“I haven’t prepared my taxes since I was — good Lord, in my twenties. I’m really inept. I’m not good at that.”
Category: Tax
Tim Geithner Hated His Old Accountant
It’s probably the same one that Doug Shulman’s been “[using] for years.”
[HuffPo]
Would Sarah Palin Consider Helping Pamela Anderson with Her Tax Problem?
When celebrities have tax trouble, the majority of reporting out there feels like schadenfreude. Being of the more helpful mindset (especially when it comes to America’s beloved rich [or not so much] and famous) we try to provide solutions for those celebs down on their luck.
In celeb-tax-trouble du jour, Pam Anderson has been named to the California’s Franchise Tax Board Top 250 Tax Delinquents. She owes the people of California nearly $500k.
Someone equally as famous but without the financial difficulties is former VP candidate Sarah Palin.
We’re not suggesting that SP spread the wealth around but just to help out a real American like herself. What’s $500k between two women that share the uncanny ability to seduce the American psyche? They’re a natural team – both have rabid fans; Pam is currently on a reality show, Sarah’s is in the works. Sarah Palin hates taxes; if Pam didn’t before, she certainly does now.
Sure, SP kills animals while Pam stumps for them but those a small issue like digesting animal flesh or wearing fur can surely be set aside for the good of the country. Plus, it would make for a great Sarah stump speech come 2012.
Pamela Anderson Owes $493,000 in Back Taxes [AP]
See also:
California’s Top 250 Tax Deadbeats [TaxProf]
What Do Pamela Anderson And Tim Geithner Have In Common? [DB]
IRS Agent Who Threw Temper Tantrum Faces 55 Years for Threatening Treasury Agents, Filing False Returns
Last summer we told you about an IRS agent who threw a temper tantrum after threatening to kill Treasury Agents they showed up to search his home.
Just briefly refresh, after the agents stopped Albert Bront from going back into his house, where he kept three loaded guns (no doubt they were Remingtons), he was shoved into the back of the car where “he kicked the front seat of the law enforcement vehicle and pounded the door with his elbow.”
Besides the small matter of telling Federal Agents that ‘I’m Going to Kill All of You!’ Bront has also been indicted for filing false returns and helping others file false tax returns. Web CPA reports that he is convicted on all 16 counts in the indictment he faces 55 years in adult prison.
While we are firmly against the violence, we fully support seat kicking, foot stomping, pouting and all around conniption fits for those that feel wronged by the IRS. At the very least, it’s more effective than marching on the Internet.
IRS Checks Sole Proprietorships Off Its “To Audit” List
This morning we shared some best practices on how to keep your ass out of hot water should an IRS audit befall you. The concern is that the government spending is out of control, huge deficits yada yada yada, the IRS will be knocking on more doors.
For the most part, everyone has been covered – large corporations, millionaires, possibly temptresses, the list is thorough.
Well, now it appears that the last entity type standing, the sole proprietorship will join the rest as an IRS target. IRS-criticizer-in-chief J. Russell George’s TIGTA issued another report but this time it cites sole proprietorships for “$68 billion of the $345 billion tax gap in 2001,” in underreported income. Web CPA reports George’s thoughts:
“Sole proprietors who underreport their income can create an unfair burden on honest taxpayers and diminish the public’s respect for the tax system,” said TIGTA Inspector General J. Russell George in a statement. “It is imperative that the IRS institutes policies to address this problem.”
How’s this for addressing a problem? The Internal Revenue Code, you my have heard, is mind-numbingly complex. Sole proprietorships, out of all the entity structures, are the least equipped to ensure compliance with the tax law. Auditing more of them will not result in increased compliance but rather enormous costs to their businesses. As for “diminish the public’s respect for the tax system,” didn’t that ship sail ages ago?
One Firm’s Tax Season Tradition Ignores the “Beards Are Kept Trim” Mantra
All firms realize that tax season is a grind and put up with various silly/downright stupid traditions for the sake of employees’ morale. There’s no work/life balance to speak so concessions are made. In anticipation for the annual tradition that is tax professionals raging on April 15th, FINS has compiled a few interesting traditions that are carried on by various firms. The idea, however, that men are walking around the office sporting the Grizzly Adams defies comprehension.
For you purists of the white collar world, facial hair makes you ill. The sight of five o’clock shadow is downright repulsive and anyone that isn’t shaving at least daily (except for the flesh-colored beard types) will not be dealt with a swift manner.
