Monday, March 30, 2015

Big News from Washington

Americans have been complaining about income taxes since the IRS unleashed the first Form 1040 on us back in 1913. Sure, we all hate paying them. But as the tax code has ballooned to twice the length of the Bible (with none of the good news), preparing them has become just as big a problem. As Albert Einstein once put it, "the hardest thing in the world to understand is the income tax." And if Einstein couldn't wrap his enormous brain around those ridiculous Alternative Minimum Tax depreciation rules, what chance do the rest of us have?
Today, House Ways and Means Committee chair Paul Ryan (R-WI), along with Ranking Minority Member Sander Levin (D-MI), introduced their attempt to kill both of those birds with one stone: House Resolution 1040, the "Revenue Reform and Restructuring Act of 2015." As its name implies, the bill is a rare bipartisan effort to repeal the current income tax system completely — and even eliminate the dreaded Internal Revenue Service.
"We know that everyone hates paying taxes," Chairman Ryan said at a press conference announcing the bill. "But the way we calculate and collect them just adds insult to injury. Former President Jimmy Carter once called our tax code 'a disgrace to the human race.' I'm hardly a Jimmy Carter fan," the Chairman added. "But he was sure right about that."
"Look, folks, we're not stupid," said Representative Levin (as the assembled press corps snickered). "We've all seen the polls showing Congress is less popular than hemorrhoids, potholes, and dog poop. But can you guess what Americans hate even more? Just kidding — you'll totally guess, because it's the tax code. And we're the ones who wrote it! So we asked ourselves, what can we do to solve the tax problem and restore our good name?"
The answer, of course, is to scrap the bloated income tax that so many Americans detest, and replace it with something completely new and different. But how to claw back that $2.2 trillion in revenue? The Committee debated various flat tax proposals, but those didn't go far enough. They considered a sales tax or value-added tax, but that would fall most heavily on the poor. They even considered a carbon tax to discourage burning fossil fuels. Then the Texas delegation remembered that the Department of the Interior manages 155 million acres of public land for animal grazing. And those acres are filled with millions and millions of cows. Their idea: trade a few of those cows for some magic beans, and watch the beanstalks grow to the sky!
"Americans are hungry for something to unite around. They're crying out for something they can all believe in," said Ryan. "We're hoping 'Beanstalks to the Sky' can join a 'New Deal,' 'a Chicken in Every Pot,' and 'Give 'em Hell, Harry' in America's hearts and minds."
IRS officials had no comment on the proposed legislation. However, one senior staffer, speaking off the record, said "We're just as happy to get rid of those stupid tax forms as you are. But once we've transitioned to a beanstalk-based revenue system, they'll need us all at the Department of Agriculture." Across town at the White House, presidential spokesman Josh Earnest had even less to say — reports say that he stared blankly at a copy of Ryan's speech and asked "Is this some sort of joke?"
What do you think? Are Ryan and Levin on to something? Is the "B.S." (Bean Stalk) bill as credible as anything else coming out of Washington? Or are we just trolling you with an April Fools' Day gag?
Either way, you know what's really foolish? Paying more tax than you're legally required! But until we really can pay our bills with magic beans, there's only one way to pay less — and that's to create a plan. So call us if you're ready to pay less — and you're not willing to wait for Washington anymore! 

