from the return and put it to immediate use. If you ended-up owing taxes, you need to adjust your withholdings and/or start making larger estimated tax payments. If you end-up with a very large refund, again, you may need to adjust your withholdings or estimated tax payments. That way you will receive that refund immediately in your regular paychecks. You could then take that money and put it to good use in wise investments or replenish your savings.

Also, if you do owe for 2007 and will need to work with the IRS at resolving your IRS tax debt (instead of paying in one lump sum), you will be required to make adjustments to your withholding and/or estimated tax payments. That is because the IRS is unwilling to work with taxpayers until they have taken steps to ensure that they will not owe again in the future. Higher withholding taxes and/or estimated tax payments are also allowable expenses, which is important in qualifying for some forms of IRS tax debt resolution (i.e. Offer in Compromise, Installment Agreements, Currently Not Collectible status, etc.).

Other Countries Have Simpler Tax Systems

The Tax Foundation Tax Policy Blog has an interesting article on how other countries around the world are taking steps to simplify their tax systems. Additionally, some of these countries are greatly lowering their corporate tax rates, while the United States corporate rates remain the second highest in the industrialized world at 39.3%. According to the entry, the following countries are taking the actions listed:

• Poland may adopt a flat tax
• Iceland and Taiwan to cut corporate tax rates
• People leaving Ireland due to high personal income taxes
• Hungarian government considers a flat tax
• Kuwait cuts corporate tax rate
• Swiss canton adopts flat tax

For the full entry check out More Countries Move to Simpler, Lower Taxes.

IRS Reminds Farmers & Fishermen They May Have Until March to E-File

The IRS published a release reminding agricultural taxpayers, including farmers and fishermen that they may need to wait until March 3rd to e-file their tax return. According to the IRS, any taxpayer who files Form 1040 returns with Form 4136, Credit for Federal Tax Paid on Fuels, will have to wait.

"Normally, 1040 filers who are farmers or fishermen are not required to make an estimated tax payment if they file their return and pay all taxes due by March 1," claims the IRS. "But this year, because March 1 falls on a Saturday, the date extends to Monday, March 3. For eligible farmers and fishermen who attach Form 4136 to their Form 1040, the return will be considered timely filed with all tax paid if the return is e-filed and accepted on or before March 10 and all tax due is paid on or before March 10."

The IRS expects this delay to affect about 77,000 farmers and fishermen who electronically file Form 1040 with Form 4136 in the early weeks of the filing season. For more information, please visit www.IRS.gov.

Clinton, Obama, & McCain: The Good, Bad, & Ugly Candidate Tax Views

As the primary elections continue across the United States, I am keeping to my commitment to getting the candidate’s tax views more attention. So much attention is being placed on superficial topics that taxes are taking a back seat. Taxes and the economy will probably become a popular topic in the general election, but I strongly encourage every one to think taxes now! Read up on the candidate’s respective websites, and check out neutral information sources like SmartVoter.org.

At this point in the game there are only three major candidates left in the race. Each have quite different tax views. Below are the good, bad, and ugly tax views of each major remaining candidate.

Hilary Clinton

The Good

Let Bush’s Tax Cuts Expire

Ms. Clinton adamantly claims that the middle class has been ignored by the current administration and seeks to strengthen and grow the middle class and restore the basic bargain: "if you work hard and do your part, you can build a better life for yourself and your family." One method of doing so would be to let the Bush tax cuts expire. This may be a controversial view, but most liberals will agree that it’s essential for the improvement of the American economy. These tax cuts only go to the extremely wealthy individuals in the country and do nothing for the hard working American class. Although some argue that cutting taxes for the rich stimulates the economy, since these tax cuts were enacted the national debt has only increased. Most Americans are quick to judge any tax increase because no one likes paying more in taxes. However, I doubt any one reading this blog would be affected, as letting Bush’s tax cuts expire would only raise taxes on the super rich.

The Bad

Maintain Current Social Security Cap

Clinton supports retaining the current income cap on the Social Security tax, which is a good idea. Currently income over $102,000 is not subject to taxation from the social security tax. Therefore the top income earners do not pay the social security tax on their full income. Increasing the limit on the social security cap, or removing it all together, would create millions of dollars in additional federal revenue.

The Ugly

Mandatory Health Insurance

With heath care issues on the top of every one’s mind Clinton recently proposed the "American Health Choice Plan" which revolves around an individual mandate requiring everyone to have health insurance. Her plan would give more choices to taxpayers seeking health insurance without quite making it universally available through he federal government. Clinton claims her program would cost about $110 billion per year, but has not yet given any specific information on how the plan would be funded. The concept is not so bad on it’s own, but the lack of funding information makes this an ugly tax view.

Barack Obama

The Good

Tax Wealth More Than Regular Wages

One of the tax cuts enacted by President Bush was to drop the tax rate on capital gains from 20% to 15%. This was another tax break that specifically targets the wealthiest in this country who do not earn wages, but rather live off of investments and accumulated wealth. There’s no reason that capital gains should be taxed so much less then regular wages, and Obama agrees. By raising the tax back to 20% some studies estimate that an additional $100 billion in revenue could be generated for the federal government.

The Bad

New Tax Credits

Obama's tax plan features a prominent "Making Work Pay" credit that would offset federal taxes on the first $8,100 of a taxpayers earnings. It would essentially generate a credit of up to $500 for single persons or $1,000 per family. According to Obama this credit would eliminate income taxes for at least 10 million low-income Americans. The idea of lowering taxes for low paid working Americans is considered great by many liberals, but there isn’t really a need for a new credit to accomplish this. Instead, why not expand the Earned Income Tax Credit or the standard deduction amount rather than trying to get a new credit passed by codgers.

The Ugly

No Taxes For Senior Citizens

One of Obama’s tax proposals is to eliminate all federal taxes imposed on senior citizens making under $50,000 per years and not requiring them to file tax returns. This may be a good way to get the senior vote, but it’s much more complicated than it seems. First of all, senior citizens often have income from multiple sources including capital gains, dividends, Social Security, retirement plans, etc. Determining their exact income would still require the same effort as filing a tax return. Additionally, this plan gives special tax treatment to a group if individuals based solely on their age, which seems like borderline age discrimination. Why should a struggling single mother have to pay taxes on her $49,999.00 income when a retired grandmother would pay noting on the same income amount?

John McCain

The Good

Investment Tax Cuts

McCain is a strong supporter of lowering taxes to encourage economic growth, which is the dominant economic stance of the Republican party. Not only does he support renewing the Bush tax cuts, but he also favors numerous tax cuts. McCain hopes to reduce taxes on Capital Gains, Interest, Dividend, Investment income, and even corporate tax rates. And as if his tax cuts weren’t enough, McCain also supports a new rule that would require a 3/5-majority vote to raise taxes. In summary, McCain is a strong supporter of permanent tax cuts, and the Republicans love him for it.

The Bad

Continued War Funding

McCain is a strong supporter of the American military and the "War on Terror," with promises of a continued military presence in Iraq. According to his website, he believes that the answer to our current national security problems is to not "roll back our overseas commitments," but to increase the size of our Army and Marine Corps and continue the current War on Terror. McCain has recognize there is a problem with current military spending but has not provided any information on how to continue the military efforts while lowering the current $12 billion-per-month budget.

The Ugly

No Pledge Against Taxes

Although liberals typically support raising taxes to stimulate the economy, this view is very unpopular among republicans. McCain is one of the only republicans who ran for president this year who declined to sign the pledge put forth by Americans for Tax Freedom not to impose any new taxes or increase existing taxes. The conservative wing of the Republican Party are almost always against increasing taxes and this lack of a commitment could hurt his chances of winning the presidency.

Economic Stimulus FAQs

There has been a lot of confusion lately about the recently passed economic stimulus package. To help sort out the bewilderment about these rebate checks, the tax professionals at the Roni Deutch Tax Help Blog have composed answers to the following rebate related FAQs.

1. How are the rebate amounts determined?
2. How will the "reduced rebate" work?
3. Who will qualify to receive a "reduced rebate"?
4. Who will NOT qualify to receive a rebate?
5. Do I need to apply for the rebate?
6. What if I only have Social Security income and no tax liability?
7. When will I get my check?
8. What if I filed as Head of Household or Married Filing Separately?
9. Will the rebate delay or impact my 2007 tax refund?
10. Will I be taxed on my rebate check?
11. Will this rebate cut into my 2008 refund?

You can check out the full entry, including answers, by check out Economic Stimulus Package: Clearing Up Any Confusion on the Tax Help Blog.

IRS Now Processing AMT Affected Returns

Yesterday afternoon, the IRS announced that they have begun officially processing the five tax forms that were affected by the last minute AMT legislation. On Monday, IRS systems began to unofficially accept and process returns that include the five affected forms. After several days of processing, the IRS has confirmed that their systems are in fact working properly.

Back in December, the IRS announced that they would have to delay the processing of several AMT affected tax forms. However, for most people the filing season this year began on time. Only taxpayers whose return included the five affected forms were forced to wait.

The affected forms include:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

World’s Dumbest Taxpayer

An Oregon man trying to pay his taxes in cash led to the state’s largest marijuana bust in over 10 years after a tax clerk smelt marijuana on the money.

According to the Associated Press, in Oregon, the Benton County sheriff's department arrested a man for trying to pay a tax clerk his tax liabilities with $600 in cash. Paying your taxes in cash is not usually considered illegal – however, the bills this gentlemen used apparently smelled like marijuana.

The concerned tax worker reported Eric Brian Michaelis to the Benton County sheriff’s department who then discovered over 230 marijuana plants inside Michaelis’ home. Deputies found plants in almost every room in his house, some reportedly over four feet tall. They also discovered a back-up generator that could be used to power "grow lamps" in the case of an electrical power outage.

"It's safe to say that it's at least the biggest indoor marijuana bust in the last 10 years," claimed the Chief Deputy District Attorney Chris Stringer.

Mr. Michaelis was arrested and forced to turn over $65,000 in cash that was seized in his house. He was also sentenced to 16 months in prison. However, there was no mention as to whether his original $600 payment was accepted or not.

As we get closer and closer to tax day stories that mention taxes are gaining popularity. Usually these articles talk about humorous tax deductions or advice on filing your taxes, but this article really stood out and made me laugh aloud. I guess the lesson learned is that federal taxes and illegal drugs do not mix.

Tax Policy Podcast with Taxpayer Advocate Nina Olson

The Tax Foundation Blog recently conducted an interview with interview with Ms. Nina Olson, the nation's Taxpayer Advocate at the IRS. The podcast interview can be downloaded at the Tax Policy Podcast page.

In the interview Ms Olson discusses the role of the Taxpayer Advocate in protecting taxpayer rights, the independence of the office, and the annual report she submits to Congress identifying problems facing taxpayers. She also talks about the problems that both the IRS and taxpayers face when they make last minute changes to the tax code. The interview is slightly over 20 minutes, but presents tons of great information for any one interested in tax policy.

IRS Warns Taxpayers of Correct Locations

With tax season in full swing, taxpayers across the nation are beginning to file their returns with the IRS. As such the IRS distributed a press release reminding taxpayers that they may have to send their return to a different location than prior years.

If you received a booklet from the IRS then the correct mailing list will be included on the labels you receive. Additionally, taxpayers that e-file their returns will not need to worry. According to the IRS the mailing changes affect returns from seven states: Iowa, Kansas, Kentucky, Oklahoma, Pennsylvania, West Virginia, and Wisconsin.

Taxpayers should send:

• Returns from Iowa, Kansas, Oklahoma and Wisconsin to the IRS center in Fresno, California.
• Returns from Kentucky to the IRS center in Austin, Texas.
• Returns from Pennsylvania and West Virginia to the IRS center in Kansas City, Missouri.

For more information on the correct mailing addresses for the IRS centers, please visit IRS.gov.

Top 10 Reasons Wesley Snipes Was Acquitted

Last Friday, a jury acquitted actor Wesley Snipes of all the charges of felony tax fraud. He was however found guilty of three misdemeanor charges of failing to file tax returns and will still have to pay millions to the IRS. The maximum sentence carries up to three years in prison, but he is expected to get a much lighter sentence. Although he was found guilty for the lighter charges his felony tax fraud had carried a maximum of up to sixteen years in prison.

Essentially the jury determined that Snipes had no intention to defraud the government, but the more I thought about this case the more I realized there were probably dozens of other reasons the jury decided to acquit Snipes. Below is a list of the top 10 reasons why Snipes was actually acquitted.

10) Wesley Snipes is an international celebrity, and everyone knows that famous people automatically get one "get out of jail free" card. It is the American way.

9) At his trial, Snipes was frequently attired in a very "Matrix-y" look of a solid black suit, dress shirt, and tie, and sunglasses. The jurors were probably fooled into thinking Snipes was from the future and that the statute of limitations for his crimes had already expired.

8) Snipes said under oath that he did not intend to defraud the government, although he had never paid taxes on tens of millions of dollars he earned. The jury probably just assumed that since he was under oath, he must have been telling the truth.

7) In the Blade films, Snipes played a vampire hunter who devoted his life to saving the lives dozens of innocent people. How could the jury possible be expected to put a Vampire-hunter in prison? What if we come under attack from Transylvania?

6) In 2001 Snipes was nominated for Best Actor in a Network/Cable Movie for his work in HBO’s made for TV movie, "Disappearing Act." Unfortunately he got beat out by T. K. Carter, who famously played Milo Williams in "Good Morning, Miss Bliss" a/k/a "Saved by the Bell, the Junior High Years". The jury probably figured it was punishment enough to go from being an international movie star to losing a network/cable movie award to Milo Williams.

5) Before his trial, Snipes spent a few months in the African country Namibia, the same place Angelina Jolie chose to give birth in. Jurors probably assumed Snipes was doing charity work with Brad and Angelina and therefore felt he deserved a lighter sentence.

4) Over the past few years, IRS has successfully charged numerous high profile individuals for criminal evasion including Edward and Elaine Brown and Richard Hatch. The jury probably just figured since the New England Patriots could not go undefeated, neither should the IRS.

3) In the movie, "White Men Can’t Jump," Snipes’s character famously uttered the phrase, "you can put a cat in an oven, but that don't make it a biscuit." At trial, his attorneys successfully confused the jury by repeatedly citing this phrase when objecting to any evidence the IRS presented of Snipes’s tax fraud.

2) One spectator reportedly filmed the entire trial. Another repeatedly yelled, "Action" and "Cut" at the beginning and end of each session of the trial. This confused the jury into thinking they were in fact cast into a movie – a courtroom drama, starring Wesley Snipes. It probably also helped that the judge in the case looked like actor Tom Wilkinson, and that Snipes’s list of potential witnesses included Sylvester Stallone, Muhammad Ali, Spike Lee, and Tom Brokaw. When the prosecutor failed to get Snipes to say, "You can’t handle the truth," the jury figured they had to acquit.

1) "Blade: Trinity," Snipe’s 2004 episode of the Blade franchise was poorly received by critics and took in substantially less money then the previous films at the box office. Five of Snipe’s latest six movies went directly to DVD and were not released in theaters. Snipes has not had a multi million dollar pay check in nearly five years and it is unlikely Snipes will ever be featured in a large budget film again. It is even more unlikely that Snipes saved enough of his money to fully re-pay his tax liabilities. The jury figured, "hey, why beat a dead horse?"

Survivor Winner’s Tax Appeal Denied

Former Survivor winner Richard Hatch – who made the list of biggest tax evaders on the RDTC Tax Help Blog – had his appeal denied by a Boston-based 1st U.S. Circuit Court of Appeals on Friday. Hatch claimed that he caught Survivor employees smuggling food to other contestants, but CBS denies these allegations. He said the show’s producers made a deal to pay his income taxes if he kept his mouth shut. However, the court noted that that Hatch was given several opportunities to testify about the deal, but he never took the opportunity.

"The failure of Hatch to present any evidence of such conversations when invited by the court strongly suggested that no actual promises were made, and no such 'deal' actually existed," the court wrote in its 52-page decision. "It was not the court's right, much less duty, to put words in Hatch's mouth." For more details check out Yahoo News.

IRS Audits More Millionaires

According to ABC News, in 2007 one out of every 11 households with incomes over $1 million were audited by the IRS in 2007. However, the IRS claims it’s auditing rates were up for people of all income levels last year.

The audit rates in 2007 were as follows:

• 9.25% for those with incomes of more than $1 million, up from 6.3% in 2006.
• 2.87% for those with incomes above $200,000, up from 2.5% in 2006.
• 0.93 percent for those earning under $100,000, up from 0.89% in 2006.

The IRS looked at a total of 1,384,563 returns in fiscal 2007. This represents 1.03% of the total individual returns filed with the IRS. The average audit rate was up 7% from the year before. On the business side, the IRS focused on partnerships and mid-market corporations in 2007, especially those with assets between $10 million and $50 million.

IRS Promotes EITC Awareness

The Department of Treasury, the IRS, and dozens of other non-government partners are kicking off EITC (Earned Income Tax Credit) Awareness Day to promote the refundable tax credit for low-wage workers and options for free tax preparation.

"Believe it or not, there are many taxpayers who are eligible to receive the Earned Income Tax Credit, but fail to claim it simply because they are not informed," claimed U.S. Treasurer Anna Escobedo Cabral.

According to IRS data, over 22.4 million taxpayers received more than $43.7 billion from the EITC last year. However, they estimate that approximately one in four eligible taxpayers fail to claim the EITC.

"Ensuring that more eligible families receive their EITC is important this year, as it is every year. I encourage people all across America to check to see if you are eligible for the Earned Income Tax Credit," said Treasury Secretary Henry M. Paulson, Jr.

IRS Warns of Rebate Scams

According to the IRS, there are a few new e-mail and telephone "scams". These scams pretend to be from the Internal Revenue Service and attempt to get taxpayers personal or financial information The IRS is expecting the scams to continue through April 15th.

This time around the IRS is warned to lookout for scams that mention advance payment checks from the IRS. Congress has not yet passed the economic stimulus package, and even so, the checks are not expected to be mailed out until this spring.

The IRS’s new release claims: "identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows "scamsters" to act quickly and cover their tracks before the victim becomes aware of the theft."

Therefore, it is important to be aware of these scams so you do not fall victim to their gimmicks. The IRS never sends out e-mails requesting personal or financial information. If you do receive an e-mail like this, do not reply to it. Instead, forward it to phishing@irs.gov.

5 Tax Saving Valentines Day Gifts

Valentines Day is known across the country as a day to give gifts to your loved ones (that is 2 weeks from this Thursday, for all you “Forgetful Freds” out there). But this date just so happens to fall in the middle of tax season, when taxpayers across the country have taxes in the mind. But do not be worried, there are a few gifts you can give that might also help you lower your tax liability. So if you had to write a big check to the IRS last year you may want to try one of the following tax saving valentines day gifts.

1. Give Money to a Spouse

If you and your spouse are both American citizens, then you can transfer money directly to your spouse. You will not have to pay any taxes on the transfer and it will actually lower your overall tax liability. However, it will have an adverse effect and raise your spouse’s liability.

2. Setup a Retirement Account

What better way to celebrate Valentines Day than by planning for your future? If you are married you can setup a retirement account for you and your spouse. You can transfer additional funds into this account which will help lower your tax liability.

3. Make a Charitable Contribution

Making a charitable donation in you’re the name of your loved one can be an excellent Valentine’s day gift. It will not only show them you care about charitable causes, but you can also deduct the expense as a charitable contribution. Just be sure keep proof of your contribution!

4. Pay College or Medical Bills

By offering to pay for a loved ones college or medical bills you can help them out while also getting a tax deduction. The IRS allows you to deduct these expenses as long as you mail in the bill yourself so that you have proof.

5. Give a Business Branded Gift

If you own a business you can always purchase some type of product that bears your company logo and write it off as a business expense. This may not seem like the most romantic of gifts, but now days you can have your logo printed on just about anything. Try considering a bathrobe with a small logo on the front, or custom chocolates.

AARP Upset Over Stimulus Package

According to Yahoo News, the AARP is speaking out against Congress’ plans for an economic stimulus package. The plan could give individual taxpayers as much as $600 in rebates, and an additional $300 per qualifying child. The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000.

However, the package would exclude any one who earns less than $3,000 from earned income. Therefore about 20 million senior citizens living off Social Security would not be eligible. "Less than half of all Americans 65 and older would get it," claims AARP spokesman Jim Dau.

President Bush would like to push the plan through ASAP. "I strongly believe it would be a mistake to delay or derail this bill," Bush said. "I understand the desire to add provisions from both the right and the left," he noted. President Bush added that doing so would be in error and would delay the purchasing power boost the stimulus package is designed to create to confront a feared impending recession.

Tax Rebates to Complicate Tax Filing in 2009

As Congress works to iron out the details of an economic stimulus package, many people are already predicting complications for tax day on April 15, 2009. If approved, the stimulus proposal would take the form of checks to be sent out this spring. However, they are expected to be advances on a one-year tax cut in 2008. The IRS is going to use data from the 2007 tax year to calculate each households check. Adult taxpayers are expected to receive between $500 and $600 and there is also going to be a $300 per child credit. Therefore households with two parents and two children could get as much as $1,800 from the federal government.

Unfortunately, since the IRS is using 2007’s data there are going to be some problems for individuals passing the age of being a qualified child in 2008. In these situations the parents will be mailed a check this Spring that they will have to repay come next year’s tax filing season. Additionally, if a taxpayer's child passes away during the year they would also have to return the money.

Tax Rebates are Coming Soon!

The Tax Policy Blog posted this interesting article reminding everyone that tax rebates are coming soon. Over the past few days there has been a lot of talk about the country’s economy and emergency stimulus plans designed to increase American spending. However, as the Tax Policy Blog reminds us, billions of dollars in tax rebates are already scheduled to be sent out over the next few months. Last year "over $140 billion in individual income tax refunds were sent out from January 2007 through March 2007. Plus, another $78 billion was sent out from April through June."

Next Big Thing for Major League Baseball: China

According to this article, Major League Baseball has billions of reasons to play ball with China, and its international business chief says the sport's owners are ready to pitch. MLB is hoping to increase efforts to expand Chinese interest in Baseball, similarly to how the NBA courted the Chinese market nearly 20 years ago. Nowadays, the NBA Chinese affiliate accounts for over $2.3 billion of revenue.
"Whether you're a sport, consumer product or any other business, everyone is now interested in China to grow," claims MLB's international senior vice president Paul Archey, who is set to visit Beijing on Wednesday.

7 Green Cars of the Future

With rising fossil fuel costs and global warming getting more attention in the media, environmentally friendly cars were all the rage at the Detroit Auto Show last week. At these auto shows, car manufactures usually present out-of-this world concept cars. This year, nearly every company showed off new environmentally-friendly cars.

The biggest trend at the show was new range-extended electric vehicle (REEV) concepts that run on an electric motor that powers the car 100% of the time. The vehicles plug into power outlets that charge the batteries for a 20 – 60 mile driving range. After they pass that range, a generator kicks in which recharges the batteries using any popular fuel. This includes gasoline, ethanol, or even hydrogen.

However, there were dozens of other energy efficient concept cars introduced besides REEVs. Enjoy the following list of 7 green cars of the future.

New Toyota Prius

At the Detroit auto show, Toyota's President, Katsuaki Watanabe announced that he would unveil two new hybrid models at next year’s show. One is suspected to be a Lexus hybrid, while the other is known to be the replacement for the Toyota Prius. Not much is known about what the new Prius will feature, but it is predicted to be more energy efficient with a lower price tag. Some speculate the new version could feature new plug in hybrid technology.

Volvo ReCharge

Volvo’s ReCharge concept car truly takes the phrase "green car" to the next level. Why? Because the vehicle even features green wheels. The car is a plug-in series hybrid with a battery with sufficient capacity for 62 miles of electric driving. After that, the car’s battery begins to recharge the battery. It is expected to average 124 mpg.

Chrysler ecoVoyager

Chrysler’s ecoVoyager takes the idea of plug-in hybrids to the next level. It relies on a fuel cell rather then gasoline or diesel. The vehicle features the modern "skateboard" design, which allows for a roomy cabin and low center of gravity. It weighs less than 3,000 pounds and Chrysler claims it gets a 12.9-second quarter mile. The car looks futuristic with its smooth design and vertical skylights.

Do not expect to see them on the road any time soon. Chrysler has not yet confirmed they are working on electric hybrid technology, but it certainly did not stop them from putting together an attractive concept car.

ASF Trinity Vehicles

AFS Trinity vehicles are actually not a new brand of car, but rather a working plug-in hybrid system. The company modified a regular Saturn Vue Hybrid by adding a powerful battery capable of running 40 miles on only electric power. Trinity is one of the first companies to successfully produce a REEV and is years ahead of the major automakers.

However, the technology is still going to need improvement before it will be ready to hit the market. The system likely requires large areas of storage space for the huge batteries required to run the car. Trinity has not yet released specific pricing information.

Chevy Volt

The Volt is Chevrolet’s concept of their future REEVs. General Motors has made great strides in environmentally friendly vehicles over the past few years and plans to have the first street-ready editions on sale by late 2010. The car is expected to be able to go 40 miles on 120-kW electric motor. GM hopes to have upwards of 60,000 of the vehicles ready for its first year on the market and plans for a base price of between $30,000 and $40,000.

Opel Flextreme

The Opel Flextreme is essentially a European version of the Chevy Volt. It features many of the same features as the Volt with a slightly different looking exterior. However, one major difference is that the Flextreme comes with a rear storage space specifically designed to fit a pair of Segways that can charge off the car’s batteries. Unfortunately, this extra storage space means less room for fuel, which reduces the car’s range from 640 to 444 miles.

Fisker Karma

The Fisker Karma represents the future of luxury sports cars. The vehicle has a sporty and attractive design but maintains maximum fuel efficiency. It features a lithium ion battery pack that can power the car for 50 miles before needing fuel. According to Fisker it can go from zero to sixty in 5.8 seconds and reach a top speed of 125 mph.

Images curtosy of AutoBlogGreen.com

New Years Resolutions For The IRS

Saturday afternoon my Internet marketing specialist submitted a press release regarding my latest open letter to the Department of Treasury and Internal Revenue Service. In the letter I identified 8 new years resolutions the IRS should consider. If the IRS were to implement these changes it would greatly help taxpayers seeking to settle their debts to the IRS. You can download a PDF of the letter by clicking here.

My law firm, Roni Lynn Deutch, A Professional Tax Corporation, represents thousands of taxpayers across the country. Given my experience and perspective as a representative, I am confident that the IRS can better improve their service by taking my suggestions to hear.

My 8 suggested New Years resolutions include:

1. Lump Sum Payment Discounts
2. Accelerated Payment Plan for Release of a Federal Tax Lien
3. "Reminder to Save" Letter to Those Who Owed Taxes the Previous Year
4. Publicize Current Compliance Years and Collection Statute Expiration Dates
5. Past Commitment to Compliance Makes You Eligible for Tax Debt Waiver
6. Double the Amount of a Tax Refund if Applied to an IRS Back Tax Debt
7. Stop Levying Social Security for Individuals over the Age of 75
8. Create Online IRS Tax Debt Accounts

For more information check out Tax Lady Roni Deutch Sends Open Letter to the Treasury and Congress With 8 New Years Resolutions in 2008 Concerning the IRS on PRweb.com.

Which States Tax Groceries?

The Tax Foundation has posted this interesting entry on which states tax groceries. According to the entry, “states that tax groceries (rate if not fully taxed): Alabama, Arkansas (3%), Hawaii, Idaho, Illinois (1%), Kansas, Mississippi, Missouri (1.225%), Oklahoma, South Dakota, Tennessee (5.5%), Utah (1.75%), Virginia (1.5% + 1% local option tax), and West Virginia (5%).”

However, it is important to note that “Idaho's income tax provides a $20 credit per person that is designed to partially offset the impact of taxing groceries. Also, our source for this data, CCH, cites a Kansas law that allows for a ‘limited tax refund available to disabled, elderly, and low-income households.’”

Clinton Unveils $70 Billion Emergency Spending Plan

As we get closer and closer to the general election, economic issues are beginning to get attention. Earlier today presidential hopeful Hilary Clinton unveiled a new $70 billion emergency spending package designed to help those affected by the U.S. housing crisis and to help counteract an upcoming recession.

“Economists and politicians are finally waking up to what many of America's families already know: that we might be sliding into a recession," claims Clinton. "We need an immediate strategy to get our economy back on track. I would work with leaders from both parties to pass an aggressive, fast-acting stimulus package to create good new jobs and revitalize our economy."

According to Reuters, “Clinton's plan would provide $30 billion for an emergency housing crisis fund for states to help low-income families unable to make mortgage payments; $25 billion to help low-income families pay their heating bills; $10 billion to extend unemployment insurance for people unable to find jobs; and $5 billion for alternative energy programs.”

IRS E-Filing Now Open For Most Taxpayers

As of last Friday, the IRS officially opened e-filing for the tax season. All taxpayers that are not affected by the last minute AMT patches are now eligible to e-file their federal tax returns. To find out if these changes will delay when you can file your return, check out “How Will Congress’ Last Minute AMT Fixes Affect My Tax Return” on the RDTC Tax Help Blog.

Last year over 80 million taxpayers e-filed their income tax returns. Almost 57 percent of all returns were filed electronically.

“IRS e-file is the fastest, easiest and most accurate way to file a tax return,” claims IRS Acting Commissioner Linda E. Stiff. "We strongly encourage taxpayers to take advantage of the benefits that electronic filing offers."

Open Request to Presidential Candidates

The upcoming presidential election is one of the most talked about in recent history. However, tax and economic views are a major topic that nearly none of the candidates seem to be addressing. As we move into the general election, the economy will likely get more attention. However, I think it is important to talk taxes now!

As such, I have posted numerous blog entries on the candidate’s tax views on both my personal blog, and the RDTC Tax Help blog. Some of the entries include: Tax Views of Top 10 Presidential Candidates, Where the Candidates Stand On the Issues, and Huckabee’s Tax Plan: The Achilles Heel of his Campaign.

In continuing with my effort to bring attention to the candidate’s tax views, I am putting out an open request to all the presidential hopefuls to talk more about taxes. Additionally, I would love the opportunity to speak with any of the candidates about their views. Either through e-mail, telephone, or even in person. I encourage any of the candidates to contact me as soon as possible to give more detailed information to the readers of my blog.

IRS Announces Rules for Seeking Help from Tax Preparers

A few days ago, the IRS and Department of Treasury announced new rules designed to give taxpayers greater protection and control over tax return information held by professional tax return preparers. The new rules are the first in more then 30 years and bring an update to the disclosure and privacy laws related to tax return preparers. The IRS hopes the update will bring taxpayer consent requirements up to date with the electronic age. Preparers will have until January 1, 2009 to implement the new consent requirements, allowing for a full year to make any necessary changes.

According to the IRS, the new rules are as follows:

• Generally, preparers must obtain taxpayer consent, either by paper or electronically depending on how the return is being filed, before tax return information can be disclosed to any third party or used for any purpose other than filing the return.
• If the taxpayer consents to the disclosure and use of his information, the consent must identify the intended purpose of the disclosure, identify the recipients and describe the particular authorized disclosure or use of the information.
• Mandatory language informs individual taxpayers that they are not required to sign the consent; that if they sign the consent, federal law may not protect their information from further disclosure; and that if they sign the consent, they can set a time period for the duration of that consent. If taxpayers fail to set a time period, the consent is valid for a maximum of one year.
• To prevent consent requests from individual taxpayers from being buried in fine print, the rules require the paper consent documents to be in 12-point type on 81/2 by 11 inch paper and require electronic consent requests to be in the same type as the Web site’s standard text, all to prevent consent requests from being too difficult to read for individual taxpayers.
• If a taxpayer declines to provide consent for an unrelated tax preparation disclosure or use request, the preparer cannot make a similar consent request. The intent is to protect taxpayers from being pressured with repeated consent requests regarding the same issue.
• Mandatory consent from taxpayers also is required if the tax information is going to be disclosed to a tax preparer located outside the United States. This provision is intended to ensure taxpayers are informed if their tax information is being sent offshore for return preparation. The individual taxpayer’s Social Security Number also must be redacted.

Additionally, the IRS and Treasury Department also addressed the topic of Refund Anticipation Loans (RALs). They are concerned that may give preparers a financial incentive to take improper credits or deductions in order to inflate refund claims. The IRS issued an Advance Notice of Proposed Rulemaking announcing that they are considering a proposal to prohibit preparers from disclosing or using taxpayer return information for the purpose of selling RALs and similar products. The IRS has given itself a 90-day written comment period after which they will consider what steps, if any, they will take to modify rules related to RALs.

Paige Hareb Makes Surfing History

Teenage surfer Paige Hareb created surfing history by taking second place at the Junior Women's World Championship event in Sydney. She entered the event as wildcard and surprised everyone by making it to the finals. Hareb beat South African champion Nikita Robb in the quarterfinals before beating former champion Courtney Conlogue in the semi-finals. Hareb then lost to Sally Fitzgibbon who took the championship title. However, Hareb's performance earned a $3,400 prize making her the first New Zealand female surfer in the history of the junior world championships.

