Amazon collecting sales tax in 40 states & D.C.

Amazon's tax collection system expands on March 1 with Oklahoma and Wyoming joining the ever-growing list of locations where online customers will see sales tax added to their purchases.

Photo by MikeBlogs via Flickr

In February, five more states -- Mississippi, Missouri, Rhode Island, South Dakota and Vermont, joined the Amazon sales tax list.

With the addition tomorrow, March 1, of two more, that will bring the number of taxing jurisdictions where the Seattle-based online retail giant will be collecting sales levies to 41.

In addition to collection sales tax on products shipped to Washington, D.C., the table below shows the 40 states where, in less than 24 hours, Amazon will be collecting sales taxes.

Alabama	Kansas	Nevada	South Dakota
Arizona	Kentucky	New Jersey	Tennessee
California	Louisiana	New York	Texas
Colorado	Maryland	North Carolina	Utah
Connecticut	Massachusetts	North Dakota	Vermont
Florida	Michigan	Ohio	Virginia
Georgia	Minnesota	Oklahoma	Washington
Illinois	Mississippi	Pennsylvania	West Virginia
Indiana	Missouri	Rhode Island	Wisconsin
Iowa	Nebraska	South Carolina	Wyoming

Since 5 states don't collect a state-wide sales tax, that leaves just five states where Amazon customers -- and, in some cases, other cyber shoppers -- won't see sales taxes added to their online invoices.

The still Amazon tax free states, for now, are Arkansas, Hawaii, Idaho, Maine and New Mexico.

Not stopping at Amazon: Since Amazon is the largest global online retailer, it is viewed as a sales tax collection bellwether. The hope of the 40 states and District of Columbia is that other companies will follow Amazon's tax collection lead.

But several of the 45 states with sales taxes aren't waiting for that to happen.

In addition to welcoming Amazon's collection action, they are continuing legislative efforts to try to get every possible sales tax penny they're due.

Take, for example, Colorado's unpopular tattletale tax. Beginning July 1, if an online seller doesn't follow Amazon and collect sales tax on items sold to Colorado customers, the company must instead send state officials sales data so Centennial State tax collectors can focus on getting the money from the buyers per the state's use tax law.

Three states -- Louisiana, Oklahoma and Vermont -- have passed laws similar to Colorado's.

And of the five states where Amazon does not yet collect sales taxes, Arkansas, Hawaii and New Mexico lawmakers are considering legislation that would broaden nexus.

Another high court sales tax decision: Meanwhile, South Dakota's sales tax law soon could rewrite nationwide sales tax collection on remote sales. 

The Mount Rushmore State's law says that remote sellers with no physical location still must collect and remit sales tax on online purchases sent to customers within its borders. That directly challenges the nexus requirement cited in the U.S. Supreme Court's 1992 Quill v. North Dakota ruling that now governs interstate tax collection. 

This challenge to nexus is working its way through the legal system.

That's exactly what South Dakota officials hoped when they enacted the law. They and other state officials hope the South Dakota law will supplant the one from its northern neighbor when it comes to taxation of online and other remote purchases.

A decision by the nation's highest court, along with Amazon and other online retailers voluntarily expanding their sales tax collection to the remaining five states (you know it will happen eventually) could make stalled Congressional efforts to deal with online taxes irrelevant. 

Insert your own House and Senate effectiveness joke here.

You also might find these items of interest:

• Amazon tax vs. state use taxes
• City and other local taxes add to overall sales tax takes
• States could get more money by modernizing sales tax laws

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/6ZY2yfHn2Sc/amazon-collecting-sales-tax-in-40-states-and-dc.html

6 signs married couples should consider separate tax returns

Whenever I want to escape the crazy that is real life, I turn to the movies. Sometimes it's my favorite tax-themed films.

Amanda Abbington and Martin Freeman, pictured here on the set of "Sherlock" with Benedict Cumberbatch, who plays the show's title character behind them, have separated. (Photo courtesy PBS Masterpiece)

Other times when I can't get away for a couple of hours, I surf entertainment news. Go ahead, judge me. Then admit you've done the same!

In perusing the web recently, I stumbled across a list of celebrity couples who have split.

In addition to the usual Brangelina and Johnny Depp/Amber Heard breakup deets, I made a terrible discovery.

Dr. John Watson and his wife Mary Morstan are splitsville.

Unsolvable marital mystery: OK, you caught me. In the "Sherlock" series that airs on PBS in the United States, Mary — spoiler alert — is dead.

But actor Martin Freeman, who portrays Watson, and his real-life wife Amada Abbington, who had the Mary role, have separated.

I obviously do not know either actor personally, but this makes me sad. I've loved Freeman since he was Tim Canterbury in the U.K. original "The Office." And as a wife who has worked with my hubby, I enjoyed the interaction of Freeman and Abbington in "Sherlock."

The couple is British, but their personal marital travails obviously got me thinking about U.S. married couples and how their relationship status affects their tax filing. Yeah, you caught me again, the true romantic!

Most of the time, it's better to file one return jointly. But there is another option, married filing separately, that could be called for in certain marital situations. 

Married couple filing options: If you're legally married at the end of a tax year — that's Dec. 31 — then you and your spouse have the choice of filing one federal joint tax return or each of you submitting a married filing separately. 

Most married couples file the single Form 1040. Not only is it easier, but there usually are tax advantages to filing jointly. Married but separate return taxpayers often discover that many tax breaks are no longer available.

Couples claiming married filing separately (MFS) status could lose the tuition and fees and student loan interest above-the-line deductions. Also at risk under MFS are several popular tax credits, including the dollar-for-dollar tax breaks for the elderly and disabled, child and dependent care, education and the Earned Income tax credit (EITC).

Wait. There's more. Or actually less. Also affected by the MFS status are the tax-free exclusion of Social Security benefits and the phase-out range (it's much lower) for IRA deductions.

And because the MFS rules say that both spouses must either claim the standard deduction or both must itemize, one partner is likely to take a tax hit on the deduction method.

When you should file separately: OK, you say. You'll stick with married filing jointly.

Not so fast.

As is always the case with taxes and the practical and monetary hassles of MFS notwithstanding, your individual tax, personal and financial situations must be considered.

Generally speaking, however, here are six situations where MFS might be wise.

