Don't Mess With Taxes

Click image to read full indictment.

April 4, 2023, is one of those "where were you when…" days. Many of us were in front of our televisions or computer screens watching the formal criminal arraignment of a former U.S. president.

Donald J. Trump pleaded not guilty today to 34 felony counts of falsifying business records.

"True and accurate business records are important everywhere, to be sure. They are all the more important in Manhattan, the financial center of the world," said Manhattan District Attorney Alvin Bragg at an afternoon press conference in which he discussed why his office brought the charges.

Trump is, of course, considered innocent until convicted. The process of arriving at guilty or not won't happen until the end of this year, as the arraignment judge gave both sides months to deal with pre-trial motions and responses.

More tax trouble for Trump? During the course of the arraignment and subsequent remarks to the media, Bragg mentioned that the allegedly illegal transactions at the center of the Trump indictment also were misrepresented to tax authorities.

UPDATE, April 5, 2023: The New York Times looks at the unsealed indictment and its inclusion of a claim that Trump falsified records to commit a state tax crime. "That's a much simpler charge that avoids the potential pitfalls," said Rebecca Roiphe, a New York Law School professor and former state prosecutor.   

Does that mean Trump now also is in possible tax trouble again? From the New York Department of Taxation and Finance and/or the Internal Revenue Service?

Earlier this year, two Trump family businesses were fined around $1.6 million following the 2022 convictions on 17 felonies, including tax fraud and falsifying business records.

And questions were raised about whether the Internal Revenue Service dropped the ball in auditing the former president's returns (and if so, why?) after the House Ways and Means Committee last year made public some of Trump's federal tax returns.

In the wake of today's formal New York charges and Bragg's remarks, more tax charge questions are inevitable.

I'm not a lawyer, and I definitely am no expert on Empire State laws tax or otherwise, so this is the end of my comments on the current Trump legal travails. Like the rest of us, I'm just going to watch the wheels of the legal system grind at their own slow pace.

General tax lessons for us all: However, the charges do offer a good opportunity to remind us of everyone's — from Commander in Chief, former or current, to Jim and Joan Taxpayer — to follow tax law or face consequences.

And rather than re-invent the wheel, here are some of my former posts in the areas highlighted by the Trump felony charges.

As far as business records and taxes, there's Time to track your 2023 tax deductible business miles, The importance of good, and separate, business records, and How ordinary & necessary expenses become tax deductions.

General, non-business records also are key when it comes to taxes, as noted in Time for tax and other record keeping tasks and Tips on rebuilding tax and other records lost in a disaster. I go into the time frames the IRS has to review tax returns in my It's time for post-filing tax record keeping post, which notes that the IRS can come asking questions any time it suspects a taxpayer committed fraud.

A new wrinkle has been thrown into record keeping with an IRS decision to delay a new law about third-party reporting of income at a lower $600 amount. Realizing that the New gig economy reporting law could create tax confusion for online sellers of personal property, the IRS announced that it wouldn't enforce the law that was to take effect this year. Instead, during this transition year, the hope is that taxpayers, tax professionals, and third-party payment processors can work out the finer points of 1099-K issuance, and taxpayer education, by 2024. The IRS move earned it both 1099-K reporting delay yays and nays.

Then there's IRS audits, or examinations at it calls them. If you do get questions from Uncle Sam's tax collector, there's my post on Preparing for a possible IRS tax audit, as well as an earlier one on Tax audit odds are low, but if it happens be prepared. There are even some Tax audit lessons from 'Mom' on, of course, Mother's Day.

Audits most of the time end up with civil penalties for unpaid taxes. However, there could be criminal charges, which reminds us that Not reporting illegal income is a tax crime. And as for tax crimes themselves, this post's headline sums it up: Don't commit these federal tax crimes.

Finally, while these are serious subjects, I'm choosing to close on a more upbeat tax audit topic, specifically how, thanks to the movie "Everything Everywhere All at Once," Taxes, in a good way, are getting Oscars' attention.

If you tire of the blow-by-blow of the latest Trump case, then you can watch that movie or the other tax-themed flicks cited in that post.

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