Donations to Haiti Relief Via Online Gambling Websites

Posted on January 26, 2010 by Russ

I’ve received quite a few inquiries asking about making a donation to Haiti earthquake relief via an online gambling website. Here’s the latest:

An online poker site is saying that if I transfer funds to a specific account, they’ll use the money for earthquake relief in Haiti. Would such contributions be tax deductible?

The answer is no: Contributions made through an online poker website are not tax deductible.

In order for a contribution to be tax deductible, you need proof of the donation: A canceled check or a credit/debit card receipt (or a charge listed on your credit card statement). Congress just last week authorized “texting” contributions that are delineated on your cellular phone bill as allowable charitable contributions for Haitian earthquake relief. But a contribution via an online gambling website does not meet that standard.

You do not obtain a receipt. Yes, you may show a record of the transfer to the specific Haiti Earthquake Relief Account, but in the eyes of the IRS (and Congress, which wrote the law) that’s not good enough.

I don’t mean to discourage such charitable contributions; earthquake relief in Haiti is a good cause. However, if you make a contribution via an online gambling website don’t expect to be able to deduct the contribution as a charitable donation on your tax return.

President Obama signed the legislation that allows you to take allowable charitable contributions for earthquake relief in Haiti on either your 2009 or 2010 tax returns. Remember, you can’t take them twice. Also, it’s likely that most states will not conform with this legislation.

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Government 2, Democrat 0, Republican 0

Posted on January 24, 2010 by Russ

Roger Corbin was a founding member of the Nassau County (Long Island, New York) Legislature. He was arrested last year and accused of filing false federal tax returns and lying to agents of the FBI and IRS. He allegedly received $226,000 from developers—checks made out to “Cash”—and deposited them in his personal account. He then allegedly ‘forgot’ to include them on his tax return. He compounded this by then allegedly lying to government agents.

His attorney, Thomas Liotti, told the Associated Press that he will plead guilty to tax evasion on Monday. Mr. Liotti, a Democrat, was defeated in his re-election bid last fall.

Across the Hudson River, another politician is in trouble. Leonard Kaiser, the former Republican mayor of North Arlington, New Jersey, and the former executive director of the Bergen County Utilities Authority and the Meadowlands Commission, pleaded guilty to tax evasion. Mr. Kaiser’s wife also pleaded guilty to a similar charge.

Mr. Kaiser’s troubles stemmed from his 2002 re-election bid. Mr. and Mrs. Kaiser wrote checks from their 2002 campaign fund to Mrs. Kaiser for “salary.” However, New Jersey law doesn’t allow personal use of campaign funds, and the payments weren’t disclosed on campaign financing documents or on their tax returns. Given that the total income involved is $30,000, a minimal sentence is likely.

Public servants indeed.

Posted in New Jersey, New York, Tax Evasion | 1 Comment

Are Registered Warrants (IOUs) in California’s Future…Again?

Posted on January 24, 2010 by Russ

California’s Controller, John Chiang, called California’s cash situation “precarious.” Mr. Chiang called on the legislature and Governor Schwarzenegger to act on the $9 billion of budget cuts by March. The alternative is that California will run out of cash.

If this sounds familiar, it should. This situation happened last year, and led to the bad budget fix last February which included tax increases.

The budget that Governor Schwarzenegger proposed earlier this month has billions of budget cuts in it. However, Democrats in Sacramento showed that they were completely out of touch with both fiscal and political realities when they passed a $200 billion health care plan in the State Assembly. (If this plan should reach Governor Schwarzenegger’s desk, he would undoubtedly veto it.) I do not expect the budget negotiations to go smoothly this year. Indeed, I can’t see a budget passing by March…or May. Even July is optimistic.

The time of easy budget cuts is gone. Most Californians do not want tax increases. It’s time to cut the budget with a chainsaw. Unfortunately, the politicians in Sacramento haven’t figured that out.

Expect IOUs to be issued again in about a month.

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Why Is Iowa Looking at Allowing Major Poker Tournaments?

Posted on January 24, 2010 by Russ

Iowa House Majority Leader Kevin McCarthy (D-Des Moines) is proposing legislation to allow large poker tournaments in ballrooms at the state’s 17 licensed casinos. Given my vocation and avocation I’m always happy to see an expansion of poker in the United States. But the cynic in me did have to wonder if this was done for helping poker or for some other reason.