1. One spouse has a lot, a whole lot, of income. Many well-to-do couples already have to deal with the top ordinary tax rate of 39.6 percent. But since 2013, some high-income taxpayers also have faced new surtaxes. Jointly filing married couples with a combined wages of more than $250,000 in wages have to pay a 0.9 percent added Medicare tax, as well as a 3.8 percent tax on most investment income. Plus, there's the higher capital gains rate — 20 percent instead of 15 percent — for joint filers making $466,951 or more in 2016 (it goes to $470,701 or more in 2017). Determining whether splitting your wages and investment income and filing separate returns is worth it tax wise will take some work. But if you're making big bucks, you probably have a tax professional who can run the numbers for you.

2. One spouse has a lot, a whole lot, of medical expenses. If you're younger than 65, in order to deduct medical expenditures as an itemized expense on Schedule A, the doctor etc. costs must exceed 10 percent of your income (and that percentage applies to all regardless of age starting in 2017). If a husband or wife has enough costs to offset his or her separate earnings, it might be worth splitting your tax returns so that the ailing (and hopefully feeling better) spouse can deduct them.

3. Many miscellaneous deductions. Like medical expenses, miscellaneous deductions must meet a percentage of adjusted income threshold. In this case, it's 2 percent. A variety of work-related costs can be claimed in this Schedule A section, including professional dues and fees, job-search costs and unreimbursed business expenses. If one spouse has a lot of these because, for example, she traveled a lot for work or was laid off and diligently hunted for new work, filing separately against her solo income could make these costs.

4. Your spouse's former family. Many couples have had prior marriages and families. That also means money to care for those kids. If your husband or wife owes child support, the tax collector will take those overdue payments out of any federal refund. Do you want to surrender your part of the refund for your spouse's legal child care lapse.?

5. Your spouse's tax history. Does your spouse owe Uncle Sam money? Has he or she ever been audited? When you review your joint tax return that your spouse fills out, does it look like he or she is taking some tax-filing liberties that could cause some potential problems? If so, file your own paperwork with the IRS. This is particularly true if you have any concerns that what your spouse is doing tax-wise is illegal and not just sloppiness.

6. Your relationship status. I'm not talking filing status here, but your status a la Freeman and Abbington. Just how do y'all feel about each other? Have you lost, as the song goes, that loving feeling? If you're pretty sure that you and your spouse won't be legally wed for much longer, it might be time to separate your taxes along with all your other goods.

Don't forget about your state taxes: There's also one more thing for couples in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin to consider. These nine states are community property states and your state's law must be considered when deciding how to file your federal return.

And remember that most state tax departments base their filing rules on federal returns. What you do with your IRS 1040 will affect your state return, too.

Here's hoping you have a long and happy marriage, as well as many easy and tax-saving filing seasons. But taxes, like marriage, take work, so be sure you're properly filing joint or separate returns.

Disclosure: Much of this blog post first appeared as a Don't Mess With Taxes item on Aug. 21, 2014.

You also might find these marriage related posts of interest:

• I love you, honey, but not your tax return
• Calculating your possible marriage tax penalty or bonus
• Married couples filing joint returns share all tax liability, too

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/ioyCF9dvcb4/6-signs-married-couples-should-consider-separate-tax-returns.html

Coloradans hate the state's new 'tattletale' sales tax law, but it will take effect this summer

Sure, you're happy to tell your friends about the online bargains you get, but not so much your state's tax officials.

That essentially will happen in Colorado this summer. But it won't be shoppers revealing their internet purchases. It will be the companies that sold them the stuff.

Most Colorado online shoppers oppose the state's new sales tax reporting law because it violates their privacy. And oh yeah, they'll now have to pay more tax.

The online purchase info is part of a creative way Colorado lawmakers devised to try to collect the almost $173 million in tax revenue they say the state loses each year to remote sales.

Details on buyers via sellers: Current law, based on the 1992 U.S. Supreme Court ruling in Quill Corporation v. North Dakota, says that companies without a physical presence, or nexus, in a state, don't have to collect sales tax on those products.

But states with sales taxes also have use taxes, which require purchasers to pay the tax on the items they buy and use within the state. Most consumers don't do that, even when states include line items on their tax returns asking filers for the use/sales tax info and due money.

So Colorado passed what has been dubbed the tattletale tax.

Under the new law, remote sellers that make more than $100,000 in sales must notify Colorado customers that their purchases are taxable. Plus, the sellers must send reports to the state tattling showing the total amount paid by the purchaser that year for online purchases.

The Direct Marketing Association (DMA) sued to stop the tax. It went all the way to the U.S. Supreme Court, which declined to hear the case, thereby leaving the law in place.

Following the high court's decision, the lawsuit parties worked out a deal on Feb. 22 that postpones the law's enforcement until July 1. In addition, Colorado won't impose penalties on companies for noncompliance until then and the DMA will drop its challenge.

Many reasons to oppose the law: That is awful news for a majority of Coloradans who, according to a recent survey, hate this law.

The highlights of the online (naturally!) survey conducted by Morar Consulting for the e-commerce trade association NetChoice include:

• 78 percent of Coloradans said the state should not be allowed to force businesses to turn over information on their internet purchases, including the retailer's name, the customer’s name, the billing address, the shipping address, and the amount of purchases.
• 67 percent said the Colorado law violates their expectation of privacy from government intrusion into their online and catalog purchases.
• 84 percent said that when making online purchases, their privacy is "very important" and another 14 percent said it is "somewhat important." Only 2 percent of Coloradans indicated privacy was not an important factor.

"This polling shows the majority of the citizens in Colorado are deeply concerned about their online purchases and privacy," Colorado Senate Majority Leader Chris Holbert said. "The online purchases from Colorado citizens should be protected information, which our current online purchase law does not protect."

Use tax education effort needed: One other finding, though, might be the one that worries the legislators who passed the new sales tax reporting law: 60 percent said they consider the law's intent equivalent to a statewide tax increase.

That perception percentage earns 60 percent this week's By the Numbers honor.

And it underscores the need for Colorado officials to get the word out, and quickly, that they aren't adding or hiking taxes.

Rather, the folks who've not been reporting their out-of-state and online purchases and paying already in place use tax are breaking the law.

Colorado's consumer use tax rate is 2.9 percent, the same as the state sales tax rate. Use tax is also collected by some special districts such as the Metropolitan Denver Regional Transportation District (RTD) and the Metropolitan Scientific and Cultural Facilities District (SCFD).

