Here at Tax Resolution Center...

Here at Tax Resolution Center...

Monday, November 23, 2015

The FTC’s Top 10 Holiday Shopping Tips

Whether you’re shopping by phone, mail or online this holiday season, here are a few tips to help you shop wisely and save a few bucks, too.
1.     Make a list and a budget. Include incidentals, like cards, wrapping paper and eating out.
2.     Check out websites that compare prices for items sold online, and at stores in your area.
3.     Be aware that shopping apps can collect a lot of information, like your name, address, phone number, email, and Social Security number. Look for apps that tell you what they do with your data, and how they keep it secure.
4.     Check out product warranties. Although not required by law, warranties come with most major purchases.
5.     Don’t give out personal information for a chance to win the newest tech toy or a free gift card. Your information can be sold or used to commit identity theft.
6.     Look for rebates. Some can be redeemed at checkout, but most require you to send documentation to the manufacturer to get your rebate.
7.     When shopping online, keep copies of your order number, the refund and return policies, shipping costs and warranties.
8.     If money’s tight, consider layaway. You typically make a deposit and pay over time; the retailer holds the merchandise until you’ve paid for the item in full.
9.     Shipping to loved ones overseas? Check the U.S. Postal Service’s calendar for shipping deadlines.
10.           ‘Tis the season to be wary, especially of charities that don’t — or won’t — provide key information in writing. Search the name of the organization online. Use the words “complaints” or “scam.”




Wednesday, November 18, 2015

Amazingly, IRS Says You Can't Rely On IRS Instructions

If the IRS gives you instructions how to complete a tax form, you can rely on them, right? You would think so. Yet, instructions are not actually part of the tax law. In fact, there are many tax cases in which well-meaning taxpayers claim their tax position is justified by IRS instructions or publications. In most instances, taxpayers lose, even if they have a credible reading.

Call it the ultimate Catch-22. A long line of cases says the only authoritative sources of tax law are official statutes, regulations, and judicial decisions. Does this impressive weight of authority mean taxpayers can never cite form instructions? As is so common with blanket statements in our Byzantine tax system, not always. That is important if you are a confused but well-meaning taxpayer. First, let’s see what you are up against.
Usually, courts reject attempts to rely on IRS instructions, including these:
·         Joe claimed a settlement payment was not subject to Social Security taxes, because an IRS publication said settlement proceeds should be reported as “Other Income” on line 21 of Form 1040. Joe lost.
·         Sally claimed her housekeeper was an independent contractor, because an IRS publication stated that “individuals who furnish personal attendance, companionship, or household care services to children,” and who are not employees of a placement service, “are generally treated as self-employed for all federal tax purposes.” Sally lost too.
·         Jose said that at the time he filed his return, an IRS publication supported his position that a deduction for educational expenses did not have to be reduced by benefits paid by the VA. Jose also lost.
·         Ellen claimed her contributions to an IRA were not subject to excise taxes based on language in an IRS publication. It said you can contribute to an IRA if you are not an active participant “during any part of the tax year.” Ellen lost, and the excise tax applied.
·         Victor claimed he was a foreign resident despite living in the United States, citing a Treasury Department Tax Guide for U.S. Citizens Abroad that suggested all he needed was a clear intention to return to his country of origin. Victor lost too.
·         David argued that an IRS handbook on Domestic International Sales Corporation rules, published after the statute had gone into effect but before the regulations had been issued, was controlling. The IRS won.
·         Frankie claimed that a court order regarding custody entitled her to take a dependency exemption on her taxes. After all, the instructions to IRS Forms 501 and 504 were “less than clear and may even be misleading,” although the statute required the custodial parent to sign a release. Frankie lost too.
This is a daunting list. In fact, only a very few courts have held the IRS to what it says in its instructions and publications. But think about the business world. Could a toy manufacturer escape liability by arguing that its instructions how to assemble a toy are not relevant and not part of the product? Hardly, and the IRS should be held to the same standard.
A key taxpayer victory that may give you some hope is Wilkes v. United States, 50 F. Supp. 2d 1281, 1287 (M.D. Fla. 1999). The case is more than 15 years old, but it has apparently never actually been cited by another court on this point! The court stated that “general principles of equity dictate that the IRS should not be allowed to issue instructions for completing its forms and later disavow those instructions.”

The Wilkes decision shows that the IRS’s own instructions to its forms can sometimes be cited to support a taxpayer’s position. Depending on the facts, it should be possible to hold the IRS to its own forms and its own publications where one is reading them reasonably. After all, shouldn’t the IRS be required to write reasonable instructions, just like a toy manufacturer?


