California’s Tax Amnesty

Posted on February 13, 2005 by Russ

For those who didn’t file, or those that California thinks didn’t file, there is a tax amnesty underway. To accountants’ dismay, the filing period is concurrent with the tax season (February 1st – March 31st). An excellent article on the amnesty is available here.

If you receive a letter from the Franchise Tax Board, don’t throw it away! This means that they think they didn’t receive a filing (or there is some other situation). Contact your tax professional immediately.

We strongly recommend that you keep your tax filings forever. Although California’s statute of limitations is four years (the IRS’s is three years), California does not have a statute of limitations on debt collection.

I’ll be writing more about California’s amnesty program in the near future.

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HSAs: Will California Conform

Posted on February 13, 2005 by Russ

Health Savings Accounts (HSAs) are an excellent vehicle for saving money on health care and have tax advantages for your Federal tax returns. But California has yet to conform and, based on last year’s experience, probably won’t.

According to this article in the San Francisco Chronicle, State Senator Abel Maldonado has reintroduced legislation so that California conforms to Federal law. We’ll hope that the bill passes (you can follow the progress here), but we’re not holding our breath.

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Board of Minutes and Resolutions (Scam Alert)

Posted on February 13, 2005 by Russ

Having returned from four days in computer netherworld, I ventured to get the mail from my PO Box and found a letter from the “Board of Minutes and Resolutions, Compliance Division.” For just $175, this “Board” promises to do your annual compliance filing (in California, that’s with the Secretary of State’s office; in other states, the Board of Corporations handles this function). If you do it yourself, it costs $25.

It’s a scam, of course, in probable violation of several California statutes — The fraudulent use of corporate ID numbers; Language designed to frighten recipients into acting quickly; Language designed to convince recipients that their service is necessary to maintain compliance with state regulations when it is not; Lack of a true physical address where the business is located on the solicitation form; and
Fraudulent use of multiple private mail box drops to make it appear that they are a government agency.

When you receive an invoice that you aren’t expecting, make sure it’s real. In this case, the envelope noted it was mailed “Standard” rate (formerly bulk rate).

Incidentally, I found lots of information on scam.com — a good source for future reference.

— Russ

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Farrago a la Evasion

Posted on February 9, 2005 by Russ

Our thanks to Roth & Company’s Tax Updates for this article to a Tax Court decision on a frivolous appeal, or, as the Tax Court put it:

Petitioner filed a timely petition in which he sets out a farrago of nonsense as to why the notice of deficiency is invalid and he does not owe the tax determined.

>From Special Trial Judge Powell of the Tax Court, in Currier vs. Commissioner, T.C Memo 2005-21.

Farrago, according to www.dictionary.com, means “an assortment or medley; a conglomeration.”

Oh, Currier lost the case.

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Flat Tax

Posted on February 9, 2005 by Russ

Does anyone believe our tax system is fair and easy to comprehend? I’m a professional tax preparer, and there are sections of the Tax Code that I don’t understand completely (when I run across such an issue, I get help).

Even though it would probably eliminate a good portion of my business, I’m in favor of a fair flat tax. So is Alabama’s Richard Shelby who, according to this story in the Tuscaloosa News plans on reintroducing it in the Senate.

It’s doa in Congress, at least for now.

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“Fired” Judge Gets Last Laugh

Posted on February 9, 2005 by Russ

If you’re ever in court, hopefully you won’t insult the judge. It might come back to bite you.

According to the Arlington (TX) Star-Telegram, Charles Ford and his wife Bivian Brumley were found guilty of tax evasion. Presiding at the trial was US District Court Judge John McBryde. During the trial, Ford and Brumley told the judge and the bailiff, “You’re Fired.”

Any bets on them receiving the maximum sentence (sentencing is May 20th)?

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The Times’ Bias

Posted on February 9, 2005 by Russ

I no longer subscribe to the Los Angeles Times. The Times still has some solid points in its’ favor: a great sports section, and excellent coverage of the entertainment industry. But the bias in its’ political coverage is rampant.

Take this story (registration required), where George Skelton says, “…Finance Director Tom Campbell left open the faint possibility of a tax hike.” But that’s not what he really said: “…my strong advice would be that [tax hikes] would be a mistake. But I really think that is where the debate is likely to be.”

This article, which did not appear on the op-ed page, repeats the standard Democratic line: “[The] ‘reform’ governor cuts benefits for the elderly poor, welfare moms and the disabled who need home care â

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Mississippi Gambling Taxes May Increase

Posted on February 9, 2005 by Russ

One of my practice areas is gambling. It appears that the Mississippi legislature is looking at increasing taxes on casinos, according to this report in the Casino City Times. This will probably be good news for Louisiana’s casinos.

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Thompson Convicted on Tax Evasion Counts

Posted on February 9, 2005 by Russ

The “tax honesty” movement claimed that you didn’t have to pay US income taxes because the IRS was misapplying the law.

Al Thompson was the leader of one group of protesters. Note the use of “was.” His new home will be a Federal institution.

I remember when I hired someone who believed that he didn’t have to pay Federal income tax. He gave me a bunch of forms before he started on his first day, and told me that the income tax was illegal. I showed him to the exit door.

Article: Taipei Times.

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What Causes Deficits: Not Enough Taxes or Too Much Spending?

Posted on February 9, 2005 by Russ

It can be both, of course; however, the National Taxpayers Union says of the Federal budget deficit, it’s too much spending. While Nancy Pelosi states that President Bush and Congressional Republicans have, “completely abandoned fiscal responsibility,” the National Taxpayers Union has a different view.

“Our review of the numbers shows that if Congress had exercised even very modest spending restraint over the past half dozen years, we would have no deficit problem today,” said NTU President John Berthoud.

In this article, Berthoud is quoted that if spending growth had been limited to 3.2%, there would be a surplus.

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