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November 2009

Tax carrot + stick nab 14,700 scofflaws

Federal investigators are feeling pretty darn good about themselves right now. After a persistent effort to get info on taxpayers they believe hid money subject to U.S. taxes in offshore accounts, the Department of Justice and IRS announced yesterday that more than 14,700 taxpayers have 'fessed up about their previously-undisclosed foreign bank holdings. "We have now gained access to thousands of taxpayers and bank accounts that we have never had before," said IRS Commissioner Douglas Shulman, adding that it had sent "a shock wave around the world." You can forgive the commish for being perhaps a bit hyperbolic. It's not... Read more →

It's Tax Twitter Tuesday time again! Sorry I'm a bit tardy. This Tuesday had me in a real tizzy! But I'm finally here, and glad you are, too. For first-timers, on the third Tuesday of each month I sift through the gazillion tax Tweets and collect some as a blog post here at Don't Mess With Taxes. If you're on Twitter and talk about taxes, all you have to do is keep doing what you're doing. The new lists feature should help me find your item. But just to make sure I do, you can always "at" me; that is,... Read more →

Tax record keeping song and dance

The year is winding down. You're trying to gather of all your receipts. (Yeah, I know, next year you'll institute that record-keeping system). But some paperwork is missing. What can you do? You might want to check out a 79-year-old rule regarding the estimation of tax deductions. In 1930, a federal court ruled that a famous actor, playwright and producer could deduct entertainment expenses based on estimated expenses, rather than having to produce detailed records of each expenditure. The holding in this case became known as the Cohan Rule. Yep, Cohan as in George M. As in the man most... Read more →

My earlier warnings about problems that the Making Work Pay tax credit will cause some folks are now official. The Treasury Inspector General for Tax Administration (TIGTA) has issued a formal report on the matter that I blogged about back in March. The credit seemed like such a good idea. Under the stimulus package enacted in February, the credit will provide individuals up to $400 and couples up to $800. To get it, all people have to do was continue to collect their paycheck. The IRS rejiggered the withholding tables so that workers would simply have a bit less in... Read more →

Swiss considering 'foreigner tax pledge'

Swiss banks are considering asking some foreign clients to sign a pledge declaring they aren't breaking tax laws at home. The chairman of the Swiss Bankers Association, Patrick Odier, told the Swiss weekly newspaper NZZ am Sonntag (hat tip to Taiwan News) that the industry group is examining ways to pre-empt demands by other countries for an automatic exchange of client information.One option would be to make customers from nations that have a tax agreement with Switzerland sign a written declaration that they comply with their home country's tax laws. That Swiss bankers are even considering any accommodations to other... Read more →

Earlier this year, a pay-per-mile federal driving tax was floated. Even the Secretary of Transportation expressed some interest in a VMT, or vehicle mileage tax. As you might suspect, any even remote idea to make Americans pay more on anything related to our beloved automobiles was quickly shuttled to the "No Way" exit on the political highway. Mileage tax on track in Europe: It's a different story, however, across the pond. In the Netherlands, just such a road tax proposal is on its way to becoming law. If finalized, when 2012 rolls around Dutch drivers will pay for every kilometer... Read more →

Taxpayers often complain that the IRS seems to want an arm and a leg from them. Well, it turns out that a pound of flesh (although usually much less) might one day literally be considered when it comes to taxation. "Transfers of human body materials are ubiquitous. From surrogacy arrangements, to sales of eggs, sperm and plasma to clinics, to black markets for kidneys, to pleas for donations of body materials, these transfers are covered and debated daily in popular and academic discourse," writes Lisa Milot of the University of Georgia Law School. But, adds Milot, current law is unclear... Read more →

It's no secret that celebrities get into tax trouble as often, if not more so, that we regular folks. And it's definitely true that when famous folk run afoul of the IRS or state revenue offices, the unpaid tax amounts are pretty impressive. So it make sense that the famous and, after their tax troubles, formerly rich also take advantage of a remedy available to everyone: installment payment plans. That's the case for a couple of celebrities in recent days. Tax lien trouble, dahling: The Hungarian bombshell of the 1950s and 1960s, Zsa Zsa Gabor, is dealing with a tax... Read more →

Another Friday the 13th is upon us, the third one this year. Are you superstitious? That's OK, most of us are. But for real terror, April 15 is probably the day that frightens most Americans. Yep, that annual income tax filing deadline can be pretty horrifying. But there are some ways to ease your fear of filing in particular and taxes in general. Check out 7 tax terrors and how to overcome them. Full disclosure: It's a story I wrote for That said, I think it's pretty darn good. The terrors I identified are: 1. Afraid I can't do... Read more →

It does if your name is on one of the 107,831 refund checks that bounced back to the agency as undeliverable mail. While the number of checks is tiny compared to the millions who file returns and get refunds, the amount that's in a holding pattern is huge. The checks collecting dust instead of interest in their proper owners' bank accounts total $123.5 million. The average undeliverable refund check amount this year, says the IRS, is $1,148. That's $158 more than the average returned refund the agency got back last year.Of course, that's an average amount. If you're one of... Read more →

