It’s not news that most people complain about having to pay taxes. New Yorkers seem to especially complain about their state and local tax burden. The Tax Foundation, with a database that currently covers the years 1977-2012, interprets the tax burden of individual taxpayers by measuring what they actually spend in local and state taxes. Its. According to its rankings of states with the highest state and local tax burdens, Americans paid an average rate of 9.9 percent in state and local taxes in 2012. Further, the state with the highest state-local tax burden was New York at 12.7 %. In fact, the top three states – New York, New Jersey and Connecticut – have been ranked as the top three in this category since 2005. Not surprisingly, New York’s tax laws are relatively complex compared to other U.S. states. Here are some things to know about taxes in the Empire State.
Red Flags That Attract IRS Auditors
People typically think that the amount of their income is the biggest red flag that attracts an IRS auditor, and they would probably be right. But what are some of the other items on a tax return that may attract their attention? Some say that simple, plain returns are fairly safe and likely to avoid extended scrutiny by IRS auditors. According to the IRS, there are multiple ways a return may end up audited, here are some examples:
Erin Andrews Wins A $55 Million Verdict…Now For The IRS Bill
In early March, after a two-week trial and eight hours of deliberations, a Nashville jury awarded TV sports reporter Erin Andrews $55 million in damages for her lawsuit against a Nashville hotel after she was videotaped in 2008 without her knowledge. Andrews sued for $75 million in damages for negligent infliction of emotional distress and invasion of privacy.
What Is An IRS Levy?
A tax or IRS levy is an administrative action by the IRS under its statutory authority to legally seize property to satisfy a tax debt. This is in contrast to a lien which is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax liability. Obviously, an IRS levy is a frightening proposition to most, if not all, taxpayers.
Discharging, Withdrawing, And Subordinating A Federal Tax Lien
A federal tax lien is the government’s legal claim against your property when a taxpayer neglects or fails to pay a tax debt. A federal tax lien exists after the IRS assesses liability, i.e. puts a balance due on its books, and sends the taxpayer a Notice and Demand for Payment, a bill that explains how much tax is owed. If the full debt isn’t paid in a timely manner, the IRS files a Notice of Federal Tax Lien, a public notice, to notify creditors and other interested parties that the government has a legal right in a taxpayer’s property. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exist:
Pushing It To The Limit: Odd, Unusual And Crazy Tax Deductions
Working at the IRS or representing clients before the IRS has its perks and advantages. Having the opportunity to observe all of the outlandish and bizarre attempts by taxpayers to assert legitimate,valid tax deductions is rare. On one hand, it certainly may involve the observance of a unique form of comedy. Here are some odd, crazy, unusual, and please note, unsuccessful tax deductions:
*Crazy Home Office Deductions
A woman that ran a home business tried to deduct what was basically her home refrigerator. She explained to her tax professional that she kept drinks in the refrigerator for customers and other business associates that came to the home office for meetings. According to the owner, this occurred four or five times a year while the refrigerator was in her kitchen and served her family.
Increased Compliance – Record High Fbars Were Filed In 2015
Do you live abroad? Do you own an asset or bank or investment account that had an accumulated value or total exceeding $10,000 at any time in 2015 (or any year)? If so, you are required to file a Report of Foreign Bank and Financial Reports (FBAR). Thus, if an asset was valued at, or an account totaled, $10,001 for just one day, an FBAR is due and must be filed. The Treasury Department’s Financial Crimes Enforcement Network (FinCen) received a record high 1,163,229 FBARs in 2015. What is surprising is that FinCen data shows that FBAR filings have grown an average of 17 percent per year during the last five years. Over 90,000 taxpayers filed FBARs in 2015.
You Can’t Pay Your Tax Bill In Full? You Have Options…
Taxpayers that have tax liabilities they are currently unable to pay, have options. A knowledgeable and experienced tax attorney can assist and inform taxpayers of all of the options available to settle tax debt. First and foremost, taxpayers should take action as soon as possible, and still file their tax return even if they cannot pay their tax bill in full. The IRS charges penalties and daily interest on unpaid tax bills, thus waiting only increases overall tax liability. After determining and estimating what, if anything, they can pay to settle their tax liability, taxpayers have the following options:
Hulk Hogan Wins $140 Million. Windfall For The IRS (And Lawyers) Too.
A Florida jury awarded Terry Bollea, much better known as Hulk Hogan, $115 million in a lawsuit against Gawker Media for publishing footage of him participating in sexual activity four years ago. Jurors found that the defendant acted with reckless disregard publishing the video and awarded Hogan $60 million for emotional distress and $55 million for economic injury. This could increase as jurors still have to reconvene and deliberate whether punitive damages are appropriate.
Fail to Turn Over Payroll Taxes To The IRS? You Could Be Looking At Jail Time
An employer is required to withhold federal income and payroll taxes from its employees’ wages for payment to the IRS. Payroll taxes such as federal income taxes and FICA (Federal Insurance Contributions Act) taxes, both withheld by an employer, are held in trust until the employer makes a federal deposit of these amounts. The IRS applies a term, “Trust Fund Recovery Penalty” or TFRP, well-known by employers, to describe the fine for employer’s willful failure to remit payroll taxes.