tag:blogger.com,1999:blog-52171578058966673982024-02-08T09:14:42.749-05:00The Law Offices of L.W. Cooper Jr., LLCThe Law Offices of L.W. Cooper focuses on tax litigation, business and bankruptcy litigation, tax controversy, tax collections and tax planning. We represent individuals and businesses in matters locally, regionally, and nationwide.Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.comBlogger83125tag:blogger.com,1999:blog-5217157805896667398.post-73834310304025334862016-08-24T10:08:00.002-04:002016-08-24T11:57:36.667-04:00Forty-Four Percent of Americans Do Not Pay Federal Income Taxes<br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“I can see my tax dollars are hard at work!”</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">We’ve all heard it before. It’s usually said sarcastically in response to the latest scandal involving politicians, teachers, police officers, or other public servants. There is a pervasive idea in American culture that the customer is always right. The benefits and drawbacks of this viewpoint are many and varied, and could be debated endlessly, but the fact that we feel like we deserve honesty and integrity from the people that are paid through our taxes will likely never be completely eradicated from our collective conscience.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">What if the premise of that argument wasn’t even true, though? </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">According to Roberton Williams, the Sol Price Fellow at the Urban-Brookings Tax Policy Center, about 44 percent of Americans pay no federal income taxes. </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“Either you’re too poor or you benefit from these various provisions in the code,” he said. The provisions he is referring to are called refundable tax credits – which can not only bring your taxable income down to zero, but any remaining funds in the credit can actually be refunded to you. The Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit (for high education costs) are all refundable credits.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">On top of these credits driving up the number of Americans who pay no federal income tax, individual taxpayers who are younger than 65 are not required to file a return if their gross income was less than $10,300 (that number is doubled for married taxpayers).</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">The Tax Policy Center expects that the percentage of Americans paying no federal income tax will gradually decrease, predicting that about 40 percent of taxpayers will pay nothing in 2026, according to data released July 11.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">Part of this prediction is based on the fact that about half of Americans didn’t pay income tax during the Great Recession (2007-2009), partly because of tax provisions that were included in the American Recovery and Reinvestment Act of 2009. The Tax Policy Center anticipates that over the next decade, the American economy will continue to strengthen, and taxpayers will be in better financial positions.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">So, where is all of the money going that is being taken out of your paycheck every two weeks?</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">While nearly half of Americans don’t pay federal income tax, most still have it withheld from their paychecks (which is why many Americans receive a tax return – they have “paid” through these withholdings, but ended up owing little to no income tax, so that amount is refunded to them). </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">Additionally, about 60 percent of taxpayers paying no income tax will work and owe payroll taxes that support Social Security and Medicare. Only about 9 percent of households qualify for credits that fully offset their payroll tax.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“The fact they don’t pay income tax isn’t the only thing in the world,” Williams said. “There are lots of other taxes – property taxes, sales taxes and excise taxes – that are pretty hard to duck entirely.”</span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-20754893680029970052016-08-24T10:08:00.000-04:002016-08-24T11:56:45.323-04:00Forty-Four Percent of Americans Do Not Pay Federal Income Taxes<br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“I can see my tax dollars are hard at work!”</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">We’ve all heard it before. It’s usually said sarcastically in response to the latest scandal involving politicians, teachers, police officers, or other public servants. There is a pervasive idea in American culture that the customer is always right. The benefits and drawbacks of this viewpoint are many and varied, and could be debated endlessly, but the fact that we feel like we deserve honesty and integrity from the people that are paid through our taxes will likely never be completely eradicated from our collective conscience.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">What if the premise of that argument wasn’t even true, though? </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">According to Roberton Williams, the Sol Price Fellow at the Urban-Brookings Tax Policy Center, about 44 percent of Americans pay no federal income taxes. </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“Either you’re too poor or you benefit from these various provisions in the code,” he said. The provisions he is referring to are called refundable tax credits – which can not only bring your taxable income down to zero, but any remaining funds in the credit can actually be refunded to you. The Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit (for high education costs) are all refundable credits.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">On top of these credits driving up the number of Americans who pay no federal income tax, individual taxpayers who are younger than 65 are not required to file a return if their gross income was less than $10,300 (that number is doubled for married taxpayers).</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">The Tax Policy Center expects that the percentage of Americans paying no federal income tax will gradually decrease, predicting that about 40 percent of taxpayers will pay nothing in 2026, according to data released July 11.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">Part of this prediction is based on the fact that about half of Americans didn’t pay income tax during the Great Recession (2007-2009), partly because of tax provisions that were included in the American Recovery and Reinvestment Act of 2009. The Tax Policy Center anticipates that over the next decade, the American economy will continue to strengthen, and taxpayers will be in better financial positions.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">So, where is all of the money going that is being taken out of your paycheck every two weeks?</span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">While nearly half of Americans don’t pay federal income tax, most still have it withheld from their paychecks (which is why many Americans receive a tax return – they have “paid” through these withholdings, but ended up owing little to no income tax, so that amount is refunded to them). </span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"></span><span style="font-size: xx-small;"></span><br />
<div style="margin: 0in 0in 8pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">Additionally, about 60 percent of taxpayers paying no income tax will work and owe payroll taxes that support Social Security and Medicare. Only about 9 percent of households qualify for credits that fully offset their payroll tax.</span></div>
<span style="font-family: "georgia" , "times new roman" , serif; font-size: xx-small;">“The fact they don’t pay income tax isn’t the only thing in the world,” Williams said. “There are lots of other taxes – property taxes, sales taxes and excise taxes – that are pretty hard to duck entirely.”</span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-7056354086792630652015-06-12T10:45:00.001-04:002015-06-12T10:45:22.316-04:00New South Carolina Law Authorizes Tax Amnesty Program<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">The new South Carolina law authorizes the South Carolina Department of Revenue (“Department”) to
designate an amnesty period which has a beginning and ending date as determined
by the Department. </span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">During the amnesty period, the Department can waive potentially 100% of all interest and penalties if the taxpayer complies with the program. A</span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">mnesty will
be granted to taxpayers that request an amnesty form and voluntarily file all
delinquent tax returns and pay in full all taxes due; voluntarily file an
amended tax return to correct an incorrect or insufficient original return and
pay all taxes due; or voluntarily pay in full all previously assessed tax
liabilities due within an extended amnesty period as determined by the
department. The department may set up installment agreements so long as all
taxes are paid within this period.</span><br />
<span style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span>
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 10.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;">A taxpayer who
has an appeal pending with respect to an assessment is eligible to participate
in the amnesty program if the taxpayer pays all taxes owed. However, amnesty
will not be granted to a taxpayer who is the subject of a state tax-related
criminal investigation or criminal prosecution.</span></div>
Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-37428601301657076202014-11-19T17:31:00.000-05:002014-11-19T17:31:46.636-05:00IRS to Provide Guidance for Marijuana Retailers<span style="font-family: Georgia, Times New Roman, serif;">The
IRS Office of Professional Responsibility plans to release guidance in the
first quarter of 2015 for practitioners working with marijuana retailers in
states where the business is legal. The practitioners are pushing for the IRS to issue guidance clarifying that a tax professional will not be considered unethical, targeted for audit or be considered in violation of Circular 230 rules solely for preparing a return for a marijuana business. Although some states now allow the sale of marijuana, those sales are still illegal under federal law. Because the sale of marijuana is an illegal activity under federal law, the cost of goods sold will be an issue as drug dealers are never allowed to claim a cost of goods sold. In addition, there are related issues such as deductions dependent on whether the sale of marijuana is a trade or business
of cultivating or sale, or whether it's a subsidiary trade or business that
just happens to have a connection. Indeed, if the IRS does not allow COGS or Section 162 deductions, the tax bills could be a major hurdle.</span><br />
<!--div class="for-more-info"-->Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-14437235286957673782014-11-04T17:26:00.002-05:002014-11-04T17:26:44.165-05:00Long Waits for IRS Practitioners<span style="font-family: Georgia, Times New Roman, serif;">The
average time it will take for tax practitioners to get through to the Internal
Revenue Service on their dedicated practitioner phone line in 2015 is projected to be 52
minutes, National Taxpayer Advocate Nina Olson said on November 4, 2014. Ironically, the IRS calls the dedicated line the "Tax Practitioner Priority Hotline." There's nothing "priority" or "hot" about that 52 wait and could be slower than the DMV.</span><br />
<br />Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-35247636915208015042014-10-29T17:05:00.002-04:002014-10-29T17:05:52.050-04:00A Step Forward for Captive Insurance - Securitas Holdings<span style="color: black; font-family: Georgia, Times New Roman, serif;">In the matter of <span style="color: black;"><a href="http://ustaxcourt.gov/InOpTodays/SecuritasHoldings,Inc.Memo.Buch.TCM.WPD.pdf">Securitas Holdings, Inc. v. Commissioner</a>,</span> T.C. Memo. 2014-225 issued today by the the
U.S. Tax Court, the Court found that Securitas had established a bona fide captive insurance arrangement among its U.S. companies and was entitled to
interest expense and premium deductions. As with all true insurance companies (which most captive arrangements are if done for business purposes), the </span><span style="font-family: Georgia, 'Times New Roman', serif;"> captive arrangement shifted risks, distributed
risks, and constituted "insurance" in order to make the premiums deductible. </span><br />
<span style="font-family: Georgia, 'Times New Roman', serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Indeed, if a captive insurance company is applicable to your holding company structures, the tax and premium benefits may be substantial. This Office is happy to answer any questions that you may have concerning captive insurance arrangements.</span><br />
<span style="font-family: Georgia, 'Times New Roman', serif;"><br /></span>
<span style="font-family: Georgia, 'Times New Roman', serif;">The opinion of the Court can be found at this link:</span><br />
<span style="font-family: Georgia, 'Times New Roman', serif;"><a href="http://ustaxcourt.gov/InOpTodays/SecuritasHoldings,Inc.Memo.Buch.TCM.WPD.pdf" target="_blank">http://ustaxcourt.gov/InOpTodays/SecuritasHoldings,Inc.Memo.Buch.TCM.WPD.pdf</a></span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-14817615558725885052014-10-28T17:31:00.001-04:002014-10-28T17:31:04.060-04:00South Carolina Needs To Change Its Tax Climate - Tax Rankings Released<span style="font-family: Georgia, Times New Roman, serif;">South Carolina is standing in the shadow of North Carolina (as well as the rest of the country) and needs to take the necessary steps to make the State more tax competitive to draw business as well as individuals. Currently South Carolina received the following rankings from the Tax Foundation's 2015 State Business Tax Climate Index. <a href="http://taxfoundation.org/sites/taxfoundation.org/files/docs/TaxFoundation_2015_SBTCI.pdf" target="_blank">http://taxfoundation.org/sites/taxfoundation.org/files/docs/TaxFoundation_2015_SBTCI.pdf</a></span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">South Carolina Overall Rank - 37th</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Corporate Tax Rank - 13th</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Individual Income Tax Rank - 41st </span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Sale Tax Rank - 18th </span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Unemployment Insurance Tax Rank - 40th</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Property Tax Rank - 21st </span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, 'Times New Roman', serif;">From these rankings its clear there needs to be substantial changes to the individual income tax and unemployment insurance tax regimes in South Carolina. </span><span style="font-family: Georgia, 'Times New Roman', serif;">North
Carolina made the single largest annual jump in the history of the rankings to No. 16 from No. 44 by lowering its corporate and individual income tax and its sales taxes. South Carolina should take the cue as there is no reason for us to be in the bottom percentile. </span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-91997392302129604422014-10-22T10:51:00.000-04:002014-10-22T10:51:13.752-04:00Social Security Taxable Maximum Increased to $118,500<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="p"-->The
maximum amount of earnings subject to Social Security tax will rise to $118,500
in 2015, from the current $117,000, the Social Security Administration
announced today.</span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-91933793664446310682014-10-21T15:26:00.001-04:002014-10-21T15:26:48.807-04:00OVDP: Definition of Willful Left Broad<span style="font-family: Georgia, Times New Roman, serif;">Jennifer Best of the
IRS stated that the IRS has deliberately refrained from offering a lot of examples about what
constitutes willful failure to disclose offshore assets. </span><span style="font-family: Georgia, 'Times New Roman', serif;">Taxpayers
are only allowed to use the Internal Revenue Service's streamlined offshore
voluntary disclosure program when they have failed to report foreign income or
foreign financial accounts or assets, if they can certify that their failure to
do so was non-willful. </span><span style="font-family: Georgia, 'Times New Roman', serif;">Every
taxpayer has a unique set of circumstances, therefore, definition of the term of "Willful" was intentionally left broad.</span><br />
<!--atom:title--><br />
<br />Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-65050497800683884962014-09-15T08:33:00.003-04:002014-09-15T08:34:25.720-04:00WSJ Article: U.S.'s Tax Competitiveness <a href="http://online.wsj.com/articles/were-number-32-1410729349?mod=trending_now_1" target="_blank">http://online.wsj.com/articles/were-number-32-1410729349?mod=trending_now_1</a>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-57974922792975035672014-09-10T17:13:00.001-04:002014-09-10T17:13:59.010-04:00Dow Chemical Loses Appeal on Royalty and Depreciation Expenses<span style="font-family: Georgia, Times New Roman, serif;"><span style="font-size: 12px;">The Fifth Circuit ruled today on appeal that Dow Chemical was not entitled to royalty and depreciation expenses related to two partnerships that were designed by Gold Sachs. The Court had found that the transactions related to the partnerships were shams or tax shelters. The total tax benefit that was lost by Dow was approximately $2.0 billion. The Appeals court remanded it back to the District Court to determine whether the substantial valuation and gross valuation misstatement penalties were appropriate. </span></span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-24934296638053674402014-06-19T11:12:00.000-04:002014-06-19T11:12:31.355-04:00South Carolina DOR Gives Guidance on $300 Sales Tax CapSouth Carolina Department of Revenue issued Rev. Ruling 14-2 stating the utility trailers that are capable of being pulled by an automobile, minivan or pick-up truck are not subject to the $300 sales tax cap, but instead, are subject to the 6% sales tax rate, plus any local additions. Utility trailers are trailers that are not recreational vehicles, fire safety education trailers or horse trailers. <br />
<br />
<a href="http://www.sctax.org/NR/rdonlyres/AF3D4D34-9902-460A-9AA4-89B4E4E9ED19/0/RR142.pdf" target="_blank">http://www.sctax.org/NR/rdonlyres/AF3D4D34-9902-460A-9AA4-89B4E4E9ED19/0/RR142.pdf</a>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-55800992268376748022014-06-17T13:30:00.000-04:002014-06-17T13:30:32.377-04:00S Corporation Conversion from C Corporation Tax Benefit Made PermanentOn June 12th, the House agreed to make permanent an expired tax provision that allows an S corporation after it converts from a C corporation to recognize the built in gains over a five (5) year period from the conversion date. Without this provision, S corporations had to wait 10 years before it could sell its business assets in order to avoid the built in gain tax.Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-35762981647853636472014-06-17T13:18:00.000-04:002014-06-17T13:19:02.118-04:00Supreme Court Rules that Inherited IRAs Not Exempt from Bankruptcy CreditorsIn the case of <u>Clark v. Rameker, Trustee</u>, Justice Sotomayer penned an unanimous opinion finding that inherited IRAs are not afforded protection under the Bankruptcy Code against creditors. The Court found that inherited IRAs are not "retirement funds" within the meaning of Section 522(b)(3)(C) of the Bankruptcy Code. There were three primary factors that lead the Court to this conclusion that inherited IRAs are not "retirement funds" within its ordinary meaning. (1) the holder of an inherited IRA may never invest additional money into the fund; (2) the holder must make withdrawals from the IRA no matter how close to retirement; and (3) the holder can withdraw the whole amount at any time.<br />
<br />
In light of this decision, a person may wish to carefully weigh the benefit of holding assets in an inherited IRA from a tax benefit perspective and an asset protection point of view. This determination will be heavily driven by a person's risk profile. Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-53998981888761058312014-06-11T10:48:00.001-04:002014-06-11T10:48:41.600-04:00IRS Issues Taxpayer Bill of Rights<span style="font-family: Georgia, Times New Roman, serif;">Yesterday, the
Internal Revenue Service released the Taxpayer Bill of Rights setting forth 10 rights of taxpayers that are contain in various parts of the Internal Revenue Code.<o:p></o:p></span><br />
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;">• The right to be
informed.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to
quality service.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to pay no
more than the correct amount of tax.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to
challenge the IRS's position and be heard.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to appeal
an IRS decision in an independent forum.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to
finality.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to
privacy.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to
confidentiality.<o:p></o:p></span></div>
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to retain
representation.<o:p></o:p></span></div>
<!--div class="for-more-info"--><br />
<div style="margin-bottom: 5.0pt; margin-left: .25in; margin-right: .25in; margin-top: 5.0pt;">
<span style="font-family: Georgia, Times New Roman, serif;"><!--div class="list1"-->• The right to a fair
and just tax system.</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><o:p></o:p></span></div>
Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-9509278851879768692014-06-04T12:32:00.000-04:002014-06-04T12:32:05.216-04:00Waiver of Privilege:Sharing Information with Deal Team in Tax PlanningIn <u>Schaeffler v. U.S.</u>, the taxpayer filed a motion to quash the U.S.'s request to discover information that was shared between lawyers, financiers and accountants under the attorney work product doctrine. <br />
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In short, the taxpayer owned a limited partnership that was funded by a consortium of banks to purchase a target company. Shortly, after the target company was acquired, the share price dropped significantly, and the taxpayer, the banks and the partnership were required to restructure. As part of the restructuring, the parties entered into an Attorney Client Privilege Agreement ("ACPA") and retained EY and Dentons US, LLP to assist with the restructuring. The U.S. sought via summons all documents shared under the ACPA.<br />
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First, the Court ruled that, although the banks had an large interest in the partnership's tax treatment, there was no common interest, so the common interest rule did not apply. In order for the common interest rule to apply, there must be: (1) a common legal, rather than commercial, interest, and (2) the disclosures were made in the course of that common legal goal. The Court held that the banks' interest was primarily commercial in that they were interested in how much they would have to finance to pay the tax burden. As such, their interest was commercial, not legal, and there was no attorney-client privilege.<br />
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The Court also rejected the work product argument as applied to EY in that the restructuring plan formed by EY was not in anticipation of litigation. The Court used the standard of whether EY would have created the document containing the opinion in a similar form even if litigation or an audit had not been anticipated. The Court found that EY would have had a legal duty to create similar memorandum under a similar form. The Court reasoned that Circular 230 and Treas. Reg. 1.6694-2(b) require tax practitioners in providing tax advice to base their opinions on all legal issues and risks regardless of anticipated litigation or audit. As such, EY was legally bound to provide a similar analysis even if an audit was not anticipated. <br />
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In this Office's opinion, the Court's opinion makes any tax advice from a non-lawyer to a client non-privileged because the tax practitioner must consider legal arguments and risks in formulating an opinion under Circular 230 and the regulations. Clients would be well advised to use law firms in place of accountancy firms in analyzing the risks of business transactions.<br />
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<u>See</u> <u>Schaeffler v. U.S.</u>, 1:13-cv-4864 (SDNY May 28, 2014)Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-4487845310785475862014-05-28T16:58:00.000-04:002014-05-28T16:58:53.490-04:00Zwerner Willfully Failed to File FBARs<span style="font-family: Georgia, Times New Roman, serif;">Today, a Federal jury found that Carl R. Zwerner willfully failed to file FBARS and
is liable for penalties in those years. <u>US v. Zwerner</u>, CA No. 1:13-cv-22082. Oddly, the
jury held that Zwerner willfully failed to file FBARs in 2004,
2005 and 2006, but not in 2007. This is a substantial win for the government. We will follow up once more is known.</span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-75592288471757678572014-05-20T19:00:00.002-04:002014-05-20T19:15:25.583-04:00WSJ: Great Article on Triple Crowns And the Market<a href="http://blogs.wsj.com/moneybeat/2014/05/20/whoa-nelly-triple-crown-winners-are-bad-for-stocks/" target="_blank">http://blogs.wsj.com/moneybeat/2014/05/20/whoa-nelly-triple-crown-winners-are-bad-for-stocks/</a><br />
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<br />Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-37589187161273303602014-05-19T17:18:00.000-04:002014-05-19T17:18:11.264-04:00Credit Suisse Is Charged by DOJ<span style="font-family: Georgia, Times New Roman, serif;">The U.S. filed charges today against Credit
Suisse in Virginia for conspiring to help American taxpayers evade taxes through the use of secret offshore accounts. </span><span style="font-family: Georgia, 'Times New Roman', serif;">The
charges were filed as an information indictment that means the defendant agreed to the form of the information indictment pre-filing. Practically speaking, because an information was filed, it indicates that Credit Suisse and the U.S. have already negotiated a plea agreement; however, it is still subject to the Court accepting the plea and then entering a form of sentence/punishment. </span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-59897897818436683792014-05-15T14:28:00.000-04:002014-05-15T14:28:38.503-04:00Jury Soon to Determine "Willfulness" in FBAR Case<span style="font-family: Georgia, Times New Roman, serif;"><span style="font-size: 9pt;">In the case of </span><u style="font-size: 9pt;">United
States v. Zwerner</u><span style="font-size: 9pt;">, a federal jury will determine whether a taxpayer acted willful in the failure to file FBAR reports. Seldom has t</span></span><span style="font-family: Georgia, 'Times New Roman', serif; font-size: 9pt;">his issue </span><span style="font-family: Georgia, 'Times New Roman', serif; font-size: 9pt;">been litigated, and not recently. For international practitioners, this shall be a closely watched outcome. </span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-69969032710519261382014-04-21T11:40:00.003-04:002014-04-21T11:41:58.041-04:00Expired Research & Development Tax Credit Clips Google's ProfitFor a large company, tax rates and applicable credits can have a major impact on profitability. The expired research and development tax credit that Google lost shaved 2% off its profitability. For a company with billions in revenue and profits, 2% is not insubstantial. Proper tax planning and knowing your business's tax planning is a must. <br />
<br />