That's one of the answers to questions about the Centennial State's use tax that's part of a special Colorado Department of Revenue has a special use tax web page.

Check out the page if you live in Colorado.

And if you live in one of the other 45 states (and Washington, D.C.) that collect sales tax, you probably have been evading sales tax in your home, too.

Your state's (and D.C.'s) tax department websites will have more information on what you owe and how to pay your use tax.

You also might find these items of interest:

• 5 sales-tax-free states
• Louisiana joins Amazon sales tax collection ranks on Jan. 1, 2017
• Trump's Supreme Court appointee could help decide online sales tax issue

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/9fuG6uB6Zys/colorado-tattletale-sales-tax-law-hated-but-starts-july-1.html

Oscars, tax breaks and best tax-themed films

When the Academy Awards are handed out Sunday, Feb. 26, it's a good bet that most of the films already were tax winners. They used special tax breaks to help offset their sometimes enormous production costs.

As of Jan. 1, all those credits will come from states.

End of the federal film tax break: The only federal tax incentive designed specifically to keep film and television production in the United States ended when 2017 arrived.

It was part of a group of extenders — temporary tax breaks that must be periodically renewed by Congress — that lawmakers last year decided not to renew.

The law, section 181 of the Internal Revenue Code, reduced investors' risk by allowing a 100 percent loss against taxable income in the year or years the money was spent. For example, a producer or investor in the 30 percent tax bracket who put up $1 million for a film could save $300,000 in taxes.

The deduction was allowed on the first $15 million invested in every qualified project. For shows made in certain low-income areas, the cap increased to $20 million.

In 2015, the same federal tax break was extended to theatrical productions. Thanks, Hamilton.

It's possible that the film and TV tax break, which was enacted as part of the American Jobs Creation Act of 2004 in an effort to stem the stem the flow of shows to foreign countries, could be renewed, either separately or as part of expected tax reform.

It's more likely, however, that with budget hawks, who are looking to trim any and everything, and Donald Trump, who has his own issues with Hollywood, now in charge of shaping U.S. expenditures, the federal film and TV tax incentive will not be revived.

State, local options remain: that means there will be more competition for state tax incentives, which have been around for a quarter century.

The National Conference of State Legislatures provides a brief history —

Louisiana was the first state to adopt state tax incentives for film and television production in 1992. In 2002, Louisiana expanded its program and the state's film industry began to experience strong growth. Other states responded to Louisiana’s success. By 2009, 44 U.S. states, Puerto Rico and Washington D.C. offered some form of film and television production incentives. However, popularity for these programs has waned, and support for the film industry has decreased in recent years. In 2016, only 37 states continue to maintain film incentive programs, and several of these states are tightening the requirements for qualifying expenses and reeling-in per-project and annual program caps.

A count by The Hollywood Reporter in April 2016 shows 33 states, along with Washington, D.C. and Puerto Rico, offer film and TV producers a variety of tax credits, grants, rebates or a combination of the tax breaks.

Many cities also offer additional tax enticements for movie et al makers. Down I-95 from me, San Antonio is adding as much as 7.5 percent in incentives for film projects on top of Texas-offered incentives.

Weighing total cost of movie tax breaks: The key for lawmakers at all levels is finding a way to balance the creative arts' production incentives with the fiscal needs of other state programs.

During the recent recession, that became more difficult, with growing budget deficits forcing many states to reduce or eliminate their film and TV tax incentives.

Others, however, have extended or expanded their tax breaks.

Once the film industry luminaries get past the Oscars, the final and most important event of the current awards season, expect its members to start lobbying for the return of the federal tax credit.

Financial film favorites: While tax breaks for movies, television shows and even video game productions do cost us taxpayers at the state and possibly federal levels, the immediate money matter to us as movie goers is whether our Cineplex ticket price was worth it.

This time of year also generates a lot of discussion about not only the current best movies and performances, but also of classic films.

In advance of the Oscars, FindLaw has been taking to its Twitter account to highlight Hollywood's on-screen connections to attorneys. Most recently, the legal marketing component of Thomson Reuters, directed us to a Business Insider article on what movies get right and wrong about lawyers.

But what caught my eye were FindLaw's polls, like stereotypes of onscreen lawyers and favorite legal classic movie. The results of that last one shocked me.

"Legally Blonde." Really?

My reaction:

Judgy? Yes. But I had some legitimate alternatives. I sent FindLaw my list of best legal movies (they asked!). And it got me thinking about tax-related flicks.

Best tax movies: That social media conversation got me thinking about movies in which taxes played a plot role. Sometimes it was a major creative component. In others, it was a glancing tax mention.

Regardless, to celebrate the 2017 Oscars, here are my favorite movies, in my preferred order, in which a tax matter is part of the plot.

The Shawshank Redemption: Taxes aren't the film's major focus, but Andy Dufresne's knowledge of the tax code helped him survive and -- spoiler alert -- escape prison, first by his helping prison guards and then getting inside the warden's financial double dealing. Plus, it's got a great cast (Morgan Freeman!). Regardless of where Shawshank is in its broadcast, when I run across it on TV, I must watch it to the end.

The Untouchables: This sleek version of mob boss Al Capone's vicious reign and the efforts of a select group of Armani-clad Treasury Department agents to bring him down boasts a cast of three Oscar winners (Robert De Niro as Capone; Kevin Costner as Eliot Ness; and Sean Connery, who snagged his best supporting actor statue as Ness' streetwise lieutenant Jim Malone). There are plenty of shootouts, but the film's most frightening scene may well be the one in which the Untouchables' tax accountant brandishes a Tommy gun.

The Producers: The plot for this zany movie, co-written by comic genius Mel Brooks, is one big giant, funny, zany tax fraud. Down-on-his-luck producer Max Bialystock (Nathan Lane) teams up with timid accountant Leo Bloom (Matthew Broderick) in a get-rich-quick scheme to put on the world's worst show. Three words. "Springtime for Hitler."

Stranger Than Fiction: Will Ferrell plays an IRS auditor who suddenly finds himself the subject of narration only he can hear. The narration, by a writer portrayed by Emma Thompson, begins to affect Farrell's character's entire life, from his work, to his love-interest, to his death. The movie wasn't a commercial success, but I enjoyed it, even Ferrell playing against type. But the movie makers probably would have made more money if they'd come up with a story of the IRS auditing the Talledega Nights drivers.

The Descendants: The plot includes an arcane tax law, the rule against perpetuities, which helped make it a hit with estates and trusts attorneys. Oscar winner George Clooney made it a hit among the general public. The screenplay writers took home an Oscar for their work.

The Firm: In this thriller, based on a book by John Grisham, lawyers deal with taxes and securities for incredibly wealthy and awful people. It has an impressive cast of Oscar winners and nominees, including Tom Cruise, Gene Hackman, Ed Harris, Holly Hunter and David Strathairn, and the late, great Sidney Pollack in the director's chair.

The Blues Brothers: A bit too long, especially for a concept that came out of a Saturday Night Live skit, but the soundtrack alone — Aretha! — gets this on my list. Jack and Elwood spend 2 hours and 13 minutes on a mission from God to raise money to pay taxes on the orphanage where they were raised.

The Mating Game: Yes, I know, you haven't heard of this one, primarily because it was made in 1959. Tony Randall plays a tax collector who heads out to rural Maryland to find out why a farm owner hasn't paid taxes, ever. As he tries to calculate the farm's income, his task is complicated by the lovely farmer's daughter, played by Debbie Reynolds. Hilarity ensues.

The Young Philadelphians: Another cinema classic, also from 1959. (What happening with taxes that year?). A young Paul Newman is an up-and-coming tax lawyer, struggling to climb Philly's Main Line social ladder. The tax connection is overshadowed by themes of class, principle, loyalty and manipulation as Newman's character must move from the Internal Revenue Code to the criminal legal world after his best friend is charged with murder.

Say Anything: Earnest slacker Lloyd Dobler, portrayed by John Cusack, and his boom box have become iconic symbols of devotion. Oh, yeah, the object of his love must deal with her dad going to prison for tax fraud and tax evasion. But that boom box belting out Peter Gabriel's "In Your Eyes." Perfect.

If nothing on the 2017 Oscar list catches your film fancy, consider tracking down one of these 10 tax-related movies.

You also might find these items of interest:

• Movie and TV production tax credits, trick or treat?
• Did tax credit cut cause Pixar to close its Vancouver office?
• Film tax incentives sometimes lead to extra state costs for criminal prosecution

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/__zPYslPcGM/oscars-tax-breaks-and-best-tax-themed-films-.html

Global tax blogs includes 21st Century Taxation Blog

Feedspot has gathered the global list of top 100 tax blogs based on various criteria. The list is interesting and includes several I had never come across before.  The 21st Century Tax Blog (this blog) is number 77. I guess that's not too bad. I see that many of the blogs have Twitter and Facebook accounts associated with them. If you are going to set up a blog, that's probably a good idea. My Twitter and Facebook pages are tied to my name (I use Twitter a lot for tax news; rarely use Facebook).

Take a look at the list. Here are a few I find of interest.
 #5 - The Tax Policy Center - This non-partisan site is full of excellent tax research and data.
 #13 - Tax Connections - Great site for accounting and finance professionals - it picks up a nice range of tax blogs (including mine).
 #25 - Carbon Tax Center - this is a hot issue
 #31 - Tax Analysts Blog - always very insightful posts

What do you think? Find anything new you'll sign up for?

source http://21stcenturytaxation.blogspot.com/2017/02/global-tax-blogs-includes-21st-century.html

Congressional investigations into Russia's hacking of presidential campaign could open up Trump tax returns

Donald Trump said during the presidential campaign that America's voters didn't care about his taxes. He wishes.

After hearing from angry constituents during a town hall meeting on Feb. 23, Rep. Matt Gaetz (R-Florida) now says the president should release his tax returns. A GOP Senator says Russian hacking investigations could lead to just that. (Image from CNN Twitter post)

Although the 45th president is the first presidential politician in almost 40 years to keep his Internal Revenue Service filings secret, folks remain curious as to what's on Trump's 1040s.

'We the People' and real people: The first petition filed at the White House's "We the People" web page after Trump took office has been e-signed by more than 1 million people.

During this week's Presidents Day break, some members of Congress who dared to hold town hall meetings with their constituents also were heard chants of "tax returns" from the crowds.

Arkansas Sen. Tom Cotton was greeted during a town hall meeting on Feb. 22 with calls for Trump to release his tax returns. (Image courtesy Kyle Griffin/MSNBC Twitter post; click image to watch a GIF of the exchange.)

Such interactions prompted at least one Trump supporter, GOP Rep. Matt Gaetz, to join the chorus.

"Absolutely, Donald Trump should release his tax returns," Gaetz told the raucous crowd gathered Thursday, Feb. 23, at a bowling alley just outside of Pensacola.

Another Republican lawmaker went a possible Congressional step further, saying she's open to demanding Trump's tax returns as part of a Capitol Hill probe into Russian involvement in the 2016 presidential election.

Trump tax connection to Russian hacking: Sen. Susan Collins (R-Maine), a member of the Senate Intelligence Committee, told a Maine public radio program this week that she wants former Trump national security adviser Michael Flynn to testify as part of that committee's investigation of Russia's alleged election meddling.

In addition, Collins said she and her colleagues could demand Trump's tax returns to see if they reveal any of his or his companies' business dealings in Russia.

"If it's necessary to get to the answers, then I suspect we would," Collins said Wednesday, Feb. 22, when asked about Trump's taxes during an appearance on the public radio program Maine Calling.

Myriad inquiries: In addition to the Senate Intelligence investigation, the Upper Chamber's Judiciary Subcommittee on Crime and Terrorism has launched a separate probe into Russia's election hacking.

Senate Armed Services Committee Chairman John McCain (R-Arizona) also plans an investigation into how best to deter and counteract cyberthreats posed by countries such as Russia.

The Republican-led House also has its own formal inquiry, led by the House Intelligence Committee members.

However, House GOP leaders have so far resisted a call by mostly Democrats for an independent bipartisan commission to investigate the Kremlin connection.

But that could change if the various examinations start uncovering substantive information about Russia's involvement in the 2016 presidential campaign.

And while the tax-writing House Ways and Means Committee earlier this month rejected an option that would let those members (and possibly the public) see Trump's taxes, the filings could be a by-product of all the Russia investigations.

