The Tax Gap is the amount the Internal Revenue Service says it is owed, but which it's been unable to collect. That amount now is $496 billion. The figure, which was reached after the IRS analyzed tax activity from 2014 through 2016, is an increase of $58 billion from the agency's last estimate. The IRS also did some Tax Gap forecasting. The agency's projections for tax years 2017 through 2019 show an estimated $540 billion per year. Both those Tax Gap amounts are huge, and disturbing. That's why they earn this weekend's dual By the Numbers recognition. Tax Gap components:... Read more →
Tax numbers
Dealing with global taxes can be a real puzzle. (Rubik's Globe photo by Alan Kotok via Flickr CC) Americans are inordinately competitive, especially when it comes to international matchups. But there's not much for the United States to cheer as far as our ranking in the Tax Foundation's latest International Tax Competitiveness Index. Each year, the Washington, D.C.-based tax policy nonprofit measures the degree to which the tax systems of the Organisation for Economic Co-operation and Development's (OECD) 38 member countries promote competitiveness. The U.S. tax system basically is middle of the pack in the Tax Foundation's 2022 evaluation. OK,... Read more →
Following these youngsters' example could pay off in more money from Uncle Sam. The IRS is notifying individuals and families who didn't have to file a 2021 tax return to take another look and consider submitting one by Nov. 17 to claim valuable tax breaks, like the enhanced Child Tax Credit, that they missed. The Internal Revenue Service is still trying to distribute tax benefits to 9 million families that have yet to claim them. The yet-to-be-collected tax breaks are COVID-19 economic impact payments available as the Recovery Rebate Credit (RRC), the Child Tax Credit (CTC), and the Earned Income... Read more →
The Internal Revenue Service saw its largest tax fraud case ever end on Aug. 5 when Robert T. Brockman died. The 81-year-old billionaire had been charged with 39 criminal financial crimes, including tax evasion. Federal investigations alleged that Brockman was part of an elaborate offshore tax fraud scheme that cheated the U.S. Treasury out of more than $1.4 billion in taxes, penalties, and interest. While the criminal case is over, legal actions in civil and tax courtrooms to recoup the allegedly unpaid taxes (and add-on charges) continue. Special tax action to protect collection: As part of that process, the IRS... Read more →
UPDATE, Oct. 6, 2022: North and South Carolina, which were hit when Ian made a second U.S. landfall after devastating southwest Florida, now also get until Feb. 15, 2023, to meet various tax deadlines. More in my Carolinas/Ian follow-up post. This image from the NASA/Landsat Operational Land Imager (OLI) was taken about three hours before Hurricane Ian made landfall on Sept. 28 in Cayo Costa, Florida. (NASA Earth Observatory image by Joshua Stevens, using Landsat data from the U.S. Geological Survey, GEOS-5 data from the Global Modeling and Assimilation Office at NASA Goddard Space Flight Center, and roads from OpenStreetMap.... Read more →
Just more than a year ago, a Parkville, Missouri, man pleaded guilty to charges filed in two separate federal investigations. One was a case involving conspiracy to commit wire and major program fraud. The defendant admitted to his role in a $335 million scheme to defraud federal programs that award contracts to firms owned by minorities, veterans, and service-disabled veterans. The second charge was one of tax evasion to the tune of $615,847. The Missouri man confessed to claiming fraudulent business expenses on his 2016 tax year return and filing false returns from 2013 to 2016. Last Thursday, Sept. 22,... Read more →
Photo by Vidal Balielo Jr. The Child Tax Credit was expanded in 2021 to help families coping with the adverse economic effects of the COVID-19. During the height of the pandemic, the American Rescue Plan Act (ARPA) temporarily bumped up the amount available via the already popular CTC. It went from $2,000 per qualifying child to $3,600 a year for children younger than age 6, and $3,000 per child for youngsters ages 6 to 17. The credit amounts were phased out once tax-filing families hit certain income levels. More of the increased CTC also was refundable, meaning that if the... Read more →
One Martha's Vineyard vacationer had lots of questions when he was arrested for tax evasion following a minor traffic accident. The answer was a 'tax' typo. (Photo by Vadim Bogulov on Unsplash) Every taxpayer knows that a small mistake on a tax return could create big tax problems. A Philadelphia man found out a one-letter typo involving the word "tax" also carried a hefty price. Angus McCoubrey, who with his wife was vacationing last month on Martha's Vineyard, spent two nights in an island jail following a minor traffic accident. The jailing, however, wasn't for the fender bender. Instead, in... Read more →
Some come to the Cayman Islands for the beauty of Seven Mile Beach and other natural recreational areas. Others enjoy the Caribbean locale for financial and tax reasons. For more than a decade, wealthy U.S. tax evaders have taken advantage of a gaping tax law loophole that allows them to stash billions in foreign bank accounts, according to a recently released congressional report. Even though the 2010 Foreign Account Tax Compliance Act (FATCA) requires them to report any non-U.S. accounts and pay taxes on all income earned, too many non-taxpayers are using what the Senate Finance Committee report describes as... Read more →
Barclays Bank building in Madrid (Photo by M.Peinado from Alcalá de Henares, España - 001782 - Madrid, CC BY 2.0) It's not a crime to put your money into legitimate foreign financial institutions. However, if the amount meets a certain threshold, you are required to report that money to the U.S. government. When U.S. taxpayers ignore this process, officially known as filing of a Report of Foreign Bank and Financial Accounts, or FBAR, they can face costly consequences. That's the case in the FBAR collection complaint filed Aug. 15 by federal officials seeking judgment against the defendant who, per the... Read more →
