Pasties Won’t be Taxed in Britian
Believe me, it’s not what you think. In the United States pasties are a warm weather clothing(ish) item worn by some women. But in England it is a popular food eaten by the common folk. Picture a cross between a pizza pocket and a chicken pot pie; a hand-held pastry filled with meat and vegetables. Preparing them at home can be tricky and time-consuming. According to one recipe by our guy Emeril Lagasse, prep time is about 1 hour & 20 minutes. Many Britons pick them up at the corner shop where they are mass-produced and sold lukewarm.
Britain’s finance minister came under fire lately for suggesting a tax that would increase the price of these goodies. This could have been perceived as either discriminatory towards the middle-lower class citizens, or simply as proof that the he and other elites in government are out of touch with ordinary Brits. But the Pasty Tax was never ratified. Instead an exception was carved out for “hot takeaway food that is cooling down after being cooked.”
Like this:
The Ultimate Case of Refund Fraud
I’ve blogged about refund fraud before. I’ve even blogged about inmates committing refund fraud from their prison cells, as odd as that may sound. But the story of Jason Whitfield will Blow. Your. Mind.
Whitfield was charged with second degree murder back in November 2011. He is accused of shooting and killing 26-year-old Michael Massaline on October 26, 2011. Then, while in prison, Whitfield was caught putting together fraudulent refund returns in hopes of getting free money from the government. Sometimes these refund fraud types use the identities of people they know, and sometimes inmates even sell their personal information knowing what it will be used for. Not the case here. At least one of Whitfield’s victims was definitely not a willing participant because it was the same guy he is accused of murdering! Talk about adding insult to injury! I guess once you’ve killed someone your tax problem seems inconsequential, and there isn’t much else you can feel guilty about . . . IF he’s guilty, of course.
It probably won’t surprise you to learn that this is another case out of the (now infamous) tax fraud capital of the nation, Tampa Bay, FL. If it bothers you that inmates are surfing the internet and maintaining improper contacts with the outside world, you’re not the only one. Prison guards and officials in Hillsborough County are in over their heads with this “epidemic.” One deputy estimated that more than half of the inmates there are somehow involved in fraudulent refund schemes.
IRS Closing 43 Offices Across the Nation
image via joyfeldman.com
Yesterday the IRS announced that it would be initiating a massive “office space and rent reduction initiative” that will save taxpayers $17.2 million in rental costs during 2012 and even more the following year. Employees aren’t being laid off — this isn’t a reduction in staff — it’s all about packing them in tighter by eliminating some offices and consolidating others.
The IRS is quick to point out that this initiative will not result in a decrease in customer service because none of the actual walk-in taxpayer assistance centers are going to be closed. The IRS anticipates “minimal taxpayer impact.” Ok, everyone recognizes that “minimal” does not mean “none.” These press releases are carefully worded, and I think The Commish chose to hedge a little here because of course there is going to be at least some impact on taxpayers and their access to tax relief.
The truth is a vast majority of taxpayers contact the IRS by phone, not via the walk-in offices. And what happens when you pack employees in like sardines? Best case scenario is they get a little grumpy. Interestingly, this office space reduction announcement came just one day after the IRS publicized a slackening of the rules related to the Offer in Compromise program (which will likely result in a moderate to severe increase in OIC filings). I can’t imagine either of these changes were too popular among IRS personnel (“What! More work AND less space?!”). I support the office space consolidation initiative 100%, I’m just skeptical about The Commish and his “minimal taxpayer impact” line.
IRS Makes Potentially Huge Changes to OIC Program
The IRS recently announced some historic modifications to the Offer in Compromise (OIC) program which could result in drastic increases in accepted offers. I say it “could” have this result because the IRS is notorious for not training its personnel to understand their own rules. Changes such as these take quite a while to trickle down to the rank-and-file IRS employees who handle most collections case. And sometimes parts are lost or misinterpreted during the trickling process.
