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Posts Tagged ‘IRS’
Friday, July 30th, 2010
About Conrad Murray
Some celebrities are famous for their skill in acting or singing, but not Conrad Murray. Murray is famous for being the doctor to The King of Pop, Michael Jackson, and is now embattled with legal problems for the alleged role he played in Jackson’s death.
It is said that Conrad Murray has a history of owing people money: According to the Huffington Post, Murray’s medical practice owed thousands of dollars in fines and judgments and overdue fees on loans and credit cards. To top of the “nice guy” image, he also owes thousands in child support and even had a fine of nearly $1,000 for driving with an expired license plate and no proof of insurance.
Conrad Murray tax problem
The Huffington Post also reported that Murray owed back taxes so we went hunting for them and found a tax lien of over $23,000 owing in back taxes in 1993, 1996, and 2003.
Tags: celebrity tax problems, conrad murray, Income Tax, IRS, Tax Lien, tax owing, unpaid taxes
Posted in IRS, Tax Lien, Tax Problems | No Comments »
Monday, July 19th, 2010
 In zombie movies, the dead rise from the graves and shuffle around the neighborhood looking to feast on human flesh. This past year, life imitated art (and I use the term “art” loosely), and the dead rose to file tax forms.
Yes, you read that correctly. This past year, 16 accountants in the Bronx and Manhattan were charged with filing numerous income tax returns of a dubious nature. These tax returns included making claims on dependents that were not actually dependent (or even related), and filing the tax forms of deceased people to get tax credits.
You can read the article here.
Fortunately, they were caught by undercover IRS agents who recorded these accountants offering a variety of illegal services.
This is truly a frustrating news story for me because it makes it harder for regular, honest, tax-paying citizens like you and I to get the tax solutions we deserve to our tax problems. For the 16 who were caught, I imagine far more have gone unnoticed and our current “redistribution of wealth” system is taking money from hard workers and funneling to people who would rather file tax returns for dead people than do real work.
[Image source: DanHollisterDuck]
Tags: Income Tax, income tax filing, IRS, tax crime, Tax Crimes, taxes
Posted in IRS, Income Tax, Tax Crimes | No Comments »
Thursday, July 15th, 2010
 Adam Smith wrote the book “The Wealth of Nations”, a massive work that set the tone for employment, economics, and industrialization in the US. Published in 1776, much of Smith’s work is as relevant today as it was back then.
Among his many insightful economic positions, he believed that taxes were a good thing but they should be “certain, and not arbitrary”.
No one here disputes that we shouldn’t have taxes. Taxes are necessary to pay for roads and police and the many other services that come with living in the US. But what we do have a problem with is that the tax code has become a tool to redistribute wealth, taking it from some and giving it to others, ultimately redefining the American Dream into something that looks more like a socialist economy.
Adam Smith believed that taxes should be “certain, not arbitrary” but our taxes right now are anything but certain! Filling out tax forms – accomplished by wading through an overwhelming number of forms and documents – is akin to pulling the lever on a slot machine… but a slot machine that punishes you instead of rewards you!
Smith proposed a flat tax. While I realize that there are many challenges to implementing a flat tax, and there are reasons why a flat tax might not work, it is the most equitable form of taxation because it is certain and knowable. In fact, a flat tax might actually decrease the amount of bureaucracy and expense incurred by the IRS every single year in trying to understand their own tax code and then trying to enforce it.
The Washington Times has a fascinating article that starts by talking about the IRS and how IRS employees are receiving a growing number of threats for trying to enforce Congress’ tax laws but then, on page 2 of the article, it launches into a scathing examination of IRS employee culpability and ultimately concludes with other great thoughts by Adam Smith. Read the full article here.
Tags: Congress, economy, fair tax, IRS, redistribution of wealth, tax, taxes
Posted in IRS, Income Tax, Tax Law | 1 Comment »
Saturday, July 10th, 2010
The IRS wants taxpayers to pay their outstanding taxes. If those taxes aren’t paid, the IRS has a growing arsenal of actions it can take, from garnishing wages to seizing assets.
