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August 2009

The tax alphabet is sure filling up. Earlier this month, I blogged about the new Schedule L that some taxpayers will have to file with their 2009 returns next year. Let me now introduce you to Schedule M. As the Schedule M snippet above indicates, it's related to the Making Work Pay credit that was part of the American Recovery and Reinvestment Act. Under that bill, popularly known as the February 2009 stimulus package, working taxpayers could get up to a $400 benefit. In addition, the stimulus package provided a special $250 payout to many retirees. Now comes the fun... Read more →

Tax reform's lesson for health care

"Whenever Congress undertakes large-scale reform, there are times when disaster appears certain — only to be averted at the last minute by the good sense of its sometimes unfairly maligned members." That's the assessment of Bill Bradley, a former U.S. Senator from New Jersey, as well as a former tax loophole for the New York Knicks. In a New York Times' op-ed, Bradley notes how his time as an NBA depreciable asset helped in the 1986 passage of the historic tax reform measure. Twenty-three years later, Representatives and Senators need to find similar creative but effective legislative ways for Democrats... Read more →

As despicable as Joe Francis' business is, you've got to give him credit for chutzpah. Outlandish efforts also seem to be what the Girls Gone Wild (GGW) founder looks for in his tax attorneys. Francis is awaiting trial on federal tax-evasion charges that he hid business income in offshore companies and deducted millions in phony business expenses. When Francis' trial starts this fall, his attorneys will try to convince jurors that all those write-offs were OK because Joe is the business. And since Joe is GGW, everything he does is business related and therefore legally deductible. Or, as Joe Kristan... Read more →

OK, it's just one state, Connecticut, right now. But I suspect that officials in 49 other states and the District of Columbia soon will be looking to see if any of their residents had secret Swiss bank accounts. Connecticut Attorney General Richard Blumenthal (pictured at right) is leading the charge. His office wants to know if any Nutmeg State residents are among the 4,450 U.S. citizens who evaded taxes through offshore accounts with Swiss banking giant UBS. The thinking is that as long as Uncle Sam is going to get his share, Connecticut should, too. "UBS is naming names of... Read more →

One of the Lone Star State's interesting tax laws allows senior citizens to defer their residential property tax payments. This is not the homestead exemption for older homeowners. It is additional tax relief, a postponement of all property tax payments until the age-65-or-older owner sells the residence, moves out of it or dies. When one of those events occurs, the real estate taxes are due, with interest, after 180 days. If the former owner has passed away, the estate usually pays the tax bill, or the new owner comes up with the money. Delaying higher tax bills: This law, Texas... Read more →

In looking at the IRS proposal to develop standards for paid tax preparers and ways to enforce any such eventual guidelines, I'm transported back to my college days in Journalism 101 class. My J-School instructor back then laid out the basic questions any budding Brenda Starr or Jimmy Olsen should always ask: Who, What, Why, When, Where and How. That's the same process the nation's tax agency is using. But during a recent discussion with some of us on the Taxpayer Advocacy Panel (TAP), the preliminary answers to those core inquiries seemed to raise more questions. Now the TAP meeting... Read more →

Is your new 'friend' a tax collector?

Be careful about the financial information you share via social media sites. State tax offices are paying attention. In today's Wall Street Journal, Laura Saunders reports that state revenue agents are nabbing scofflaws by mining information posted on social-networking Web sites. Relocation announcements, professional profiles and, not surprisingly, boasts of financial success are catching collectors eyes, and adding to state treasuries. Tax officials in Minnesota, California and Nebraska were cited in the story as having success locating tax deadbeats who shared a little too much online. MySpace seems to be, for now, the primary source of finding out about individuals... Read more →

Federal court halts Delaware betting plan

Delaware officials hoping to make easy money off sports bettors will have to revise their gaming plan. A Third Circuit Court of Appeals panel says Delaware's proposal to offer single-game bets on all major league and college games violates a 1992 federal ban on sports gambling. Because of that, the court issued an emergency injunction against the practice. Delaware officials had hoped to have the single-game system operating by Sept. 1. Now, however, they'll have to rely on parlay betting on professional sports. As I understand it, with this system you pick, for example, the Cowboys and Redskins and they... Read more →

Crime reportedly doesn't pay, but Uncle Sam recently handed out $250 checks to almost 4,000 jailed felons. The payments were mistakenly issued as part of the American Recovery and Reinvestment Act, popularly known as the February 2009 stimulus law. Under the Making Work Pay credit portion of the new law, workers have seen a smaller amount of payroll taxes withheld from their paychecks. But folks who don't have jobs also got a stimulus benefit. Separate $250 checks were sent to 54.4 million beneficiaries of Social Security, veterans and federal railroad payments. And some of those check recipients are behind bars.... Read more →

What would you do if a tax refund check of almost $123,000 showed up in your mailbox? Laura Schultz. an employee with the Denver-area Sunshine Maids, did just as the IRS asked and voided the $122,783.51 check. That's some serious good Karma Schultz just bought herself. Of course, she could have actually bought herself a lot more stuff if she'd cashed in on Uncle Sam's mistake ... for a while. Chances are the IRS would have discovered its error and come looking for the misdirected money. Then Schultz would have had to give it back, along with interest. As things... Read more →