Monday, March 23, 2015

Shocking News

This time of year, taxpayers across America are scrambling to put together their last year's mileage records. First you've got to total up how many miles you drove for your trade or business. Then you've got to add up all the costs of operating your vehicle — depreciation, interest or lease payments, gasoline, maintenance and repairs, registration, and even your satellite radio bill. Then you'll multiply those expenses by your "business use percentage" to calculate your actual deduction. (Are we having fun yet?) Alternatively, you can just take the IRS standard mileage allowance, which stands at 57.5 cents per mile for 2015. Problem: it's the same amount for every car on the road, from gas-sipping Priuses to road-hogging SUVs. And you still have to track your miles. But at least it avoids the hassle of tracking all those receipts!
Keeping good mileage records can be important even if you're not just looking for more tax deductions. Illinois Representative Aaron Schock learned that lesson the hard way last week. The Congressman was already under fire for dropping $40,000 to decorate his office, Downton Abbey-style, and for accepting favors like private plane trips from well-heeled donors. Then we learned his mileage didn't add up. From 2010 through 2014, he billed Uncle Sam and his campaign for 170,520 miles he put on his Chevy Tahoe. But when he traded in the truck last year, there were only 81,860 miles on the odometer. Oops! Schock resigned his seat just hours after the story broke, which means he'll get to spend more "quality time" with his attorneys. (Yeah, another Illinois politician looking at a ride on the Incarceration Express — we were stunned, too.)
Schock is hardly the first politician to find himself in hot water over expense reimbursements. So who was the first? (No, not Martin Van Buren, but that's an awfully good guess.) Back in 1816, Congress began reimbursing members 40 cents per mile for travel between home and Washington "by the usually traveled route." And how did Congress arrive at that rate? Did they carefully calculate the cost of depreciating the buggies, boarding and feeding the horses, and oiling all that antique brass hardware? Well, not exactly. Congressmen made $8 per day back then. Apparently some enterprising clerk in the post-colonial equivalent of a windowless cubicle acknowledged the conventional wisdom that a Congressman could travel 20 miles a day. Then he took a quill pen to foolscap, divided those 20 miles into $8, and came up with 40 cents per mile.
By 1848, though, steamships plied the waters and railroads were fast replacing canals. The 40 cent rate was a relic. And Horace Greeley, editor of the New York Tribune and a Congressman himself, was outraged. On December 22, 1848, he released an expose blowing the whistle on those who claimed more miles than they really traveled. And who should we find on that list? Sandwiched between future Vice-Presidents Hannibal Hamlin and Andrew Johnson, was a one-term Whig from Aaron Schock's old district named Abraham Lincoln, who claimed $677 in excess reimbursement. That may not sound like much, but it works out to about $18,700 in today's dollars.
The "mileage swindle" scandal, as Greeley dubbed it, would have made a great story on House of Cards. Congressman after Congressman took to the floor to denounce Greeley in colorfully florid nineteenth-century style. (This was the era of "the caning of Charles Sumner," after all.) The House passed a bill limiting miles to "the shortest continuous mail route," and Congress lowered the rate to 20 cents. But even today, members of Congress still get a pretty generous travel allowance. Current rates range from 96 cents to $1.32 per mile — pretty sweet, compared to what our friends at the IRS give us.
What do you think? Should young Representative Lincoln have resigned his seat over his inflated expenses? Or was his future bright enough to justify giving him a second chance?
Ironically, once "Honest Abe" eliminated his own mileage entirely (by moving into a big white house with a convenient home office), he signed the first federal income tax into law. But if Lincoln hadn't done it, someone else would have. Either way, you'd still want to pay less, if you could, and we'd still be here to give you the plan to do just that. So call us when you're ready for that plan. And don't forget to deduct the miles you drive to get here!

Monday, March 16, 2015

007 for a Day

Who hasn't wanted to be a spy at some point or another? Boys see their first James Bond movie, and they don't want to be like 007 — they want to be 007. Girls learn how Mata Hari put her charms to work as a lethal double agent and think they can show the boys a thing or two. But sooner or later, most of us abandon that dream. And sadly, those job aptitude tests your high school guidance counselor makes you take rarely recommend "International Man of Mystery" as a career path.
But now, you've got the chance to finally realize that childhood fantasy. You don't even have to hide out in some third-world danger zone to do it. You can be a spy in a sun-splashed Mediterranean paradise full of friendly, welcoming people. What's not to love about that?
When you think of Greece, you probably think of Alexander the Great, the Acropolis, or the birthplace of democracy. But Greece is the national equivalent of the kid who peaked in high school, and Greek finances are a steaming pile of debt masquerading as a modern economy. Imagine an entire government that rushes down to the payday loan office right before closing every Friday, praying this week's installment won't get eaten up by last week's fees, and that's Greece. Seriously, don't be surprised if you fire up the news tomorrow and see they're trying to pawn the Parthenon.
Tax collections are a big part of Greece's problem. Greeks hate paying taxes, even more than we do. In fact, some Greek banks admit using "adaption formulas" to estimate how much their self-employed borrowers can really afford, simply because so few of them tell their government how much they really make. The average self-employed Greek spends 82% of their monthly reported income repaying their loans. But some groups, including doctors, lawyers, and even accountants (!) actually spend more on their mortgage payments than they admit making!
So Greece is desperate to avoid going broke. The government wants to start narrowing the "tax gap" between what they should be getting and what they really get. Last week, finance minister Yanis Varoufakis begged Greeks to start finally paying their taxes, pretty please, because it's their patriotic duty. But just in case that doesn't work, he's planning to recruit "casual" tax spies, like tourists, students, housekeepers, and other nonprofessionals, "to pose, after some basic training, as customers, on behalf of the tax authorities, while wired for sound and video."
We're not sure what sort of training you need to be a tax spy. The old-school techniques like "brush passes" and "dead drops" they teach at the CIA probably won't help as much as cyber-sleuthing and "social engineering." We also don't know how much the gig pays. (Our IRS cuts whistle-blowers in for up to 30% of what they help collect.) Still, it's a chance to play 007 for a day — who really cares what it pays?

So, Greeks who want to pay less have a simple plan — not telling the government how much they make! Here in the United States, that works, too — except it doesn't. (It's also against the law.) So if you feel like you're bailing out Uncle Sam with more than your fair share, call us for a plan. Let's see if we can save you enough for a Greek vacation that you don't have to spy for!

Monday, March 9, 2015

Crossing the Finnish Line

You know that sinking feeling. You're driving down the road, minding your own business, when you see a cop's "cherries and berries" flashing in your mirror. Then you look down at your speedometer, and realize he's gunning for you. Sure, it's a bummer. But it's not that big a deal. The cop checks your license, registration, and proof of insurance. He runs your name through the computer to make sure there aren't any outstanding warrants. Then he sends you on your way, a few bucks lighter and a few miles per hour slower.
Well, they do things a little differently in Finland. What else would you expect from a country where reindeer sausage is a delicacy and wife-carrying is a thing? (No kidding — whoever crosses the Finnish line first wins his wife's weight in beer!) In Finland, when the police pull you over, they check your license, your registration, and your tax return. They want that ticket to hurt, even if you're loaded — so the more you make, the more you pay.
Lots of Americans would be surprised to learn that Finland even has rich people. It's socialist Scandinavia, right? But neighboring Sweden is actually home to more billionaires per capita than we are, and Scandinavian entrepreneurs are responsible for cash cows like Skype, Spotify, and even Angry Birds. So those fines can get pretty heavy.
Reima Kuisla is a Finnish investor, hotelier, and racehorse owner. One day he was driving to the airport, and the polissi clocked him doing 64 mph in a 50-mph zone. They checked his taxes, saw that he had made about $7.15 million the previous year, and fined him the equivalent of$60,000! (The BBC, which originally broke the story, doesn't tell us what kind car Kuisla was driving. But we can probably assume it comes fully equipped with the latest heads-up navigation display, active suspension, and special charcoal scrubbers to filter out the smell of poverty.)
Kuisla's supercharged fine works out to the same as $415 for someone making $50,000 per year. Painful, but not fatal. Still, that's not stopping him from being a crybaby. "Ten years ago I wouldn't have believed that I would seriously consider moving abroad," he whined on his Facebook page. "Finland is impossible to live in for certain kinds of people who have high income and wealth." Not surprisingly, he's not getting a whole lot of sympathy. He isn't even the first Finn to wind up on the exhaust end of a big speeding fine. In 2002, a Nokia executive named Annsi Vanjoki was fined $103,600 for riding his Harley-Davidson a lousy 47 mph through a Helsinki suburb. He appealed the fine, arguing that his income had dropped, and successfully reduced it to "just" $5,245. Such a bargain!
Here in the United States, of course, we don't have to worry about traffic cops snooping through our taxes. But if we did, it would just be another good reason to have a plan to pay less. So call us when you're ready for your plan. Set up a time to come see us. And watch your speed on your way over — we wouldn't want you wasting your tax savings on a ticket!

Wednesday, March 4, 2015

You Taxin' Me?

Actor Robert DeNiro has played some of the most compelling characters in movie history: the schizophrenic ex-marine Travis Bickle in Taxi Driver, the young mob boss Vito Corleone in The Godfather Part II, the Chicago bootlegger Al Capone in The Untouchables, the "gentleman" gangster Jimmy Conway in Goodfellas, and the shrewd bookmaker "Ace" Rothstein in Casino. He's accumulated seven Oscar nominations for his work (including two wins), along with nine Golden Globe nods (two wins), dozens of other awards, and even a star turn as Harvard's Hasty Pudding Club Man of the Year.
But DeNiro is more than just an actor. He's also a shrewd businessman and entrepreneur. He's co-founded the TriBeCa Productions studio and TriBeCa Film Festival, and partnered with successful real estate and restaurant developers throughout the city. He's even starred in "I Love NY"commercials promoting Hudson Valley tourism. (If Travis Bickle were still driving today — perhaps for Uber? — he wouldn't recognize the streets. Ironically, DeNiro is partly responsible for that cleanup!) DeNiro's business ventures have given him a $200 million net worth. And for a brief moment last month, they led to a $6.4 million back tax bill.
This isn't the first time DeNiro has made news for his taxes. His first fight involved a 98-acre compound he owns in the Hudson Valley town of Gardiner, which the New York Times reports includes a house, "two guesthouses; a 14,000-square foot barn converted into a recreation center with a full gym, a swimming pool, boxing ring and film production suites; another barn turned into offices; tennis courts; and a ski slope." In 2006, the trustees controlling the property sued the town to lower the assessed value, which was pegged at $6 million. The trustees argued it was worth $4 million, while the town countered it was actually worth closer to $9 million.
The town won and the trust's lawyers appealed that decision. But by that point, the town's legal bills dwarfed the extra tax they stood to collect, and the town's residents were turning against DeNiro. (It may not have been quite like how Jimmy Conway turned against Henry Hill in Goodfellas, but it certainly wasn't pleasant.) When DeNiro learned the trust's lawyers had filed their appeal, he threw a fit that would have made Travis Bickle proud, withdrew the suit, and ordered his accountant to reimburse the town for $129,000 in legal fees.
DeNiro's latest tax issue involves our friends at the IRS, with even more money at stake. Last month, the IRS filed a lien to collect $6,410,449.20 he owed on his 2013 personal return. That amount naturally includes interest and penalties that accumulated over time, but had to be a big bill to start out with!
Fortunately for everyone involved, DeNiro's latest tax caper has a happy ending. That's refreshing, considering how many of the characters he plays end up dead or in prison. His spokesman reported that the IRS bills had been "sent to an old address," and once the actor learned about the debt, "he had a check for the full amount hand delivered to the IRS" the next morning. Apparently it's good to be worth $200 million — even if you have so many addresses the IRS can't find the right one to send the bills!


Hollywood's brightest stars aren't generally known for their financial smarts. DeNiro is an exception to that rule, but his success still hasn't guaranteed him an easy time with the tax man. That's why it's so important to have the right advisors on your side, advocates who can help you pay the least amount possible with the least hassle possible. And that process starts with a plan. So call us when you're ready for your star turn!