That’s right, the IRS can and will seize your assets in lieu of your tax payments. Now, don’t think of them as a giant pawnshop where you can get your favorite chair or your mother’s wedding ring back once you’ve paid. The IRS will put your stuff up for auction! Airplanes, boats, vehicles, homes, property, the list goes on and on. (Check out the IRS Auction Site… if you don’t see something you like today, new items are listed regularly, all “donated” by tax payers who are unable to pay their taxes).
Now, more than ever, people with tax problems need to take an active approach to fighting the IRS to clear up their tax issues and their good name. Leaving your tax problem and hoping it will go away could mean that you’ll get a knock at your door and they’ll be asking for the clothes on your back (figuratively speaking)! Wishing that the IRS won’t come after you isn’t much of a game plan, and it isn’t going to work. If you have tax problems, they’re looking for you so they can look through your stuff like a kid with a catalog at Christmas.
[image source: bsabarnowl]
Tags: Income Tax, IRS, Tax Collection, tax owing, unpaid taxes
Posted in IRS, Tax Collection, Tax Problems | No Comments »
Tuesday, June 22nd, 2010
 In poker, the term “grinder” refers to a player who spends their days playing poker. Grinders treat poker like a business, sitting down for 8 hours to play, grinding it out like everyone else might grind out their work at a day job.
Michael Mizrachi’s nickname is “The Grinder” and he does exactly that, “working” at poker in a way that others might work at picking up garbage or running a cash register. And, like the rest of us, he has taxes to pay.
Unfortunately for Mr. Mizrachi, the IRS has recently put a lien on his home for $340,000 in unpaid taxes.
Over the course of his poker-playing career, the young Mizrachi has earned a whopping $6.9 million but, though poor money management and accounting practices, he owes $339,711, and he is facing foreclosure.
For many taxpayers, especially younger ones who begin to make a lot of money quickly in business, sports, Hollywood, or poker, taxes come as a nasty shock. People expect to pay taxes but making a lot of money can bump you up into a higher tax bracket very quickly, resulting in taxes owed that are far greater than you expected. It’s even more difficult to estimate the amount of tax you will owe when you don’t make a regular wage but rather earn your money in fits and starts (as a poker player might win a few times a year or a movie star might earn a few checks a year). Lots of my self-employed clients have this problem.
In Mizrachi’s case, it’s not simply a matter of putting in overtime or asking the boss for a raise. If he plans to continue “running his poker business”, he needs to play… And he needs to win… And he must develop the discipline to pay his taxes – on time.
This is a cautionary tale for those who want to play professional poker, professional sports, get into acting, or be a normal self-employed person: With every single paycheck, estimate the amount of taxes you owe and set that money aside (or pay quarterly) to avoid tax problems down the road.
(Read the full article here)
(Photo credit: plutor)
Tags: Income Tax, IRS, michael mizrachi, poker, poker player, Tax Problems, unpaid taxes
Posted in IRS, Income Tax, Tax Problems | 1 Comment »
Wednesday, May 12th, 2010
Your taxes have been filed. You sit back and relax, and maybe even wait for an overpayment refund. All seems right with the world. But then you get something strange in the mail. A letter from the IRS but you think there must be some mistake: You owe them MORE; or, you get back less than you were expecting.
What should you do? Some might accept it as their unlucky situation, as if their tax return was a slot machine and it came up as three different symbols instead of the 3 lemons you were expecting. I suspect the IRS is banking on this. After all, they are the faceless, bureaucratic giant and you are the lowly person afraid that you’ll open Pandora’s Box of Audits if you say anything.
But you do have options if you don’t like what the IRS is dishing out. The IRS has a system in place for taxpayers to file appeals. It’s with the IRS Appeals office, which is a separate and independent office so you don’t have to deal directly with the people who worked on your return.
When appealing an IRS decision (including your refunds or other things like penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies), you should pull together as much information as you can in order to support your case. And, when appealing, you can represent yourself or have representation from a tax attorney.
For more information about filing an appeal with the IRS, download this IRS-created PDF called
“Your Appeal Rights and How to Prepare a Protest if You Don’t Agree“.
The IRS is a tough, hard organization, but if it has a softer side at all, it’s the folks who work for the Appeals Division.
Tags: appeal, Income Tax, income tax filing, IRS, protest, tax owing, tax refund
Posted in IRS, Income Tax, Tax Problems | 1 Comment »
Monday, May 10th, 2010
In a recent article by Robert Samuelson at RealClearPolitics.com called “How Big a Government Do We Want?“, Samuelson talks about a proposed Value-Added Tax (VAT) which its proponents suggest would relieve the US of its disproportionate tax burden and help to pay the deficit.
While a sales tax SEEMS like a good way to redistribute taxes to everyone who buys (instead of charging higher income taxes to people who earn more money), it is not a good solution. Implementing a VAT is complicated and, as Samuelson suggests, will only increase government.
And that is what concerns me more. Of course I don’t want higher taxes, but a bigger government is even more worrisome – because they create unnecessary spending (case in point: More of our income taxes go towards the federal pension than to education).
What’s the perfect size of government? I want it to be no larger than it was approximately 100 years ago. It want it small, the way it was before the big government era when we thought “the bigger, the better.”
Here’s why: The government is killing us while it benevolently attempts to provide us with a cradle-to-grave safety net:
- It’s killing us with taxes
- It’s killing our spirit of independence and non-government dependence
- It’s killing our “can-do” spirit
The US was founded on liberty and opportunity and both of those things are quickly disappearing as we become overtaxed and then enslaved to debt.
Large groups of Americans now wait eagerly for their government check:
- Farmers
- Corporations
- Earned Income Credit recipients
- Seniors who obtain more in benefits/insurance value than their tax contributions would have ever bought on the open market
The government, through its hand-outs, is creating class warfare, age warfare, and warfare between small business and large business.
- Those that earn more are encouraged to dislike those that earn less.
- Those that earn less are encouraged to be suspicious of those that earn more.
- Those that are older are encouraged to be hyper sensitive to younger folks who don’t want to pay for their benefits.
- Those that are younger are beginning to begrudge the payments they must make to seniors who are better off than they are, or already have their homes paid off, while they also receive extra tax deductions, and in some instances may be excluded from paying property tax on the local level.
- Small businesses looks askance at corporate welfare.
- Large businesses seek to gain preferential tax treatment over smaller competitors.
Everyone SAYS they don’t like taxes and big government, but they’ve already been “bought”. They want everybody else’s government check be reduced or stopped – but they don’t want their government benefits or preferential treatment touched.
Do we have the guts to have a smaller government? Do we have the will to fight for reduced government that may actually cause our own governmental benefits to be cut? As I survey the present landscape, I don’t see much reason to be optimistic.
Tags: Income Tax, IRS, IRS reform, problems with tax, redistribution of wealth, sales tax, smaller government, Tax Reform, taxes, taxes owning, value added tax, VAT
Posted in IRS, Income Tax, Tax Reform | No Comments »
Saturday, May 8th, 2010
The news site Politico.com recently reported about a poll was conducted by Pew Research on how favorably people rated various government organizations.
The good, the bad, and the ugly
Just to give you a range for some context: At the top of this is the Post Office with an 83% favorability rating. At the bottom of this is education, earning only 40% favorability among Americans.
The FBI, Defense Department, and Center for Disease Control all rated 67%. The CIA rated 52%.
Now let’s talk about the IRS
Politico reported that the IRS made the biggest jump, up 9 percentage points to 47%. At first glance, this could be good news for the IRS, but let’s take a little closer look at the poll.
Three problems with these findings
First of all, there’s a 4 point margin of error. So the CIA might only be favored at 48% and the IRS might be favored as high as 51%.
Second, they polled 2,505 people. According to US Census data from July 2009, there just over 307 million people. I did the math. 2,505 is 0.000816% of 307 million people. Now, I’m not a statistician but I do wonder whether or not that is a statistically valid sample. And I wonder who they are asking: Are they asking confirmed taxpayers? Is it an equal representation of “wealthy” people who pay disproportionately higher taxes? Is it middle-income earners Americans? Is it “poorer” Americans? Did they divide it up equally among all the states? I’m not sure how they conducted the poll but we can be sure of one thing: Those 2,505 respondents were the ones who answered – either by picking up the phone or responding to questions at the door. I’m confident that this is not an accurate sample.
Third, they conducted the poll between March 11 and March 21. That’s about one month prior to when people’s taxes are due. The people who know they are getting money back on their tax return are likely going to respond positively. If this same poll was conducted one month later, while people were wading through difficult-to-understand tax forms, I’m sure that the number of folks expressing favorable feelings toward the IRS would have been lower.