Photo by Nick Fewings on Unsplash One of the outcomes of an audit is that the Internal Revenue Service finds no reason to demand changes to a return. That's obviously a welcome result. None of us want to end up paying Uncle Sam more taxes, plus penalty and interest charges. But there's still is a cost. We've likely paid a tax professional to help us through the process. And as the old credit card ad says, our time is priceless. Some audits end up OK for filers: The generally good news, according to the Aug. 4 Kiplinger Tax Letter, is... Read more →
UPDATE, Sept. 27, 2022: A Spanish judge on today approved a trial for Colombian pop singer Shakira on charges of tax fraud. The date for the trial has yet to be set. Shakira and Spanish singing star Alejandro Sanz in 2008 met Spain's then-king Juan Carlos I. Today, Shakira's interactions with Spanish tax officials are not so friendly. (Photo by Movimiento ALAS - Flickr: ALAS_CUMBRE_64, CC BY 2.0) The rich and famous are different from you and me. But when it comes to taxes, sometimes they're the same. That's the case where they face the legal ramifications of some questionable... Read more →
Photo by David Boeke via Flickr Democratic leaders in the Senate are still aiming to vote next week on the Build Back Better bill rewrite by Senate Majority Leader Charles Schumer of New York and his intraparty frenemy Sen. Joe Manchin of West Virginia. UPDATE, Sunday, Aug. 7, 2022: The Senate approved the Inflation Reduction Act of 2022 today along a 50-51 party-line vote, with Vice President Kamala Harris casting the deciding vote. The House is expected to consider the measure on Friday, Aug. 12. The 725 revised pages of H.R. 5376, now dubbed the Inflation Reduction Act of 2022,... Read more →
HMRC warns United Kingdom citizens that tax avoidance is when people bend the rules of the tax system to try to pay less than they owe. The tax agency has created a guide to help spot tax avoidance schemes. Regardless of where we live, people essentially are the same, especially when it comes to taxes. Some of us tend to push the tax envelope, perhaps too much. That's what United Kingdom tax officials think. And they've had enough, especially in these difficult times. Tracking down tax cheats: Her Majesty's Revenue & Customs (HMRC), the UK's version of our Internal Revenue... Read more →
A scene from AMC's Dark Winds, starring Zahn McClarnon (standing) as Lt. Joe Leaphorn of the Navajo Tribal Police, and Kiowa Gordon as his deputy Jim Chee. The series, which has been renewed for a second season, is shot in New Mexico. (Photo by Michael Moriatis/Stalwart Productions/AMC) Later today, the hubby and I will watch the season finale of Dark Winds. Tomorrow night, we'll be planted in front of our TV for the next episode of Better Call Saul. Not only are both shows on AMC, they are great television. They also are filmed in New Mexico, primarily because the... Read more →
Shutterstock The hubby and I are spending the Independence Day holiday like we usually do. We're staying home. Even in our younger days, we didn't travel on holidays. We also lived in places where fireworks, the big draw on the Fourth of July, were easily accessible or visible from our homes. Of course, there was that year in Washington, D.C., where our car almost got towed, but that just added excitement to the festivities on the National Mall. Almost 48 million people, however, disagree with the way the hubby and I celebrate July 4th, according to AAA. That's how many... Read more →
The IRS is getting a bit more from this in the House Appropriations Committee's fiscal year 2023 proposal. (Photo by Karolina Grabowska) The tax world, both professionals and regular Jane and Jim Taxpayers, continue to criticize how the Internal Revenue Service does, or doesn't do, its job. Yes, we're looking at lacking telephone assistance and the millions of still unprocessed tax returns. The IRS generally responds by noting the challenges it faces, primarily budgetary. The lack of adequate funding, say agency officials, leads to other problems, notably staffing shortages. And yes, that's complicated how the IRS handles telephone assistance duties... Read more →
This is how many investors felt after last week's stock market dive. (Photo by Angie) The Dow Jones Industrial Average ended last week below 30,000 for the first time since January 2021. Will it bounce back? Probably. Will that happen soon? Probably not, at least not at the levels the market reached before concerns about historic inflation, the Russian invasion of Ukraine, U.S. corporate earnings, and the Federal Reserve's actions consumed investors. I'm not a financial adviser, but I've been an individual investor long enough to know that if you can afford it, hang in there. The proverbial stock roller... Read more →
You thought you'd get a break from taxes when summer arrived, didn't you? Sorry. June, the first month of summer, also includes tax deadlines for some taxpayers. If you're a U.S. taxpayer who is living and working abroad, including members of the Armed Forces posted overseas, June 15 is your Tax Day. You must file your 2021 tax return by then. June 15 also is the due date for the second estimated tax payment of 2022. This applies to folks who make money that isn't subject to withholding tax. And some folks in Puerto Rico who suffered through major flooding... Read more →
A group of Kentucky homeowners switched to a different, higher-rate tax district so their increased taxes would pay for things like street cleaning. A transcription error meant they got it and other services for free for eight years. (Photo by Kay Bell) Property tax bills are a major expense for homeowners. They also can be confusing. Here in Texas, most property tax money goes to the homeowners' local school districts. But there's usually more. Our real estate bill, for example, has collections for our independent school district, as well as five other taxing jurisdictions. That's why every tax bill recipient... Read more →