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Showing posts with the label audits

Be Careful Claiming Your Charitable Deduction for 2014

The IRS loves to audit people who claim charitable deductions.  The reason is that there are very strict record-keeping rules when it comes to charitable deductions and most people are not aware of them so the IRS usually finds a way to disallow the deduction, which of course triggers increased taxes, penalties and interest.  Do not let this happen to you.

 Generally, to claim a charitable contribution deduction for gifts of $250 or more in cash or property to charity, donors must get a written acknowledgment from the charity.  This is usually not a big deal.  For donations of property, the acknowledgment must include, among other things, a description of the items contributed.  Typically the place you donate the property gives you a blank receipt.  So you need to fill it out and make sure you list all the items donate.  You also need to determine the value of the property contributed if it is not cash, which sometimes can cause problems if the amount determined is incorrect.

 The law a…

Be Careful Claiming Your Charitable Deduction for 2014

The IRS loves to audit people who claim charitable deductions.  The reason is that there are very strict record-keeping rules when it comes to charitable deductions and most people are not aware of them so the IRS usually finds a way to disallow the deduction, which of course triggers increased taxes, penalties and interest.  Do not let this happen to you.

 Generally, to claim a charitable contribution deduction for gifts of $250 or more in cash or property to charity, donors must get a written acknowledgment from the charity.  This is usually not a big deal.  For donations of property, the acknowledgment must include, among other things, a description of the items contributed.  Typically the place you donate the property gives you a blank receipt.  So you need to fill it out and make sure you list all the items donate.  You also need to determine the value of the property contributed if it is not cash, which sometimes can cause problems if the amount determined is incorrect.

 The la…

“Jersey Shore’s” Mike ‘The Situation’ Sorrentino Indicted on Charges of Federal Tax Evasion. Pleads Not Guilty

For all those Jersey Shore fans, television personality Michael 'The Situation' Sorrentino and his brother Marc Sorrentino appeared in federal court in Newark to face an indictment alleging they did not properly pay taxes on $8.9 million in income 'The Situation' received from promotional activities, the U.S. Attorney announced. 'The Situation' and his brother, Marc, have been charged with one count of conspiracy to defraud the United States. Marc and 'The Situation' also are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012. 'The Situation' faces an additional count for allegedly failing to file a tax return for 2011, despite earning $1,995,757 that year.

According to the indictment, Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances,” said U.S. Attorney Paul J. Fishman. The brothers allegedly also claimed costly clothes and…

“Jersey Shore’s” Mike ‘The Situation’ Sorrentino Indicted on Charges of Federal Tax Evasion. Pleads Not Guilty

For all those Jersey Shore fans, television personality Michael 'The Situation' Sorrentino and his brother Marc Sorrentino appeared in federal court in Newark to face an indictment alleging they did not properly pay taxes on $8.9 million in income 'The Situation' received from promotional activities, the U.S. Attorney announced. 'The Situation' and his brother, Marc, have been charged with one count of conspiracy to defraud the United States. Marc and 'The Situation' also are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012. 'The Situation' faces an additional count for allegedly failing to file a tax return for 2011, despite earning $1,995,757 that year.

According to the indictment, Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances,” said U.S. Attorney Paul J. Fishman. The brothers allegedly also claimed costly clothes an…

Marijuana Dispensaries Who Pay Taxes in Cash Get Penalized

If you are a marijuana business, regardless of whether you are operating within state law, you have major tax and banking headaches.  Banking and most tax laws are governed by Federal law, which deems these activities illegal.  One challenge commonly faced by marijuana businesses is the lack of access to the banking system, because banks don't want to deal with businesses illegal under federal law.

Without banks, dispensaries pay the government in cash, but face a penalty for the cash payments.  This situation highlights the hypocrisy of the government's tax and drug policies, requiring payment on the one hand, punishing you for paying on the other.  A recent case filed in U.S. Tax Court by a Colorado dispensary, Allgreens LLC, is the most recent challenge to this Catch-22 created by the government. Unfortunately, the IRS is probably going to win because it is just following the letter of the law here - a change to the tax or the drug laws is necessary for a fix.

Financial insti…

Marijuana Dispensaries Who Pay Taxes in Cash Get Penalized

If you are a marijuana business, regardless of whether you are operating within state law, you have major tax and banking headaches.  Banking and most tax laws are governed by Federal law, which deems these activities illegal.  One challenge commonly faced by marijuana businesses is the lack of access to the banking system, because banks don't want to deal with businesses illegal under federal law.

