PAUL’S TAX BLOG

As I’ve written previously, we defend a lot of people that have been selected by IRS for examination. Sometimes these exams go well, particularly if the taxpayer has tight records and good explanations, and other times it’s more difficult, such as when documentation is spotty, or the explanations defy logic. Our office is good at dealing with these issues, but recently we were surprised by an audit that had tight records, good explanations, and still is a struggle. The case involves automobile deductions for a business. Most of you are (or should be) aware of the IRS’ requirement that business...

By now you’ve probably seen the headlines and heard the political rhetoric about the new tax law that was enacted yesterday. While a complete discussion of all the aspects of the law is more than I can fit in here (and more than you want to read, no doubt), I want to clarify a couple things. First, let’s talk about “tax cuts”. Despite what you read and hear politicians say, there were only three taxes actually cut in this legislation. By cut, I mean reduced. They are 1) Alternative Minimum Tax (AMT), 2) the estate tax, and 3) Social Security...

I haven’t written anything tax related recently for two reasons. 1) I have been doing a bit of reconnecting with nature and have been spending a lot of my spare time in the eastern sierras, local mountains, and oh yeah, scuba diving. (Fall is my favorite time of year!) and 2) there hasn’t been much tax news to write about. The latter point is due to largely to Congress’ inaction regarding any of the pressing tax issues that must be resolved by year end. The country keeps waiting for some guidance regarding the expiration of the so called ”Bush Tax...

Its now official: The state of California is stiffing everyone it owes tax refunds “until further notice” see http://www.ftb.ca.gov/refund_delay_2010.shtml. The good news is that they were forced to take this action just before the election, so everyone voting can see how dysfunctional our state legislature is. The situation must be dire or the incumbents up for reelection would have surely found a way to paper over it a couple more weeks….. This is especially galling given that we are talking about an involuntary loan (at zero interest) by ordinary taxpayers to the State. It’s your money they borrowed, and now...

Did you know that $203 Million of the Economic Stimulus money that was doled out last year was given to the IRS? Further, it was revealed this week in a report from the Treasury Inspector General that these funds are in danger of being misspent due to continued problems with contract oversight. What a surprise. I know the older I get the more my memory is fading (especially when it comes to my anniversary or my family's birthdays), but it seems to me that the entire premise around the economic stimulus payments was to stimulate the economy by putting money...

Last week the IRS announced that they will no longer be printing and mailing tax forms to individuals. The printed forms will now only be available by internet or from libraries and Government offices. Of course, the reason for this change in policy is to save the taxpayers' money by avoiding printing, handling and postage costs. I think it’s a great idea, but it falls short of its potential. While there is no question that the costs to send out these forms must be significant, the real costs to taxpayers occurs on the return trip. If they really wanted to...