As a long-time birder and a bit of an opera buff, I got a kick out of the story that a U.K. woman who shared my interests had left most of her sizable fortune to New York's Metropolitan Opera and a British nature charity. Even better, there's a tax connection. The bequests to the Met and the Wildfowl and Wetlands Trust came from the $16.3 million estate of Mona Webster (left), whom the New York Times reports was at one time during her 96 years a clerk in the British tax office. But wait. There's still more about taxes. A... Read more →

Military tax tips

Veterans Day this year is particularly poignant due to the tragedy at Fort Hood. Please keep those who lost family and friends at the Texas base in your thoughts today, along with all our veterans who have served the United States. Tax tips for our troops: While taxes are far down the list of concerns for members of the military, these men and women face the same tax responsibility as do all U.S. citizens. However, our troops do get some special tax considerations. The latest tax break for our servicemen and women comes in the recently enacted measure that continues... Read more →

State tax collectors ramp up enforcement

Baseball great Satchel Paige once said, "Don't look back, something might be gaining on you." That comment immediately came to mind today when I read about New York State's latest effort to get as much tax money as possible. New York Gov. David A. Paterson told a joint session of the legislature yesterday that the state is "on the brink of a financial challenge of unprecedented magnitude" never before seen. One way Paterson has suggested to resolve the crisis is through budget cuts. Empire State tax collectors, however, are taking a different approach. The New York Times reports that: "Desperate... Read more →

What a weird hurricane season. Here in the waning days, we're getting some action in the Gulf of Mexico. I hope that forecasts are correct and Ida will make landfall as a tropical storm instead of a hurricane. Still, the rains associated with these so-called lesser systems often cause more damage and, unfortunately, too many drowning deaths. So first of all, everyone in Ida's path, take precautions now and stay safe. The mantra "Turn around, don't drown" is true. If you don't have a full-fledged disaster kit in place, it's probably too late, particularly for food and first aid items.... Read more →

Lost in all the hoopla about the just-extended first-time home buyer tax credit is the fact that the clock is ticking down on another stimulus-created tax break. In addition to tweaking the home buyer credit, the American Recovery and Reinvestment Act included a deduction for state and local sales and excise taxes paid when you buy a new vehicle. This includes cars, light trucks, motorcycles and even motor homes. The auto-related deduction became available when the stimulus act became law, meaning you can deduct the sales tax on qualifying vehicle bought between Feb. 17 and Dec. 31. That gives you... Read more →

The home buyer credit's three E's: extension, expansion and effective date

That's right! Politics trumps tax and economic policy yet again! Obama put pen to paper this morning and signed the Worker, Homeownership, and Business Assistance Bill of 2009 into law. Don't get me wrong, I'm happy for folks who can use this to buy a house. Despite the ongoing frustration of keeping a residence in good repair (even without a water heater disaster!), I've been a tax-deducting homeowner for almost three decades. I just hope that the first-time buyers and those who've lived in their homes for five or more years and are able to claim $8,000 and $6,500 credits,... Read more →

UPDATE: On Nov. 6, Obama signed the bill extending and expanding the first-time home buyer credit. Read more on the final tax credit in The home buyer credit's three E's The House just voted to approve the Senate's latest changes to the first-time home buyer credit. Since the tax break is tied to unemployment benefits, Obama should sign it into law any time now. Yes, Capitol Hill is still calling it the first-time home buyer credit, even though some folks who currently own residential real estate can now benefit from the new soon-to-be law. More on that in a minute.... Read more →

Senate OKs home buyer credit extension

UPDATE: On Nov. 5, the House passed the Senate's first-time home buyer credit provisions discussed in this post. Obama is expected to sign the bill, possibly as soon as Friday, Nov. 6. Read more on the final tax credit in Home buyer credit new definitions, limits The Senate finally extended unemployment benefits, with continuation of the first-time home buyer credit part of the deal late this afternoon. As expected, and blogged about in Reconfigured home buyer tax credit, the $8,000 credit would stay in place through April 30, 2010, with a two-month grace period for folks with signed contracts by... Read more →

Voters opt to keep taxes

At least that was the case yesterday in Maine and Washington state. Tuesday's final votes in those two states highlight a tax conundrum. We love to complain about taxes, but often we decide to keep them or refuse to limit them because we like the services the revenue pays for. Did your state or county or city have any kind of tax issue on the Nov. 3 ballot? How did it turn out? What would you give up to get lower taxes? How would you convince your tax-paying neighbors to go along with you on cutting or restricting taxes?Related posts:... Read more →

I know Halloween is over, but at the Capital of Texas Enrolled Agents (CTEA) meeting I attended this morning, I heard a few more first-time home buyer credit horror stories I thought you might find of interest. Many of the cases that the Austin Taxpayer Advocate Service office is dealing with right now are connected with amended returns filed in order to claim the credit. As you might expect, a fair share of taxpayer mistakes have led to IRS run-ins. Locally, as has happened everywhere, folks claimed the credit before they actually owned and occupied the residence. Some married couples... Read more →