By far the most significant change that was announced has to do with the way the IRS calculates a taxpayer’s reasonable collection potential. Previously this would have included the combined equity in all assets and the future earning capacity projected over 4-5 years following the offer’s acceptance. It will still include all the equity in assets but now the future income calculation should be multiplied across only 1-2 years.
Some taxpayers have no available income (after paying allowable expenses), and this change will have no impact at all on them. However, for everyone else, this change may mean the difference between an accepted or a rejected OIC. If the IRS is serious about implementing these changes, then I think more people will obtain tax relief because more people will meet the criteria for the Offer in Compromise program. And if other practitioners think like I do, then we should see a big increase in OIC filings, which will mean a backlog of OIC cases and longer delays. So we’ll have to take the good with the bad on this one.
IRS Tax Tip for Federal Student Aid Applicants
With the federal deadline for online FAFSA applications coming up on June 30th, the IRS reminds the college-bound that the easiest way to verify tax return information is by using the “IRS Data Retrieval Tool.” Yes, I know, it’s nice when the IRS shows it is concerned about more than just collecting on your tax debt.
If you’ve already “been there, done that,” then the acronym FAFSA may bring back some bad memories. If you’re about to embark on your college journey and you’re not wealthy enough to pay cash for tuition, then you’re learning that this stands for “Free Application for Federal Student Aid.” As with many applications, the filling of empty fields is the easy part; it’s the documentation that must be produced (or even just found) to back up what you put on the app that makes the process so tedious. I know my own FAFSA spent a significant amount of time gathering dust on the top of the fridge after I filled out my name and address. But that was several years ago.
These days the FAFSA is completed online, . . . so no dust. But the deadlines are still critical, so anything that speeds up the application process is nice. The IRS Data Retrieval Tool allows students to access tax return information from the IRS website and securely dump it right onto their FAFSA form. All you need is a valid Social Security Number and a Federal Student Aid PIN (which can be obtained on the federal student aid website). Of course, if you have not filed last year’s tax return, then you will not qualify to use this tool because the information will not be available for you. And if you didn’t file, that’s a whole other problem — you may want to talk with an experienced tax relief attorney because you may be on the hook for back taxes, penalties, and interest.
FATCA Marching on Despite Opposition
The Foreign Account Tax Compliance Act (FATCA) is one of the ways the US plans on ramping up collection of taxes so everyone pays his/her fair share. The IRS sees it as an important tool in combating tax evasion, but many financial firms and individuals see it as little more than a gateway to further tax problems and complications.
Under the proposed rules, there are requirements for individuals and requirements for foreign banks. US taxpayers with more than $50,000 in a foreign bank would be required to report certain information on a form (Form 8938) that must be attached to the annual Form 1040. Foreign banks would be required to, among other things, report certain information about account holders directly to the IRS. See the IRS website for additional information.
Most of the requirements will not kick in until next year, but many businesses are expressing strong opposition to FATCA and the burdens it would create. If they are not successful in repealing it or amending it to make it more lenient, then they at least hope for some kind of postponement to give financial institutions time to prepare.
On the Eve of the Facebook IPO
The state of California anticipates generating billions in tax revenues from the Facebook IPO which is supposed to take place this Friday morning.
The Legislative Analyst’s Office predicts the state will receive some $2.1 billion over the next year from the public offering as employees cash in their stock options. This would result in revenue approximating one-fifth of California’s total economic growth during that same time frame.
Of course, these predictions are based on a number of assumptions:
- The Facebook IPO will go down this Friday as expected
- Shares will be priced at $38 and then trade at $45 six months from now
- Voters will pass Governor Brown’s tax increase affecting the IPO transactions
California expects to rake $195 million on day one when Facebook CEO, Mark Zuckerberg, exercises options to buy 60 million shares at 6 cents each. The difference between Zuckerberg’s price and the market price is considered income, and the one thing we know about income is that it’s taxable.
