Tax Relief? Buffet Wants None of It

While most Americans are looking for tax reliefwherever they can find it, billionaire investor Warren Buffett would actually like to see his taxes increased.

How could I not mention Warren Buffett today? He is all over the news for his New York Times opinion piece about how the government should raise his taxes and the taxes of all the “mega-rich.” He says he would immediately raise rates on households with taxable income of more than $1 million, and he would add an additional increase for those making $10 million or more. He says he and his mega-rich friends have been coddled long enough by Congress, and it is time for the government to get serious about shared sacrifice.

The billionaire investor goes on to say “Last year my federal tax bill . . . was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

And what about his mega-rich friends? He says that most of them wouldn’t mind paying more in taxes either! Unbelievable. That can’t be true. They didn’t get where they are by seeking out opportunities to pay more taxes. How could anybody say with a straight face that Buffett’s comments were not politically motivated. One thing is true; President Obama is already citing (and backing) Buffett’s words as he tours the country on his re-election campaign.

Taxes in Cuba

In communist Cuba most people work for the government. Private sector workers in Cuba must give up to 50% of their income back to the government under the new tax system. The government would like to increase the number of private sector workers, but I don’t see how they’re going to accomplish that if they don’t lighten up and give them some tax relief.

Interesting article: For Cuba’s New Entrepreneurs, the Tax Man Cometh.

IRS Promotes its Spanish Language Website

The Spanish language section of the IRS website is slowly becoming more robust, but it still offers a very limited amount of information compared to the massive amount of content on the main website. Today the IRS highlighted 9 key features to be enjoyed by Spanish speakers on irs.gov/espanol:

1. Its a website, so its always accessible, 24/7

2. You can get tax forms and publications in Spanish

3. E-file is available with Spanish instructions

4. You can check the status of your refund

5. The Spanish site includes an Earned Income Tax Credit eligibility tool

6. There is information about assistance for those who are unemployed or who are otherwise suffering a hardship

7. Tax law updates are available in Spanish

8. The Multimedia Center has video and audio content in both English and Spanish

9. Twitter @IRSenEspanol

This seems like a healthy list of features, but this is pretty much everything the site has to offer. Even the “More Topics” link in the “Espanol Topics” menu just takes you to the same topics in the menu itself. Kind of goofy if you ask me, but its getting there.

5150

On this day in 1981 IBM introduced its first personal computer, the model 5150. Five years later Van Halen released its first album recorded with Sammy Hagar, also called “5150″ but in no way a reference to the computer.

This fun fact has been brought to you by Montgomery & Wetenkamp.

Beware of Bogus IRS Emails

I have said this before, but it bears repeating. Any emails you might receive purporting to be from the IRS are more than likely spam. The IRS does not communicate with individual taxpayers in this manner. You should forward any such email to phishing@irs.gov and then delete the emails without opening them.

Apparently there is another batch of bad emails being dispersed this week. Thanks tKelly Phillips Erb at Forbes for the heads up. One is from “manager@irs.gov” and the other is from “support manager@irs.gov.” Hopefully you’re not so curious that you would risk infecting your computer, or worse, giving up personal information to identity thefts. But, if you can’t stand not knowing what the emails say, this is the gist of it:

“Important information about your tax return. We are unable to process your tax return. We recived your tax return. However, we are unable to process the return as field. Our records indicate that the person identified as the primary taxpayer or spouse on the tax return did not provided all the required documents shown on the tax form. Our records are based on information received from the Social Security Administration. Based on this information, the tax account for the individual has been locked.” The message is full of typos, which could make you wonder if it really isn’t from the government. But it goes on to request personal financial information. Its definitely a scam.

Beanie Sigel Needs Tax Relief

The Philadelphia rapper pleaded guilty this week to failing to file federal income tax returns for 2003, 2004 and 2005. The IRS believes that Sigel failed to pay nearly $350,000 in federal income taxes over that time period on more than $1 million in income. This is just the latest in his fairly long history of legal troubles. He beat an attempted murder charge for which he was tried twice. And he pleaded guilty to gun and drug charges back in 2004. Apparently Sigel was earning money while in prison, and failing to report that income. Sentencing is set for November 18th and he could face up to three more years prison time for his tax issues. Click here for the complete story and some interesting background information on the career of Beanie Sigel.

Have you noticed that the celebrities who find themselves in hot water with the IRS are usually those aging stars whose careers seem to be going downhill? It’s no coincidence. Something similar tends to happen with business owners whose businesses are suffering. Income drops, but they tend to hold out hope that things will improve.  And by “hold out hope” I mean that they do not change their standard of living or their celebrity lifestyle.

FTB’s Massive Filing Status Audit

The California Franchise Tax Board announced today that they mailed out 135,000 audit letters to taxpayers suspected of erroneously claiming Head of Household status on their 2010 tax returns. A similar audit campaign last year resulted in additional assessments exceeding $35 million. People use Head of Household status because of the tax savings, but few really understand how it works. To qualify, the taxpayer must provide care for more than one-half of the year and pay more than one-half the cost of maintaining their home. The qualifying person must be related to the taxpayer and meet the requirements to be a qualifying child or relative.

IRS’ Tips are Self-Serving this Time

Installment #14 in the IRS’ Summertime Tax Tips series is for people who owe money to the IRS.

Here is what the IRS recommends:

1. Get a loan and/or pay what is owed with a credit card. Fair enough. If the interest rate on the loan or the card is better than what will accrue in interest and penalties, sometimes it is best to just pay it off.

2. Request additional time to pay. Ok, but the most you will get is probably 90 days.

3. Pay it back in installments, pay it back through Electronic Funds Transfer, or pay it back online. Great tips IF you can afford to pay, but a lot of people owe the IRS because they can’t afford to pay.

4. Set up an installment agreement by mail (balances under $25k), or complete a Form 433F (balances over $25k).

5. Save money on the installment agreement processing fee allowing the IRS to automatically deduct payments from your bank account.

6. Change your withholdings so you don’t owe again.

Are you seeing a theme here? Almost all of these “tips” involve paying the IRS back in full, in one form or another. What is lacking from this set of tips is any guidance for taxpayers who really can’t pay what they owe. But I also understand that the IRS doesn’t want to advertise the other options; that would not be in their best interest.