taxgirl

Fix the Tax Code Friday: Pay Per Mile Tax

Kelly — Fri, 20 Nov 2009 22:04:57 +0000

It’s Fix the Tax Code Friday! This week, there has been a lot of discussion across the internet about “going Dutch” a la the pay-per-kilometer system recently passed in Amsterdam.

So today’s Fix the Tax Code Friday question is:

Should the US consider a pay-per-mile tax system to pay for roads and other infrastructures?

If your answer is no, would that change if the US adopted the Dutch policy of abolishing the current road taxes and sales taxes for cars in exchange for the pay-per-mile system?Similar Posts:

Tax Update Blog: ‘Cheat’? I don’t think the word means what they think it means.

Kelly — Thu, 19 Nov 2009 17:19:32 +0000

Great piece by Joe Kristan at Roth & Company PC about FBAR reporting…

Tax Update Blog: ‘Cheat’? I don’t think the word means what they think it means.: “”

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Ask the taxgirl: Do I Need a Form 1099?

Kelly — Thu, 19 Nov 2009 13:32:08 +0000

Taxpayer asks:

Several elderly friends have asked me to help them with administratrive work in there home. I would probably do this on an ongoing basis and I am sure each would end up paying me more that $600 a year. I would report all of this money (Schedule C I think) but am concerned for the people I would be doing the work for. Do they have to issue a 1099 for the work I would do for them? Could I just report the money quarterly without ever getting a form from them and have it be legal, I don’t want to get them into trouble?

Taxgirl says:

If I understand it, you’re going to be kind of like a Girl Friday? Opening mail, paying bills, that sort of thing, at times that are convenient for you – and for a number of different people?

Assuming that you can’t be classed as a household employee (which I think you’re not if my understanding of your situation is correct), then there is no obligation for your customers to report payments made to you.

Forms 1099-MISC are generally issued when payments are made in the course of trade or business. Personal payments are not reportable. If your customers are making payments to you for services in much the same way that they would pay their hairdresser or a kid that occasionally mows the law, there’s no reason to submit a 1099 to you.

Again, this assumes that you’re self-employed and that you control how the work is done. A self-employed worker also usually provides his or her own tools and offers services to the general public in an independent business – which sounds like what you’re doing.

If, however, you could be classified as a household or other employee (which would result in a form W-2 issued to you), or if you’re performing services for your customer’s trade or business (which would result in a form 1099-MISC issued to you), that’s a different story. You can read more about household employees here.

I hope that helps. And good luck with your business!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the taxgirl! – Now on Facebook at http://www.facebook.com/taxgirlSimilar Posts:

Girls Gone Wild Founder To File Bankruptcy, Blames IRS

Kelly — Thu, 19 Nov 2009 02:23:48 +0000

And here I thought my days of reporting on Joe Francis were over…

It turns out that the Girls Gone Wild founder hasn’t quite put his tax woes behind him. After taking a deal to plead guilty to two misdemeanor counts of filing false tax returns – and escaping additional jail time in the process – Francis has found himself in the hot seat again.

If you believe TMZ, the IRS has liened Francis for nearly $34 million. To clarify, the IRS claims that Francis owes tens of millions of dollars in unpaid taxes. The breakdown is as follows: $17.7 million in 2001, $11.2 million in 2002 and $4.9 million in 2003. I’m not sure how much the penalties are since I haven’t seen the actual liens but those numbers put his net income somewhere close to $100 million for those three years.

I know, I know. Here I’ve blogging tax all this time when clearly, I should be producing porn.

On the plus side, though, I haven’t had to advise TMZ that my accounts have been frozen by the IRS to the tune of $100 million (no, those numbers don’t quite make sense – just reporting as I hear it). Francis has also allegedly reported that he will file for personal bankruptcy on tomorrow.

I’m not sure how this will affect Francis’ plea deal which requires him to resolve his outstanding tax issues. I mean, it is a resolution – but I’m guessing not so much what IRS had in mind. We’ll see.

(Editor’s note: I have since seen a copy of the liens as filed with LA County. As of 11/06/2009, the liens totaled $33,819,088.14)Similar Posts:

So Tell Me, Taxpayer: Do You Feel Lucky?

Kelly — Wed, 18 Nov 2009 12:37:54 +0000

It was a question posed to US taxpayers by the IRS in the wake of the UBS scandal: do you feel lucky?

The US offered US taxpayers the opportunity to voluntarily disclose offshore bank accounts as part of an amnesty program earlier this year. The choice? Come forward now and escape criminal prosecution or take your chances later.

It turns out that a number of US taxpayers didn’t feel quite so lucky. IRS Commish Doug Shulman has announced that more than 14,700 taxpayers came forward under the voluntary disclosure program. The disclosures were in the billions and covered accounts in 70 countries.