Without banks, dispensaries pay the government in cash, but face a penalty for the cash payments.  This situation highlights the hypocrisy of the government's tax and drug policies, requiring payment on the one hand, punishing you for paying on the other.  A recent case filed in U.S. Tax Court by a Colorado dispensary, Allgreens LLC, is the most recent challenge to this Catch-22 created by the government. Unfortunately, the IRS is probably going to win because it is just following the letter of the law here - a change to the tax or the drug laws is necessary for a fix.

Financial in…

Tax Problems Facing Marijuana Dispensaries, This Time From the City of Los Angeles

The LA times published an interesting article about marijuana dispensaries operating in Los Angeles.  The article focuses on the interesting fact that as Los Angeles tries to clamp down on the number of marijuana dispensaries operating in Los Angeles by making them follow Proposition D requirements, more than 450 medical marijuana shops filed business tax renewals with the Office of Finance.  This number is more than three times as many stores than what is estimated to be allowed to stay open.  So while local lawmakers are troubled by the number of medical marijuana shops that still exist in Los Angeles, the Office of Finance has no problem cashing in on all the taxes being collected from them.  The article states that Los Angeles collected roughly $2.1 million from medical marijuana tax renewals this year, an Office of Finance staffer told a City Council committee Monday.

The interesting thing about this article is that City Council is upset that these people are paying business taxes…

Tax Problems Facing Marijuana Dispensaries, This Time From the City of Los Angeles

The LA times published an interesting article about marijuana dispensaries operating in Los Angeles.  The article focuses on the interesting fact that as Los Angeles tries to clamp down on the number of marijuana dispensaries operating in Los Angeles by making them follow Proposition D requirements, more than 450 medical marijuana shops filed business tax renewals with the Office of Finance.  This number is more than three times as many stores than what is estimated to be allowed to stay open.  So while local lawmakers are troubled by the number of medical marijuana shops that still exist in Los Angeles, the Office of Finance has no problem cashing in on all the taxes being collected from them.  The article states that Los Angeles collected roughly $2.1 million from medical marijuana tax renewals this year, an Office of Finance staffer told a City Council committee Monday.

The interesting thing about this article is that City Council is upset that these people are paying business tax…

IRS (Probably) Spent More Money than Tax Owed in Symbolic Tax Court Victory

Symbolic of what?  I'll leave that to you.  From a Tax Court opinion released earlier this week, file this under Ridiculous Things the IRS Does:

Taxpayers filed a perfectly correct return listing their taxable social security income on the correct line.  IRS received the return and, using its big brain, decided the social security income was nontaxable, recalculates the tax, and issued the taxpayers an additional $548 refund.  Somehow, the IRS later realized the taxpayers were right and they shouldn't have sent the extra dollar bills, so they audited the couple and demanded they repay the $548.  When the couple declined, the IRS issued a notice of deficiency, on which the couple appealed to the tax court.  Somehow, probably driven by the couple's righteous indignation, the case went all the way to trial, where it was decided in a judicial opinion.  The taxpayers argued they shouldn't have to pay for the IRS's mistake, but the court found in favor of the…

IRS (Probably) Spent More Money than Tax Owed in Symbolic Tax Court Victory

Symbolic of what?  I'll leave that to you.  From a Tax Court opinion released earlier this week, file this under Ridiculous Things the IRS Does:

Taxpayers filed a perfectly correct return listing their taxable social security income on the correct line.  IRS received the return and, using its big brain, decided the social security income was nontaxable, recalculates the tax, and issued the taxpayers an additional $548 refund.  Somehow, the IRS later realized the taxpayers were right and they shouldn't have sent the extra dollar bills, so they audited the couple and demanded they repay the $548.  When the couple declined, the IRS issued a notice of deficiency, on which the couple appealed to the tax court.  Somehow, probably driven by the couple's righteous indignation, the case went all the way to trial, where it was decided in a judicial opinion.  The taxpayers argued they shouldn't have to pay for the IRS's mistake, but the court found in favor of t…

Tax Court Draws Bright Line in Completed Contract Method of Accounting Cases

Tax Court Draws Bright Line in Completed Contract Method of Accounting Cases

IRS "Adopts" Taxpayer Bill of Rights, Except No Actual Taxpayer Rights Adopted

The IRS issued a press releases this week, which can be found here, alerting taxpayers to the newly adopted Taxpayer Bill of Rights, which are outlined here.  Except there are no new rights and nothing can be "adopted" when it is a list of responsibilities and rights already belonging to the IRS and taxpayers.  Imagine if McDonald's put a customer "Bill of Rights" on their menu, which said that, when you pay for a hamburger, we'll give you a hamburger, except when we don't, in which case you can complain to your cashier and then to the manager to see if they care.  The IRS's Taxpayer Bill of Rights, included in Publication 1, which presumably will be sent to taxpayers during audits, provides the following: