Saturday, November 28, 2009


Did you survise "Black Friday"? I didn't leave the apartment - except to get breakfast from a local deli and to get my mail.
* In case you missed my Thanksgiving Day entry – check out this Thanksgiving-themed post from Professor James Maule of MAULED AGAIN titled “Gratias Vectigalibus”. His comments echo some of my own sentiments.

* And in case you were too busy shopping on “Black Friday” to visit TWTP – check out my post on “The ‘Education Menu’ of Tax Benefits

* USA TODAY reports that “Americans' Tax Burden is Lightest in Developed World”.

Total U.S. tax revenues in 2008 equaled 26.9% of gross domestic product, according to provisional figures released Tuesday by the Organisation for Economic Co-operation and Development. That figure – which includes local, state and federal taxes, including Social Security – was lower than the 1990 ratio and far below levels across Europe. In Denmark, the total tax take exceeds 48% of the economy. In France, it tops 43%; Germany, 36%.”

Try telling someone who lives in New Jersey that their tax burden is “light”.

* Joe Kristan joined Kay Bell and Kelly Phillips Erb (and, of course, king of the tax bloggers Paul Caron) in reporting and commenting on the proposed “war tax” included in the "Share the Sacrifice Act" in his post "War Tax. Why Stop There?" over at the ROTH AND COMPANY TAX UPDATE BLOG.

Joe, his tongue firmly in check (where it is often found), suggests –

It might be a good idea to have a dedicated "Share the Sacrifice" tax for every new program. The possibilities are endless:

- A 'Give it up For Goldman' tax to finance TARP and the bailouts.
- 'Reach Deep for Realtors' to finance the extended homebuyer credit.
- A 'Pimp your Neighbor's Truck' tax to finance "Cash for Clunkers."
- 'Pay up for Pork' for any transportation bill.
- A 'Share the Stupid' tax for the stimulus spending

Joe also offers “Bend Over For Benzes” to finance Iowa’s film tax credit. I would revise this a bit to “Bend Over For Bozos” for just about any quick fix reaction tax bill from Congress.

* Kelly Phllips Erb tells us “7 Audit Lessons (or How I Learned to Stop Worrying and Love the IRS)” at TAX GIRL.

Love the IRS” may be going a bit far. I doubt if anyone loves the IRS. But there is no reason to hate, or fear, the Service.

As I mentioned in Wednesday’s BUZZ Kelly’s law firm was audited by “Sam”. This post continues the tale of her audit – and provides 7 great tips for anyone facing an audit.

I have blogged in the past about the fact that I have, thank the Lord, had very little audit experience over the past 38 years. I can count the number of audits I have been involved with on the fingers of both hands. I do not represent taxpayers before the IRS (one reason I never saw the need to become an EA), nor do I want to if I can help it. I only get involved in the audit of a tax return I have personally prepared. But from what little audit experience I have had I can tell you that Kelly’s tips are right on the money. While the audit in question was of a corporation, these tips apply to audits of 1040s as well.

Every taxpayer faced with an IRS, or state, audit should read this post before going to the appointment.

* Stacie Clifford Kitts asks, “Have You Heard About Form 1099K?” over at STACIE’S MORE TAX TIPS.

Stacie tells us –

If you use Paypal or another service to process credit card payments, under these proposed regulations you may be receiving a new form 1099K which will report the amount of payments processed by the service for you.”

She then goes on to quote the official IRS notice on the new requirements. According to the notice, these new requirements will take effect “starting with transactions in calendar year 2011”. So don’t go looking for an 1099K form this coming January or February.

* The NATP’s weekly email newsletter reminds us of something I believe I mentioned earlier in the year here in a BUZZ installment -

NRP Employment Tax Audits to Begin in February 2010

In February 2010, the IRS will begin its first Employment Tax National Research Project (ET NRP). Business practices regarding employment tax issues may have changed significantly over the last 25 years since the last IRS employment tax study in the 1980s.

Examinations comprising the study will be conducted to collect data that will allow the IRS to understand the compliance characteristics of employment tax filers. The results will allow the IRS to gauge more accurately the extent to which businesses properly comply with employment tax law and related reporting requirements. When completed, this information will help the IRS select and audit future employment tax returns with the greatest compliance risk.

There are two main goals for the ET NRP:

• To secure statistically valid information for computing the Employment Tax Gap, and
• To determine compliance characteristics so IRS can focus on the most noncompliant employment tax areas.

The IRS will randomly select 2,000 taxpayers each year for the next three years. The examinations will be comprehensive in scope. Taxpayers will receive notices describing the NRP process similar to those used in recent NRP studies for individuals and Form 1120S corporations.

Records pertaining to employment tax returns and issues will be subject to review during these examinations. Employers should have all of their records available to expedite these examinations

* Back at the ROTH AND COMPANY TAX UPDATE BLOG, Joe Kristan’s post “New Business? How Do You Go About It?” led me to “Get It Right the First Time” by Chris Branstad at IOWABIZ.COM.

It is great to have one’s professional advice supported by peers. Both Chris and Joe echo my advice on incorporating.

Chris says –

Running to the secretary of state to get corporate filings is not the first step in developing your business.

Incorporating before your business has an identity is like getting a marriage license before you decide on a groom. You will likely have to start over.

First, determine: Who are you? What do you want? What is your growth strategy? What is your exit plan?

Chris’s marriage analogy is similar to what I have used in the past. I have told readers and clients that incorporating is like marriage – getting the marriage license may be cheap, but the divorce can cost a fortune.

Joe advises (highlight is mine) –

Don't go with a corporation -- S corporation or C corporation -- unless you really are sure of what you are doing. Once you incorporate, you may find yourself with taxable income for the privilege of undoing it.”

Joe gives the best advice of all, which applies to a multitude of tax issues – “You should get your tax pro involved”!

* And speaking of great advice, the Small Business Taxes and Management site’s News and Tip of the Day for Friday, November 27th gives an excellent piece and advice and provides a court case reference to tell you why.

If you're agreeing to something with the IRS, get it in writing. In Harry E. Crisci (2009-2 USTC 50,647; U.S. District Court, West. Dist. Pa.) the IRS levied on the auction proceeds from the sale of the company's assets. The amounts recovered by the Service were applied to both trust fund and nontrust fund liabilities of the company, rather than first applying all the proceeds to the trust fund liabilities. That left the company officers with a personal liability. The Court found no evidence the IRS said the proceeds would first be applied to the trust fund liability and found reliance by the company on the Service's vague statements unreasonable.”
* A guest post by Kimmer at THE MISSOURI TAX GUY just made it into the BUZZ. The title - "Personal Finance 101: Budgeting - It Doesn't Have to Hurt". It is a good primer on the subject.
* Don’t limit your Christmas gift-giving to presents for individuals. Make gifts to charity as well. Here is a good one to consider:

The Second Chance Fund of the American Humane Association- The medical costs of treating and rehabilitating an abused animal can easily become overwhelming for any animal welfare organization -- particularly when long-term care is necessary. The Second Chance Fund is one way American Humane works to support member organizations in their vital work. By providing financial assistance, in select cases, to animal welfare organizations responsible for the temporary care of animals as they are prepared for adoption into permanent, loving homes, the program provides animal victims of abuse or neglect with a second chance at life.


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