You also might find these items of interest:

• It's official: Trump's not releasing his taxes
• No Trump taxes make list of top 10 tax topics of 2016 and what to expect in 2017
• Trump pledges to donate hotel profits from foreign government payments to the U.S. Treasury

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/fB_7zwcPRIM/russia-campaign-hacking-investigations-could-open-up-trump-tax-returns.html

Religious freedom is not a valid tax evasion defense

Although separation of church and state is a key constitutional tenet in the operation of the United States government, God regularly plays an unofficial role at tax filing time.

There are those folks who take his name in vain as they struggle with a particularly complex part of the tax code. Guilty!

Then there are those folks who seek his divine guidance in figuring out their annual tax liability. Or, once they've done that, pray for a miracle to pay what they owe. Guilty again!

But religion shouldn't have any part in defending criminal tax evasion.

That's not just my personal opinion. It is the ruling of the Indiana Court of Appeals.

The decision was handed down in connection with a taxpayer's attempt to use the Hoosier State's Religious Freedom Restoration Act (RFRA) as a reason to avoid paying income tax.

Fight for, against religion-focused law: You remember Indiana's RFRA. When it was signed into law on March 31, 2015, by then-Gov.-now-Veep Mike Pence, the state erupted in a battle for and against it.

Critics argued that it could be used by individuals and businesses to discriminate, particularly against members of the LGBTQI (lesbian, gay, bisexual, transgender, questioning and intersex) community. Things escalated quickly, with the state's major newspaper, the Indianapolis Star, running a provocative front page editorial demanding that lawmakers "Fix This Now."

After threatened boycotts and potentially damaging economic effects if major companies left or refused to relocate to Indiana, an additional bill designed to protect LBGT individuals was signed into law on April 2, 2015.

Beyond expected uses: Still, the law has provoked frustration, anger and unintended consequences.

Indianapolis resident Bill Levin said RFRA protected the right to use cannabis for religious reasons and founded the First Church of Cannabis.

Rodney Tyms-Bey also cited RFRA as a defense for not paying taxes. Tyms-Bey had been in a tax dispute with the Indiana Department of Revenue since 2013, when the state tax agency determined that he had falsely reported his income and eligible tax deductions in 2012 and owed the state $1,042.82.

In response, he claimed that he was a "sovereign citizen," declared himself an estate and refused to amend his tax return or pay the outstanding balance that Indiana claimed he owed.

Indiana DoR's response was to charge Tyms-Bey in 2013 with three counts of tax evasion. Each is a Class D felony.

Religious tax defense raised, struck down: And on July 1, 2015, the date that Indiana's religious freedom law took effect, Tyms-Bey countered by filing a notice of defense of religious freedom.

Tyms-Bey has never identified what religious practice is affected by the state's tax actions, but in the latest legal turn, a divided appellate court found his argument unpersuasive.

In the Jan. 13 decision, the three-member appeals panel held 2-1 that Tyms-Bey and similarly situated defendants may raise an RFRA claim in a criminal prosecution.

But Judge John G. Baker, with Chief Judge Nancy H. Vaidik concurring, further determined that under RFRA, Indiana can "substantially burden a person’s exercise of religion if the burden furthers a compelling governmental interest and is the least restrictive means of furthering that interest."

Baker added:

"In other words, in the case at hand, regardless of the state’s chosen enforcement mechanism, the 'burden' that Tyms-Bey wants to avoid is the same -- the requirement that he pay taxes. The fact that the state has both civil and criminal enforcement options is beside the point. We find that the uniform and mandatory tax system as a whole, which incorporates the criminal penalties at issue here, is the least restrictive means of furthering the government's compelling interest in collecting revenue."

Therefore, according to the ruling:

"[I]n the context of Indiana's RFRA, there is a compelling governmental interest in collecting income tax revenue. Moreover, we hold as a matter of law that the least restrictive means of furthering that compelling interest is uniform and mandatory participation in the income tax system. There are no facts that Tyms-Bey could proffer with respect to his exercise of religion that would not be overcome by the State's compelling interest and the means used by the State in furthering that interest. In other words, as a matter of law, Indiana’s RFRA offers no protection for the allegedly criminal nonpayment of income taxes by Tyms-Bey, and the trial court did not err by denying his request to assert the defense."

One judge partially persuaded: A third appeals panel member, Judge Edward Najam, Jr. disagreed with his colleagues.

In his lengthy dissent, Najam said that while Tyms-Bey might not be successful with his religious freedom claim against paying taxes, he was not required to present evidence in support of his RFRA defense during a pretrial hearing. That, said Najam, could come when Tyms-Bey gets his day in court to which he is entitled.

There's no word yet from Tyms-Bey as to whether he plans to pursue his case further through the state legal system.

More religious tax claims coming? In addition to Indiana, the National Conference of State Legislators says 21 other states have their own versions of religious freedom laws, with 10 others considering such bills.

The Indiana case, however, is the first time a state's income tax laws have been challenged under a state religious freedom law, according to Bloomberg BNA's SALT (State and Local Tax) blog.

"Tyms-Bey could end that possibility in Indiana," writes James Gatliff, a state tax law editor at Bloomberg BNA, "but will it foreclose the use of such a defense in other states?"

You also might find these items of interest:

• Church of Scientology is still tax-exempt 
• VP pick Mike Pence also has a penchant for privacy
• Pope Francis tells churches to help refugees or pay taxes

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/M3S3IAOtSk8/tax-evasion-defense-indiana-religious-freedom-act-ruling.html

Are You Raising Red Flags with Potential Clients?

The IRS is cracking down on fraudsters this tax season and that includes warning taxpayers about “return preparer fraud”. It’s unfortunate, but there are people who set-up shop each season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers.

This tax season it is imperative that you represent yourself as a qualified, honest preparer and not raise any red flags to potential customers. Here are 6 ways to reassure potential clients that you are a competent preparer.

Don’t promise the moon

Everyone’s tax situation is different. While it seems like an easy marketing tactic to promise big tax refunds, it’s probably one of the worst things you can do. Not only does it set-off red flags, in most cases it’s simply not true. A good tax preparer can guarantee one thing: that their clients will pay the least amount of taxes legally possible.

