Posted on December 02, 2014 in Taxation Law

This year's tax filing season will commence on January 20 as scheduled. The season will commence in spite of a last-minute law passed by Congress.

The Internal Revenue Service has announced that taxpayers can begin filing their tax returns for 2014 on January 20, 2015. There had been concerns that the filing season would have to be postponed this year, as lawmakers continued to delay a bill containing tax breaks. Earlier this month, lawmakers passed the bill, which extended dozens of tax breaks which had expired. The law now extends those tax breaks to the end of the year, which means taxpayers will now be able to claim those breaks when they file their tax returns for 2014.

In previous years, last-minute wrangling by lawmakers had delayed the start of the tax filing season. However, that will not happen this year. The agency has assured taxpayers that the agency has reviewed all the tax law changes the government made recently, and had come to the conclusion that there is nothing to prevent taxpayers from filing their returns, because the systems will be updated on time.

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 Posted on November 05, 2014 in Taxation Law

The Internal Revenue Service warns that persons who are expecting tax refunds next year are likely to face delays receiving their checks in the mail. That's because the federal agency is battling a severe resources crunch and budget shortfalls.

According to the Internal Revenue Service Commissioner, the agency is being forced to cut costs in a number of ways, and he expects that a number of services including taxpayer services as well as tax enforcement efforts, could be adversely affected by the shortfall. Of most importance to taxpayers is the fact that their refunds could probably be delayed. There could be fewer staff members for the processing of refunds and you could receive the checks much later than expected.

In recent years, the agency has been able to process tax refunds within a timeframe of three weeks in the case of electronically filed returns. However, that timeframe will probably not apply this year because of the funding crunches. The IRS's troubles stems from budgeting cuts for the budget year ending in 2015. Lawmakers cut the budget by as much as $346 million.

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 Posted on October 02, 2014 in Taxation Law

A new study ranks California at close to the bottom of the heap for its tax laws. According to the poll by the State Business Tax Climate Index from the Tax Foundation, California has the 48th best tax climate out of the 50 states.

The State Business Tax Climate Index for 2015 measures the structure of the tax code of each state, taking into account a number of variables. Those variables include sales tax, property tax, income tax and employment insurance. States that had overly complicated, complex, and convoluted tax codes were ranked low on the list. States that had neutral and transparent tax codes fared much better on the list.

It should be no surprise to any California tax lawyer that the state is ranked at the bottom of the heap. The state ranked very poorly in a number of variables. It was ranked 48th for its overall business tax climate, and 34th for its corporate tax structure. It was ranked right at the bottom at number 50 for individual income tax structure, and at number 40 for sales tax structure. It fared slightly better when it came to property tax structure and unemployment insurance tax structure, gaining a position of number 14 for each of these variables.

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 Posted on September 05, 2014 in Taxation Law

Inversion, or the process by which a corporation moves its base to a foreign country to avoid corporate taxes in the United States, has been a favored tool to avoid taxes for years now. However, in the future, new rules could possibly slow down the rate of inversions.

Lawmakers have proposed new rules that they believe will make it less attractive for companies to move their bases overseas, to avoid taxes. The rules have been specially designed to discourage inversions, and prevent the large volumes of lost tax revenues as a result of these moves by corporations.

The new rules are meant to suffocate corporate inversions, and discourage such moves in the future. The policies are aimed at making it harder for companies to move their bases overseas, and to make it less profitable for them to do so. Typically, during an inversion, an American company will move its tax base to a country outside the United States, where the taxes are much lower. American companies usually prefer countries like the United Kingdom or Ireland. In such cases, it is only the tax base that is moved overseas, and the administrative headquarters of the company continue to remain in the United States.

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 Posted on August 03, 2014 in Taxation Law

Burger King recently announced that it will soon acquire Tim Horton's Inc. of Canada, and will move its base to Canada as a result. The deal is backed by billionaire Warren Buffett, who is already under criticism because the move amounts to inversion.

Recently, Burger King announced that it had signed an $11 billion agreement to buy Tim Horton's, which is the one of the largest coffee- and- doughnut chains in Canada. This falls under the "inversion" category, and Burger King's headquarters will now move from Miami to Canada. It helps that Canada has a much lower tax structure compared to the United States. Burger King shareholders as a result of the move, will also be protected from capital-gains taxes.

Inversions, or corporate moves overseas like these, are mainly meant to save corporate taxes, and such inversions have been criticized roundly by lawmakers. The White House recently pitched in, saying that such companies that want to move outside the United States and move their bases to foreign lands simply to avoid taxes are being unpatriotic. Burger King denies that minimizing taxes is behind its deal. It says that the deal is aimed at capturing new growth opportunities.

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 Posted on July 06, 2014 in Taxation Law

Companies that choose to leave the United States in order to take advantage of the more lenient tax laws overseas are facing flak. A new fledgling movement against such practices involves a threat that investors will sell off shares of companies engaging in such tactics.

