"I was quoted in the Washington Post on September 16th in Karen Hube's article about the President's new tax proposal. This proposal is very important from a tax perspective to many people whom I consider to be the upper middle class in America and doesn't really tax the truly wealthy."
Click Here for The Washington Post
If you'd like to read the proposal, see the link below.
Click Here for a Section by Section Analysis of the American Jobs Act of 2011
Additional articles quoting LWC on Obama's tax plan:
Obama Fires Up the Debate Over Who Is Wealthy-- The Fiscal Times
Couples Earning $250K/Yr Aren't "Millionaires and Billionaires Abusing Tax Loopholes"-- Business Insider
Monday, September 19, 2011
Wednesday, September 7, 2011
Friday, August 5, 2011
Tuesday, July 26, 2011
Freedom for the Innocent: IRS Relaxes Innocent Spouse Relief Qualifications
The IRS, in a dramatic announcement yesterday, finally repealed the regulations prohibiting the consideration of an application for innocent spouse relief made more than two years after the IRS’ initial attempt at collection. The new rule permits taxpayers to apply for innocent spouse relief at any time during the statute of limitation for the collection of a tax liability, which usually lasts 10 years.
Pursuant to Section 6015 of the Internal Revenue Code, a taxpayer may seek relief from joint and several liability associated with filing joint returns in certain circumstances. Under subsection (f), a taxpayer could seek equitable relief from understatements and underpayments when relief is not otherwise available. This section allows the IRS broad power to reduce or eliminate certain penalties when an appropriate case presents itself. However, this relief was dramatically limited by the Treasury Regulations, which placed a two-year window in which a taxpayer may seek such relief.
As part of the announcement, the IRS also stated that previously rejected applications for innocent spouse relief would be reconsidered, as long as the taxpayer re-files the IRS Form 8857 and the collection statute of limitations for the tax years involved has not expired. Taxpayers with cases currently in suspense will automatically fall under the new rule and do not need to reapply. Further, the IRS will not apply the two year limitation in pending litigation, and may suspend collection on certain judgments.
If you believe you may qualify for relief pursuant to the innocent spouse rules, download and file IRS Form 8857 found at http://www.irs.gov/pub/irs-pdf/f8857.pdf.
Pursuant to Section 6015 of the Internal Revenue Code, a taxpayer may seek relief from joint and several liability associated with filing joint returns in certain circumstances. Under subsection (f), a taxpayer could seek equitable relief from understatements and underpayments when relief is not otherwise available. This section allows the IRS broad power to reduce or eliminate certain penalties when an appropriate case presents itself. However, this relief was dramatically limited by the Treasury Regulations, which placed a two-year window in which a taxpayer may seek such relief.
As part of the announcement, the IRS also stated that previously rejected applications for innocent spouse relief would be reconsidered, as long as the taxpayer re-files the IRS Form 8857 and the collection statute of limitations for the tax years involved has not expired. Taxpayers with cases currently in suspense will automatically fall under the new rule and do not need to reapply. Further, the IRS will not apply the two year limitation in pending litigation, and may suspend collection on certain judgments.
If you believe you may qualify for relief pursuant to the innocent spouse rules, download and file IRS Form 8857 found at http://www.irs.gov/pub/irs-pdf/f8857.pdf.
Tuesday, July 19, 2011
Accrued Taxes During Bankruptcy Not Included in Bankruptcy Estate: Tenth Circuit Joints in Circuit Court Split
Last month we told you about the circuit court split involving the understatement of basis. This month, the Tenth Circuit joined in a split regarding whether taxes incurred during the sale of certain farm assets during a Chapter 12 bankruptcy proceeding are part of the Bankruptcy estate, or are instead incurred by a debtor personally, outside of the protections of the bankruptcy. The court held in U.S. v. Dawes that federal income taxes resulting from the sale of farm assets are not incurred by a Chapter 12 bankruptcy estate.
The facts of the case did not fare well for the taxpayers. Mr. and Mrs. Dawes had a history of not paying their income taxes; specifically, they pled guilty to the crime for taxes due in 1981, 82, and 83. They also failed to pay their taxes for the years 1986, 87, 88 and 1990. This caused the IRS to seek and obtain a judgment for the unpaid tax. The judgment also found that the Daweses had fraudulently conveyed certain assets in an effort to avoid the IRS and other creditors. After the judgment was obtained, the IRS notified the Daweses that it intended to seize certain assets. Before it could, the couple filed Chapter 12.
During the bankruptcy, the Court permitted the Daweses to sell several tracts of farm land to pay off debt, which created certain income tax liabilities. These new tax liabilities were incorporated into their plan for reorganization, which sought to place them in the category of unsecured debt, paid only to the extent funds might be available after priority claims were satisfied.
The Dawses hoped to take advantage of Section 1222, which provides that certain claims otherwise entitled to priority payment (such as claims filed by the IRS), but which are owed to the government as a result of the sale of farm assets, are downgraded to unsecure claims and deemed eligible for discharge. They argued that because the federal income taxes at issue are owed to the IRS as a result of a farm asset sale and were “incurred by the estate,” they may be treated as general unsecured claims.