Huckabee’s Tax Plan: The Achilles Heel of his Campaign

On January 3, Iowa voters spoke out and voted for Mike Huckabee, the former Republican Governor from Arkansas. Over the past few week’s Huckabee has garnered a lot of media attention due to his far right religious views and his support for a national sales tax. These views appealed to the people in Iowa as 35% of Republican voters selected him to represent their party in the general elections. Although the Iowa voters supported Huckabee, his “fair tax” views are likely to become the Achilles heel of his campaign, and could cost him the election.

The fair tax policy is an idea that was actually thought-up in the mid-1990s by the Texas based Americans for Fair Taxation. The basic premise is simple. Instead of charging a federal income tax all of the federal revenue would be generated from a 23% flat tax on purchases. According to the plan, states would collect the funds and forward them to the federal government. Huckabee claims this system ensures a fair, progressive, sustainable tax system that encourages economic growth. He claims it allows working individuals to take home 100% of their paychecks and it would encourage saving and responsible spending.

This plan may look good at a glance, but upon further inspection it’s full of holes. Tax experts across the country, both Republican and Democratic, agree this plan will not work. Bruce Bartlett, a conservative economist and former official from the Department of Treasury even goes as far as saying, “anyone who supports it {the fair tax} should not be taken seriously.”

Supporters of the fair tax claim a 23% sales tax would need to be levied on all purchases Americans make. But how they came up with this number is a mystery. Independent research continues to show that the tax would need to be far higher to support the government at current levels. One bipartisan group, the Advisory Panel on Tax Reform, conducted a study that showed the tax rate would need to be at least 34%. Additional studies put the tax rate as high as 50%.

Huckabee’s plan also predicts that American spending habits will stay the same as they are now. However, with a massively higher sales tax many predict a strong black market would surge, thus providing a way for many to avoid the tax on larger purchases. Not paying the sales tax would be as easy as driving across the border to make a purchase in Canada or Mexico.

One major selling point of the fair tax is that people can keep 100% of their wages. People seem to respond well to this idea of not having to hand over a portion of their wages. This logic has problems. What about retirees who have paid an income tax their entire lives? Would they not be – in effect – taxed twice? So far, Huckabee’s plan fails to account for these individuals.

Huckabee also claim’s his fair tax is progressive. “All of us will get a monthly rebate that will reimburse us for taxes on purchases up to the poverty line, so that we're not taxed on necessities,” Huckabee explains. “This means people below the poverty line will not be taxed at all. We will be taxed on what we decide to buy, not what we happen to earn.” However, these rebates would cost the federal government an estimated $600 billion per year.

Consider this: a 2006 Department of Labor study shows that households at every income level spend more than the poverty line. The average family making under $70,000 per year spends more then it earns. While the average family making more then $150,000 per year spends less then half of what it makes. Therefore middle-class families would get hit the hardest from a national sales tax. This plan is not progressive whatsoever it’s regressive.

Huckabee’s plan also calls for the abolishment of the Internal Revenue Services (IRS). This has many people wondering - if there is no IRS, then who will collect and monitor the new sales tax? Additionally, who is to monitor the distribution of the tax rebates? The government certainly cannot rely on the “honor system.” The American public disdains the IRS and any plan to get rid of it sounds good to most Americans. However, in order for the government to function and collect the sales tax a new institution with many of the same responsibilities as the IRS would need to be setup. It would just have a different name.

Granted, the fair tax plan is not completely bad. Economists do generally agree that a fair tax has the potential to cause economic growth. Without income taxes there will be no need for corporate tax shelters. With no corporate taxes, corporations would be more likely to do business in the country. However, it is unlikely these small benefits will outweigh all the other holes and discrepancies in the fair tax plan.

It is also interesting to note that Huckabee is the strongest supporter of the fair tax plan, when his history as Governor of Arkansas gives a drastically different impression of his tax views. While he was in office, he cut taxes 90 times but more than made up the difference with 21 tax increases. Between 1998 and 2006 Arkansas’s state budget increase by over $5.2 billion.

Huckabee may have won over Iowans with his empty promises of a fair tax, but he will have a much harder time as this election year continues. So much attention has been placed on his moral and religious beliefs that voters probably have not given any real though to his radical tax plans. If Huckabee wants to stand a chance in the general election, then he will slowly begin to distance himself from the fair tax plan. However, he may have dug himself into a hole as going back on his fair tax plays would get him labeled as a flip-flopper.

How the AMT Will Affect 08 Tax Filing

With Congress passing last minute changes to the Alternative Minimum Tax (AMT), expect the upcoming tax season to get quite confusing. The IRS expects tax season to begin as usual this January, except for the taxpayers affected by last minute AMT "patches." They estimate over 13.5 million taxpayers will use IRS forms related to the AMT. These taxpayers will have to wait to file their income tax returns until the IRS can reprogram its system.

The IRS hopes they will be able to begin accepting these tax returns by no later than February 11, 2008. They claims this date allows enough time to properly update and test their systems without disturbing other tax season related operations.

Therefore, federal tax returns that include the following forms cannot be filed until February 11th, 2008:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

The AMT became part of the U.S. tax code with the Tax Reform Act of 1969. Originally, Congress designed the AMT to target a small number of high-income taxpayers that could claim so many deductions they owed little or no income tax. However, the AMT gained a lot of negative attention as an increasing number of middle-income taxpayers became subject to the AMT.

Q&A About Ford’s Energy Efficient F450

AutoBlogGreen has an interesting Q&A session with Beau Boeckmann, the president of Galpin Auto Sports about the Ford F-450 Super Duty that runs on biodiesel and hydrogen. You can read the transcript of the interview by checking out AutoBlogGreen.

Happy Holidays from Roni Deutch

IRS Working Quickly to Implement AMT Patch

The IRS announced yesterday that it will immediately begin taking the necessary steps for its income-tax processing systems to prepare for the upcoming tax season following final passage of the Alternative Minimum Tax "patch" Wednesday by the House of Representatives.

"Our people will do everything they can to quickly update our systems for this major change and make this filing season as smooth as possible for everyone," said Linda Stiff, IRS Acting Commissioner. "Our goal is to process tax returns accurately and to issue refunds to taxpayers as quickly as possible."

The IRS will post more information on the AMT patch on their website as it becomes available.

Redesigned RoniDeutch.com

Wednesday afternoon my web team published an all-new design for my law firm’s website, RoniDeutch.com. I’m really proud of this new layout which features numerous modern design elements to give the site a really fresh Web 2.0 feel. Every single page looks fresh and inviting to people looking for help with IRS tax debt relief. My law firm takes great strides to stay current with the latest technology advancements and we feel like this new website truly reflects our efforts. Check out the new design by going to RoniDeutch.com.

Where the Candidates Stand On the Issues

Primary elections are just a few weeks away in some states, but the candidates’ views on tax issues are not really getting decent media coverage. To help voters make informed choices I constructed the following chart detailing where the top 10 presidential candidates stand on 20 important tax issues. Click the thumbnail below to view the full image.

IRS Receives Passing Marks for 2006 Filing Season

According to WebCPA, the IRS improved last filing season, but still has an opportunity to further improve for this upcoming tax season. According to their report, the accuracy of answers provided by the IRS to questions from callers was at about 90 percent and the performance of the IRS's web site also improved. However, the Government Accountability Office (GAO) noted that the IRS should attempt to reduce the number of paper tax returns it processes by mandating e-filing.

Hawaii economy stuck in fairly decent rut

According to the Honolulu Observer, Hawaii has been suffering slow economic growth, but it has not altogether stopped their ten-year economic expansion. A Weakening US economy and high-energy prices have contributed to the relatively slow growth over the past year.

"We do not yet see an end to the current long economic expansion," said UH economist Carl Bonham. The outlook "is a little bit weaker, but not much. The tone of the report is a little more pessimistic."

Tourism and construction are expected to remain stable next year, which could translate into continued income and job growth and low unemployment, though at less favorable levels than in recent years. So far, Hawaii is expected to sidestep a US real estate slowdown that has hobbled home prices in many Mainland markets.

Slower growth also means Honolulu residents are expecting to get relief from rising prices. Honolulu's inflation rate is expected to drop from 5 percent this year to 3.8 percent next year. Honolulu's inflation rate hit a 15-year high of 5.8 percent in 2006 because of booming real estate prices.

IRS Expands Their Fast Track Settlement Program

Recently the IRS announced that it would be expanding the number of test areas that can take advantage of the Fast Settlement program for taxpayers under examination by the Small Business/Self-Employed (SB/SE) Division. The program will run until September 5, 2008 in the following areas: Philadelphia, central New Jersey, San Diego, Laguna Nigel, California, and Riverside, California. The program will continue in the three original test cities (Chicago, Houston and St. Paul.)

