Segal Cohen & Landis Reviews The Louisiana Second Amendment Sales Tax Holiday

Wouldn’t it be great if there was a weekend where sales tax didn’t exist? Well it turns out there is, but only in Louisiana and only for anything hunting related. According to Peter J. Reilly at Forbes, from September 6 to 8 is the Annual Louisiana Second Amendment Weekend Sales Tax Holiday. However, this is not a sales tax free weekend on everything.

According to Reilly this tax free weekend purposefully corresponds with the commencement of hunting season and only includes items used in the pursuit of hunting. Such as, rifles, pistols, revolvers, or other handguns which may be legally sold or purchased in Louisiana. The amendment also extends beyond weaponry and includes all things hunting related.

As long as it is hunting related you can get anything from binoculars to off-road vehicles all tax free. However, if you want to buy binoculars because you are a member of the Audubon Society and just want to watch the birds then you will be taxed. In short, if you love to hunt and hate taxes then Louisiana is where you want to be in-between September 6th to 8th.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
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Segal Cohen & Landis Reviews War Tax Resisters

War Tax Resisters are catching a break. According to Peter Reilly at Forbes the IRS is easing up on War Tax Resisters. What exactly is a War Tax Resister and what sets them apart from other tax protestors? War Tax Resisters are people who refuse to pay either a portion, specifically the portion that would go to the Department of Defense, or all of their taxes as a form of protest to the war.

This consciousness objection is what sets them apart from other tax protestors who might protest paying their taxes because they are a “sovereign citizen” or might write “nunc pro tunc” on their returns. “Nunc pro tunc” is what some taxpayers unsuccessfully attempt to use as a way to make a delinquent return timely, invalidate a signature, create a claim for refund of taxes previously paid, or reduce ones federal tax liability. As a side note, “nunc pro tunc “ is not a valid legal argument nor will it be accepted by the IRS. The IRS considers these types of arguments to be frivolous and you could face penalties for doing so.

However, the IRS does not consider all arguments to be frivolous. The IRS has in the past deemed conscientious objection to military spending to be frivolous and has in the past hit people with penalties up to $5,000. Lately this has not been the case. The IRS recently issued a ruling which stated that they will not penalize anyone who when files their taxes shows the correct tax due but refuses to pay it. According to Mr. Reily at Forbes, in short, the return should not be altered. Do not add a line to take some sort of war tax deduction or credit. If you wish to protest in the name of peace simply compute the correct balance due, then do not pay. There will still be penalties for not paying your taxes but you can avoid the $5,000 penalty for frivolousness.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal Cohen & Landis Reviews Why IRS Proposes to Ease Restrictions For Innocent Spouse Relief

When a couple files their taxes they may file as married filing jointly to take advantage of the benefits of filing together. However, there can be a downside. Each spouse is then liable for the entire amount owing to the Internal Revenue Service (IRS) even if they did not earn a single dime during the marriage or did not prepare the tax returns. Under limited circumstances the IRS will allow a spouse to be relieved of the tax liability.

These limited circumstances changing according to Kelly Erb at Forbes. Last year the IRS released Notice 2012-8 which “significantly lowered the bar for innocent spouse relief.” Why the change? The IRS is attempting to address various issues that occur when a claim for innocent spouse relief is filed. Among those issues is the issue of abuse which before recently was treated unevenly by the IRS in absence of firm evidence of physical abuse. This standard has changed for the better and the IRS now recognizes a wide range of abuse.

The real change comes however comes in the form of extending the amount of time a taxpayer may file for this relief. Before taxpayers only had two years to file for innocent spouse relief. This week the IRS proposed to make permanent rules to extend the amount of time taxpayers can apply for equitable relief through an innocent spouse application. A taxpayer now has up to ten years to file for relief. Good news indeed for taxpayers.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal Cohen & Landis Reviews ‘Stateless Income’

According to Forbes and Reuters, companies such as Apple, Google, Starbucks and H-P are avoiding paying U.S. taxes by putting income in pockets around the world. Many of these companies state they are not doing anything illegal and are simply taking advantage of breaks offered by governments to create jobs and business.

However, this is not how the IRS and foreign governments see it. The G20, a group of leading world economies made up of 19 countries plus the European Union, ­­­­­expressed its hopes for a fundamental reassessment of the rules on taxing multinational corporations. On July 19, 2013 the Organization for Economic Co-operation and Development, which advises the G20 on  tax and economic policy released an action plan that addressed loopholes used by companies  such as Apple and Google to avoid billions of dollars in taxes.

