Taxing Statistics

With all of the discussion as to who bears the major portion of the actual income tax burden in the US, I found it interesting to consider another kind of tax related burden. These stats from Forbes relate to the burden in time and cost to comply with tax laws in regard to keeping proper records and preparing tax returns.

Self-employed persons with adjusted gross incomes topping $200,000 spend 62 hours a year working on taxes and $1,315 in tax preparation fees, compared with just 34 hours and $393 for similarly paid workers who labor for others, says a new study for the IRS by IBM Business Consulting. Total annual out-of-pocket costs to all taxpayers for tax compliance: $16 billion.

Glossary Of Terms

As with all professions, we in the tax and accounting arena have our own jargon. I have also adopted several other abbreviations and acronyms in order to save time and space when writing and speaking. As a public service, I’ve set up a glossary of the most often used terms. I’ve also added a link to it in the blogroll to the left on this page. If there are other terms that should be included here, please let me know.

As more new acronyms are coined every day, I hope to see glossaries such as this on other web sites. Places like Lucianne.com have developed their own shorthand way of communicating and it slows the discussions down when newcomers are always asking for definitions of such terms as PIAPS (pig in a pant suit) after stories are posted about our next president, Queen Hillary Rodham.

KMK

20/20 Puff Piece

I watched the 20/20 piece on Lynn Meredith, the scamster tax protestor, and the only way to describe the show was superficial. While I have never been reticent about pointing out the left wing bias in most ABC News broadcasts, this was one story in which they took no side. However, when someone is advocating illegal things, it seems like responsible journalism would cry out for the 20/20 staff to make the case that this woman is a criminal. It seemed more like a Robin Leach episode of the Lives of the Rich and Famous as they showed Lynn Meredith’s fleet of expensive cars and her recreated soda shop, complete with antique juke boxes. They didn’t do much to show the down side to Meredith’s criminal actions, other than have to wear an ankle bracelet as she walked along the beach. I can recall a time when the media made a point of illustrating the consequences of choosing a criminal path in life. Just mentioning that another tax protestor had died in prison wasn’t as illustrative as showing some of the convicted tax cheats doing hard time working on a chain gang busting up rocks.

While it may sound like I am most upset with ABC for the way in which they told this story, that’s not the case. The brain trust at the IRS has proved their incompetence once again by refusing to comment on the matter for the show. What imbeciles. As I have been explaining for decades, the tax protestor movement has grown as a direct result of IRS neglecting their responsibility to debunk the bogus claims being made, such as taxes being voluntary and money is not really income. In this country, silence means agreement. Whenever IRS refuses to comment on matters such as this, they are in effect endorsing the other side’s case. They passed up another golden opportunity to clear up a lot of confusion in the minds of the American people as to the legality of the claims being made by Ms. Meredith and her fellow tax protestor scammers. IRS spokespersons could have very easily debunked every one of Meredith’s arguments and followed up with real life stories of people who are in prison for following them.

It’s long been very frustrating that I have to do the IRS’s job for them in explaining how the tax protestor arguments are wrong and dangerous. In a way, it’s almost as if IRS wants the tax protestor movement to grow because they sure aren’t doing as much to stifle it as they could. Maybe it’s part of some scheme to justify even more money and power when the number of flagrant tax violators grows much larger.

KMK

Tax Cuts: Rhetoric v. Reality

Non-Cash Donations

For the first time, I have purchased the CD-ROM version of the QuickFinder reference books that I have been buying for the past 20 years. It looks pretty handy, with PDF versions of both the 1040 and business books, as well as several IRS publications and forms. There are also several worksheets; most of which I don’t need because my tax software already automatically does them. One that should be quite useful, plus covers information that doesn’t show up in QuickBooks, has to do with donating non-cash items, such as old clothes and furniture. It even has some suggested values. I’ve posted that worksheet here on my site.

KMK

Tax-cut pollsters are up to their old tricks.

In typical liberal fashion, pollsters decide what answers they want and then word the questions to achieve those results.

Taxing the Minority

Forty percent of tax payers may pay all federal income tax.

The Smell of Money

Giving a whole new meaning to the need to launder money, these marijuana growers were busted after their bank teller noticed that their cash deposits had a funny smell.

KMK

S Corporations

Lately, I have been receiving a lot of feedback from various people around the country who have read my article describing some of the big differences between C and S corporations, thanking me for pointing out things that other advisors have been ignorant of. One area of confusion still seems to be regarding exactly when a corporation becomes an S. Many people believe that the decision to be an S or a C is made at the time when the corporation is originally formed. That is not true. All corporations, when originally chartered by the State, are C corporations. Do nothing extra and it will remain a C corp.

However, to convert it to an S corporation, the shareholders must all sign and submit Form 2553 with the IRS to request that status. This can be done right away after the corp is originally chartered, or several years down the road. You need to be sure to watch the effective dates of the S election. Some States automatically accept the IRS’s S election, while others require a separate form to be submitted to the State tax agency.

If a corp has been using a fiscal year that ends in a month other than December, it will have to change to a 12/31 fiscal year end if it changes to an S status. If the S status is later revoked, you will not be allowed to change from the 12/31 year end.

KMK

Tax Protestor On TV Tonight

I was just scanning what’s on TV tonight and noticed that ABC’s 20/20 show is doing a profile on one of those idiot tax protestor promoters who claims that taxes are all voluntary and who supposedly makes a fortune selling her garbage to gullible saps. I haven’t seen the show yet; but will try to watch it and report on how accurate it is.

I hadn’t heard of this Lynn Meredith before, but found this report of her arrest in April 2002 for tax fraud. She is supposedly connected to Bob Shulz’s idiotic and illegal We the People group, which I have discussed on several occasions earlier.

KMK