Don't miss out! Get Chief Family Officer's free daily roundup:


WHAT'S HOT RIGHT NOW:

  • Enter to win one of two $25 Target Bean Bag gift cards!
  • Plus, enter to win another Mystery Box Full of Goodies!
  • Rent over 20,000 videos for $1.99 or less at Amazon.


  • Tax rebates going out early

    Update: Don’t Mess With Taxes has a different revised schedule, with direct deposit rebates being completed on May 12.

    Thanks to Living Almost Large for letting me know that I can expect to get my tax rebate early. According to this MSN article, direct deposit rebates will start going out on Monday (four days earlier than the original schedule). What’s more, all direct deposit rebates are expected to be completed by next Friday, May 2 (the day they were supposed to start).

    Tax rebates being sent by mail will start going out on May 9, a week earlier than originally scheduled. But the completion date for mailed rebates remains the same (July 11).

    Comments

    1. Daniel Erasmus says:

      BLOG Comment Posted by Daniel N Erasmus of http://www.dnerasmus.com

      So where does all the money come from to pay for the tax rebates? Well following the Wesley Snipes Tax Story, there is a whole lot more out there for the IRS to collect. Why are they not collecting it? A $350bn annual under collection on money they know is owing! Wesley Snipes is a drop in the ocean.

      Only 0.9% tax returns were subjected to audits by the IRS. That is too little to ensure proper tax compliance. But back to Wesley, and the taxpayer’s angle…

      Wesley Snipes’ position is typical of a targeted high profile taxpayer who did not pay proper attention to basic tax risk management strategies. These include:

      1. proactively reviewing particularly any aggressive or alternate position taken on the payment or non payment of tax based on a specific set of facts;
      2. strategizing around what may happen if the IRS pursues a transaction and what defenses could be raised – which would obviously have been the case with a high profile person like Wesley Snipes – including obtaining legal opinions to support the position taken after careful consideration of all the facts;
      3. ensuring effective communication between the different advisors and the taxpayer to make sure all facts and changing facts are considered and reconsidered to ensure the taxpayer is not breaking the law.

      A strategy may have included obtaining an injunction against the IRS in compelling the taxpayer to submit tax returns in the first place (although difficult to execute), and in that way bringing the dispute to the court sooner than later, so that it does not appear as if the taxpayer is taking the law into his own hands, like many of the tax protestors appear to do. The civil outcome may have been no different, but Mr Snipes may have escaped the criminal penalty imposed on him.

      The lesson here is acting on aggressive advice or direction without building the proper team around you, and managing the risks going forward carefully, will cause much more exposure than in the case of dealing with these issues proactively.

      Taxpayers, particularly businesses and public company taxpayers, must look at the annual IRS Databook to see what trends are developing. Criminal prosecutions and penalties are on the rise – by 10% on 2006 figures, and more corporate taxpayers are being audited, although the overall percentage is still around 1% of corporate taxpayers. Then there is the additional statistic that if you are a Nevada corporation there is a 150% greater chance of being audited.

      All these factors should be considered in any tax risk management strategy, a never ending process.

      Some more interesting statistics from the IRS Data Book 2007:
      4211 taxpayers were criminally investigated;
      2155 were convicted;
      2123 were incarcerated – 81.2% a high percentage.

      These numbers are close to 10% up from the previous years statistics showing that criminal prosecutions for tax related crimes are increasing.

      But then 4211 criminal investigations, out of 189 million tax returns filed where only 0.9% of those tax returns were subjected to an audit, is statistically a low figure (0.002% or 22 in a million).

    class="nolinks"