Not long after the G20 voiced its concerns, the IRS made clear that it would be looking into the issue as well.  Erik Corwin, an IRS deputy chief counsel, said that they would be looking into cases of which “most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation.”  He later went on to say in a speech to tax lawyers in Washington …“those are a family of cases that are in the pipeline and being looked at.”

It’s no wonder so many organizations are sitting up and taking notice considering that U.S. companies are said to have more than $1.5 trillion sitting off shore. Most companies claim that they keep the money there to avoid the taxes they would otherwise face in the U.S. This tactic has not gone unnoticed by U.S. Treasury Secretary Jack Lew stating “we must address the persistent issue of ‘stateless income,’ which undermines confidence in our tax system at all levels.”

How the G20 and U.S. government go about addressing the issue of ‘stateless income’ will be interesting to watch. Now that the war has been declared on ‘stateless income’ it will be interesting to see how companies such as Google and Apple react. One thing is for sure, Segal Cohen & Landis will continue to keep an eye on this fight.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal Cohen & Landis Reviews

reviewsWhat does a $448M lottery jackpot mean to the IRS? Segal Cohen & Landis reviews Robert Wood’s Forbes article.

So far three Powerball winners-two in New Jersey and one in Minnesota have won the multistate lottery’s massive jackpot. The pot was originally at $425 million, but a frenzy of last-minute ticket buying pushed the jackpot up to $448 million. The biggest Powerball jackpot in history however was a $590 million win in Florida. The odds against hitting Powerball’s six-number jackpot are long, over 175 million to one.

According to Mr. Wood at Forbes the $448M jackpot means quite a bit to the IRS. Not only is paying tax on your winnings not an option, as an IRS Form W-2G will report your winnings, but you can also count on paying up to 39.6% of your winnings. Even if you wanted to give all your money to charity charitable contribution tax deductions are usually limited to only 50% of your income and in some cases less. Therefore, you might still have to pay tax on half of the money.

Segal, Cohen & Landis
9100 Wilshire Blvd Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Keep The IRS Off Your Health Care Act of 2013

According to Kelly Phillips Erb at Forbes congress is ramping up efforts to end Obamacare. Ms. Erb writes that the House recently passed the Keep The IRS Off Your Health Care Act of 2013. The purpose of the bill, H.R. 2009, is to prohibit the Secretary of the Treasury from enforcing the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.

According to Ms. Erb the bill states that the recent IRS tax exemption organization scandal “raises pertinent questions about the agency’s ability to implement and oversee” the law and “could be an indication of future IRS abuses…” As a result, the bill demands that the Treasury not enforce the health care act.

Although the bill is not a repeal of the Health Care Act it is an attempt to skirt around it and the bill is considered to be part of #StopGovtAbuse Week an initiative by House Republicans to “restrain runaway government and re-empower citizens.”

Ms. Erb notes that President Obama has threatened to veto the bill but it will likely be unnecessary. The Democrats hold a slim majority in the Senate and are not likely to approve any variation on the bill.

Segal, Cohen & Landis
9100 Wilshire Blvd Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Local Currencies and the IRS

According to Kelly Erb at Forbes, the IRS is sitting up and taking notice of the increasing use of local currencies. Erb writes about the growing use of local currencies by communities. She attributes this growth to many people’s fear of an economic collapse and states that more and more people are volunteering or working in exchange for local currencies.

Erb also notes that many people using local currencies are under a mistaken impression that this currency is not taxable. Although Erb does not believe people are intentionally avoiding paying taxes on local currencies she does make it clear that they are mistaken and the IRS is paying attention.

Erb cites to the example of the government shutdown of Liberty Reserve in May 2013. Liberty Reserve was an offshore alternative currency exchange – which handled more than 6 billion dollars during its existence. It was quickly shut down because of its lack of use of identifying data, no forms W-2 or other tax documents which made it all too easy to launder money and evade taxes.

For these reasons and more the IRS is expected to continue to crack down and take note of the use of alternative currencies.

Segal, Cohen & Landis
9100 Wilshire Blvd Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Possible Further IRS Budget Cuts

According to a recent article in Forbes by Howard Gleckman, the IRS is facing possible budget cuts. The House Republicans have publicly stated that they will bring a series of proposals regarding the IRS to the house floor in the coming months. Also, the appropriation committee’s spending bill proposes further cuts to the IRS budget, which would leave the budget levels below the congressionally-approved budget from March (24%, to be exact).

In the article, Gleckman calls the move “foolish and counter-productive,” emphasizing that such budget cuts would only weaken the agency’s ability to carry out essential functions even further.

He notes that as a political move, it is effective, as the IRS has been in hot water with the public after the tax-exempt scandal broke earlier this year, but as a realistic proposal, it is not. Gleckman goes on to say that the root of the issue may have been in the “low skills, poor training, low morale, a shortage of resources, and bad management.” Whether or not this is the case, budget cuts would only cause these issues to worsen.

Gleckman ends the article by stating that is obvious that this will not pass, but it will certainly cause more stress and uncertainty at a time when the IRS needs such things the least.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews New IRS Safe Harbor Rules

A recent article in Forbes, entitled “Does the IRS New Safe Harbor Rules Help or Hurt Remote Workers?”, discusses the IRS weighing in on a popular topic of the moment: telecommuting. Yahoo’s CEO Marissa Mayer’s decision to bring telecommuters back into the office every day sparked discussion in several spheres. The article notes that regardless of which side of the debate you land on, there is one thing most people believe is a benefit of working at home—pleasant tax deductions.

While this is the common thought, this is not always correct. Unfortunately, the terminology used when referring to this arrangement, such as “working from home,” doesn’t always paint an accurate picture. The terms are ambiguous, and do not readily note the different circumstances.

For example, “working from home” could mean an individual is a solo entrepreneur trying to start up a business, or it could mean that he or she is a parent working for a large corporation. The IRS takes this distinction very seriously. The article notes that with the way the Home Office Deduction is set up, it seems like they side with Mayer in her approach to telecommuting.

The IRS looks at telecommuters and self-employed taxpayers very differently. The new Safe Harbor exception is one such instance in which the difference is obvious.

Before this year, the tax laws were seemingly inhospitable to the increasingly-prevalent telecommuting that was going on. Unsurprisingly, the original form for deduction was complex, with 43 lines and 4 pages of text.

The new Safe Harbor method allows workers to deduct $5 per square foot of home office space, with a maximum of 300 square feet. The IRS has stated that it expects the new method to save small business owners more than 1 million hours each year in recordkeeping and paperwork time.

The new rules are not the same for telecommuters though. The new rules state that if taxpayers are compensated for their home office set up, they are not eligible for a deduction.

Also, the rules make it clear that the convenience must be on the side of the company, not the taxpayer, in regards to telecommuting. This is not advantageous for individuals who must telecommute for personal reasons, such as parents who must watch over children.

While not explicitly working against telecommuters over small business owners, there are aspects to the new Safe Harbor method that could put telecommuters in a challenging spot.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Taxes and Basketball

The Fourth of July weekend was interrupted for many Lakers basketball fans as news broke that Dwight Howard was potentially leaving Los Angeles. Fans and sports commentators waited with baited breath as Howard weighed his options. In the end, Howard decided on the move to the Houston Rockets, despite being offered more by the Lakers. Many asked why he would leave behind a bigger contract in California. The answer could lie in one thing—taxes.

The Lakers offered Howard $118 million over four years, while the Rockets offered $87.6 million over four years, which would be a smaller 4.5% annual increase over his existing contract with the Lakers. A recent Forbes article written by a tax expert notes that taxes do matter, as tax advisers have calculated what Howard would receive after taxes in California (with a 13.3% tax rate), and they have decided that it would end up being a smaller amount than in Houston, as Texas has no state income tax. The Forbes writer points out that it isn’t sufficient to merely take note of who is the highest paid, but rather who is bringing home the most money after the requisite taxes are paid.

Another Texan professional athlete is similarly placed in a favorable position due to the lack state income tax—Tony Romo. Romo, who is the fifth highest paid NFL player before taxes, is the number one highest player after taxes. He is an example of how significant the impact of taxes can be on the highest earners.

Last November, California voters approved the raising of tax rates to the high rate of 13.3%, an increase from 10.3%, on taxpayers earning more than $1 million in income. Some think that such a high tax rate will provide an incentive for athletes and other professionals alike to seek out states with lower tax rates, leaving California for greener (money) pastures.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999