Massachusetts' use tax is in the news again, as that state's highest court ruled today that the state can't collect taxes from a New Hampshire retail chain that sells tires to Massachusetts residents. "The Legislature may, of course, enact such a presumption, but in the absence of any such statutory authorization, it is error to rely on a presumption that tires sold to a Massachusetts resident outside the Commonwealth were actually used in the Commonwealth,'' according to the court's decision. The case arose when, in 2003, a Massachusetts auditor found 313 invoices in a sample of sales records at three... Read more →

Rep. Charles Rangel, the New York Democrat who heads the tax-writing House Ways and Means Committee, is back under the ethics spotlight. This latest scrutiny comes after Rangel revealed on his amended 2007 financial disclosure report that he didn't originally detail hundreds of thousands of dollars in assets. The new information, according to CQ Politics, includes an account at the Congressional Federal Credit Union worth at least $250,000, land in southern New Jersey and stock in PepsiCo and fast food conglomerate Yum! Brands. Rangel already is under two separate investigations by the House ethics committee. Expect renewed calls, including from... Read more →

IRS expanding video options

Can't find a program that appeals to you on TV? Tune in the IRS network! Yes everyone's favorite federal agency, the Internal Revenue Service, is taking new media very seriously. The IRS now has its own YouTube page, with a collection of video presentations for your viewing and tax pleasure. The videos cover a variety of relevant tax topics and are in English, American Sign Language (ASL) and Spanish. In addition, iTunes aficionados can find IRS podcasts at that site. The latest IRS clips contain information on the 2009 stimulus plan, otherwise known as the American Recovery and Reinvestment Act.... Read more →

NFL Eagles pass on ex-con tax credit

The City of Philadelphia has a special program that offers employers a $10,000 tax credit if they will hire ex-cons. The city's National Football League team, however, has decided against taking the money although it now has convicted felon Michael Vick on payroll. The Philadelphia Daily News reports that the Eagles could recoup 0.625 percent of Vick's $1.6 million salary under the Mayor's Office for the Re-entry of Ex-Offenders (MORE) program. A team spokesperson, however, told the paper that's not going to happen. Given the controversy surrounding the team's signing of Vick, who just got out of federal prison after... Read more →

State use taxes tend to be useless

Sales taxes have gotten a lot of attention in recent weeks, mainly because more than a dozen states opted not to collect them temporarily during back-to-school sales tax holidays. But there is a similar levy that state tax collectors usually don't collect throughout the year, although they'd really like to have the money. I'm talking about the use tax. A state's use tax generally applies to the "use, storage or other consumption" of tangible personal property within the state even if it wasn't bought in the state. If it had been, it would have been subject to the state's sales... Read more →

What's the deal right now with lotteries? Suddenly we have winners, potential winners and a winner about to forfeit a jackpot. First, a look at those who cashed in. Two Iowa couples claimed a $1 million lottery prize on Friday. After taxes, the four took home about $700,000 in cash from the Powerball drawing. Next we head to Italy, where lottery fever has gripped the country. The SuperEnalotto jackpot has been growing since January. It's now worth almost 144 million euros, or $204 million U.S. dollars, the biggest ever in Europe. Even better for that eventual lucky winner, the prize... Read more →

Vermonters, get ready to shop tomorrow. Saturday, Aug. 22, is your state's only sales tax free day of 2009. The good news is that the Green Mountain State has a generous tax-free threshold. Most items costing $2,000 or less are exempt from state sales and local option sales taxes as long as the products are purchased for personal, not business, use. There are a few exceptions. For example, the tax holiday doesn't apply to the Meals and Rooms tax. You'll still owe tax on food and beverages, including booze sold in restaurants and bars. And if you were thinking of... Read more →

UBS deal sends wrong message

Three American University law professors say that some terms of the UBS bank accounts deal make it look like America's tax laws are not enforced uniformly. Nancy Abramowitz, Andrew Pike and Robin Westbrook, professor's at the D.C. university's Washington College of Law, are particularly concerned about the possibility that some of the wealthy suspected tax evaders could get amnesty after their names are turned over by the Swiss to U.S. tax investigators. In a letter to IRS Commissioner Douglas Shulman (text reproduced at, the professors tell Shulman that: "In the last few years, we have seen an increase in... Read more →

Richard Hatch back in slammer

Richard Hatch, the first $1 million winner of the reality show Survivor, is back in jail. Hatch' reincarceration on Tuesday came just hours after an interview he gave the Today Show aired. At that time, the big news was Hatch's claim he was jailed because he was gay, not because he failed to pay taxes on his million dollar prize. Oh my heavens, Hatch! You need to sell that property on the River Denial and get a grip! It seems this guy is always looking for a way to top himself. He first gained notoriety by being the "fat, naked... Read more →

Finally! We Lone Star State residents now get to do some tax-free shopping. Friday, Aug. 21, kicks off a weekend of no sales taxes on most clothing and footwear priced under $100. The tax holiday runs through Sunday, Aug. 23. New on the tax-free list this year is a collection of school supplies. These classroom items, which also must be priced at less than $100 each, are detailed at the Texas Comptroller's special tax holiday Web page. In addition, the state has put together a list of apparel and accessories that are tax exempt, or not, during the holiday. Read more →