U2 Scorned for Tax Dodging

Activist group, Art Uncut, has planned a protest during U2′s performance at this weekend’s Glastonbury Festival in England.   The group has not said exactly what actions they will take to make their point.

Most people looking for tax relief don’t have the liberty of selecting which country they want to pay taxes in.  But in 1996 U2 went shopping around with the intention of moving their business affairs to a country with lower taxes, and they landed in the Netherlands.   Art Uncut’s position is that this “tax dodging,” (by U2 and others) although not illegal, is causing poor countries like the band’s native Ireland to grow even poorer.  Furthermore, it is their view that this move really undermines frontman Bono’s highly publicized campaigns aimed at reducing poverty in developing nations.

Interestingly, Forbes recently placed U2 at the very top of their list of highest paid musicians, earning $195 million over the relevant 12 month period.

IRS Optional Standard Mileage Rate Increased to 55.5 Cents

The IRS optional standard mileage rate is being increased from 51 cents per mile to 55.5 cents per mile starting July 1, 2011.  The IRS normally adjusts the mileage rate each fall for the following calendar year.  However, this year, due to high fuel prices, the IRS is making an additional adjustment to the rate halfway through the year.  The 55.5 cents per mile rate will be effective until December 31, 2011.

Looking back, the IRS adjusted the rate part-way through the year in 2005 and in 2008 as well.  It peaked at 58.5 cents per mile back in the second half of 2008.

The standard mileage rate is used to compute the deductible costs of operating an automobile for business use.  It is ”optional” because taxpayers may choose to track their actual vehicle operating costs instead.  This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.  California employers are not required to use the IRS standard rate, but it is presumed to be reasonable.  If your employer reimburses you for mileage and is paying you less than 55.5 cents per mile after July 1st, you may want to point out the standard rate increase.

Do You Need to Adjust Your Withholding?

It’s nice getting a couple thousand bucks back from the IRS each April, right?  Of course it is, but its nicer to not hand it over to them in the first place if its just going to be coming back to you in a refund.  When you allow your employer to withhold too much, you are essentially loaning your money to the government all year.  Your goal should be to have your employer withhold only enough to cover the taxes you actually owe.  The IRS Withholding Calculator can help you determine how many exemptions you should claim on your W-4.  You may need to go back to the IRS Withholding Calculator when you experience major changes in your life, such as marriage, divorce, death of a dependent, birth of a child, other personal financial changes, or changes in the law.

However, take care that you don’t underwithhold either because if your employer does not withhold enough, then you will find yourself owing the IRS.

IRS-impersonation Scam Emails

The IRS has emphatically stated that they do not send out unsolicited emails. So, if you receive an email that appears to be from the IRS, but requests personal / financial information, then chances are it is a scam. People who fall prey to these emails may become victims of identity theft if they give up the requested information to the scammer or if they unknowingly open up their computers to malicious software.

If you receive an email requesting personal information that appears to be from the IRS, do not open it and do not click on any links. You should immediately forward the email to phishing@irs.gov, then delete the email. If you believe you have become a victim of identity theft, contact our tax relief firm and we may be able to help you.

Smooth Criminal

Raymone Bain, former general manager of Michael Jackson, pleaded guilty for failing to file her 2008 tax return. She faces possible 1 year in prison and $100k fine. As part of the plea agreement, she will also have to pay back up to $400k that she owes for tax years 2006-2008.

IRS “Fresh Start” Program

On February 24, 2011, the IRS announced they would be rolling out a series of changes to current collection procedures that would prove to the world that they are just a bunch of softies.  Ok, they didn’t go that far.  But they did say that they would be filing fewer liens, simplifying the procedure for removal of a lien, and streamlining the Offer in Compromise program for certain taxpayers.

Here we are in June and there are still more questions than answers.  For example, the IRS claims that the new dollar threshold for filing a federal tax lien is now $10,000 instead of $5,000, but liens may be filed on balances less than $10,000 when circumstances warrant.  What circumstances might warrant a deviation from this new rule?  We don’t know.  The IRS also claims that they will be expanding the Streamlined Offer in Compromise process.  What are the details of this procedure?  And does it really benefit the taxpayer?  From what I have seen, “streamlining” a procedure can be a double-edged sword.  On one hand, the process is shortened so the taxpayer finds tax relief sooner if the offer is accepted.  On the other hand, if streamlining skips important steps or moves the process along so quickly that it prejudices the taxpayer, then only the government benefits.

IRS Employees in Need of IRS Tax Relief

IRS Employees in Need of IRS Tax Relief ?

According to the Treasury Inspector General for Tax Administration (TIGTA), for years 2004 to 2008, the Internal Revenue Service (IRS) identified that it had an average of 8,788 employees per year who were not complying with U.S. tax laws. Of the 43,941 IRS employees not in compliance with U.S. tax laws over the five-year period, 34,095 of them failed to pay taxes owed, failed to pay on-time, or failed to timely file their tax return. In a report released by the TIGTA issued May 5, 2011, and released on June 21, 2011, an additional 133 IRS employees previously undiscovered by the IRS were not in compliance with tax laws. The TIGTA findings were made during an audit of the Employee Tax Compliance Program that is supposedly designed to ensure that IRS employees are held to a high standard of compliance with the tax laws. The bottom line is that the unforgiving Revenue Officer knocking on your door may be issuing along with that  bank levy or wage garnishment, a dose of “do as I say, not as I do.”

So-Cal Pilot School Case

The owners of a Southern California test pilot school pleaded guilty to filing a false 2008 tax return. They transferred money from their corporation to several offshore accounts, then deducted the transfers from their corporate and individual income tax returns. Then they failed to report the interest on the foreign accounts. Maybe it goes without saying, but this is not allowed. Now they will have to pay upwards of $2 million in penalties on top of their $710,000 tax bill. I think its safe to say that their options for tax relief are limited at this point. If they don’t have the cash to pay it all at once, that’s going to be one big installment payment!

SSN Randomization

Your social security number (SSN) is actually made up of three different numbers: the 3-digit area number, 2-digit group number, and 4-digit serial number. This is the way its been done since social security numbers first started being assigned back in 1936. But later this month the Social Security Administration (SSA) is going to begin assigning numbers randomly. This will make additional numbers available that are currently restricted due to the area number. Basically, it will take longer for the SSA to run out of numbers. Also, the randomization method of SSN assignment is supposed to better protect the integrity of the numbers. Bad guys won’t be able to figure out the first 3 digits based on state. Even after this change, the SSA will still not be using 000, 666, or 900-999.