The issue- whether income taxes flowing from the sale of a farm asset during a Chapter 12 bankruptcy are taxes “incurred by the estate and so subject to downgrade and discharge—is the subject of a circuit court split. The Eighth Circuit says yes; the Ninth says no. The United States Supreme Court granted certiorari on June 13th. Considering the split, the Tenth Circuit found that the taxes incurred due to the sale of the property were the individual liability of the debtor, not of the bankruptcy estate. As such, the Dawses were not allowed to take advantage of Section 1222 and discharge the owed tax.
Do not fail to consider the tax consequences of certain property transfers if you are seeking bankruptcy protection under Chapter 12. The Fourth Circuit has not decided the issue so be sure to discuss this potential problem with your Bankruptcy attorney.
The facts of the case did not fare well for the taxpayers. Mr. and Mrs. Dawes had a history of not paying their income taxes; specifically, they pled guilty to the crime for taxes due in 1981, 82, and 83. They also failed to pay their taxes for the years 1986, 87, 88 and 1990. This caused the IRS to seek and obtain a judgment for the unpaid tax. The judgment also found that the Daweses had fraudulently conveyed certain assets in an effort to avoid the IRS and other creditors. After the judgment was obtained, the IRS notified the Daweses that it intended to seize certain assets. Before it could, the couple filed Chapter 12.
During the bankruptcy, the Court permitted the Daweses to sell several tracts of farm land to pay off debt, which created certain income tax liabilities. These new tax liabilities were incorporated into their plan for reorganization, which sought to place them in the category of unsecured debt, paid only to the extent funds might be available after priority claims were satisfied.
The Dawses hoped to take advantage of Section 1222, which provides that certain claims otherwise entitled to priority payment (such as claims filed by the IRS), but which are owed to the government as a result of the sale of farm assets, are downgraded to unsecure claims and deemed eligible for discharge. They argued that because the federal income taxes at issue are owed to the IRS as a result of a farm asset sale and were “incurred by the estate,” they may be treated as general unsecured claims.
The issue- whether income taxes flowing from the sale of a farm asset during a Chapter 12 bankruptcy are taxes “incurred by the estate and so subject to downgrade and discharge—is the subject of a circuit court split. The Eighth Circuit says yes; the Ninth says no. The United States Supreme Court granted certiorari on June 13th. Considering the split, the Tenth Circuit found that the taxes incurred due to the sale of the property were the individual liability of the debtor, not of the bankruptcy estate. As such, the Dawses were not allowed to take advantage of Section 1222 and discharge the owed tax.
Do not fail to consider the tax consequences of certain property transfers if you are seeking bankruptcy protection under Chapter 12. The Fourth Circuit has not decided the issue so be sure to discuss this potential problem with your Bankruptcy attorney.
Thursday, June 16, 2011
NY Judge Fails to Recognize Lap Dance as Art
Earlier this month, a New York court ruled that entertainers at strip clubs are subject to sales tax, and their performances are not considered choreographed artistic performance eligible for tax exemption. In 2005, “Nite Moves,” an adult establishment in Latham, New York, was audited by the state Division of Taxation and assessed close to $125,000 in sales tax and interest. The club argued that its performances constituted art, and therefore fell within an exception found in the state’s tax code and were not subject to the tax. The state’s assessment was upheld in a unanimous decision by the court.
The nine-page ruling cited numerous elements of tax case law and went into extreme detail defining dramatic or musical arts, choreography, and analyzed whether Nite Moves qualified as a “place of amusement.” At the hearing, the club presented testimony from a cultural anthropologist, who researched exotic dance, visited the club and viewed DVDs of the dancers’ performances. She stated that the shows at Nite Moves, and the lap dances performed in private rooms, were “unequivocally live dramatic choreographic performances.”
The court disagreed. It found that dancers were not required to have formal training, instead relying on videos or tips from other dancers to learn their moves. It ruled that the dances offered at the club did not constitute “’live dramatic or musical arts performances’ within the meaning of the statute.”
So if you are heading up to New York for some adult entertainment, remember to bring some extra George Washingtons to pay your sales tax.
The nine-page ruling cited numerous elements of tax case law and went into extreme detail defining dramatic or musical arts, choreography, and analyzed whether Nite Moves qualified as a “place of amusement.” At the hearing, the club presented testimony from a cultural anthropologist, who researched exotic dance, visited the club and viewed DVDs of the dancers’ performances. She stated that the shows at Nite Moves, and the lap dances performed in private rooms, were “unequivocally live dramatic choreographic performances.”
The court disagreed. It found that dancers were not required to have formal training, instead relying on videos or tips from other dancers to learn their moves. It ruled that the dances offered at the club did not constitute “’live dramatic or musical arts performances’ within the meaning of the statute.”
So if you are heading up to New York for some adult entertainment, remember to bring some extra George Washingtons to pay your sales tax.
Money Matters: LWC on the Radio!
Lindsey's latest appearance on Money Matters is uploaded below:
Listen to Lindsey's radio show below which originally aired in May:
Listen to Lindsey's radio show below which originally aired in May:
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