Filing your tax return usually isn't much of a chore. If you're like most people, you e-file it and call it a day. (Maybe you cross your fingers in hope that teenage Russian hackers don't steal your identity.) If you're old-school, you trudge down to the post office to snail mail a paper return. But if Representative Gwen Moore's new bill passes, filing might get a little harder.
Moore represents Wisconsin's Fourth District, which includes Milwaukee and several working-class suburbs. She has a special sympathy for constituents on public assistance because she's been there herself. "I am a former welfare recipient," she says. "I've used food stamps, I've received Aid for Families with Dependent Children, Medicaid, Head Start for my kids, Title XX daycare [subsidies]. I'm truly grateful for the social safety net." And she's offended by measures requiring welfare recipients to pass drug tests to qualify for aid, especially since evidence suggests they're no likelier to use drugs than anyone else.
Apparently Moore believes the notion that what's good for the public-assistance goose is good for the silk-stocking gander. And many of her Congressional colleagues argue that massive tax deductions are grants of public money just like welfare benefits. So, on June 16 she introduced H.R. 5507, The Top 1% Accountability Act of 2016. And what would her bill do to ensure "accountability"? Simple! It would require the highest-income taxpayers to pass a drug test before claiming $150,000 or more in itemized deductions. Can't pass the test? Settle for the standard deduction!
Fortunately, Moore's bill wouldn't require lucky Top 1%-ers to line up at IRS offices with designer specimen cups in hand. It merely requires "a test completed within 3 months before the date on which the return of tax is filed which shows that the taxpayer (or the taxpayer's spouse in the case of joint return) did not test positive for any controlled substance."
The bill generously gives taxpayers three ways to pass. They could submit a test conducted by their employer. They could submit a test from a program certified by a state. Or they could provide a certified letter from a "medical review officer" qualified under federal workplace drug testing regulations. "Controlled substances" include pretty much everything you'd expect, with no exception for medical marijuana.
Moore understands there's a certain element of "sticking it to the man" in her bill. "I would love to see some hedge fund manager on Wall Street who might be sniffing a little cocaine here and there to stay awake realize that he can't get his $150,000 worth of deductions unless he submits to a drug test," she says.
But she also wants to raise serious questions about how the government treats Americans occupying different places on the financial food chain. Take housing subsidies, for example. A low-income family renting a 2-bedroom apartment might qualify for a Section Eight voucher of $1,000 per month, depending on where they live. But if that Wall Street hedge funder snorting coke writes off $50,000 in mortgage interest on his swanky Manhattan condo, he'll save $20,000 in taxes. So why shouldn't he pass the same drug test, she asks?
Moore's bill obviously has no hope of passing in today's Congress. But it illustrates how tax threats can come out of left field. That's why it's not enough to settle for tax professionals who just record history. You need a proactive planner with foresight to anticipate challenges before they hit your wallet. So call us for the plan you need!
Monday, June 27, 2016
Monday, June 20, 2016
Take This Tax and Shove It
Country music has a long history of celebrating outlaw behavior,
which naturally extends to celebrating "outlaw" performers. Plenty of
fans have heard the album Johnny Cash recorded of his first prison
concert at California's San Quentin
penitentiary. But Cash's fellow country icon Merle Haggard, who
recently passed away at age 80, was there to hear the concert live — because he was actually serving time in the joint!
(Haggard was no stranger to the wrong side of the bars — his own mother
gave him up to juvenile authorities when he was just 11 years old.
Haggard later credited Cash with inspiring him to turn from burglary to
music.)
Now the singer-songwriter David Allan Coe is the latest to saddle up with the outlaw brigade. Last week, a federal judge in Cincinnati sentenced the 76-year-old performer to three years' probation and ordered him to pay $980,912 in restitution. So what was his crime? Horse thievin'? Cattle rustlin'? Train robbin'? Uh, no . . . try "impeding and obstructing the due administration of the Internal Revenue laws."
Coe is most famous for writing Johnny Paycheck's 1977 smash hit, "Take This Job and Shove It," which climbed all the way to #1 on the charts and even inspired a movie. Apparently, though, he didn't realize the outlaw act was supposed to be just an act. Prosecutors say Coe performed over 100 concerts a year from 2008 through 2013. But he failed to file returns for 2008 and 2010. And he failed to pay for 2009, 2011, and 2013. Where did the money go? To pay gambling debts, of course. (This is a country music outlaw we're talking here, not Robin Hood — did you think he was using it to sponsor orphans in the Philippines?)