Tax inversions or the strategy in which companies leave this country for overseas tax havens that are much more lenient, have been used as a money-saving tactic by companies to avoid taxes for several years. Recently, billionaire investor Mark Cuban made it clear that he, for one, was very unhappy with such practices. He tweeted that when companies engaged in such practices, it increased tax shortfall, and that the rest of the country was then required to make up for the tax shortfall, causing the government to increase taxes. He threatened that he would sell off shares in companies that choose to leave the United States for tax havens overseas. He clearly and emphatically recommended that shareholders hold companies accountable, by selling off shares in those companies that choose to move overseas.

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 Posted on June 02, 2014 in Taxation Law

The Internal Revenue Service recently announced that it will launch a new quality certification program for tax preparers.

The agency recently released new procedures that clearly describe details about the new education program. The Annual Filing Season Program, as it is called, is already a controversial one. The launch of the program came soon after the agency lost several court decisions, over its authority to impose mandated tax preparation programs.

For instance, the American Institute of CPAs has been in the forefront of criticizing the federal agency's plans for launching a tax preparer certification. The American Institute of CPAs says that such a program could even be unlawful. Several other groups have also raised their own objections to the program.

As part of the plan, while there will be no such formal certification exam like the one that exists for the now-invalidated Registered Tax Return Preparer or RTRP program, preparers would be required to take an annual refresher course. The program would be administered by a continuing education provider approved by the Internal Revenue Service. The refresher course would be designed according to the guidelines provided by the IRS, and would have to last for six hours. The program would also include a test of the course material. This would involve include a minimum of 100 questions, and applicants who complete the refresher course successfully would be required to provide right answers to at least 70% of the questions. Those who complete all formalities would receive a Record of Completion by the Federal Agency.

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 Posted on May 04, 2014 in IRS Scams

If you are currently receiving or paying alimony, the Internal Revenue Service has its sights on you. According to the Internal Revenue Service, it will soon begin devoting more time and focus to tax claims related to alimony.

Typically, tax laws require that spousal maintenance payments that are made by one spouse to the other be claimed as deductibles by the payer. The amount is also taxable for the recipient. Basically, the person who is paying the alimony can claim it as a deductible, while the person receiving the alimony must declare it as income on tax papers. However, the Internal Revenue Service does not believe that Americans are being totally honest about the alimony that they are receiving. It believes that there is a wide discrepancy between alimony deductibles and the alimony that is claimed as income.

Earlier this year, the Treasury Inspector General for Tax Administration released a report in which it identified that there was a very large gap between deductions for alimony by people making the payments, and the income claimed on returns. The report focused on about 570,000 income tax returns in tax year 2010. It found that the deductions for alimony paid exceeded the income from alimony by more than $2.3 million. Overall, the report found that 47% of the tax returns that were analyzed had some discrepancy between the payments.

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 Posted on April 01, 2014 in Tax Audits

According to news reports, many physicians who waited till April 13 to file taxes may have become victims of tax fraud.

Many doctors have reported being surprised when they attempted to file the taxes on April 15, and found out that their taxes had already been filed. Filing fraud taxes on behalf of another person is a simple tax fraud scheme that is fairly common. In these schemes, the person then pockets the refunds that the victim was eligible for.

This scheme is fairly simple to operate. The fraudster will access a company's W-2 database, which provides all the data about employees of the firm, their earnings, as well as personal data. With all that information, a person can find it very easy to file returns on behalf of the employee. In fact, some fraud schemes use fraud software that actually automates fraudulent and tax return filing. Some payroll systems are much more vulnerable to hacking than other types of systems.

Several medical societies have reported recently that a large proportion of their doctors have reported identity fraud, and tax fraud. In fact, one statement by the American Medical Association finds that fraudsters have hit doctors and healthcare providers this year. It's not yet clear whether the fraudsters were trying to attract doctors specifically, or whether they were trying to target high-income professionals.

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 Posted on March 03, 2014 in IRS Scams

We're in the 2014 tax season, and as with every year, this year too, it's important for taxpayers to look out for some of the most common scams out there. The Internal Revenue Service, as it does every year, is warning taxpayers once again to be careful and lookout for tax-related scams that are very often perpetrated using the IRS name.

There are several tax-related scams out there, and these usually emerge in tax season. From e-mail refund schemes that pose as the IRS, to telephone calls from IRS impersonators, taxpayers this year are likely to be targeted through a number of such frauds.

One of the most important things to know to avoid a tax-related scam is that the Internal Revenue Service, a federal agency, does not contact taxpayers by e-mail, and ask them for personal or financial data. If you receive any kind of electronic message, which includes e-mails, text messages, or any private message on your Facebook or Twitter accounts, you can rest assured that this is not the Internal Revenue Service contacting you. Besides, when the Internal Revenue Service contacts you, it does not ask you for personal financial information like your passwords, your personal identification number, and access information for your credit cards and bank account.

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