The cynic in me was correct. Mr. McCarthy is looking at ways of increasing tax revenues to help Iowa’s budget situation. Mr. McCarthy said, “We’re looking at ways that would be win-win for the institutions, the communities and the state.” I’ll translate that: We’re looking at a way of increasing tax revenues. Since I can’t add video poker terminals (that was voted down by the Iowa legislature) this looks like a way I can increase revenues so I can spend more money.

Perhaps I am just a little too cynical about Mr. McCarthy’s motives. However, this appears to be yet another case where the cynics are right.

Posted in Gambling, Iowa | 1 Comment

A Hole in 365

Posted on January 24, 2010 by Russ

Golfer Jim Thorpe was sentenced last week to one year at ClubFed. As we reported last year, Mr. Thorpe pleaded guilty to two counts of tax evasion. Mr. Thorpe has agreed to make complete restitution to the IRS of the taxes, penalties, and interest totaling more than $2 million.

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Payroll Tax Companies & Registration of Tax Professionals

Posted on January 24, 2010 by Russ

The IRS came out with a FAQ on the new regulations of tax professionals. Among the nuggets on the FAQ is that payroll tax companies will have to register (though they may not have to take the competency exam) and that California CTEC practitioners will have to take the new exam. It also appears that California isn’t going to be dropping the CTEC requirements, so tax practitioners who are not CPAs, EAs, or attorneys in California will have dual requirements.

Hat Tip: Roth Tax Updates

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New York: $1 Billion in New Taxes Proposed

Posted on January 21, 2010 by Russ

The headline says it all: Yet another politician who doesn’t understand what voters want. New York governor David Paterson (D) proposed a $134 billion budget that contains $1 billion in new taxes:

  • A $1 increase in the cigarette tax to $3.75/pack;
  • A new tax on sodas of $0.01 per ounce; and
  • 50 speed cameras that will issue tickets at $100 a pop.

Governor Paterson is up for re-election this fall. I suspect voters will remember the proposed budget and the speeding cameras at election time.

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Kansas: E-File or Wait for Godot

Posted on January 21, 2010 by Russ

Kansas announced that if you file a paper return, you could wait 16 weeks for your refund. The Sunflower State is having budget troubles, and the Kansas Department of Revenue responded by not hiring temporary workers for this tax season. The temporary workers normally process the paper returns, but not this year. Full-time employees will have to do them as they have time.

There is an opportunity here if you owe money, though. If you file a paper return, your return may sit gathering dust for four months. That’s quite a bit of float on what you owe. However, if you file a paper return and are expecting a refund, you may be Waiting for Godot.

Hat Tip: Don’t Mess With Taxes

Posted in Kansas | 1 Comment

Are the Democrats in Sacramento that Blind?

Posted on January 21, 2010 by Russ

There was an election in Massachusetts on Tuesday. As I’m sure you’re aware, Republican Scott Brown is the new Republican Senator from Massachusetts. Apparently, Democrats in Sacramento are blind to the obvious.

The voters in Massachusetts, a state more liberal than California, had enough of tax and spend, and the Democrats’ health care plan. They wanted fiscal responsibility. So what happened in Sacramento today?

SB810, a $220 billion healthcare plan, passed on a party-line vote today in Sacramento. The bill would create a one-payer system, is far more intrusive than any of the proposals in Washington, and is one that would officially bankrupt California. The good news is that it is extraordinarily unlikely that Governor Schwarzenegger would sign the measure.

Still, why this measure even saw the light of day says a lot about the dysfunction in Sacramento and why I expect more smoke and mirrors to be the “solution” to the budget crisis in the state capital.

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Senate Passes Haiti Charitable Contributions Bill

Posted on January 21, 2010 by Russ

As expected, the Senate quickly and unanimously passed a bill allowing Americans who make charitable contributions to Haitian earthquake relief to take those charitable contributions on their 2009 tax returns. I expect President Obama to sign the measure very quickly.

As I’ve mentioned before, do not expect conformity in California. Our legislature has its own issues (see the next post), and there are more important things on its agenda.

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