wsj<a href="http://online.wsj.com/news/articles/SB10001424052702304626304579509523971197320?KEYWORDS=google+taxes&mg=reno64-wsj">http://online.wsj.com/news/articles/SB10001424052702304626304579509523971197320?KEYWORDS=google+taxes&mg=reno64-wsj</a>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-86624819320381138752014-04-16T17:37:00.001-04:002014-04-16T17:38:20.107-04:00Funding ESOPs with S Corp ProfitsBelow is a link to an interest article from the WSJ that discusses a corporate structure to use S Corp profits to fund ESOPs. Obviously, the ESOP that wholly owns a profitable S Corp can provide a large funding opportunity for an owner's retirement. Planners need to watch the <u>Austin v. Comm'r</u> case development closely and pay attention Rev. Ruling 2004-4 to avoid potential challenges. <br />
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<a href="http://online.wsj.com/news/articles/SB10001424052702304419104579324851519855352?mg=reno64-wsj">http://online.wsj.com/news/articles/SB10001424052702304419104579324851519855352?mg=reno64-wsj</a><br />
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<br />Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-85288674861079368092014-04-13T12:59:00.000-04:002014-04-13T12:59:16.226-04:00Post and Courier Article on Cooper Client in Latham Case<h1 class="story-title" style="background-color: white; border: 0px; font-family: Palatino, 'Palatino Linotype', Cambria, Georgia, serif; font-size: 30px; line-height: 32px; margin: 0px 0px 20px; outline: 0px; padding: 5px 0px; vertical-align: baseline;">
Latham case co-defendant may get pre-trial diversion</h1>
<ul class="meta clearfix unstyled block" style="background-color: white; border: 0px; color: #666666; font-family: 'Lucida Grande', 'Lucida Sans Unicode', 'Lucida Sans', Verdana, Tahoma, sans-serif; font-size: 12px; line-height: 12px; list-style: none; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
<li class="meta-byline ddown" style="background-color: transparent; border: none; clear: both; display: block; margin: 5px 0px 10px; outline: 0px; padding: 0px 5px 0px 0px; position: relative; vertical-align: baseline; width: 600px;"> by natalie caula HAUFF<br />ncaula@postandcourier.com</li>
<li class="meta-date red" style="background-color: transparent; border: 0px; clear: both; color: red; display: block; margin: 5px 0px 10px; outline: 0px; padding: 0px 5px 0px 0px; position: relative; vertical-align: baseline;">Posted: March 28, 2014</li>
</ul>
<section class="story-body clearfix" style="background-color: white; border: 0px; color: #333333; font-family: 'Lucida Grande', 'Lucida Sans Unicode', 'Lucida Sans', Verdana, Tahoma, sans-serif; font-size: 14px; line-height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">One of the co-defendants in a Charleston murder-for-hire case that targeted a former bank executive’s estranged wife might not go to prison. Rachel Palmer of Louisville, Ky., was recommended for a pre-trial diversion program, according to court records. Her boyfriend, 38-year-old Samuel Yenawine, also of Louisville, also was charged in the case.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Yenawine was accused of being hired to kill Nancy Cannon, who was married to Chris Latham, 51, of Charleston at the time. Yenawine killed himself at the Georgetown County jail while awaiting trial.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Yenawine sent Palmer, who was pregnant at the time, a suicide note apologizing to her and expressing his love, according to a State Law Enforcement Division report.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Palmer was indicted with three counts for her alleged involvement in the scheme. She did not travel to South Carolina but was aware Yenawine had been hired for the plot to kill Cannon, according to court testimony. It remains unclear what other involvement she may have played but during Moore and Latham’s trial, she did not testify and little was mentioned of her.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Latham and his girlfriend, 38-year-old Wendy Moore were convicted for their roles in the plot. Another co-defendant, Aaron Wilkinson, 40, of Louisville, Ky., whose impromptu confession in April 2013 foiled the plan, was sentenced to four years in prison Wednesday.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Palmer’s attorney, <b style="background-color: transparent; border: 0px; color: rgb(177, 1, 18) !important; margin: 0px; outline: 0px; padding: 0px; text-decoration: underline !important; vertical-align: baseline;">Lindsey</b> <b style="background-color: transparent; border: 0px; color: rgb(177, 1, 18) !important; margin: 0px; outline: 0px; padding: 0px; text-decoration: underline !important; vertical-align: baseline;">Cooper</b>, of Charleston, requested Wednesday that Palmer, be removed from house arrest and electronic monitoring, according to court records.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Palmer has been on house arrest since May 28, 2013, and “has been completely compliant and cooperative,” the request stated.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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In his request, <b style="background-color: transparent; border: 0px; color: rgb(177, 1, 18) !important; margin: 0px; outline: 0px; padding: 0px; text-decoration: underline !important; vertical-align: baseline;">Cooper</b> stated Palmer is the only defendant left in the case and has been recommended for pre-trial diversion.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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If Palmer is approved to enter the pre-trial program, the court would decide the level of supervision, which could include employment, counseling, education, job training or psychiatric care, according to the U.S. Department of Justice.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Many courts have required restitution or forms of community service as part of the pre-trial program.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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If Palmer were to successfully complete the program, the U.S. Attorney’s Office would then decline prosecuting her.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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<b style="background-color: transparent; border: 0px; color: rgb(177, 1, 18) !important; margin: 0px; outline: 0px; padding: 0px; text-decoration: underline !important; vertical-align: baseline;">Cooper</b> could not be reached for comment Thursday.<div style="background-color: transparent; border: 0px; margin-bottom: 18px; margin-top: 18px; outline: 0px; padding: 0px; vertical-align: baseline;">
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Reach Natalie Caula Hauff at 937-5594 or Twitter.com/ncaula.</section>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-50914472253799147962014-04-11T15:37:00.000-04:002014-04-11T15:38:08.527-04:00<b>Taxpayer Don't Forget to Report Foreign Financial Assets and Accounts:</b><br />
<b><br /></b>
With the tax return filing deadline fast approaching, taxpayers should not forget to report any foreign income or financial assets on their tax returns. Foreign dividends and interest must be disclosed on by checking the box on your Schedule B, and foreign income from trusts and gifts should be disclosed on the Form 3520. Even certain foreign assets totaling greater than $50,000.00 that are income producing or not must be disclosed on the Form 8938, Statement of Foreign Assets. Many tax return preparers in the past failed to ask clients if they had foreign income and assets, and such mistakes are less common with the prevalent media of the IRS's collection efforts against foreign assets. However, don't get unwittingly caught because the penalties for non-reporting are stiff.<br />
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Moreover, FBAR disclosures must be made this June 30th electronically to the U.S. Treasury through the following website: http://bsaefiling.fincen.treas.gov/main.html. It is not much comfort that the website is entitled, "Financial Crimes Enforcement Network." <br />
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If you have questions about foreign income or asset issues, feel free to contact us. <br />
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<br />Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0tag:blogger.com,1999:blog-5217157805896667398.post-45552384350624587672014-04-09T19:35:00.000-04:002014-04-09T19:35:28.200-04:00<span style="font-family: Georgia, Times New Roman, serif;"><b>No Taxpayer Refunds: Supreme Court Rules that Severance Payments Are Subject to FICA</b></span><br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">If you have followed this blog, we have been writing on the closely watched <u>Quality Stores</u> case involving the taxability of severance payments (<u>United States v. Quality Stores Inc.</u> (<u>In re Quality Stores Inc.</u>), 6th Cir., No. 10-1563, petition for rehearing filed 10/18/12). </span></span><span style="font-family: Georgia, 'Times New Roman', serif;">The Sixth Circuit held that payments a company made to employees as part of the company's severance program were not subject to tax under the Federal Insurance Contributions Act (FICA) . This decision was appealed, and the Supreme Court decided to resolve the issue because of the Circuit split.</span><br />
<span style="font-family: Georgia, 'Times New Roman', serif;"><br /></span>
<span style="font-family: Georgia, 'Times New Roman', serif;">Unfortunately, on March 25, 2014, the Supreme Court ruled that severance payments (or SUB payments) were subject to FICA tax and withholding. Even the Supreme Court did not take pity on those who were, are or will be severed from their employment.</span>Lindsey W. Cooper Jr.http://www.blogger.com/profile/06882928685695331619noreply@blogger.com0