According to the IRS’ news release, “the program was designed to expedite IRS case resolution. It allows taxpayers under examination with issues in dispute work with IRS representatives from SB/SE’s examination unit and the Appeals Division to resolve those issues. Fast Track employs various techniques to facilitate case resolution. A taxpayer or IRS examination representative may initiate the Fast Track process after an issue is fully developed, and preferably before a 30-day letter is issued. The Fast Track process is designed to be completed within 60 days of acceptance of the application.”

However, taxpayers retain the right to have their issue addressed through the traditional appeals process.

Land Rover LRX Revealed!

Check out the image below of the new Land Rover LRX. This car is being highly anticipated, and is expected to be unveiled at next month’s Detroit auto show. It has long doors, a sloping roof, 20" wheels, and a 2+2-cabin configuration. For more pictures check out AutoBlog.

Outsourcing Tax Return Preparation to India

TaxGuru has made an interesting post on an Indian firm that emailed him in regards to their American income tax preparation services. According to the email the Indian firm was hired by over 35 different American CPA firms last year and prepared over 3,500 tax returns. They charge a very low rate per return allowing a healthy profit to be made by the large CPA firms outsourcing these duties. This company is just one out of dozens that are already offering Indian outsourcing services. According to The CPA Journal some estimate that nearly 200,000 American income tax returns were prepared in India in 2004. Outsourcing these services allows the large CPA firms to lower their hourly expenses by over 50%, while sustaining their high fees.

As this practice becomes increasingly common, I recommend that everyone be cautious when dealing with a firm that outsources to any country. Although the individuals might be trained and might be qualified to prepare taxes, I would still be cautious. Having 100% accurate data in your income tax returns is extremely important. If something is wrong in your return it could result in massive IRS problems, including audits and even owed back taxes. With so much at steak you want to make sure you seek tax help from a reputable company, and outsourcing services to low-paid Indian workers does not exactly scream quality in my eyes. I suggest you ask any firm your considering point-blank if they outsource and where they outsource income tax preparation. If their response is no then you have nothing to worry about. However, if they do outsource I would be very cautious about using their services unless they provide some sort of guarantee.

New 2010 Mustang Spotted

Spies over at Jalopnik.com spotted Ford performing road tests of what look like the 2010 Ford Mustang. Many of the features seen on the new car reflect the Giugiaro concept car Ford introduced at last year’s LA Auto Show. These features include front and rear fascia and major upgrades to both the interior and exterior. Check out the picture below, or you can view the whole set of pictures at Jalopnik.com.

IRS Announces OPR Settlement

Earlier in the week, the IRS’s Office of Professional Responsibility (OPR) announced a settlement agreement with three attorneys in connection to a $31 million municipal bond issuance involving River Park Square in Spokane, Washington in 1998 handled by the former firm of Preston, Gates & Ellis LLP. However, the IRS and the attorneys both agreed that the settlement does not constitute any admission of wrongdoing. According to the IRS, the ORP is pleased to have reached this agreement because it demonstrates their commitment to ensuring bond lawyers comply with Circular 230 when involved in tax-exempt municipal bond issuances.

Fake A Million Dollar Bill? Go Directly to Jail

Last week, Alexander D. Smith, an Augusta, Georgia resident, was charged with disorderly conduct and two counts of forgery after he walked into a bank and attempted to open a new account by depositing a fake $1 million bill. Not only did he try to deposit the bill, but when the teller refused to accept the fake bill Alexander began cursing at the bank employees. Within a few minutes the police arrived and took the man into custody. Upon investigation the police discovered that Alexander had previously purchased cigarettes from a nearby grocery store using a stolen check, thus the second forgery charge.

It amazes me that some one would be dumb enough to even consider using a fake million-dollar bill. But, at least this time he was trying to deposit the money, unlike the woman a few months ago who tried to break a million dollar bill at Wal-Mart.

The picture below, supplied by the Aiken County Sheriff's Office, shows what the fake $1 million bill looked like.

IRS and States Team Up on Payroll Taxes

According to the Wall Street Journal online, the Internal Revenue Service is joining forces with more than twenty-five states in an intensified effort to crack down on employment related tax violations. Among the key issues is whether a worker should be classified as an employee or an "independent contractor" - a difference with significant tax implications for both businesses and workers. You can check out the full article here.

Tax Views of Top 10 Presidential Candidates

The Roni Deutch Tax Center Tax Help Blog recently posted an interesting article on the tax views of the top ten presidential candidates. The entry include summaries of each of the candidates proposed tax plans as well as voting records for those who served in Congress. You can check out the article by checking out "Tax Views of Top 10 Presidential Candidates" on the Tax Help Blog.

December Tax Talk Today Topic: Filing Season

Recently the IRS’s website announced that the next Tax Talk Today will be on "getting Ready for the Filing Season 2008." It will broadcast on Tuesday December 11th and will "focuses on individual tax return issues, such as changes to forms, the latest tax law changes and IRS processing issues that affect individual taxpayers. Tax preparers also will get tips on how to avoid common errors that can cost them and their clients time and money."

Panelists will be Kathleen Collins, principal of her own Savannah, Georgia-based tax practice, and president of the Georgia Association of Enrolled Agents; William Stevenson, president of National Tax Consultants, Inc., a tax preparation and taxpayer representation firm for individuals and businesses; Pamela J. Walker, IRS deputy director for Submission Processing at Cincinnati and Carole Barnette, IRS acting chief for Individual Tax Forms and Publications.

For more information check out TaxTalkToday.tv

Former IRS Commissioner Fired by Red Cross

Mark Everson, the former Commissioner of Internal Revenue, was recently fired from his position as President of the Red Cross. The reason? According to a Red Cross press release Everson was released after "engaged in a personal relationship with a subordinate employee." The release continues to state that "the situation reflected poor judgment on Mr. Everson's part and diminished his ability to lead the organization in the future."

Those of us in the tax industry know Mr. Everson as the 46th commissioner of the Internal Revenue. President George W. Bush appointed him to the position in 2003 and left the IRS in May of 2007 when deputy commissioner Kevin Brown took the position of Acting Commissioner. After his departure, the Board of Governors unanimously approved Everson as President of the Red Cross.

Everson’s departure from the Red Cross comes less then six months after being approved for the position. Everson also released his own statement on the issue, which has no mention of his personal relationship with a subordinate employee and cites "personal and family" reasons for his departure.

IRS Drops First Quarter 2008 Interest Rates

Recently, the IRS announced that they would be lowering interest rates for the first quarter of 2008, beginning on January 1, 2008. According to IRS codes the interest rate is determined on a quarterly basis and can either be changed or kept the same. This upcoming quarter the rates will drop by 1% and be set as follows:

• seven (7) percent for overpayments [six (6) percent in the case of a corporation]
• seven (7) percent for underpayments
• nine (9) percent for large corporate underpayments, and
• four and one-half (4.5) percent for the portion of a corporate overpayment exceeding $10,000.

Honda Hybrid Tax Credit Phase Out

The IRS recently announced that Honda has reached the 60,000 vehicle limit during the calendar quarter ending Sept. 30, 2007. Therefore, the credit for buying any Honda hybrid vehicle begins will begin to phase out beginning January 1, 2008. Vehicles purchased before that date, however, will still qualify for the full credit. For Honda hybrid vehicles bought on or January 1, 2008, the credit is 50 percent of the otherwise allowable credit amount.

The new credit amounts will be as follows:

• Honda Accord Hybrid AT, Model Year 2007 — $650
• Honda Accord Hybrid Navi AT, Model Year 2007 — $650
• Honda Civic Hybrid CVT, Model Year 2007 —$1,050
• Honda Civic Hybrid CVT, Model Year 2008 — $1,050

Chrysler Releases Sketches Of ecoVoyager Concept

Yesterday Chrysler released sketches of their next concept car, which is expected to be unveiled at the January 2008 Detroit auto show. Check out the sketch below, thanks to Auto Green Blog.

Death Tax Conflict of Interests

The death tax, also known as the Federal Estate Tax, has been getting a lot of media attention lately. For those unfamiliar with the death tax, it is essentially a tax levied on the transfer of a taxable estate usually following a person’s death. As part of President’s 2001 tax cuts, the death tax was set to slowly die off and eventually be completely removed by December 31, 2010. However, unless the next President renews Bush’s tax cuts the prior law will reassert itself the next day, January 1st, 2011. Therefore theoretically some one who dies in December 2010 would pay no estate taxes whatsoever, while some one who passes away 24 hours later could have as much as a 55% tax levied on their estate.

Warren Buffet has been one of the strongest supporters of continuing the estate tax, even appearing before the Senate. Which seems odd considering Buffet is worth an estimated $52 billion, meaning when he dies his estate will be hit with some sort of estate tax. So why would he support the estate tax? The truth lies in Buffet’s business dealings. He has major investments in companies that sell life insurance and directly profits from the continued estate taxes.

When people want to avoid loosing large portions of their estate to the death tax, they often put their wealth into life insurance policies. Therefore once they pass the designated heirs are paid the life insurance funds without having to pay any taxes. Therefore Mr. Buffet has a huge conflict of interest and his insurance companies stand to directly profit from a continued death tax. I hope that the Senate will consider this information the next time Mr. Buffet testifies.

IRS Reminds Charities and Churches of Political Activity Ban

Recently the Internal Revenue Service put out a press release reminding charities and churches, and other section 501(c)(3) organizations, that federal law prohibits them from becoming directly or indirectly involved in campaigns of political candidates. However, these organizations can engage in advocating for or against issues and, to a limited extent, ballot initiatives or other legislative activities. "The political contests, especially for president, are starting earlier than usual. The IRS, as it has in the past, wants to remind charities and churches of the ban on political campaign activity. We also want to urge nonprofit and religious organizations to review the guidance we have issued to help them avoid any problems," notes Steven T. Miller, Commissioner of IRS’ Tax-Exempt and Government Entities Division.

Green Car of the Year: Chevy Tahoe Hybrid

Green Car Journal founder Ron Cogan announced yesterday that this year’s Green Car of the Year Award is the Chevy Tahoe Hybrid. It received the award for demonstrating that a large vehicle with could still offer fuel economy equivalent to that of a much smaller car. Five cars were nominated for this award including the Saturn Aura Green Line, Chevy Malibu Hybrid, Nissan Altima Hybrid and Mazda Tribute Hybrid.

IRS Has $110 Million In Unclaimed Refunds

According to the latest IRS news release, there are 115,478 taxpayers that are owed refunds from the IRS totaling over $110 million. The refunds averaging $953 per person were returned to the IRS as undeliverable, leaving the IRS no way to get the checks to their rightful owners. "Taxpayers should not miss out on getting their money back," said Richard Morgante, commissioner of the IRS Wage and Investment Division. "The IRS makes it as easy as possible for taxpayers to update their addresses and claim their refunds." Some taxpayers even have multiple checks waiting for them from numerous years back. The IRS is now encouraging taxpayers who think they should have received a refund to use the " Where’s My Refund?" tool on IRS.gov. Taxpayers can also access a telephone version of "Where’s My Refund?" by calling 1-800-829-1954.

Department of Treasury Responds to Letter

As you may recall I sent an open letter to congress and the Department of Treasury asking them to update their expense standards. Less then a month after I sent the letter the IRS announced they were indeed making the change, and on November 1st I received a letter from the Department of Treasury regarding my open letter. The message claims that Secretary Paulson had requested they respond to my letter informing me of the new changes and explaining the delay. According to the letter the delay was necessary to implement significant improvements that will enhance the accuracy and fairness of the standards. In addition the letter claims that Automated Collection System (ACS) personnel have been instructed to use judgement when applying standards, which was another complaint of my letter. I’m glad to hear the Department of Treasury is treating this issue with the importance it deserves. Hopefully the new standards will help make the process a little easier on taxpayers that need to negotiate IRS tax settlements.

Wesley Snipes Claims Race Discrimination in Tax Liability Cases

Wesley Snipes, who we all know is in trouble with the Federal government for not paying income taxes, has used numerous reasons to try and explain his tax debts but now he is claiming racial discrimination in an attempt to throw out his criminal case. According to this article from the Smoking Gun, Mr. Snipes and his legal team have claimed that prosecutors "deliberately chose the most racially discriminatory venue available" for his trial to take place. The documents claim that the current location in Florida is a "hotbed of Klan activity" where "substantial pockets of prejudice exist." These are all reasons cited in an attempt to get Snipes trial moved from the Ocala, Florida to the Southern District of New York.
In the motion Snipes attorneys claim the Federal government’s lawyers are trying to get an "all-white Southern jury" to hurt Ms. Snipes chances at a fair trial. But, as if the motion alone wasn’t enough, Mr. Snipes also conducted a public opinion roll comparing racial attitudes in both Ocala and New York. This is Snipes second attempt to get the venue for his trial changed; a federal judge rejected the first.

IRS Announces Record High E-filers

According to an IRS new release, in 2007 57.4% of taxpayers filed their tax returns through e-file. This number was up about 9 percent from the 73 million returns filed for the same period last year. Overall in 2007, 139.3 million returns were filed – 79.98 million of which were filed electronically. "It was another record-breaking year for e-file," said IRS Acting Commissioner Linda E. Stiff. "Paper returns continue to drop year after year. E-file is the safe, accurate way for more and more taxpayers to quickly complete their taxes and get a refund faster." Additionally, more people this year chose to have their tax refunds directly deposited than ever before. So far this year the IRS has directly deposited 61.4 million refunds, up 8 percent from last year.

2008 Dodge Viper SRT10 ACR Pictures

Although Dodge’s new Viper SRT10 ACR will not officially be unveiled until the November 13th auto show in Los Angeles, numerous sites have already posted leaked pictures of the impressive new vehicle. It features an 8.4-liter V10 engine with 560 LB-ft of torque. According to Chrysler the car generates 1,000 pounds of down force at 150 mph and can generate 1.5g while cornering. This vehicle is expected to retail for under $100,000. Check out some pictures below, thanks to Jalopnik.

Top 10 Costumes from My Firm's Annual Halloween Party

10) Whoopie Cushion

9) Beer Keg

8) Mario Brothers

7) Geisha

6) Easter Bunny

5) Surf Board

4) Borat

3) Nintendo Controller

2) Lindsay Lohan

1) Geico Cave Man

IRS Offers Help for Wildfire Victims

Last week the IRS added a new page to their site offering links and help for victims of the California wildfires. You can check the page out here.

According to the IRS’ release, if you own property damaged by fire in the presidential disaster area, you can either claim uninsured or unreimbursed disaster losses by filing an amended 2006 tax return or you may wait and claim any losses on your 2007 return. Both individuals and businesses are eligible for these options. For more information, check out the IRS website.

IRS Updates Living Expense Standards

After months of using three-year-old data to calculate taxpayers living expense standards, the IRS has finally issued new standards. These standards, also known as collection financial standards, are used when reviewing a taxpayer's account to determine their ability to pay federal tax liabilities. Essentially the IRS uses this data to determine the type and amount of tax debt relief each taxpayer qualifies for during settlement negotiations. The new standards went into effect October 1.

According to an IRS news release the standards have been designed to incorporate the following items:

• A new category for out of pocket health care expenses
• The elimination of income ranges for national standards for food, clothing and other items
• A nationwide set of tables for national standard expenses, eliminating separate tables for Alask and Hawaii
• An expanded number of household categories for housing and utilities
• An allowance for cell phone costs in housing and utilities
• Equal allowances for first and second vehicles under transportation expenses
• Fewer Metropolitan Statistical Areas for vehicle operating costs
• A separate nationwide public transportation allowance

A little over a month ago I drafted an open letter to the Secretary of the Treasury urging for changes to the IRS standards as they had not been updated since last year. I am glad to see the IRS has finally decided to update these standards as using three-year-old data to calculate a person’s expense standards was making things unnecessarily difficult on taxpayers hoping to find IRS tax relief.

Mutual Fund Taxes To Break Records

According to CNN Money, major mutual fund companies have begun estimating this year’s taxable distributions and the taxes are set to break records yet again. Last year their tax bills totaled $23.8 billion, which was the largest since 2000, but this year’s total is expected to be over $24 billion. One reason for the ever-growing tax bill is the past years "wild market," with plunging stocks and a soft housing market.

US House Votes to Extend Internet Tax Ban

On October 23, the United States House of Representatives voted with a massive 405 – 2 majority to extend the current ban on Internet taxes for the next four years. This is a small victory, as many from the tech industry lobbied to extend the ban indefinitely. First enacted by Congress in 1998, the Tax Freedom Act Amendments Act was set to expire on November 1, 2007.

Although the legislation passed through the House with flying colors, it stalled in the Senate. In order to extend the ban the act would need to pass the Senate and be signed by the President.
"Every day, broadband technology changes the way Americans live, from how they do business to how they learn and communicate to how they access medical treatment," claims Walter McCormick Jr., president and CEO of the United States Telecom Association. "An Internet access tax penalizes that way of life. In essence, we're talking about a tax on economic opportunity, on knowledge, and on finding one's voice in the democratic process."

For more information check out this article on PC World, or this editorial in the Washington Post.

Porsche to Take Over VW?

Although Porsche has been buying VW stock like crazy for the past year, there has been a piece of legislation called the VW Law which has stopped Porsche from taking full control over the company. However, the European Courts recently stuck down the law and now there is nothing preventing Porsche from increasing their stock ownership. Porsche currently has a 31% stake in VW, but with this new announcement they are expected to increase that to at least 51%. The industry expects Porsche to be patient with the rest of the process, possibly taking up to a year, but there is no doubt that they will soon control VW. Thanks to AutoBlog.

Poker Winnings Must Now Be Reported As Income

According to an IRS news release, casinos and other poker tournament sponsors will be required to report information on winnings to the IRS, starting March 4, 2008. The IRS hopes this rule clarifies the tax reporting rules that apply to poker tournaments and gain additional revenue from these popular gaming events. When the new rule takes effect, winnings exceeding $5,000.00 will require reporting to the IRS. The casinos will report the pay-out on an IRS Form W-2G. However, the IRS is reminding tournament winners that they must report all their winnings on federal income tax returns, regardless of the amount won. This rule has been in effect for years, and all tournament winners should currently be reporting all winnings. The IRS is hoping that with the new rules placed on tournament sponsors will help increase the number of winners who do report their winnings.

Even Celebrities Owe Back Taxes

On October 11th, 2007 the California Franchise Tax Board published their annual list of the top 250 taxpayers with back taxes owed to California. Included in this list of delinquent taxpayers is three celebrities, one of which claims to have no regular income whatsoever.

The publishing of this information is part of the California government’s attempt to use publicity to get the money they are owed. As with all persons owing back taxes, everyone on this list have been contacted numerous times by the Franchise Tax Board in effort to collect the debts. Specifically, before publishing the list they notify each taxpayer via certified letter reminding them of the liability. But I guess when you owe the IRS millions of dollars it’s probably going to take more then just a letter to get the money.

Out of the list of 250 delinquent taxpayers there are three celebrities that stand out. Firstly there’s singer Dionne Warwick who owes California over $2.6 million, and she’s been dodging the tax collectors for over ten years. Maybe she’s hoping the statute of limitations will run out, but if I were her I wouldn’t hold my breath.

Next on the list of celebrities is 90’s comedian Sinbad, who hasn’t had a hit anything for years but still managed to rake up a tax debt of over $2.1 million dollars. His liability has been outstanding since December of 1993. When I see numbers like this it makes me wonder… How in the world did Sinbad manage to get so far in debt to the California government? He had a few hits back in the early 1990’s but in order to get that far in debt he probably never paid taxes in full. It constantly amazes me when I see these celebrities who think they don’t have to pay their taxes. Too bad he didn’t have a better tax lawyer, or at least a decent advisor to tell him to pay his taxes. I’m betting he doesn’t have the extra cash just lying around to pay in full. But can you imagine his lawyer calling into the IRS to negotiate an offer in compromise and telling the IRS agent it’s for Sinbad? What I’d give to listen into those negotiations.

The last celebrity on the list owes the least out of all the celebrities, but for some one who claims in court to have no income what so ever he sure has a pretty high income tax liability. The star in question? The notorious O.J. Simpson, who owes California over $1.4 million in personal income taxes that have been outstanding since 1999. I wonder if he even intends to pay that debt down? I doubt it. He’ll probably just ignore it and let it add on to the millions of dollars he owes countless other people.

The lesion to be learned from all of this? As the old saying goes the only things in life that are certain are death and taxes. Every one has to pay income taxes, even has-been celebrities who haven’t worked in decades.

New GM Concept Camaro

GM car czar Bob Lutz announced a new Camaro concept car on one of his recent posts on the Fastlane Blog. He describes the new car as being remarkable claims the new Camaro is intended to be "the finest car in its class, ever." Check out a picture of the concept car below, thanks to the GM Fastland Blog.

New IRS Tax Talk Today

Later today the IRS will feature a new webcast on their Tax Talk Today website. The Webcast is scheduled for Tuesday, October 16, at 2 p.m. ET. Discussion topics on the Webcast will include an overview of OPR, Circular 230 and monetary penalties. The live hour-long Webcast will focus on the IRS’s Office of Professional Responsibility (OPR), which is responsible for setting, communicating and enforcing standards of competence, integrity and conduct among tax professionals who practice before the IRS. Tax Talk Today is a Webcast put out by the IRS with the goal of educating tax and payroll professionals on the most current and complex tax issues. You can access the Webcast for free by registering online at www.TaxTalkToday.tv.

Full List of 2007 Baseball Champions

Nutty About Sports.com has a very informative article on their site with a list of all the current baseball champions of 2007. The list includes not only Major League Baseball Champions, but Minor League Baseball Champions, Independent League Champions, College Baseball Champions and Little League Baseball Champions as well. You can see the full list by clicking here.

Republican Debate Comments From Tax Foundation

The other night was a Republican primary debate with the topic on taxes and the economy. Tax Foundation.org has put together a good review of the debate with their comments and observations on various things candidates said in the debate. Topics include revising the current tax code, government subsidies, the federal budget, corporate taxes, and others. Check out the full review at Tax Foundation.org: Observations from the Republican Debate.

Disney Planning New Resort in Hawaii

According to Radio New Zealand, the Walt Disney Company has announced plans to build a new resort on the Hawaiian Island of Oahu scheduled to open sometime in 2011. Disney has purchased over 21 acres of oceanfront property, where they plan to build a resort set to include 800 hotel rooms and villas. This new Hawaiian resort will help expand Disney’s Vacation Club, their new time share business.

Woman Sues Kmart for Taxing Toilet Paper

A Pennsylvania woman sued Kmart for allegedly collecting a 7 percent state sales tax on toilet paper. In her lawsuit, she is seeking $100 in damages plus court costs, claiming the $3.99 toilet paper she purchased was incorrectly taxed in the amount of 28 cents. Her lawsuit takes advantage of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, which allows her to seek damages 357 times her actual injury or around $100. Although most paper goods are taxable in Pennsylvania, toilet tissue is listed as a nontaxable item.

IRS Announces Increase In Corporate E-filed Returns

According to the Internal Revenue Service, more than 800,000 of the nation’s small businesses and large corporations have electronically filed their tax returns so far this year. This number represents a 60 percent increase from last year. "This is a record-breaking year for electronically filed returns by corporations and businesses," said Acting IRS Commissioner Linda Stiff. "We will continue to work with the business community, tax practitioners and the software industry to improve this important program." However not just small businesses are e-filing, thousands of large corporations are voluntarily e-filing as well. More than 42,000 large corporations have already e-filed this tax year.

Nissan Unveils Pivo 2 Concept Car

Nissan unveiled the new Pivo 2 concept car at the Tokio Motor Show a few days ago. The car features a 360-degree rotating cabin, 90-degree turning wheels, and braking and steering drive by wire capabilities. Below is a picture of this funky new concept car, thanks to Engadget.com.

Bush Says No to Children's Health Insurance

A few days ago President Bush vetoed a bill that would have expanded a children’s heath insurance program by over $35 million over the next five years. Speaking in Pennsylvania, Bush claimed he vetoed the bill because he felt it was a step towards federalizing medicine and inappropriately expanding the program to help more children. Senate and House Democrats alike were quick to condemn the veto, which had received bipartisan support. House Majority Leader Nanci Pelosi has already announced plans to gain enough votes to overturn the veto. For more coverage on this issue, check out CNN.com.

Check Out Watch Me Franchise!

Ever wondered what it would be like to open your own franchise business? Well check out the new Watch Me Franchise blog put together with the help of two new Roni Deutch Tax Center franchisees, Heather and Gentry Spell. The blog has been following the Spells from day one before they even signed a franchise agreement, and will continue to follow them through the end of tax season. Along with videos and pictures of the Spells, the blog also features informative articles and blog entries useful to any one considering investing in a franchise. Check out WatchMeFranchise.com today!