Unless of course you work at Traphagen & Traphagen CPAs LLC where the tradition of tax season beards goes back 40 years. At that length, it may precede any NHL playoff tradition of funky facial hair, “”At the close of business, they’ll troop into a conference room and together shave the beards they’ve been growing since the end of January.”
As you might expect there are client requests to send the remains to the IRS but unfortunately the partners don’t honor these requests.
In Case You Forgot, Today Is National Tax Freedom Day
That means, theoretically, the rest of the money you earn this year is yours. We understand that tea partiers too lazy to leave the house will still be marching virtually.
What’s far more interesting is Tax Freedom Day by state which shows that you’re basically getting screwed if you live near New York City or Washington, DC. Of course if you’re hung up on this whole Tax Freedom Day thing, then your ideal state is Alaska which seems about right.
Image source: Tax Foundation
Panic Isn’t Necessary if Your Tax Preparer Got Swept Up in “Operation Brass Tax”
With less than a week until April 15th, it’s safe to assume that some people are finally getting a tad anxious about the upcoming deadline. If you live in New York and happen to be one of these procrastinators, it may be wise to check with your tax professional, not only because they hate it when you show up on the 13th – 15th with nary a clue about what you earned in 2009 but also because if you’re really unlucky, your tax pro instead was just total shiester and got caught up in “Operation Brass Tax.”
First off, we’ll just say that we’re not sure who at the U.S. Attorney’s Office for the Southern District of New York or the IRS’s Criminal Investigation Division was given the modest charge of naming this particular operation but it obviously sucks. We’re not expecting you have an imagination like JK Rowling or anything but guys, c’mon.
But enough with trivial matters, the main concern is that there are many New Yorkers that are completely going batshit crazy because A) they recently found out that their tax preparer was a robbing them blind and B) they have no idea how they are going to get their tax return filed in less than a week without help because reading the instructions is NOT. AN. OPTION.
Twenty-six phony tax experts in Manhattan and the Bronx have been charged by the SDNY/IRS for pulling a smorgasbord of scams including, “stolen identities of children to falsely claim them as dependents on clients’ returns; claiming “business losses” from fictitious businesses; using stolen identities, including Social Security numbers, of deceased individuals to list as the ‘taxpayers’ on fraudulent returns, and taking the resulting refunds themselves.”
All this chicanery has U.S. Attorney Preet Bharara upset because these tax professionals are supposed to be the good guys!
U.S. Attorney Preet Bharara and IRS Special Agent-in-Charge Patricia Haynes unsealed charges Thursday against the tax preparers. Sixteen were in custody, four had been previously charged and face new charges, and six remain at large. “Professional tax preparers are supposed to be gatekeepers, not facilitators of fraud,” said Bharara in a statement.
Some might argue that this is just another reason why regulating tax preparers is the best idea the IRS has ever had. Of course then you remember that these regulations will probably drive these tax prep lemonade stands underground anyway.
While that’s another matter entirely, there’s no cause for concern. There’s plenty of tax gurus in New York like the guy who got mixed reviews on Craigslist. If venturing to Queens isn’t a solution then you can always, you know, file the extension.
26 NYC Tax Preparers Charged with Tax Fraud [Web CPA]
More New York Tax Trouble:
Investigation Reveals that 30% of Tax Preparers in NYC Lied About Rapid Refunds
After Coasting Through Tax Season, Some IRS Revenue Officers May Have to Start Doing Actual Work
While we’re typically not ones to speculate on the difficulty of any particular job (e.g. CEO of a Big 4 firm) the Treasury Inspector General for Tax Administration (“TIGTA”) probably has the easiest job on Earth.
As far as we can tell, the TIGTA is responsible for criticizing the IRS on, well, pretty much everything that the Service does wrong and then the IRS agrees that they suck and promises to do better.
And if you’re going by the TIGTA website we’re more or less correct:
“TIGTA promotes the economy, efficiency, and effectiveness in the administration of the internal revenue laws. It is also committed to the prevention and detection of fraud, waste, and abuse within the IRS and related entities.”
We’re assuming that Doug Shulman probably agree with our assessment but that guy doesn’t even like pizza, so who cares what he thinks?
Anyhoo, the latest Monday Morning QBing from the TIGTA is that some of the Service’s senior revenue officers are basically sitting around with nothing to do. Web CPA reports:
Senior revenue officers at the Internal Revenue Service who are supposed to handle more complicated tax cases oftentimes don’t receive any work assignments, according to a new government report…
The relative lack of work for the senior revenue officers to do occurred because there is no systemic means for IRS managers to identify the most complex cases, and the criteria for identifying complex cases are subjective and inconsistently interpreted.