So, while the IRS might be happy that it jumped 9 percentage points, let’s also consider that while tax burdens have dropped for some, the reality is the tax burden has become more burdensome for that decreasing number of citizens who actually pay taxes (see my recent blog post about the Tax Freedom Day).
The reality is, no matter how many people view the IRS favorably, the IRS is an aggressive tax collection agency whose only job is collect money. And they are becoming more aggressive as Congress needs more and more money to spend.
Don’t be fooled by recent IRS public relations platitudes about wanting to serve the public. They get paid to collect your money.
Tags: income tax filing, IRS
Posted in IRS | No Comments »
Tuesday, May 4th, 2010
When you don’t pay your taxes, the IRS is on you like ants to a picnic. I know that because everyday I work with people whose tax problems are exacerbated by strong arm IRS tax collection techniques.
But what about people who overpay their taxes? It might seem hard to believe but the IRS had $1.3 billion sitting owed to 1.4 million people who did not file a tax return for tax year 2006. (You can read more about it at this IRS press release). This outstanding amount owed back to taxpayers happens because someone might pre-pay their tax based on quarterly estimates but then they fail to file a tax return at tax filing time.
The problem is, if you didn’t file your income tax within three years you generally forfeit your right to receive that refund. That means the money will not be leaving the U.S. Treasury, and Congress will be able spend it for its many “important” projects.
It doesn’t seem fair does it. The IRS gets a much longer time period to collect any money you owe them, but you get a much shorter time period to collect money from the the IRS that they owe you.
I guess Congress, who makes up these screwy rules thinks it’s fair, but that because it benefits them.
They fix the rules in their favor.
Tags: Income Tax, income tax filing, IRS, irs filing date, Tax Collection, tax owing, tax payments, tax refund, taxes
Posted in IRS, Income Tax, Tax Collection | 1 Comment »
Sunday, April 25th, 2010
I came across this interesting study done on the behalf of the IRS Oversight Board. The study asked participants if they felt it was okay to cheat on their taxes. The study itself has been done since 2002 and over the years, the range of people who feel that it is completely unacceptable to cheat on their taxes usually fluctuates between 84% and 86%. In 2009, 84% of respondents said it was unacceptable to cheat on their taxes.
What I find interesting is that in 2003, only 81% said it was unacceptable to cheat on taxes and in 2008, 89% said it was unacceptable to cheat on taxes.
Along with the answer of “completely unacceptable” (the orange bars in the graphic below), somewhere between 6% and 12% believe that it is okay to cheat a little here or there (the light blue bars, below). And 3% to 5% of respondents believe that you should cheat as much as possible.
You can read the rest of the article at the New York Times.
So I went and dug up the number of tax returns filed to see what this meant in real numbers. Let’s use 2008, because we have all the data we need from that year:
In 2008, according to a report by the IRS, 155 million tax returns were filed. So here’s what it meant for 2008 tax returns:
- 89% of respondents, or 137,950,000 tax returns were completely honest.
- 6% of respondents, or 9,300,000 tax returns had a few cheats here or there in the return.
- 3% of respondents, or 4,650,000 tax returns were as dishonest as possible.
Those are interesting numbers. Here’s my take on them: I believe in paying less tax, but I believe in doing so legally. The IRS needs to be more understanding with people who are having difficulty paying their taxes, and they need to offer them real options to help them with their tax debt.
Most people with IRS problems want to want to pay their tax debt, but if money is tight, they need the IRS to be more willing to work out an arrangement. Whether that’s a payment plan or an Offer in Compromise settlement offer.
And just as importantly, the IRS needs to create ways to reduce the number of income tax cheaters (13,950,000 tax returns have some form of dishonest response).
By being so tough on honest people who are having trouble paying their tax debt, instead of going after the cheaters, the IRS is not doing its job as well as it sould.
Tags: Income Tax, IRS, irs recommendation, tax cheat, Tax Collection, Tax Evasion, tax problem, Tax Solutions, taxes
Posted in IRS, Income Tax, Tax Crimes, Tax Evasion, Tax Problems, Tax Reform, Tax Solutions | 4 Comments »
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