Eventually, of course, the IRS caught up with Coe. They even levied his bank accounts to show him they meant business. That's when Coe decided to circle the wagons. He demanded to be paid in cash only, by 3:00PM on the day of the concert. His road manager would pick up the cash, deduct enough to pay himself and the band, and give the rest to Coe in person or through MoneyGram or Western Union. Oh, and there was one more catch: There were "no $50 bills allowed as Coe believed they were bad luck and would not gamble with them."
Last September, Coe pled guilty to one criminal count. He faced up to three years in prison, so he should probably count himself lucky he won't be recording "David Allan Coe Behind Bars."
Coe isn't the only country crooner to find himself in IRS crosshairs. In 1990, the Service seized most of Willie Nelson's assets in an attempt to collect $32 million in debt. Nelson's lawyer negotiated the arrearage down to $16 million, and then again to $6 million, and Willie went to work. He released a double album titled The IRS Tapes: Who'll Buy My Memories, with proceeds dedicated to paying down the feds. He sued his accountant (naturally). He finally cleared his debt three years later. Willie's 83 now, and it looks like he learned his lesson — the only laws he breaks today involve "the Devil's lettuce."
We understand that paying your tax is no fun (especially if it gets in the way of a good wager). Fortunately, we can help you pay less without singing a sad country song. Just call us for a plan — we can bet you'll be happy with the results!
Now the singer-songwriter David Allan Coe is the latest to saddle up with the outlaw brigade. Last week, a federal judge in Cincinnati sentenced the 76-year-old performer to three years' probation and ordered him to pay $980,912 in restitution. So what was his crime? Horse thievin'? Cattle rustlin'? Train robbin'? Uh, no . . . try "impeding and obstructing the due administration of the Internal Revenue laws."
Coe is most famous for writing Johnny Paycheck's 1977 smash hit, "Take This Job and Shove It," which climbed all the way to #1 on the charts and even inspired a movie. Apparently, though, he didn't realize the outlaw act was supposed to be just an act. Prosecutors say Coe performed over 100 concerts a year from 2008 through 2013. But he failed to file returns for 2008 and 2010. And he failed to pay for 2009, 2011, and 2013. Where did the money go? To pay gambling debts, of course. (This is a country music outlaw we're talking here, not Robin Hood — did you think he was using it to sponsor orphans in the Philippines?)
Eventually, of course, the IRS caught up with Coe. They even levied his bank accounts to show him they meant business. That's when Coe decided to circle the wagons. He demanded to be paid in cash only, by 3:00PM on the day of the concert. His road manager would pick up the cash, deduct enough to pay himself and the band, and give the rest to Coe in person or through MoneyGram or Western Union. Oh, and there was one more catch: There were "no $50 bills allowed as Coe believed they were bad luck and would not gamble with them."
Last September, Coe pled guilty to one criminal count. He faced up to three years in prison, so he should probably count himself lucky he won't be recording "David Allan Coe Behind Bars."
Coe isn't the only country crooner to find himself in IRS crosshairs. In 1990, the Service seized most of Willie Nelson's assets in an attempt to collect $32 million in debt. Nelson's lawyer negotiated the arrearage down to $16 million, and then again to $6 million, and Willie went to work. He released a double album titled The IRS Tapes: Who'll Buy My Memories, with proceeds dedicated to paying down the feds. He sued his accountant (naturally). He finally cleared his debt three years later. Willie's 83 now, and it looks like he learned his lesson — the only laws he breaks today involve "the Devil's lettuce."
We understand that paying your tax is no fun (especially if it gets in the way of a good wager). Fortunately, we can help you pay less without singing a sad country song. Just call us for a plan — we can bet you'll be happy with the results!
Tuesday, June 14, 2016
Thrilla in Manila Envelopes
Words like "hero" and "icon" get tossed around pretty casually these days. But the world lost a true card-carrying legend with the passing last week of boxer Muhammed Ali after a long and public battle with Parkinson's disease. Ali first gained fame in the ring, of course, floating like a butterfly and stinging like a bee. But he made his real mark, and redefined the power of an athlete's reach, when he picked a four-year fight to battle induction into the United States Army. Now his estate could be poised for a different and equally expensive sort of battle — this time, with the IRS.
Today's pugilists earn lavish sums for sometimes-mediocre performances — witness Floyd Mayweather's nine-figure payday for 36 minutes of sparring with Manny Pacquiao. But Ali was rarely motivated by money. "What I need money for?" he told Esquire back in 1968. "I don't spend no money. Don't drink, don't smoke, don't go nowhere, don't go running with women." (Pretty smart advice, when you think about it.) The champ gave up millions during the years he was banned from boxing while fighting the army. And he was legendarily generous during his life, giving money to friends, family, and complete strangers.