So you’re a senior revenue officer with 5-6 years (?) on the job. You’ve got this gig pretty much figured out. Not only do you know the ropes, you make the fucking ropes. Your manager has suits from DC so far up their ass about collecting every dime available that they can’t see straight, so they just want you busy do anything.
You, being a reasonably lazy (and realistic) person, aren’t going to kill yourself. If you’ve got the choice of picking up a 1040 that’s hundreds of pages long versus a 1040EZ that has fewer pages that a Tony Alamo pamphlet, you’re going to pick up the 1040EZ.
Well now J. Russell George is slapping those managers around with a report deeming this unacceptable which may mean that your slacking days are over:
“I am troubled that IRS managers are not providing employees with work assignments that they are ready and able to do at a time when it is incumbent on the IRS to be as efficient and effective as possible,” said TIGTA Inspector General J. Russell George in a statement.
JRG is recommending that the IRS improve it’s methods of identifying more complex cases (that the IRS naturally agreed with). We think a tax return thickness analysis is a decent place to start.
It’s About Time a Race Car Driver with a Drug Problem Got in Trouble with IRS
Among the celebrity/athlete tax delinquents we get a decent variety – hip–hop artists, topless girl magnates/douches of the decade, juiced-up baseball players, washed-up actors, people stupid enough to have their picture taken in a Nazi visor and doing the “sieg heil.” It’s a potpourri.
Well, today we’re happy (not literally happy, tax delinquency is not a laughing matter) to report that tax troubles have now found their way into new area of the celebrity culture: race car drivers. And not just any race car driver, one that is rumored to have used meth! Lots of it!
We’re not too familiar with Jeremy Mayfield’s problems but after a quick glance at one article we’ve learned that A) he’s not crazy about NASCAR leadership B) dude has done a fair amount of crank in his day C) he’s not a fan of his “whore” stepmom who, he says, killed his Dad.
Between the work trouble, drug trouble and family trouble J May’s brain has to be mush; of course he’s going to forget to pay $300,000 in taxes. This is no different than the Snoop Dogg tax situation. Sure the drugs are different but the principle is the same. The guy just needs a solid CPA to take care of these things for him, preferably one that isn’t easily sketched out and can handle paranoid junkie types with money to throw around (assuming there’s money left).
Refundable Tax Credits: They’re for Trust Fund Babies Too!
So 47% of our nation’s households will pay no federal income tax this year. Well, stick it to those rich people, then! Help the deserving poor, like Buffy Richgirl.
Buffy is a struggling 26-year single mom with three kids and a checkered romantic history. Yet she does the best she can, earning $16,500 in various jobs in 2009 while taking courses in applied tattoology at the local college, while Mom helps with the kids.
Let’s see how a beneficent tax law helps this struggling mom make ends meet.
Some key facts:
Name: Buffy Richgirl.
Age: 26
Filing status: Head of Household, because of 3 dependent kids – Biff, Cloyd and Muffy.
Income: $16,500, all salary, no withholding.
Housing status: Daddy gave her $200,000 in 2008 to buy a house, which she bought in December 2009. She formerly lived in various apartments or with Daddy.
Educational status: She’s taking tattoo technology courses half-time at the local college (her Mom helps out with the kids), where she ran up $3500 in qualified expenses.
Prospects: She’s the beneficiary of a trust from late Grandpa that will kick out $5 million when she hits age 30, but which distributes nothing right now.
Other cash sources: She gets occasional non-taxable child support, and she has a non-interest bearing checking account with some Daddy cash.
The tax results? Adjusted Gross Income: $16,500. Taxable Income: $0. Taxes withheld and paid: $0. Tax refund: $17,009.
So how did our heroine double her income via her 1040? Through the miracle of “refundable credits” – tax credits that generate a refund even if your tax computes to zero. She wins with:
• An $8,000 First-time homebuyer credit.
• A $5,634 earned income credit.
• $2,025 in additional child credits
• $950 refundable education credit.
Don’t believe me? Look at her 1040 for yourself:
So what’s the point? It’s very hard to fine-tune the tax law. That’s especially true with refundable tax credits. No matter how carefully you try to “target” a group with tax benefits, there will be collateral unjust enrichment.
Now don’t you feel better about that check you have to send IRS next week?
Quote of the Day: Rich People Unite for Higher Taxes | 04.07.10
“We’re calling on other wealthy taxpayers to join us to send the message to Congress and President Obama that it’s time to roll back the tax cuts on upper-income taxpayers.”
~ Mike Lapham, paper-mill heir, would like to pay more taxes.