The number is higher than originally projected due to the numbers of taxpayers who made disclosures in the run up to the deadline. The deadline for disclosures had initially been September 23 but was extended to October 15 after input from tax professionals who were still fielding questions about the program from taxpayers.

UBS and the feds separately reached a settlement where UBS, in addition to a significant fine, agreed to release the names of over 4,500 US account holders at the bank. So far, only a handful of names has actually been released: at least two of those account holders have been sentenced to prison for their activities.

The remaining names will be disclosed over the next 10 months. Under the agreement, UBS will release the names of those account holders where there is a reasonable suspicion of “tax fraud or the like.” Generally, that includes high dollar accounts and accounts where there is a lot of movement of assets or complicated schemes. There will be procedure for appeals available in Switzerland.

ABC News is reporting that lawyers are already whining that their clients were misled by UBS about the extent of the banking secrecy. I suspect that means that lawsuits will be filed. That is, of course, how we like to solve problems in the US. It is *always* someone else’s fault, right? If the lawyers are smart, any such suits would do well to land in Switzerland and not in the US. Beyond the whole “juries likely don’t have sympathy for rich people who hide their money” issue, lawsuits based on the misdeeds of plaintiffs are not usually successful. Of course, that hasn’t stopped people from trying before…

For now, it’s a waiting game for UBS clients. The question is: do you feel lucky… now?Similar Posts:

Tax By the Kilometer: A New Meaning to “Going Dutch”

Kelly — Tue, 17 Nov 2009 01:44:49 +0000

The Dutch are well known for Delft pottery, wooden shoes, legalized prostitution and windmills. Perhaps not surprisingly, many of those things haven’t caught on in all areas of the world (oh c’mon, tell me that you have a pair of wooden shoes in your closet).

I have a feeling that list of things that aren’t spreading like wild fire is about to grow…

Effective in 2012, Dutch drivers will be monitored by GPS and will pay taxes on a per-kilometers-driven basis. For the average passenger car, the rate will be about € 0.03 per kilometer (or roughly $.07 US per mile). Drivers of trucks, commercial vehicles and less fuel efficient cars will pay more. Public transit and cabs will be exempt from the tax.

Additionally, the cost will increase for drivers at peak times.

How will it work? GPS will track the time, hour and place each car moves and send the information to a billing agency. The billing agency will deduct the taxes directly from drivers’ accounts.

If it works as anticipated, the Dutch government estimates that traffic will drop by 15% – and rush hour traffic will drop by 50%. Minister of Transportation Camiel Eurlings believes that carbon emissions will be cut in half.

Interestingly, the law will abolish current road taxes and sales taxes for cars. The final numbers should work out so that 6 out of 10 drivers are better off under the new scheme and reportedly, tax revenue will remain the same.

According to the German newspaper, Deutsche Welle, the tax will increase every year until 2018.

The news has stirred interest in nearby Germany with top German automotive expert Ferdinand Dudenhoeffer saying that Germany should “take the progressive (Dutch) model as an example.” Interesting for sure. But there’s one or two (or three or four or five) obstacles: namely Audi, BMW, Mercedes, Porsche and Volkswagen. Long considered an automaker’s paradise, Germany tends to be known for heavier, more luxurious, power cars – not so much the cheaper, smaller more efficient cars encouraged under the Dutch scheme. With that in mind, in a tough economy, Germany is highly unlikely to adopt a policy which might negatively affect the car industry any time soon.

But that doesn’t mean that it’s not on the radar of other countries. Singapore already utilizes Electronic Road Pricing, a pay-per-use principle, and in the UK, there is a congestion charge for some drivers in the designated Congestion Charge Zone (CCZ). Which makes you wonder… Which country, if any, will be next?

Technorati Tags:
Netherlands, Ferdinand Dudenhoeffer, Germany, auto industry, price per kilometer, auto tax

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Singapore, Liechtenstein No Longer Gray

Kelly — Mon, 16 Nov 2009 12:38:14 +0000

Who says that a little pressure doesn’t work these day? Singapore and Liechtenstein have both apparently decided that they wanted to be one of the cool kids after all. This week, both countries received word that they are slated to be removed from the dreaded gray list of the Organisation of Economic Cooperation and Development (OECD).

The gray list is a list of countries – more than 30 currently – who have made noise about increasing financial transparency but have not taken the necessary steps.

In the case of Singapore, it had publicly endorsed the transparency standard for tax purposes earlier in the year but had not signed the requisite number of financial agreements with other countries. It will hit the magic number *12* when it signs an Avoidance of Double Taxation Agreement or DTA with France this week. Singapore has also renegotiated agreements or signed new agreements with Mexico, Qatar, Norway, Austria, Australia, the Netherlands, UK, Denmark, New Zealand, Belgium and Bahrain.

Similarly, Liechtenstein has agreed two new treaties with Belgium and the Netherlands, respectively. Liechtenstein has also signed agreements with Germany, France, UK and the US. It is negotiating with Italy, Sweden and Norway.

The countries follow on the heels of Switzerland and Austria, which were removed from the grey list in September. This brings to 15 the number of countries which have been moved to the “substantially implemented” category since April 2009. The fallout from UBS is widely viewed to have contributed to the rush to be considered “mainstream.” The OECD is laughing all the way to the, er, transparent banks…Similar Posts:

It’s a Tax Lien, Dahling

Kelly — Sat, 14 Nov 2009 13:26:46 +0000

The woman who claims that she “never hated a man enough to give him diamonds back” may have to change her mind when it comes to Bernie Madoff. Zsa Zsa Gabor claims to have lost between $7-$10 million as part of Madoff’s scheme, leaving her with some substantial tax woes.

The 92 year old actress has been liened by the Internal Revenue Service for $118,000 for the years 2001 and 2002; the lien has been filed against one of Gabor’s mansions in California. Gabor’s lawyer, Chris Fields, says that the tax bill is part of the fallout from the Madoff scheme.

Gabor’s husband (from her longest marriage – so far) German playboy Frederic von Anhalt intends to help Gabor work out a payment plan with the IRS. Anhalt has reportedly received millions of dollars by selling the Anhalt name by adopting, along with Zsa Zsa, several men. If that sounds a little bit crazy, remember that this is the same man that claimed to be the father of Anna Nicole Smith’s baby (yeah, that’s where you’ve heard the name before). Crazy is relative.Similar Posts:

Fix the Tax Code Friday: Targeted Enforcement

Kelly — Fri, 13 Nov 2009 15:30:08 +0000

IRS Commish Doug Shulman has not been shy about talking about targeted enforcement. Targeted enforcement – the idea of cherry picking certain target groups to investigate or examine – is nothing new: it’s happened for years. In fact, as a young lawyer, I remember FLPs (Family Limited Partnerships) being called out under the Clinton Administration. But the IRS hasn’t been all that eager to talk about it. Until now.

Shulman has been very open about the fact that it’s happening and very happy to say what’s being targeted. Right now, the IRS seems to be circling the tank around three main areas:

Offshore accounts
Pass through entities (esp s corporations and LLCs)
High wage earners

Areas of targeted enforcement vary depending on what’s happening in the world, who’s in the White House and how many resources are available. Previous efforts have included self-employeds with Schedule C and Family Limited Partnerships.

So today’s Fix the Tax Code Friday question is two-fold:

Do you think targeted enforcement makes sense? And if does, it is fair?Similar Posts:

Ooh… I Get It… We Still Have to Pay For This Thing

Kelly — Fri, 13 Nov 2009 14:46:36 +0000

As part of the continuing discussions about health care reform, the spectre of how to pay for it has risen again. Yeah, cause that’s how it apparently works in Congress. Much like college students, the plan is to figure out how to pay for all the binge-spending “later.”

So, with that in mind, consider this: Senate Majority Leader Harry Reid (D-NV) is seeking yet another source of funding for health care reform. This one would raise Medicare payroll taxes on couples who make more than $250,000 a year. Yep, these are the same folks that are likely getting hit with an increase in regular ol’ income taxes to pay for health care reform.

Reportedly, the increase would make up for concessions being made with respect to those Cadillac plans. If you believe the chatter, those thresholds may increase – to $8,500 for individuals and $23,000 for couples. The resulting gap will be narrowed by those increased Medicare payroll taxes.

The proposal isn’t much in terms of dollars. It would simply raise the payroll tax to 1.75% from 1.45% for individuals earning more than $200,000 a year and couples making more than $250,000. Popular for the middle class, sure, and for unions who have opposed the Cadillac tax plans.

But not so popular with high dollar wage earners who feel as though they’re being looked at to pay for, well, everything. Need a dollar? Jack up taxes on the wealthy. It’s just so easy.

But maybe – and I’m just throwing it out there – there’s not an endless pool of money out there. Maybe exerting pressure at every turn on high wage earners to make up the difference could have unintended consequences. John Goodman (not the actor who plays Roseanne’s husband but President of National Center for Policy Analysis) claims that the extra Medicare tax “takes money out of the system needed to create jobs.”

That’s not something to be taken lightly in this economy. And the GOP knows it. All of the Republicans in the Senate are opposed to the bill. To push it through and put the kibosh on Sen. Joseph Lieberman (I-CT), Sen. Reid needs the okay from everyone else. Everyone. I’m not sure he’ll get it. Just doing a little bit of math here… But Lieberman kind of counts as one of those “everyone else”, right?Similar Posts: