Taxes, Extortion, Bullies & the Browns

It is my opinion that taxes are nothing more than extortion. The income tax is especially heinous. I see no difference between the government demanding money from me and telling me if I don't pay a band of armed men will come into my house, kidnap me and throw me in a cell (or perhaps kill me if I resist), or a group of armed thugs representing a mobster organization coming into my business or home and telling me if I don't pay X amount for protection than something "terrible" might happen. The similarities between these to situations is obvious, the differences are subtle. Force in used in both cases, but with the mobsters it is more blatant than with the government. One would say that with the mobsters the money taken is used solely to enrich themselves and that with the government the money goes to the "greater good." But do you truly believe that politicians don't use tax money to enrich themselves? If nothing else, what do you think pays their salaries? And do you mean to say that if the mobsters were to build a playground or a park nearby, or put up streetlamps, or fix the roads in front of the businesses they just ripped off, or provide a place for some homeless folk to stay, are you suggesting that these things would somehow make their extortionist activities ok?



Some would say that we voted the politicians into office, so that they have the "right" to steal from us. Are these people suggesting that if we voted for which mobster we wanted to shake us down that this would legitimize their crimes? On top of that, only individuals have rights. Governments do not have rights over and above the individual. Groups of people do not have rights over and above the individual. Interactions between people should be voluntary, not forced, but that is a discussion for another essay.



Some might point to the court system and say that fairness and justice can be found there and that we should trust in their judgment. What good is a court system that is owned by the mobsters? Taxes pay the judges' salaries. Do you think a judge who is making a living off the extortionist's money is going to tell the extortionist to stop? Do you believe he will be fair and impartial when his livelihood is threatened? Judges have families to feed, too. They have mortgages to pay and children to send to college. I'm certain there are a few who are principled enough to be fair and impartial and listen to all arguments from both sides, but I'd bet the majority of them are biased toward the hand that feeds them.



I've probably missed a couple of points, but I think you get the idea. Most people are pretty smart and understand what's going on, they just don't have the courage to do anything about it. I'm one of those people. I pay my taxes simply because I'm afraid. I'm afraid of our government. I'm frightened to death of those men with guns who will come arrest me if I don't pay my extortion money, I mean taxes. I don't want to be thrown into a prison and made to depend on people I don't know for my survival. These are powerful humans we're talking about here, with lots of guns and they're willing to use them. They even feel justified in doing so. I'm just one man and I feel impotent against the system, so I continue to pay the extortionists for the right to be able to work in this country, I continue to pay my income taxes.



Ed and Elaine Brown were different. They refused to knuckle under to the bullies. They refused to give the fruits of their labor to the extortionists. They tried to work through their system and were stonewalled. Now they are sitting in jail. The government made good on their threats, kidnapped them from their home and imprisoned them. The government was apparently able to infiltrate the circle of trust the Brown's had built. This just goes to show how treacherous our government is. People who did no harm to anyone are now removed from society. Now we, the taxpayers, both the willing and the unwilling, are forced to pay for the food, clothes, housing, and security of two people who were otherwise contributing in a positive way to society. Is this truly what we want for our citizens? Is this what it means to be free? Are we to be ruled by the force of the mob and devolve into group mentality, or are we to reclaim our legacy for our posterity and once again come to recognize that the rights of the individual are paramount if we are to be a truly free society?



I was on a radio program with Ed and Elaine the day before they were arrested. Elaine was a kind and gracious host. She thanked me for my efforts in support of a freer society. I thanked her for showing us the way, for I am not brave like the Browns are. I could not stand up to the Goliath as they did. They are like the little kid on the playground who finally has enough and stands up to the bully. I am just a kid who helps form a circle around the combatants. I only served to cheer them on. Unfortunately for the Browns, this time the bully won the fight. He is still king of the playground. The rest of us little kids can do nothing but shake are heads and walk away as the Browns lie bloody on the cold concrete. Ed said that he knew of only one way to defend his property, that words and paper weren't enough, and perhaps he's right. Unfortunately, words and paper are all I have, and they seem woefully inadequate. Unless all the kids on the playground decide they've had enough, unless they all decide the time has come to stop giving the bully their lunch money and to defend each other, I'm afraid the bully will remain king of the playground. Ed and Elaine Brown really have shown us the way, the question is, are we brave enough to follow?

Non-Indication Of Service Tax In Bill - An Analysis

Whenever a service is brought into the service tax net, the service provider is liable to levy service tax on the service provided by him and to pay the service tax so collected from the service receivers. The Service Tax Rules make it mandatory to issue bill/invoice/ challan to the service receivers indicating the details as required by the rules including the service tax payable. In some cases, the Tribunal have held that if service tax is not levied, the gross amount collected may be treated as cum-tax value. But it has been now decided that unless the invoice specifically says that gross amount charged includes service tax, it cannot be treated as cum-tax service price.

1. Rule 4A of the Service Tax Rules, 1994 provides that every person providing taxable service not later than fourteen days from the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, shall issue an invoice, a bill or, as the case may be, a challan issued by such person or a person authorized by him in respect of such payable service provided or to be provided. Where any payment towards the value of taxable service is not received and such taxable service is provided continuously for successive periods of time and the value of such taxable service is determined or payable periodically, an invoice, a bill or, as the case may be, a challan shall be issued by a person providing such taxable service, not later than fourteen days from the last day of the said period.

2. Such invoice, bill or, as the case may be, a challan shall serially be numbered and shall contain the following, namely :—

A -The name, address and the registration number of such person.

B -The name and address of the person receiving taxable service.

C -Description, classification and value of taxable service provided or to be provided and The service tax payable thereon.

If the provider of taxable service is a banking company or a financial institution including a non-banking company or any other body corporate or any other person providing service to any person, in relation to banking and other financial services, an invoice, a bill or, as the case may be, a challan shall include any document, by whatever name called, whether or not serially numbered and whether or not containing the address of the person receiving the taxable service but containing other information in such documents as required.

If the provider of taxable service is a Goods Transport Agency, providing service to any person, in relation to transportation of goods by road in a goods carriage, an invoice, a bill or, as the case may be, a challan shall include any document, by whatever name called, which shall contain the details of the following :

A -Serial number.

B -Name of the consignor and consignee.

C -Registration number of the vehicle.

D -Details of goods transported.

E -Details of the place of destination.

F -Person liable for payment of service tax (consignor/consignee/goods transport agency).

It is mandatory to separately indicate the amount of service tax in the bills/invoice/challan raised on the clients as per section 12A of the Central Excise Act, 1944 which is made applicable to service tax under section 83 of the Finance Act, 1994. Such mention of the service tax amount in the invoice/bill/challan would also facilitate the service receiver to avail the CENVAT credit of the service tax paid on the input services.

3. If the service tax payable is not indicated in the bill/invoice/challan, what is the legal position under the service tax provisions—Service tax is payable on amount realized. If the value of taxable service includes service tax, the amount so collected/realized from the client would be treated as gross amount inclusive and, accordingly, the value of taxable service and the service tax liability may be worked out. The benefit availed is called as ‘cum-tax benefit’. In Panther Detective Services v. CCE [2007] 8 STT 215 (New Delhi - CESTAT), the Delhi Tribunal held that the only relief in regard to the valuation is that the appellants would be entitled to treat the total receipts as inclusive of service tax. It is, accordingly, ordered by the Tribunal that the revenue shall recompose the tax amount in these appeals treating the total receipt as cum-tax.

4. In Bhagawati Security Services v. CCE [2007] 7 STT 129 (New Delhi - CESTAT) the appellant had not raised any service tax bill to their service receivers. They had paid service tax calculated on these invoices but they had not received any such payment from their clients. The Tribunal found that there was in force the appellants’ contention that if service tax is to be paid, it has to be worked out on the basis of gross amount received by them as being inclusive of service tax.

In Shakti Motors v. CCE [Order A/1415 (Ahd.) of 2008, dated 23-7-2008], the Tribunal made it mandatory to include service tax component in the bill/invoice/challan in consonance with the provisions of section 67(2) of the Finance Act, 1994. The facts of the case are as follows :

The appellants were engaged in the business of selling of Hero Honda brand motor bikes/scooters and they were authorized dealers of the said company. They were also providing business auxiliary services to various financial companies, etc. On the basis of investigation conducted, a show-cause notice was issued to them requiring them to pay service tax on taxable services rendered under the categories of ‘Authorized service station’ and ‘Business auxiliary service’ with appropriate interest and proposing to impose penalty, which culminated into confirmation of payment for service tax amounting to Rs. 46,255 with equal amount as penalty and penalty under sections 76 and 77 of the Finance Act, 1994 in addition. There was no dispute as regards liability of service and the same had been fully paid.

Resource Box:

Spear heading the pursuit of expertise and authenticity.

Taxmann is growth oriented publishing house with in depended editorial, marking and production division .We have an impressive tally of title on India – international taxation, service tax, Indian taxes, FEMA , foreign exchange laws,insurance laws, direct tax laws,corporate laws and other judicial SC/HC acts .Our experience in the industry. Editorial expertise, market, network and in house production unit combine to produce publication of quality.

Taxmann owes its success to its core strength-the editorial division. Our Editorial division consists of highly motivated group of over 200 associates fro-legal community. They monitor all the development in the judicial, administrative and legislative field and process the information with impeccable perfection and skill.

Goods And Service Tax - A Consumption Based Destination Tax

The Goods and Service Tax (GST), a landmark in the history of tax reforms, after the implementation of VAT, has started its journey by the Finance Minister’s public endorsement of the dual GST model.

The dual GST model will comprise of a Central GST and State GST. The Centre and the State will each legislate, levy and administer the Centre and State GST, separately. GST centres round evolving an efficient and harmonize consumption tax system in the country.

For the purpose, amendments to the Constitution are necessary as federal GST would extend beyond manufacturing stage and the States would be able to collect taxes on services.

1. France was the first country which introduced a comprehensive goods and service tax Regime in 1954. Today, it has spread to about 150 countries. The Goods and Service Tax (GST) is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at a national level. Integration of goods and services taxation would give India a world class tax system and improve tax collections. It would end the long standing distortions of differential treatments of manufacturing and service sector. The introduction of goods and services tax will lead to the abolition of taxes such as octroi, Central Sales Tax, State level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, and eliminate the cascading effects of multiple layers of taxation. GST will facilitate seamless credit across the entire supply chain and across all States under a common tax base.

As we have parallel systems of indirect taxation at the Central and State levels, each of the systems needs to be reformed to eventually harmonize them. The central excise duty should be converted into a full fledged manufacturing stage VAT on goods and services and the States sales tax systems should be transformed into a retail stage destination based VAT, before the two are integrated. At the central level, beginning has been made by converging widely varying tax rates and extending input tax credit to convert excise duties into CENVAT.

2. Through a tax credit mechanism, GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retail tax. Many countries have a unified GST system. However, countries like Brazil and Canada follow a dual system wherein GST is levied by both Federal and State or provincial Governments. In India, a dual GST is being proposed wherein a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of a transaction.

3.About 150 countries across the world have introduced GST in one form or the other. The GST rate in various countries ranges from 5 per cent in Taiwan to 25 per cent in Denmark. GST, consumption based destination tax, would be a major deviation in the arena of the indirect tax administration. After the implementation of Value Added Tax (VAT) in the States during the year 2005, the Budget 2009 proposed to implement GST by April 1, 2010. In the Budget Speech, the Finance Minister repose confidence on the Empowered Committee of State Finance Ministers which had made considerable progress in preparing the roadmap and the design of GST. The Empowered Committee has reached an agreement on the basic structure of GST in keeping with the principle of fiscal federalism enshrined in the Constitution of India.

4. The model will be a dual GST comprising of a Central GST and State GST. The Centre and the State will each legislate, levy and administer the Centre and State GST separately. GST is a part of the proposed tax reforms that center round evolving an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the Central and State levels. Each of the systems needs to be reformed to eventually harmonize them. In the Union Budget for the year 2006-07, the Finance Minister proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. He proposed to set April 1, 2010 as the date for introducing GST. World over, goods and services attract the same rate of tax. That is the foundation of a GST. The first step towards introducing GST is to progressively converge the service tax rate and the CENVAT rate.

5. The implementation of VAT encountered with several postponements of the cut-off date. The Government, the Empowered Committee and the Chief Ministers conference decided to switch over to VAT after overcoming several hurdles. For its implementation the Finance Ministry resorted to a constitutional amendment to allow States to tax services as recommended by the G.C. Srivastava Committee. Earlier G.C. Srivastava Committee on service tax had recommended either bringing services in the concurrent list or allowing States to tax services on the lines of the Central Sales Tax Act. Before the amendment, the power to levy tax on services is not mentioned either in the Union List or State List contained in the Schedule VII of the Constitution. With the then constitutional framework the only option is to invoke entry 97 of the Union List which has been vested with residuary powers to levy any tax not mentioned in the State List or the Concurrent List. The Central Government had invoked the entry 97 and taxed various services. Entry 97 which reads as ‘Any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists.’

6. The 95th Constitutional Amendment Bill for the inclusion of services for levying service tax has been approved by the Cabinet and passed by both Houses of the Parliament. By this amendment, the Bill proposed to insert a new entry 92C, and a new article 268A to enable the levy by the Union, but collected and appropriated by the States and to frame a law to determine how the proceeds of tax would be shared with the States.

Spear heading the pursuit of expertise and authenticity.

Taxmann is growth oriented publishing house with in depended editorial, marking and production division .We have an impressive tally of title on India – international taxation, service tax, Indian taxes, FEMA , foreign exchange laws,insurance laws, direct tax laws,corporate laws and other judicial SC/HC acts .Our experience in the industry. Editorial expertise, market, network and in house production unit combine to produce publication of quality.

Taxmann owes its success to its core strength-the editorial division. Our Editorial division consists of highly motivated group of over 200 associates fro-legal community. They monitor all the development in the judicial, administrative and legislative field and process the information with impeccable perfection and skill.

Casualty Loss Can Generate Massive Tax Deductions

A casualty loss may occur as a result of a flood, hurricane, tornado, mudslide or other natural disaster. The intuitive thought pattern is: “My apartment complex worth $5,000,000 suffered major damage totaling $1,500,000 for repairs and rent loss. Fortunately, I was completely covered for both physical damage and rent loss, other than a small deductible. There is clearly no casualty loss I can claim as a tax deduction, right?”

Tax deductions are the basis for tax reduction. Tax deductions reduce taxable income but do not directly reduce federal income taxes. For example, $100,000 of tax deductions reduces federal income taxes by $35,000 ($100,000 X 35%), assuming a 35% tax rate. Most tax deductions require a cash expenditure (labor, material, supplies, utilities, etc). A current period cash expenditure is not required for some real estate tax deductions and may not be required for a casualty loss.

Most real estate owners and investors do not consider casualty losses as a source of tax deductions. Few investors claim the casualty loss tax deduction the federal income tax code allows them. Let’s review the criteria for a casualty loss tax deduction and the thought process regarding acquisition of a property that has suffered a casualty.

Real estate owners suffer a casualty loss when the market value immediately after the casualty plus insurance proceeds is less than the market value immediately before the casualty. The complex issue is how to value the property immediately after the casualty. Let’s consider a 1-story suburban office park in Mississippi which suffered 3-feet of flooding due to Hurricane Katrina. Let’s further assume:

1) 8 feet of sheet rock must be replaced in the entire property to rebuild,

2) although the property was 90% occupied before the flood, occupancy is expected to only be 5% while rebuilding occurs,

3) stabilized occupancy after renovation is not clear since some businesses may not return,

4) construction will take 12-18 months due to the labor constraints and

5) the owner has casualty insurance to rebuild but did not have rent loss/business interruption insurance.

It is clear the market value after the casualty is less than the market value before the casualty less construction costs. Other factors to consider are: rent loss, market risk that not enough tenants will be available after construction is completed, cost of construction management, a illiquid market with few buyers just after the casualty, construction risk, interest rate risk (rates could rise during the construction period negatively affecting value), risk that operating expenses could increase during the construction period (perhaps insurance) and compensation for entrepreneurial effort to induce a buyer to coordinate labor capital, management and compensation for capital during the reconstruction and releasing process.

A careful analysis by an appraiser might show the improvements have no value after the flood. In appraisal assignments performed by the writer, a casualty loss of 10-30% of the market value before the casualty has occurred (in a straight-forward, defensible analysis) is typical. This can generate a meaningful casualty loss (and tax deduction).

For example, a property with a market value of $5,000,000 suffers a 30% casualty loss. While the casualty is a serious hardship for the owners, the $1,500,000 ($5,000,000 X 30%) tax deduction will mitigate the financial loss.

Congress provided a casualty loss tax deduction to encourage investment in real estate. If you have the misfortune to suffer a casualty loss, take the helping hand offered by congress and take the tax deduction.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of cities where cost segregation generates meaningful tax deductions.

City:
Memphis, TN
San Francisco, CA
New Orleans, LA
New York, NY
Hartford, CT
Las Vegas, NV
Los Angeles, CA
Atlanta, GA
Orlando, FL
Miami, FL
Louisville, KY
Salt Lake City, UT
Boise, ID
Lakeland, FL
Wichita, KS
McAllen, TX
Columbus, OH
Ft. Lauderdale, FL
San Antonio, TX
Durham, NC
Allentown, PA
Youngstown, OH
Little Rock, AR
Greensboro, NC
Greenville, SC
Kansas City, MO
Raleigh, NC
San Jose, CA
Palm Bay, FL
Honolulu, HI


Cost segregation produces tax deductions for virtually all property types, including the following:

Property Type:
Regional mall
Service station
Drugstore
Night club
Supermarket
Racket club
Auto service garage
Airplane hangar
Nursing home
Subsidized housing

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:
Nondurable good wholesalers
Durable good wholesalers
Day care facilities
Computer and electronic manufacturing
Health care facilities
Chemical manufacturing
Printing activities
Warehousing and storage
Electronic and appliance stores
Apparel manufacturing

The appraisal division of O’Connor & Associates is a national provider of commercial real estate appraisal services including cost segregation studies, due diligence, insurance valuations, feasibility studies, financial modeling, gift tax valuations, commercial real estate appraisal, highest and best use analyses, casualty loss valuations and HUD map market studies.

What is exempt property and what can you keep with the federal exemptions?

“The purpose of an exemption is to protect a debtor and his family against absolute want by allowing them, out of his property, some reasonable means of support and education and the maintenance of the decencies and proprieties of life.”
Poznanovic v. Maki, 296 N.W. 415, (1941)

Exempt property is not touched by the court in a bankruptcy proceeding. State and federal laws provide a list of all property that can be kept through exemption during your bankruptcy proceeding. In a Chapter 7 bankruptcy, all property that is not exempted will be liquidated in order to pay off creditors, so it is in your best interest to know what can be kept through exemption.

In Minnesota, a person must choose whether to use the Federal or State exemptions. This can be a complicated decision and clients should consult closely with their attorney before filing a bankruptcy petition. The list below includes both Federal (marked with an (f) and State exemptions. Obviously, the choice of whether to use State or Federal exemptions will have a large impact on the property you get to keep. The list below is

The following is allowable as a property exemption:

Bible and musical instruments:
- The family Bible, library, and musical instruments


Pew and burial lot:
- A seat or pew in any house or place of public worship
- A lot in any burial ground


Personal goods:
- All clothes (up to a value of $2,400(f)), one watch, utensils, and food
- Household furniture and appliances, a phonograph, a radio, a TV, provided that their total value does not exceed $4,500
- A VCR, linens, china, crockery, educational materials and equipment for children, personal effects, a personal computer and related equipment(f)
- Jewelry up to a value of $1,000(f)
- Wedding rings and other symbols of marriage, up to a value of $1,225
- Professionally prescribed health aids for the debtor or their family(f)


Farm machines:
- Farm machines for a debtor that is primarily a farmer, livestock, farm produce, and standing crops, provided their value does not exceed $13,000


Tools of trade:
- The tools, implements, machines, instruments, office furniture, stock in trade, and library reasonably necessary for the business of the debtor, provided their value does not exceed $5,000($1,500(f))
- If tools of trade and farm equipment are one and the same, then the value cannot exceed $13,000


University apparatus:
- The library and any apparatus owned by a school for the purpose of teaching


Exempt property claims:
- All money received through a court claim on any damaged exempt property
- Any recovery for claims for damages caused by any unlawful taking of exempt property
- Any rights of action for injuries to the debtor or their family


Insurance proceeds and beneficiary associations:
- Life insurance proceeds up to $20,000
- All money, relief, and benefits received from any police department, fire department, beneficiary, or fraternal benefit association
- Interest from any unmatured life insurance contract owned by the debtor, which cannot exceed $4,000


Homestead:
- Real property the debtor is using as a residence provided that it does not exceed $15,000(f) in value


Motor vehicles:
- Mobile home actually in use by the debtor as a dwelling
- One motor vehicle not exceeding $2,400 in value(f), or one motor vehicle not exceeding $20,000 in value that has been modified to accommodate a physical disability


Earnings:
- All earnings not set aside for child support or other garnishments
- Earnings of any minor child
- All earnings paid to debtor within 6 months of being released from prison
- All earnings within 20 days of being deposited in a bank
- All earnings paid to debtor within 6 months of returning to work if the debtor has received welfare in the past


Public assistance:
- All relief received based on need
- All earnings of a debtor receiving need-based relief


Employee benefits:
- All employee benefits payable due illness, disability, death, age, or length of service up to a value of $30,000
- Retirement plans with a value of not more than $1,000,000(f)
- Veterans’ benefit(f)
- Disability, illness, or unemployment benefit(f)
- Support payments from alimony(f)

Vacation homes in Alabama to spend pleasurable time

Alabama is amongst one of those states holds all those features and elements that are required for being a place that is worth spending a holiday. This is the place which can effortlessly and without any doubt can attract a traveler. Alabama possesses beautiful mountains and breathtaking beaches where the nature’s beauty can be felt. The travelers might get confused to choose the places where they must visit as there are many places in Alabama that are worth visiting. But there are no confusions about the places where they can accommodate themselves as there are vacation homes florida as well as vacation rentals Georgia for them where they can put up while they enjoy holidaying in Alabama.

If you are planning to visit Alabama, you can select from the various vacations rental homes available to spend your holiday in the comfortable and serene environment. There are vacation homes available in the form of bungalows, cottages, condos and villas. While you accommodate, all you need is to pay rent for the days that you are going to spend in Alabama. The rent that is required by you to pay largely depends on the size, location and the number of people who are coming to spend their holiday. There are a number of vacation rental homes available in Alabama.

You can also avail the other options available for accommodation such as the motels and hotels but the facilities and homely environment that is provided in the vacation homes Alabama is preferred by the people. The Alabama vacation homes hold all the necessary amenities that are present in a home such as television, Dryers, fully furnished kitchens, DVD’s and many other things. The vacation homes Alabama consists of multi rooms that also contains dining room, bed room and living room. The fully furnished kitchens in the vacation homes have all the necessary equipments where you can cook the food you want.

The vacation homes Alabama are built at the exotic locations near the sandy beaches that can surely grab your attention. With the wide variety of amenities that you might be seeking, there are many vacation homes in Alabama where you can accommodate yourself according to your needs. For those who wish to find a rental home with the facility of pool, entertainment room, huge living area, hot tubs and numerous bedrooms can easily find it and get the reservations made for a comfortable and soothing holiday. The vacation rental homes can provide you with the opportunity to spend pleasurable time during the vacations.

With the advanced information technology, you can also book your vacation homes by the means of internet. You can easily choose the rentals according to the price range, location and the facilities. Booking for the vacation homes can now easily take place from the convenience of your home with the variety of rental homes that are just a mouse click away. All you need is to fill in an application form that asks for the person details, preferences and budget. In accordance to the application, you will be sent a list of suitable vacation homes from which you can easily sort out the best one according to the requirements

Cost Segregation - Tax Deductions (Tax Rule No.1: Don’t cheat the IRS)

Tax Rule No.1: Don’t cheat the IRS. But that doesn’t mean you should cheat yourself. Take every legal tax deduction you can.

In addition to the numerous tax deductions the Internal Revenue Service allows, research indicates that most U.S. taxpayers do not claim all deductions to which they are entitled. Some of the tax deductions business owners can claim fall under categories such as charitable contributions/donation deductions, medical and dental deductions, moving expense deductions, deducting job costs, travel and entertainment expense deductions, and casualty and theft losses, depreciation and involuntary conversion deductions.

Even after the fiscal year ends, and business owners of improved commercial real estate are still seeking tax deduction opportunities, one popular option is to order a cost segregation study (CSS). A CSS will identify any item that can be depreciated over a shorter period of time. These studies can result in accelerated depreciation deductions for properties including new buildings, renovations of existing buildings, leasehold improvements, and real estate purchase after 1986. Cost segregation allows business owners to increase depreciation, generate more tax deductions, and reduce their tax rate.

Cost segregation involves separating up to 135 components of real estate that depreciates faster than the building itself. Taxpayers can depreciate many components of real estate using a five-, seven-, or 15-year recovery period. Within permissible bounds, there is a huge tax-savings opportunity for valuing this property accurately. This category includes items such as carpeting, certain fixtures, window treatments, site improvements and some wall coverings.

Cost segregation increases tax deductions by apportioning about 20% to 40% of the total cost basis to short-life property. Short-life property depreciates over a shorter life period and provides a higher level of tax deductions annually during the first 15 years of ownership. Most business owners increase depreciation by 50% to 75% by obtaining a CSS analysis.

O’Connor & Associates is a national provider of commercial real estate consulting services including tax reduction, estate taxes, cost segregation studies, due diligence, renovation upgrading cost analyses, tax return review and apartment inspections.

The Most Difficult to Understanding Employee Taxes

Employee taxes can be one of the most difficult to understand areas of running a business and hiring employees. If you don't understand all of the complexities involving employee payroll tax, it can also get you into a heap of trouble.

The first employee tax factor you should understand is what taxes you are responsible for as an employer. There are three employee taxes that you will be responsible for paying.

The first is Medicare and Social Security tax. This is often referred to as FICA and provides welfare benefits funding for senior citizens. As an employer you are responsible for paying half of the FICA taxes and withholdings for your employee while the remaining half is withheld from their paycheck.

You are also responsible for paying federal unemployment tax. This tax funds the state unemployment benefits and the administrative costs associated with those benefits. It is important for you to know that you must pay federal unemployment tax on the first $7000 earned by each person you employ during the calendar year.

In addition to federal unemployment tax, you must also pay state unemployment tax. These taxes are based on the location and size of your business as well as the number of employees you employ. Due to the fact that each state operates its own unemployment program, these rates do tend to vary; so it's best if you check with your own state's unemployment division for specific details.

In addition to the taxes you must pay as an employer, you are also responsible for withholding employee tax. Even though this is the employee's contribution, it is your responsibility to handle the employee tax withholding. You will need to pay close attention to the employee tax form, or W-4, completed by the employee in order to know exactly how much money you need to deduct from the employee's paycheck. Usually the amount of money you must withhold will depend on the number of withholding allowances claimed by the employee, their marital status and any exemption from withholding taxes that the employee might claim.

It is very important that you stay on top of your employee's tax forms because they have the right to change them by submitting a new W-4. If an employee submits a new employee tax form, thereby changing the amount of their withholding and you fail to deduct the correct amount of money, you could be subject to penalties by the IRS.

You will need to deposit both the taxes that you are responsible for paying along with the employee tax withholdings in an authorized depository for Federal taxes. You can do this by either mailing or delivering your check or money order. These taxes will be due either semi-weekly or monthly. Your employee tax withholding due dates will be determined by the size of your payroll, dictated by the schedule. Usually, however; if your payroll is less than $2,500 every three months, you can file quarterly. If your employee taxes are larger, you'll need to file more often.

In addition to the employee taxes named above, recently there has been much discussion in the media regarding a proposed employee health tax. If instituted this tax would impose a $3000 tax on employers for each employee who is not covered by health insurance. The intend of the proposed bill is to force employers to cover more employees by health insurance; however critics of the bill claim that the proposed employee health care tax will only lead to more unemployment.

Why All Employees Pay the Federal Income Tax

Federal income tax is withheld from the pay of almost all employees. Employee pay is inclusive of salaries and wages, bonuses, commissions, and vacation allowances. It is the responsibility of the employer to provide the employee with a W-4 at the onset of their employment. The determination of tax withheld is computed from the information provided on the W-4. The employee must inform the employer of their withholding status (married or single), and the number of exemptions they will be claiming. Employees also have the option to have an additional amount withheld from their pay. If, over the course of an employee's employment, they wish to change or adjust their withholding rates, they may simply request to complete a new W-4. Publication 919 “Getting the Right Amount of Tax Withheld” is available from the IRS and can assist employers and employees in making the best choices for withholding correctly.

Factors that will affect the amount of federal income tax withheld from an employee’s check include marital status, number of exemptions, or an employee has more than one job at a time. These factors will affect federal income tax computations, and should be included in information provided by the employee at the time of employment. Some employees, due to filing status, number of exemptions or allowances, and earned income totals below the national poverty level, will qualify for Advance EIC payments. These are advance payments of a refund of federal income tax. Advance EIC payments are made on the employee's paycheck each pay period, if requested.

Contributions to qualified 401(k)'s or any other program that allows deductions of “pre-tax” contributions will affect the amount of federal income tax withholding for each pay period. Generally, contributions to a 401(k) or other retirement program are a benefit to the employee at the end of the tax year. These contributions provide a tax break and reduce the amount of federal income tax due, while providing retirement benefits to the employee.

Other factors affecting federal income tax liability are filing status, number of exemptions claimed on your personal tax return, individuals with more than one job, child tax credits, education credits itemized deductions, and nonwage income.

At the end of the tax year, employees are furnished a W-2. This is a summary of the wages paid and all deductions taken from the employees gross pay over the course of the past tax year. All employers are required by law to furnish employees with a W-2 no later than January 31st of the next tax year.

To summarize, federal income tax withheld from an employee's pay can be affected by changes to the employees wage base, filing status, or simply the acquiring of a second job. All employees should take the time to review their filing status based on the information provided on their W-4 and make changes to withholding status and exemptions claimed as needed.Did you find this article useful? For more useful tips and hints, points to ponder and keep in mind, techniques, and insights pertaining to Internet Business

You are responsible for Payroll Taxes: - The monies to cover the payroll taxes due

If you have employees, you are responsible for payroll taxes. This is a term that lumps all the different forms of employment taxes into one category known as “payroll tax”. In reality, payroll taxes encompass Federal and state income tax withholding, social security and Medicare taxes (also known as FICA), Federal unemployment tax (FUTA), as well as any state and local unemployment taxes assessed.

Payroll taxes are deducted each pay period from an employee’s gross pay. The remaining money distributed to the employee is what is known as “net pay”. Along with any taxes deducted from an employee's wages, there is a social security and Medicare liability incurred by the employer. You must match the social security and Medicare amounts withheld on each employee. This is the employer paid contribution. Until recently, most employers reported and paid payroll taxes quarterly. With the advent of the EFTPS, or Electronic Federal Tax Deposit System, all employers now pay taxes on a monthly basis. The payroll taxes may also be paid via a tax coupon that is taken to your bank and presented with the monies to cover the payroll taxes due.
Every quarter, a Form 941 (or 943 for agricultural employees) must be filed with the IRS. The amounts reported on the 941 should reconcile to the amounts turned in each month via the tax coupon or the EFTPS. At the end of the tax year, a Form 940 or information return must also be filed.

If you are a small business with employees, or you plan to begin operating a business with employees, you need to understand your tax responsibilities as an employer. The IRS provides links to all the relevant Forms and Publications via their Internet. Here you will find definitions and terms associated with employees from the onset of hiring, to termination. W-4's, W-2's, I-9's, all the employment taxes you will be responsible for reporting, all the rates associated with those taxes. The IRS also provides you with information concerning recordkeeping, employment eligibility verification, benefit and retirement plans, and even the definition to be used in order to determine if someone is an employee. There is a tremendous benefit to be had by investing the time and resources necessary to understand and comply with all the federal, state, and local regulations concerned with employees and payroll taxes. However, you should frequently seek the advice of a qualified tax professional, your accountant.

Did you find this article useful? For more useful tips and hints, points to ponder and keep in mind, techniques, and insights pertaining to Internet Business.

Tax Debt Help Tips - How to Settle Your IRS Tax Debt for Less

You are probably reading this because you are in need of tax debt help. Sometimes it feels like there is no way out from under an overwhelming IRS tax debt. However, for taxpayers that simply can’t afford to pay, there is a solution. You can actually settle your IRS tax debt for less than you owe! This is known as an “Offer in Compromise” and if you qualify for it, it is one of the most beneficial forms of IRS tax debt help available. But before you try it, you need to prime yourself with a little research and some basic knowledge. Roll up your sleeves, this won’t be easy.

The IRS tax settlement program, or Offer in Compromise, reduces the amount owed for taxpayers that cannot afford to pay before the statute of limitations (time to collect on the debt) runs out. It is an agreement between the taxpayer and the IRS that settles the tax liability for less than the full amount owed. Anyone can apply for an Offer in Compromise for tax debt help. However, not everyone is going to be approved. You need to know the steps and the paperwork required for a tax settlement to increase your chances of actually securing this form of tax debt relief.

In order to apply for an Offer in Compromise you need to complete IRS Form 656, Offer in Compromise and IRS Form 655-V, the Offer in Compromise payment voucher. The IRS will not accept an offer that is less than your earning potential in the years before they can no longer collect on your debt. This means you need lots of documents to prove you simply cannot pay your tax debt before your statute runs out. Now your mission is to begin finding and assembling those documents that “will prove to the IRS” that you can’t pay your tax debt in full. Some common examples are past due notices, bills, unemployment checks, and anything and everything that serves to substantiate your financial hardship claim. Submit all of this documentation with IRS Form 656, Offer in Compromise

Before you begin on your quest for tax settlement as your preferred form of tax debt relief, it is important to know the success rate. While it is true that you can actually settle your IRS tax debt for less, the IRS does not “give up easily” on full collection of past tax debt. In fact, fewer than 20% annually of all Offer in Compromise applications submitted to the IRS are approved. For this reason, it is incredibly important to double check IRS Form 656, Offer in Compromise before you submit it. Incomplete or inaccurate applications are rejected. The IRS also rejects applications where the tax settlement “offer amount” is deemed to be too low.

It is true that some taxpayers have submitted their own Offer in Compromise successfully. However, when it comes to submitting an offer, you have a better success rate when you work with a qualified tax professional. IRS tax settlement specialists know the “ins and outs” of IRS rules and guidelines, and are experienced in assembling the necessary documentation to maximize your chances for approval. Remember that this form of tax debt relief is the most beneficial, so it may be prudent to give yourself every possible chance at success. That often means using qualified IRS tax debt help advisors. Keep in mind that if it appears you will not qualify for IRS tax settlement, a professional tax advisor is aware of all programs that may give you the tax debt relief you need.

Liv Worthington has worked in the debt management field for many years. She also advises clients who need tax debt help and are seeking information about tax settlement as their preferred form of tax debt relief.

Monaco, government, politics, tax, finance

Motivated businessmen and wealthy millionaires in the past have been faced with a dilemma - save tax by moving to Monaco, famous for its zero per cent tax rate - or stay at home, pay the taxes, and know you're contributing to your country?

But that dilemma for many in recent months has been firmly knocked into touch with the revelations in Britain that politicans - including those at The Treasury - have themselves maximised their expense claims and avoided Capital Gains Tax when selling a second home, which has been funded by the taxpayer.

As a result of the outlandish claims made by some Members of Parliament for their expenses and desire to minimise their tax bills, the number of enquiries for Monaco property has surged since the revelations began, according to the country's leading Monaco property specialist monacoproperty.net who say:

'In the past we've had enquiries from people considering moving to Monaco who have decided against it as they feel they should pay their taxes in the UK, despite the fact that many have already contributed hugely financially to the British economy - a lot of the new enquiries are people who have considered Monaco in the past and now see no reason why they should contribute more when Members of Parliament are doing all they can themselves to minimise their tax bills and claim all they can on expenses - which are funded by the taxpayer.'

One way Members of Parliament bumped up their expenses and the money they have made in recent years is something that has been dubbed as 'flipping homes' - and this has led to many businessmen and women considering buying a Monte Carlo property to see no reason why they shouldn't move to a tax haven and buy real estate.

MP's are allowed a second home allowance - vital for those who have constituencies well outside of London - and the purpose behind the second homes allowance is to enable them to live in London during the working week to attend Parliament, and represnt their constituents there.

Monaco Harbour

But some were telling the Expenses Office they needed repairs done to their second home, but moving their second home residency to their original house, and then later changing it back to the London home and having repairs done there too - flipping between the two, hence the phrase 'flipping homes'.

With the increase in London property prices in recent years many MP's have seen the value of their London property soar in value, sold it, and kept the profit themselves - with the mortgage funded by the British taxpayer. One of the most notorious expense claims was to build a Duck House on an MP's lake - the chances of making money were far higher in Parliament than the Monte Carlo Casino!

But if people do decide to move to Monaco, what can they expect to find there? After all, Monaco is only a square mile in size.

Importantly for people with money, security is often high on their agenda, and the security Monaco offers them is second to none, with one policeman for every hundred residents. Backed up with cctv that looks after the residents and visitors for the hotels in Monaco, for many it's a good reason to choose Monaco.

Equally important for many is the financial infrastructure of a country, and how secure their money is. With all the major banks having either a direct presence or partners, just like with the physical security residents have, people do feel safe that their money is deposited in one of the banks in Monaco. Add to that the Grand Prix, tennis, yacht show and social activities it's perhaps no wonder that Monaco is a favourite destination for the wealthy.

And they won't have politicians telling them to pay more tax while themselves try to pay no tax.