By Robert W. Wood. Source: http://www.forbes.com/sites/robertwood/2015/11/11/amazingly-irs-says-you-cant-rely-on-irs-instructions/

Tuesday, November 10, 2015

Veterans: Don’t Let Scammers Bilk Your Benefits

According to the U.S. Census Bureau, the nation had more than 9.3 million veterans aged 65 and older in 2013. For most of us, Veterans Day means a time to thank all our former servicemembers. But it’s a sad truth that scammers operate out of greed, not gratitude. Not-so-honest people target older veterans and their families to cheat them out of their hard-earned benefits.
In one type of scam, unscrupulous advisers claim to offer free help with paperwork for pension claims. But these attorneys, financial planners, and insurance agents persuade veterans over 65 to make decisions about their pensions without giving them the whole truth about the long-term consequences. They tell veterans to transfer their assets to a trust – or to invest in insurance products – so they can qualify for Aid and Attendance benefits. What they don’t say? The transaction could cause the veterans to lose eligibility for Medicaid services or the use of their money for a long time.

For veterans experiencing cash flow trouble, there’s a different pitfall. Some companies offer an advance on your pension to get you the funds you need fast. You sign over your monthly pension checks for, say, five or 10 years, in exchange for a lump sum payment of a lesser amount. Pension advances aren’t a cheap way to get cash; fees can be high. And what’s more, the company often requires retirees to buy a life insurance policy – with the pension advance company named as the beneficiary – to make sure that the repayments continue.
If there are veterans in your life, fill them in about these scams. Encourage them to pass it on to their friends, family, and community to help more veterans dodge a bad deal.


Monday, November 9, 2015

Federal Tax Laws and Regulations are Now Over 10 Million Words Long

In a recent Pew poll, 72 percent of Americans said that they were bothered by how complex the federal tax system is. These taxpayers are justified in their complaints: as of 2015, federal tax laws and regulations have grown to over 10 million words in length.

This figure includes the federal internal revenue code (2,412,000 words long) and federal tax regulations (7,655,000 words long). It does not include the substantial body of tax-related case law that is often vital to understanding the tax code.

The length of the federal tax code and regulations has grown steadily over the past sixty years. In 1955, the two documents were 1.4 million words in length. Since then, they have grown at a pace of about 144,500 words a year. Today, the federal tax code is roughly six times as long as it was in 1955, while federal tax regulations are about 2.5 times as long.



The length of the federal tax code is a good stand-in for the overall complexity of the federal tax system. After all, the more there is to know about federal tax law, the harder it is for Americans to file their taxes quickly or correctly.

Tax complexity creates real costs for American taxpayers and the U.S. economy. Americans spend 6.1 billion hours and $233.8 billon complying with the tax code. Due to increasing tax complexity, over 90 percent of taxpayers now hire professional tax preparers or use tax preparation software.

Why is the federal tax code so complex? In part, it’s because politicians have used the tax code to administer dozens of areas of federal policy – from healthcare to energy to education. In part, it’s because defining income and determining tax liability are inherently difficult tasks. And, in part, it’s because politicians have not made any serious effort to simplify the federal tax code for at least thirty years, instead adding on new provisions on top of one another.

To get a sense of exactly how complex the federal tax code is, I’ve selected 100 words at random from the middle of the code:

(A) In general

     The net surrender value of any contract shall be determined—

(i) with regard to any penalty or charge which would be imposed on surrender, but

     (ii) without regard to any market value adjustment on surrender.

(B) Special rule for pension plan contracts
     In the case of a pension plan contract, the balance in the policyholder’s fund shall be treated as the net surrender value of such contract. For purposes of the preceding sentence, such balance shall be determined with regard to any penalty or forfeiture which would be imposed on surrender but without regard to any market value adjustment.

Now, multiply that selection by 100,000 – and you have the federal tax code. Tax complexity creates an unnecessary burden on taxpayers, and simplifying the tax code should be a major priority of any tax reform.

Note on methodology:
For years between 1955 and 2005, we used figures from the West Publishing Company provided to us in this report. To arrive at 2015 figures, we first took a simple word count of the text of Title 26 of the U.S. Code (about 3.8 million words) and Title 26 of the Code of Federal Regulations (about 14.7 million words). However, these figures overstate the length of the tax code, as they include tables of contents, appendices, references, amendments, and effective dates. To capture the number of words in the main body text of each of these documents, we also took a simple word count of the 2005 code, and deflated the 2015 figures by the proportion by which our 2005 count exceeded the 2005 West Publishing Company figures.




Thursday, November 5, 2015

Don’t Let Small Business Saturday Come Back to Haunt You

Don’t miss taking part in Small Business Saturday only to be haunted by others’ success stories. Even though the countdown is on to November 28, 2015, it’s not too late to participate in this shopping holiday dedicated to small business. If you’re not sure where to start, take a look back at customers of holidays past.
Participation is easy, said Small Business Saturday spokesperson Nicole Leinbach-Reyhle, with the help of American Express, who started the shopping day in 2010. They offer small businesses of every kind turnkey marketing resources at ShopSmall.com. The free, customizable assets include event ideas and promotional tools to help you spread the word about your Small Business Saturday plans.
“Even without being a traditional retailer, you can still maximize this day,” Leinbach-Reyhle explained. “Have food, music and raffles that customers can enjoy. Thank past customers and promote upcoming specials on future services they may need. You can even sell gift certificates that they can apply at a future date.”

“The big takeaway, though, is to celebrate your business and invite your customers to join you,” she added. “Just be sure to build a big buzz around why they should—after all, that’s what the day is all about!”