"The Greatest" continued to earn millions even after retiring from the ring in 1981. Forbes magazine scored his endorsements at $4-7 million per year from 2000-2005. And his estate has been estimated to be worth as much as $80 million.
We don't yet know how he might have divided his assets between his fourth wife and executor, Lonnie, and his nine acknowledged children. However, we do know that he can leave an unlimited amount free of tax to his wife. Anything passing to other parties is subject to a 40% federal estate tax on amounts over $5.43 million. His home state of Arizona levies no additional estate tax.
As is sadly so often the case, it looks like Ali's family is already fighting over the estate. His second wife Khalilah reports that the champ's brother and son have accused Lonnie of cutting them out of the will, and warns that illegitimate children will "come out of the woodwork like roaches."
But the biggest bout over Ali's estate probably won't concern who gets what. Rather, it will involve how much everything is worth — especially intangible assets like "name" and "image." Pop legend Michael Jackson was one of the most recognizable people on the planet, yet his executors valued his name and image at just $2,015. The IRS countered with a slightly higher $434 million, and naturally the two sides are duking it out in court. (Ironic, considering how Jackson declared "I'm a lover, not a fighter!")
Ali ducked part of that left-hook by selling 80% of those rights for $50 million back in 2006. (He named the company he established to manage those rights "Goat, LLC," which modestly stands for "greatest of all time.") But Lonnie and the IRS still have to score how much the 20% he kept for himself is worth.
We spend a lot of our time planning for punches that life might throw, market crashes and business downturns among them. And there are some punches we know we're going to take. Unfortunately, dying tops that list. But it really is possible to avoid estate taxes — and plenty of other taxes — entirely. All you need is a plan. So call us for help with that plan, before you step into the ring with the IRS!
Today's pugilists earn lavish sums for sometimes-mediocre performances — witness Floyd Mayweather's nine-figure payday for 36 minutes of sparring with Manny Pacquiao. But Ali was rarely motivated by money. "What I need money for?" he told Esquire back in 1968. "I don't spend no money. Don't drink, don't smoke, don't go nowhere, don't go running with women." (Pretty smart advice, when you think about it.) The champ gave up millions during the years he was banned from boxing while fighting the army. And he was legendarily generous during his life, giving money to friends, family, and complete strangers.
"The Greatest" continued to earn millions even after retiring from the ring in 1981. Forbes magazine scored his endorsements at $4-7 million per year from 2000-2005. And his estate has been estimated to be worth as much as $80 million.
We don't yet know how he might have divided his assets between his fourth wife and executor, Lonnie, and his nine acknowledged children. However, we do know that he can leave an unlimited amount free of tax to his wife. Anything passing to other parties is subject to a 40% federal estate tax on amounts over $5.43 million. His home state of Arizona levies no additional estate tax.
As is sadly so often the case, it looks like Ali's family is already fighting over the estate. His second wife Khalilah reports that the champ's brother and son have accused Lonnie of cutting them out of the will, and warns that illegitimate children will "come out of the woodwork like roaches."
But the biggest bout over Ali's estate probably won't concern who gets what. Rather, it will involve how much everything is worth — especially intangible assets like "name" and "image." Pop legend Michael Jackson was one of the most recognizable people on the planet, yet his executors valued his name and image at just $2,015. The IRS countered with a slightly higher $434 million, and naturally the two sides are duking it out in court. (Ironic, considering how Jackson declared "I'm a lover, not a fighter!")
Ali ducked part of that left-hook by selling 80% of those rights for $50 million back in 2006. (He named the company he established to manage those rights "Goat, LLC," which modestly stands for "greatest of all time.") But Lonnie and the IRS still have to score how much the 20% he kept for himself is worth.
We spend a lot of our time planning for punches that life might throw, market crashes and business downturns among them. And there are some punches we know we're going to take. Unfortunately, dying tops that list. But it really is possible to avoid estate taxes — and plenty of other taxes — entirely. All you need is a plan. So call us for help with that plan, before you step into the ring with the IRS!
Tuesday, June 7, 2016
Have a Coke and a Tax
When most of us hear the word "tax," we immediately think "IRS." It's natural to associate those three-letter words with each other (even if "IRS" is an acronym and not a word). But our friends at the IRS are hardly the only tax collectors with their hands out for your money. State and local governments need love money too, and they don't have as many options for raising it as Uncle Sam. So every now and then, someone makes headlines with a plan to tax something new.
Philadelphia's incoming mayor Jim Kenney is the latest local official to propose quenching his city's fiscal thirst with a new tax. His inaugural budget would impose a three cents per ounce tax on soda, juices, iced tea, and other sugary drinks. The mayor claims the measure would raise $400 million over the next five years. The issue has even bubbled up into the presidential race — Hillary Clinton supports the tax, while her challenger Bernie Sanders condemns it as disproportionately harmful to the city's poor.
This isn't the first time governments have tried carbonating their revenue by taxing soda — since 2008, 40 similar taxes have been rejected around the country, including twice previously in Philadelphia. Only one place, famously progressive Berkeley, California, has succeeded. New York Mayor Michael Bloomberg actually banned drinks larger than 16 ounces before a state court doused the rule. (Grateful Gothamites fondly remember it as "Bloomberg's $#*@ing Big Gulp ban.")
Now Philadelphia's Kenney is hoping the third time will hit the sweet spot. But this time, he's coming at it from a different direction. He's not positioning it as a public health measure or using it to fight obesity or diabetes. He's just looking to reinvest some of the soda companies' profits into the communities where the biggest customers live. The $400 million would go towards funding universal pre-kindergarten, creating community schools, and renovating parks, community centers, and libraries.
School funding advocates and public health officials are all for it. New York's Bloomberg has joined the fray in support. But naturally, Kenney's proposal has drawn opponents. You'll be shocked to learn that the American Beverage Association has spent $2.6 million to oppose it. (They poured $9 million down the drain fighting the Berkeley referendum.) Local Teamsters oppose it, too, arguing that flat soda sales will cost jobs. And plenty of city residents feel squeezed enough already — for example, there's already a $2 per pack tax on cigarettes that helps fund local schools.
Political infighting is fierce, and council members are looking at a whole menu of alternatives. One council member proposed a 15 cent tax on beverage containers, designed to hit the people who drink mineral water and fancy kombucha teas just as hard as the people who guzzle Mountain Dew. She also introduced a "healthy beverages tax credit" to encourage stores to stock drinks worth drinking. Others are considering taxing (gasp!) diet sodas. But time is running out — council has to pop the top on a final budget by the end of June.
We realize that a three-cent tax on an ounce of soda won't get in the way of your financial goals. But if you're one of the millions who look somewhere besides coffee for your daily caffeine fix, it would be a constant reminder of the government's power to tax. We never forget how destructive that power can be, and that's why we work so hard to give you a plan to pay the least amount possible — and avoid the unpleasant surprise of a "shook-up" can!
Philadelphia's incoming mayor Jim Kenney is the latest local official to propose quenching his city's fiscal thirst with a new tax. His inaugural budget would impose a three cents per ounce tax on soda, juices, iced tea, and other sugary drinks. The mayor claims the measure would raise $400 million over the next five years. The issue has even bubbled up into the presidential race — Hillary Clinton supports the tax, while her challenger Bernie Sanders condemns it as disproportionately harmful to the city's poor.
This isn't the first time governments have tried carbonating their revenue by taxing soda — since 2008, 40 similar taxes have been rejected around the country, including twice previously in Philadelphia. Only one place, famously progressive Berkeley, California, has succeeded. New York Mayor Michael Bloomberg actually banned drinks larger than 16 ounces before a state court doused the rule. (Grateful Gothamites fondly remember it as "Bloomberg's $#*@ing Big Gulp ban.")
Now Philadelphia's Kenney is hoping the third time will hit the sweet spot. But this time, he's coming at it from a different direction. He's not positioning it as a public health measure or using it to fight obesity or diabetes. He's just looking to reinvest some of the soda companies' profits into the communities where the biggest customers live. The $400 million would go towards funding universal pre-kindergarten, creating community schools, and renovating parks, community centers, and libraries.
School funding advocates and public health officials are all for it. New York's Bloomberg has joined the fray in support. But naturally, Kenney's proposal has drawn opponents. You'll be shocked to learn that the American Beverage Association has spent $2.6 million to oppose it. (They poured $9 million down the drain fighting the Berkeley referendum.) Local Teamsters oppose it, too, arguing that flat soda sales will cost jobs. And plenty of city residents feel squeezed enough already — for example, there's already a $2 per pack tax on cigarettes that helps fund local schools.
Political infighting is fierce, and council members are looking at a whole menu of alternatives. One council member proposed a 15 cent tax on beverage containers, designed to hit the people who drink mineral water and fancy kombucha teas just as hard as the people who guzzle Mountain Dew. She also introduced a "healthy beverages tax credit" to encourage stores to stock drinks worth drinking. Others are considering taxing (gasp!) diet sodas. But time is running out — council has to pop the top on a final budget by the end of June.
We realize that a three-cent tax on an ounce of soda won't get in the way of your financial goals. But if you're one of the millions who look somewhere besides coffee for your daily caffeine fix, it would be a constant reminder of the government's power to tax. We never forget how destructive that power can be, and that's why we work so hard to give you a plan to pay the least amount possible — and avoid the unpleasant surprise of a "shook-up" can!
Wednesday, June 1, 2016
Barry Good!
Humorist Dave Barry entertained millions of readers with his nationally syndicated column from 1983 to 2004. Along the way, he earned a Pulitzer Prize for commentary, inspired a television series (Dave's World), and even, after mocking the cities of Grand Forks, South Dakota and East Grand Forks, Minnesota, earned the honor of having a sewage pumping station named after him. Dave's slowed down in recent years, but he always had a lot to say about taxes. So here are some of our favorite Dave Barry quotes for your quick enjoyment:
"It's income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta."
"We'll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail."
"Big business never pays a nickel in taxes, according to Ralph Nader, who represents a big consumer organization that never pays a nickel in taxes."
"[American tax laws] are constantly changing as our elected representatives seek new ways to ensure that whatever tax advice we receive is incorrect."
"The IRS spends God knows how much of your tax money on these toll-free information hot lines staffed by IRS employees, whose idea of a dynamite tax tip is that you should print neatly. If you ask them a real tax question, such as how you can cheat, they're useless."
"The question is: What can we, as citizens, do to reform our tax system? As you know, under our three-branch system of government, the tax laws are created by: Satan. But he works through the Congress, so that's where we must focus our efforts."
"If our government is going to be able to provide for the common good, everybody has to contribute his or her fair share in the form of taxes. And when I say "everybody," I mean, "not everybody." Because the truth is that a lot of people don't pay taxes. Poor people, for example. Also many rich people. Also a fair number of middle-income people."
"Q. At 9 a.m. today, I made large cash contributions to both major political parties. As of 1:30 this afternoon, the federal government had still not enacted special tax-break legislation just for me. What kind of country is this?
A. Unfortunately, because of the high demand, the federal government can no longer provide "same-day service," but if you do not see action by noon tomorrow, you should contact your personal congressperson; or, if you are staying in the Lincoln Bedroom, simply stomp on the floor."
This week it seems especially appropriate to remind you that there's nothing funny about overpaying your taxes, and there are no Pulitzer Prizes waiting for people who do it. The solution, of course, is a plan to pay less. So call us when you're ready for a plan of your own, and have a laugh at the expense of everyone else who doesn't have one!
"It's income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta."
"We'll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail."
"Big business never pays a nickel in taxes, according to Ralph Nader, who represents a big consumer organization that never pays a nickel in taxes."
"[American tax laws] are constantly changing as our elected representatives seek new ways to ensure that whatever tax advice we receive is incorrect."
"The IRS spends God knows how much of your tax money on these toll-free information hot lines staffed by IRS employees, whose idea of a dynamite tax tip is that you should print neatly. If you ask them a real tax question, such as how you can cheat, they're useless."
"The question is: What can we, as citizens, do to reform our tax system? As you know, under our three-branch system of government, the tax laws are created by: Satan. But he works through the Congress, so that's where we must focus our efforts."
"If our government is going to be able to provide for the common good, everybody has to contribute his or her fair share in the form of taxes. And when I say "everybody," I mean, "not everybody." Because the truth is that a lot of people don't pay taxes. Poor people, for example. Also many rich people. Also a fair number of middle-income people."
"Q. At 9 a.m. today, I made large cash contributions to both major political parties. As of 1:30 this afternoon, the federal government had still not enacted special tax-break legislation just for me. What kind of country is this?
A. Unfortunately, because of the high demand, the federal government can no longer provide "same-day service," but if you do not see action by noon tomorrow, you should contact your personal congressperson; or, if you are staying in the Lincoln Bedroom, simply stomp on the floor."
This week it seems especially appropriate to remind you that there's nothing funny about overpaying your taxes, and there are no Pulitzer Prizes waiting for people who do it. The solution, of course, is a plan to pay less. So call us when you're ready for a plan of your own, and have a laugh at the expense of everyone else who doesn't have one!
Subscribe to:
Posts (Atom)