Button up your digital presence

Consumers expect professionals to have some form of digital presence. A basic website with a professional email address is pretty easy to set-up these days. Using a gmail or other type of email can cause red flags to go up. Beyond having a website, consider setting up a LinkedIn account as well as Facebook and Twitter.

Promote your credentials

The IRS has been heavily promoting their Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. Are you on it? Are you an Enrolled Agent, Certified Public Accountant, or Attorney? Do you have an IRS Record of Completion or one of our Chartered Tax Certificates? Promote your credentials on your website, LinkedIn profile, in your office and in email communications.

Along with professional credentials you should promote any organizations or associations that you are a member of. For example your membership to any of  the national tax professional organizations. This shows that you are engaged and in-tune with the industry.

Another way to show competence and trustworthiness is to promote any positive ratings you’ve earned from websites like the Better Business Bureau.

Reassess your fees

The IRS has been warning taxpayers about tax professionals who base fees on a percentage of their client’s refund. This is not only a poor way to base fees, it’s illegal. Make sure your fees are fair and competitive. For more on fees, check out our blog post: How to Determine Your Fees as a Tax Preparer.

Promote that you offer e-file

E-file is required of any tax preparer who prepares returns for 10 or more clients. It’s also the safest and most accurate way to file a return.

Offer a guarantee

Trusting a stranger with your financials is a big step. Make sure you offer some sort of guarantee that their return will be accurate. You should also offer assistance throughout the year in the event that the IRS contacts them or they have a question.

As tax preparers we are trusted with confidential and private pieces of our client’s information. This makes most people think twice before going to anyone to prepare their taxes. With so many scams out there, it’s important that you are presenting yourself in the most professional, qualified and trustworthy light as possible.

 

source http://www.theincometaxschool.com/blog/tax-preparer-red-flags/

What will your bar tax bill be on Margarita Day 2017?

It's National Margarita Day! Each Feb. 22, the focus is on appreciating this popular tequila-based cocktail.

I'm in Texas, specifically Austin, which is the drinking-est town I've ever lived in -- not judging, just observing! -- so truth be told today is no different from the other 364 here.

FX/FXX TV's spy-turned-private detective Sterling Archer offers his margarita recipe. 

But if you're in less alcoholically inclined location and need a special reason to enjoy a margarita, then Feb. 22 is your day.

If you're looking for a drink that's a bit more elaborate that the basic one preferred by cable television's animated (in soooo many ways!) Sterling Archer, then check out the Cooking Channel's top 28 margarita recipes.

Or you can just head to your favorite restaurant or bar for lunch (if you have a lenient boss or are the boss) or happy hour.

Tax contribution of booze: Your local eateries and/or drinking establishments will thank you for your patronage and the order of an added adult beverage choice today. So will, in many cases, your state treasury.

In 17 states, the government directly controls the sales of distilled spirits, according to the Federation of Tax Administrators. The amount those states collect, along with other relevant hard-alcohol tax info for 2017, is detailed in the FTA table below. 

State Liquor Excise Tax Rates 2017

1) In 17 states, the government directly controls the sales of distilled spirits. Revenue in these states is generated from various taxes, fees, price mark-ups and net liquor profits.
(2) General sales tax applies to on-premise sales only.
(3) Washington privatized liquor sales effective June 1, 2012.

As the FTA notes, the national median tax on liquor is $3.75 per gallon.

Alaska blows that tax rate up bigly (or big league; like your margarita style, it's your choice), collecting $12.80 per gallon.

The lowest per gallon tax is $1.50 in Maryland and neighboring Washington, D.C. Insert your own jokes here about how folks working in the shadow of the federal government deserve a tax break on their imbibing.

Plus, in most states, you'll owe sales tax on the restaurant fare, food and beverages, that you order on special booze-related days like this. Mark your calendars, National Tequila Day is July 24. If you're more of a wine fan, that commemorative day is May 25.

However and wherever you celebrate National Margarita Day, tip your server and, if need be, call a cab or car service.

You also might find these items of interest:

• Some yummy hobby tax tips on National Cookie Day
• 5 sales-tax-free states are perfect places to enjoy National Ice Cream Day
• Wake up and smell the coffee and tax connections on National Coffee Day

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/n5IHd0_jMz0/state-alcohol-taxes-2017-national-margarita-day.html

Most taxpayers get failing tax knowledge grades

The Internal Revenue Service would really, really like if all of us would use tax software to prepare and e-file our taxes. It even gives around 70 percent of filers the chance to do so for free at the aptly named Free File section of the IRS website.

But a lot of taxpayers who qualify for Free File decide instead to pay a tax pro to file their returns, according to a new survey by NerdWallet.

Tax pros preferred: More than 1 in 3 taxpayers, or 38 percent, who make less than $50,000 annually hired a tax professional, according to the personal finance website. For the 2017 filing season, if your 2016 adjusted gross income is $64,000 or less, you can use Free File.

Twenty-six percent went to an accountant, while another 12 percent headed to a national tax preparation company.

While that obviously cost them some money, the choice to seek professional tax hiring help might have been a good idea.

The NerdWallet survey, conducted online by Harris Poll, also found that many Americans lack a basic understanding of federal tax rules.

Actually, it was more blunt.

Failing tax grades: Most taxpayers get failing marks for their tax knowledge.

Out of eight questions about IRS rules for common deductions, retirement and education savings plans, only a quarter of the surveyed taxpayers correctly answered the questions.

Breaking down the failing grades, the NerdWallet poll found that nearly half of taxpayers (46 percent) don’t know into what tax bracket their income falls. Seven percent didn't even know what a tax bracket is.

Another 57 percent, or nearly three in five taxpayers, don’t know what a W-4 is.

Even more, 59 percent, don’t know that deadline this year for making a tax-deductible contribution to a traditional individual retirement account is April 18.

Experience obviously doesn't matter: And yes, the survey group was more than 1,800 adults across the United States who filed income taxes last year and plan to do so again this year. Obviously, they didn't learn from last year.

And obviously, no Don't Mess With Taxes readers participated in the poll!

Seriously, though, such lack of tax knowledge is disconcerting. I know that that are, relatively speaking, very few of us tax geeks out there.

I'm also glad that those who know they are woefully short on tax understanding come here and to other reputable personal finance and tax sites for help and/or head to a tax professional.

And there is one final silver lining.

Such a shortage of tax facts -- real, not fake ones! -- bodes well for my continued employment.

But honestly, folks, I'd be happy for the day when everyone feels confident and comfortable about taxes. Hey, I want to retire some day!

You can read more about NerdWallet's findings in its story on the poll. (Full disclosure: I freelance for the site, but this piece was by NerdWallet's Kevin Voight.)

You also might find these items of interest:

• Tax filing checklist for 2017
• 5 tax tips for Free File users
• 10 reasons to file a tax return even if you don't have to

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/1al7nhg2gIg/most-taxpayers-get-failing-tax-knowledge-grades.html

Looking for tax help in lots of online places

Working on your taxes this Presidents Day? You are most definitely not alone.

The day following what officially is still just a celebration of Washington's Birthday is typically the busiest day of the year for Internal Revenue Service phone reps. They usually field thousands of calls per hour on the third Tuesday of every February.

You can find lots of tax help and filing options on your computer and smartphone.

To help ease some of tomorrow's expected call crunch, the IRS phone help line is open today, Monday, Feb. 20, even though it's a federal holiday. IRS representatives will be taking taxpayer questions today until the callers' local clocks chime 7 p.m.

However, instead of calling, be it today, tomorrow or any date, the IRS suggests that we use one of the tax agency's other help options, like its app IRS2Go.

Free File on the go: With the IRS2Go app you can track your refund or, if you owe, make tax payments directly from your bank account or via a credit or debit card.

The app also has a link to payment options if you don't have the tax due cash right now.

And if you're not sure yet whether you owe or are getting a refund because you haven’t completed your return, then you can do that from your mobile device, too.

That's right. The IRS notes that you can use IRS2Go on your smart phone or tablet to electronically prepare and file your federal and state tax returns through IRS Free File.

The IRS and its private-sector Free File Alliance partners now support a design that allows for electronic tax prep and free filing from, in addition to desktop and laptop computers, our mobile phones and tablets.

Regular Free File rules apply: IRS2Go, which is downloadable on either Android or iOS devices, has a link to the Free File Software Lookup Tool. Once there, click on the Tax Help button at the bottom of the screen and then select IRS Free File.

After answering a few questions to ensure that you qualify to use the service -- the key determinant is that your adjusted gross income is no more than $64,000 regardless of your filing status --  you can see which of the 12 Free File options this year are available for you.

Pick one and get to work filing on the go. Note that each Free File software participant sets its own eligibility requirements for its product. These generally are based on age, income or state residency.

I was offered two ways to file for free via my iPhone and started the process with both programs.

State Free File considerations: A quick personal note about my choices. Since I'm in Texas, a state that doesn't collect any kind of personal income tax, I didn't have to worry about a tax return at that level.

However, if you live in one of the 43 other states or Washington, D.C. that collect some sort of individual income taxes, your state location will help narrow down your Free File choices.

And take care if you're looking for gratis tax filing help beyond your federal 1040. Some Free File companies offer free federal and free state tax return preparation. Others charge a fee for state return preparation.

Popular IRS app: This mobile filing option may be one reason why IRS2Go is near the top of smart phone apps. At least on my phone.

When I checked the apps top charts section on my phone the IRS app, as the screenshot at left shows, came in second.

It also bested such wildly popular (so I'm told) apps as Snapchat, Instagram, Facebook and Spotify.

Of course, timing is everything, in life and especially in taxes.

I suspect that as the tax season progresses, the app will drop in popularity.

But good for the IRS for having a mobile option that seems to be working for it and taxpayers.

PC, laptop for me: As for my foray onto to hand-held tax filing, sorry Free File companies for getting your hopes up with my iPhone filing test. I am not going to complete my 1040 on my device.

I do a lot of stuff via my phone and it's nice to have this tax option, too.

But I'm still much more comfortable using my computer to fill out my 1040.

I make enough typos just texting inconsequential stuff on a tiny phone screen. I definitely don't need that to happen with my taxes!

Other online tax help options: I might use my phone, however, for other tax tasks.

And if instead I prefer another online tax option, the IRS has me -- and you! -- covered there, too.

If you don't want to use your phone or tablet to find out your refund's status, you can head to IRS.gov to check "Where's My Refund?" But please, regardless of how you get to the tool, the IRS asks that you click on it only once a day.

As for other tax questions, a perusal of the IRS.gov home page offers lots of other info and options.

If you don't see what you need there, check out the IRS Tax Map, where you can search by topic or keyword to find tax-law information by subject. Or you can go straight to the search box at the top of the IRS.gov page and enter what you're specifically hoping to find.

There's also the IRS' Interactive Tax Assistant, which will take you through a series of questions just like a customer service representatives would.

Personally, I'm still a big fan of Publication 17. This annually updated document is now available online as a searchable income tax guide.

IRL tax help, too: Sometimes, though, you need to talk taxes literally face-to-face. In these cases, you can get in real life (IRL) help at a local IRS Taxpayer Assistance Center, or TAC in IRS acronymese.

But before heading out to your local TAC, which you can locate here, you need to call first. Since these offices are jammed this time of year, IRS agents there are now meeting with people by appointment only.

Also consider taking advantage of one of the around 13,000 Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites that operate nationwide during filing season. To find a location near you, head back to your computer and search Free Tax Help on IRS.gov.

Regardless of how you find the tax information you need -- a lot of which (shameless self-promotion alert!) also can be found here on the ol' blog -- to file your return, here's hoping you have a successful 2017 filing season.

And here's also hoping that you get to spend some of this Washington's Birthday/Presidents Day doing something other than your taxes!

You also might find these items of interest:

• Thanking Abraham Lincoln for Thanksgiving Day
• Happy Birthday to Abraham Lincoln, father of the U.S. income tax
• How taxes have -- and haven't -- changed since JFK became the first president to visit IRS headquarters

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/_OczU9sVju4/online-tax-help.html

California proposal to use convert vacation home subsidy to low-income housing one

AB 71 introduced in California for the 2016-2017 session, proposes to repeal the deduction for mortgage interest on a second home (usually a vacation home) and use the savings (and apparently other funds) for low-income housing.

Some people may be surprised to learn that you can deduct interest on a mortgage on a second home. We can find some logic, perhaps, in deducting interest on a mortgage on your principal residence because we think the tax law is encouraging home ownership. But, why would it subsidize/encourage debt on a second home?

The "logic" is mainly historical. Back in 1913 when our modern federal income tax began, all interest expense was deductible. In 1986/1987, to help pay for lower rates, Congress repealed the deduction for personal interest (such as on credit card debt), and limited the mortgage interest deduction to just two home (principal and second) and limited the debt to $1.1 million (which is a lot of debt, even today in California).

Most states follow the federal rules.

The deduction is only available if you itemize your deductions. Only about 30% of individual itemize.  At the federal level, the "cost" of the mortgage interest deduction is about $80 billion per year! (of course, most of this cost is for the deduction related to mortgages on principal residences, not vacation homes).  That is one of the largest costing tax breaks, yet only benefits less than 30% of individuals (not all itemizers have a mortgage).  This is more than the federal government spends on low-income housing.

Several principles of good tax policy support repeal of the interest deduction on a second home. First, equity. This deduction is mostly claimed by higher income individuals (see April 2013 paper of Eric Toder). After all, who can afford a second home (although some use it to buy an RV)? Why subsidize this non-necessity?  Neutrality and economic efficiency are also violated.  The mortgage interest deductions has been shown to result in higher income individuals buying a more expensive home. Thus, the deduction favors housing investment rather than investment in other areas, such as businesses.

So, interesting proposal.  I would suggest a few changes though:

1. Instead of outright repeal, phase-out the deduction over two to three years to address the issue that many of the borrowers made decisions assuming they would get a tax deduction.
2. Do not earmark the savings from elimination of the deduction for interest on a second home. That just ties the hands of the lawmakers. The funds should go to the General Fund to be used for various state needs - including low-income housing.

One more area where lawmakers can help low-income housing ... Federal tax reform will most likely include repeal of the low-income housing credit to help pay for lower tax rates. Well, state and local governments are indirect beneficiaries of this tax credit. They should ask Congress to use some of the tax savings as a transfer to state and local governments for low-income housing projects.

What do you think?

source http://21stcenturytaxation.blogspot.com/2017/02/california-proposal-to-use-convert.html

Watch out for the Dirty Dozen tax scams of 2017

Phishing. Phone scams. Identity theft. Unscrupulous tax preparers.

Sound familiar? It should.

Those illegal actions once again top the Internal Revenue Service's annual Dirty Dozen list of tax scams.

Today's tax con artists are the modern day equivalent of yesteryear's snake oil salesmen, hustlers who convinced folks to buy products that could not possibly work as advertised. In all cases, past and present, the victims end up losing their money. ("The Snake Oil Salesman" by Morgan Weistling is available for purchase at Artifacts Gallery. The link to the artwork is not a paid endorsement.)

As I noted back on Groundhog's Day when the IRS started parceling out its yearly collection of the worst of tax-related crimes, this year's list started off with a definite déjà vu feel.

In fact, all the scams from 2016 made the 2017 list. Unfortunately, that staying power makes 12 this week's By the Numbers winner.

Retouching old scams: This year, as it did in 2015 and 2016, the IRS released its Dirty Dozen list in separate announcements over almost two weeks. That allowed the agency to elaborate in each news release on the tax-related criminal activity.

And while the general schemes have been disturbingly consistent, tax crooks have tweaked them somewhat from year to year.

"Taxpayers can and should stay alert to new schemes which seem to constantly evolve," warns IRS Commissioner John Koskinen. "We urge them to do all they can to avoid these pitfalls – whether old or new."

For 2017, here's the IRS' consolidated list, in the order in which they were announced, of the 12 worst tax scams, along with a summary of each.

1. Phishing: Be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information.
   
   
2. Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. Late in 2016, an international law enforcement effort raided call centers in India where many of these scam call originated. Since then, the IRS and consumer agencies have reported a drop in such criminal calls.
   
   
3. Identity Theft: Watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else's Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized.
   
   
4. Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. However, every filing season some crooked preparers set up shop to solely to commit refund fraud, identity theft and other scams that hurt taxpayers. Be sure to check out your tax professional thoroughly to avoid falling victim to one of these bad tax preparers.
   
   
5. Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Also be careful in the wake of natural disasters or tragedies. Crooks often take advantage of our desire to help out those in such dire straits. Always take the time to ensure that your hard-earned money goes to legitimate and currently eligible charities. You can use IRS.gov's online Exempt Organizations Select Check to verify the tax-exempt status of charitable organizations.
   
   
6. Inflated Tax Refund Promises: Be suspicious of anyone promising inflated refunds. Also be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims.
   
   
7. Excessive Claims for Business Tax Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses.
   
   
8. Falsely Padding Deductions on Returns: Avoid the temptation to falsely inflate deductions or expenses on your return so that you pay less than what you owe or potentially receive larger refunds. Think twice, too, before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit (EITC) or Child Tax Credit. Such criminal tax action is why a law took effect this year requiring the IRS to hold refunds for a couple of weeks when they are the result, in whole or part, of EITC and additional child tax credit claims.
   
   
9. Falsifying Income to Claim Tax Credits: Don't invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. You should file the most accurate return possible because you are legally responsible for what is on your return, regardless of who fills it out or submits it on your behalf. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution.
   
   
10. Abusive Tax Shelters: Don't use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.
    
    
11. Frivolous Tax Arguments: Don't use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.
    
    
12. Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it's a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program to enable people to catch up on their filing and tax obligations.

Don't be a scam victim: Knowing what to look out for is just the first step. Tax criminals are canny, cunning and creative. But you can beat them.

Here are three ways to avoid becoming a tax scam victim.

First, be skeptical. Don't take a caller's word for any tax claim.

Second, don't reply to any calls or emails about taxes without first confirming that the communique came from a legitimate source.

Finally, go to the tax source. If you think you might owe taxes, call the IRS directly yourself. It's better to get out in front of an overdue tax bill and make arrangements to pay Uncle Sam rather than fall for a crook's con and send him the money instead.

Good luck this tax season, in not only accurately filing your 1040, but also in avoiding all of this year's Dirty Dozen tax scams.

You also might find these items of interest:

• 4 tax cyber security tips from IRS, NY tax officials
• 5 ways to protect your tax identity and refund money
• Don't fall for tax identity theft tricks, even especially if 'Revenue Officer John Koskinen' calls you

source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/he9Yvr5IwhU/dirty-dozen-tax-scams-of-2017.html