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The World Bank's Doing Business 2010 report lists Singapore, New Zealand and Hong Kong as the top 3 places to do business in the world. The US Ranks number 4. The US's strengths are employing workers, protecting investors and getting credit (this last item makes me wonder about the difficulties in other countries!) The U.S. is closely followed by the U.K, Denmark, Ireland, Canada and Australia.
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In October, existing home sales rose by 10.1% and are now 23.5% above the year-ago rate. Sales were at a seasonally adjusted annual rate of 6.10 million, up from 5.54% in September and a 4.94 million pace a year ago.
Existing single family home sales rose by 9.7% to a 5.33 million pace, while condo sales soared by 13.7% to a seasonally adjusted annual rate of 770,000. Click Here for full article.
Congress has not fixed the Estate Tax. The current estate tax rate is 45 percent with an exemption level of $3.5 million for individuals and $7 million for couples. Unless something is done, in 2010 the rate and exemption level will fall to zero and then jump up to 55 percent and $1 million, respectively, in 2011.
In order to collect more money to pay for their profligate spending many states are hiring collectors and placing judgments against taxpayers who owe taxes. Many states are trying to declare businesses as being resident of their state and therefore requiring them to register and pay taxes with the state. New York is leading the attack, but others are quickly following suit.
First time home buyers receive a $8000 credit for purchase made before April 30, 2010.Existing homeowners who have lived in their home more than 5 years (out of the last 8) can get a $6500 credit.The credit is for couples with Adjusted Gross Income of less than $250,00 ($125,000 for individuals.)The house purchased must be less than $800,000 The purchaser must be over 18If the house is purchase prior to the tax return filing, it may be considered as purchase prior to December 31 of the previous year and included in that years tax return.
IRS Employee Going to Jail for Stealing Money from Mail!
An IRS employee in Kansas City opened taxpayer mail and stole cash payments. Even though she is going to jail, the poor victims are out of money! This should act as a reminder to NEVER MAIL CASH especially to the government,
As unemployment climbs to new highs, President Obama is claiming credit for 640k new jobs "created" be spending taxpayer's money. The $1 trillion dollar stimulus went to big banks and union industries that are rapidly lowering their workforces and eliminating jobs. The money is taken from individuals and small businesses that increase productivity and sent to Washington and the big banks. No country has every taxed and spent its way to riches and it cannot happen now!
IRS Increasing Audits of Businesses with Subcontractors!
The Wall Street Journal reported today the IRS is attacking business. Established and growing companies are being audited by the Internal Revenue Service to force compaies to treat independent contractors as employees. Construction subcontractors, cable installers, drivers, dancers, and other normal independent contractors are being argued as employees. All businesses should have their tax attorney review there employee and independent contractor agreements and documents.
New Jersey government has raced towards the goal of being the worst place in the country for business. The highest real estate tax, aggressive tax administration and ridiculous regulations combine to make New Jersey a poor choice for new business. The "nonprofit, nonpartisan Tax Foundation's...annual State Business Tax Climate Index found the state's tax structure was the least hospitable to economic growth, and its survey of census data on property taxes found New Jersey's were tops in the nation." the Atlantic City Press.
Economist Arthur Laffer warned the Federal Reserve and the government may have avoided financial disaster last year current policies may be leading us into a second Great Depression. Laffer believes Federal Reserve Chairman Bernanke desperately wanted to avoid the mistakes of the 1930s by not creating a “tight money” economy which prolonged the Great Depression.
Laffer credits the Fed for keeping Fed Fund rates close to zero, but warns that is was not tight money and higher interest rates alone that caused the Great Depression to become so bad and last so long. Laffer said in a Wall Street Journal article this week that protectionist trade policies and big tax hikes are what ultimately turned a recession into the Great Depression.
It began with the Smoot-Hawley trade legislation that slapped tariffs on foreign goods, which quickly triggered a huge response of trade retaliation by the United States global trading partners. This trade war paralyzed U.S. and global economies. Then, State…
At the end of the second quarter, 4.3% of all residential mortgages were in some part of the foreclosure process, up from 3.85% at the end of the first quarter and 2.75% a year ago. In addition, on a seasonally adjusted basis, 9.24% of all mortgages were delinquent (behind by at least one payment), up from 9.12% at the end of March, and just 6.41% at the end of June 2008.Both were records since the Mortgage Bankers Association (MBA) started keeping track back in 1972. On a non-seasonally-adjusted basis, the delinquency rate was not quite as bad at 8.86%, but still a record.That means that 13.16% of all residential mortgages (NSA basis) are in trouble. Click Here for full article.
The Internal Revenue Service has released a new version of Form 656-B, “Offer in Compromise Booklet,” and a revised Form 656, “Offer in Compromise.”
The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to access the offer-in-compromise application without printing or sorting through the offer booklet.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability. Under certain circumstances, the IRS has the authority to settle federal tax liabilities by accepting less than full payment.
Simply filling out the form is not enough! Your tax attorney must p…
Small tax-exempt organizations must file Form 990-N
The IRS and the Treasury Department have issued final regulations clarifying how and when certain small tax-exempt organizations must file an annual electronic notice.
The final regulations finalize the temporary regulations without substantive change and affect small tax-exempt organizations whose annual gross receipts are not normally in excess of $25,000. They may be required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ.
The Pension Protection Act of 2006 added this filing requirement to ensure that the IRS and potential donors have current information about tax-exempt organizations.
The first e-Postcards were due in 2008 for tax years ending on or after Dec. 31, 2007. The e-Postcard is due every year by the 15th day of the 5th month after the close of the organization's tax year. For example, if the organization’s tax year ended on Dec. 31, 2007, …
House Democrats agreed yesterday to raise taxes on the wealthy to pay for more government control of the nation's health-care system, proposing a surtax that would send the top federal tax rate toward 45 percent.
The top federal tax rate currently stands at 35 percent, but Democrats have vowed to raise it to 39.6 percent next year, when cuts enacted during the Bush administration expire. Combined with other federal tax adjustments, the surtax could leave most taxpayers with annual incomes more than $350,000 facing top federal rates of at least 45 percent. There are additional increases in Medicare tax to apply to capital gains.
The Democrats controlling the House and Senate are lining up to support hefty tax increases in the midst of an economic downturn. Most increases under consideration would go into effect next year. Capital gains will have a "Medicare" tax. The top rate will exceed 40%. Higher income earners will face more penalizing tax increases. All of this will be done in the name of "health care reform."
The Senate conducted Hearings for "Transparancy" for corporations and LLCs. This means the Government wants to know everything about small business so it can tax and control every aspect. The Representative from the DOJ said that federal legislation must include four components: (1) law enforcement must have access to the names and contact information for those who have control over a company and the company's assets; (2) define "beneficial owner" the same across all 50 states and collect name, address and photo ID from ALL recognized as beneficial owner, (3) obtain beneficial ownership information in an accurate and timely fashion which means it must be maintained on site in the state of formation, and it must be updated any time info changes and it must be certified annually, and (4) there must be a federal enforcement component. The purpose of this is to regulate and control every aspect of business by the government. This means setting-up a business will beco…
The CARD Act, the Credit Card Accountability, Responsibility and Disclosure Act,signed into law on May 22, 2009, supposedly will provide increased consumers protection.Most of the changes go into effect after February 22, 2010. Already, many credit card issuers have increased rates, fees and have taken an immediate defensive posture. Probably, when CARD takes effect, the Banks will have worked around the so-called protections. Hopefully, not too many people will be shut out of credit cards.
The "Payer" in "Single Payer" Health Care is you! Congress hates telling the truth. Rather than calling government controlled and no choice healthcare the true term, "socialized Medicine," they call it "single payer." Remember, the payer is YOU, the taxpayer! Cong. Rob Andrews (D--NJ), who by the way is not a bad guy and is really hard-working for his constituents, is holding Congressional hearings as Chairman of the Healthcare Committee on the "single Payer" system. Watch out! RJC
Reneging on his campaign promise, Pres. Obama announced he wants to tax employer provided health insurance benefits. This means the value of health benefits will be reduced for employees because they will have to pay tax on income they do not actually receive. ...More
The US government is searching for ways to grab money from US-based businesses. Even though most of the top US businesses are global, Pres. Obama and Congress want to tax money wherever earned. Businesses have reacted by moving more of their affairs overseas. With this new attack, expect more high level business and financial jobs to leave the US. ...More
House Prices keep Declining The Case-Shiller Index of the housing industry showed a 19% year-over-year decline. The Case-Shiller report shows many regions have revisited 2002 prices. Some geographic areas are seeing prices going back to those in the year 2000.Real estate, on average, has declined by 32% from its second quarter 2006 highs. Some areas like Las Vegas and Phoenix, according to Case-Shiller, are off more than 50%!
Mortgage Loan Modifications Are you getting threatened with a potential mortgage foreclosure? Having your attorney negotiate a loan modification can help change some the terms of your mortgage. For example, a lowered interest rate may make your monthly payment more affordable to help avoid foreclosure. Sometimes, past due payments can be rolled into the package to keep you current....More
Business Capital Expenses -2009 Many clients are weighing the advantages of buying a piece of equipment in this tight economy. As tax lawyer, I can develop a cost-benefit analysis to compare purchasing versus leasing the equipment and help determine whether the after-tax expenditure is likely to be worthwhile given the projected additional business the equipment would bring. ...More
Bad Economy = Good Time to Buy a Business! The current depression/recession is has been a disaster for many businesses. Companies, both large and small, are unloading assets and cutting staff. This may be the perfect time to start or expand a business to take advantage of some good opportunities. Acquiring a struggling rival business, hiring talented experienced people and growing your market share. A business resources can focus on opportunities like these to improve its competitive position at fire-sale prices. Click here
Under new Code Section 6050W, a business client who accepts payment cards will receive annual statements from the banks or other organizations issuing the cards showing the gross amount of card payments made to the client. The bank or other organization will also have to report the payments to the IRS.
While the new payment card reporting requirement will not apply until 2011, a new notice from the IRS reveals some of the issues the IRS is grappling with in implementing the new rule. For example, while the law and committee reports make it clear that the new reporting rule will apply to both credit and debit cards as well as payment through third party networks such as PayPal, the IRS indicates that it is weighing how to interpret the exact definition and scope of "payment card."
The IRS is also considering whether the current Form 1099 should be used for credit card payment reporting and, if so, whether the timing of such reports should conform to the c…
The National Association of Realtors reported median home prices fell 14% year over year. This is a cumulative 26% decline from the peak in the third quarter of 2005. It has been nearly three-and-a-half years since the 2005 peak in prices. Are we finally close to a bottom in price declines?
The IRS requires many small tax-exempt organizations to file their annual electronic informational return with the IRS by the May 15 deadline.This is the second year of the new requirement for tax-exempt organizations whose gross annual receipts are normally $25,000 or less to file Form 990-N also known as e-Postcards.
The May 15 deadline applies to all small organizations whose tax year ends on Dec. 31. Organizations whose tax year is different from the calendar year must file the e-Postcard by the 15th day of the 5th month after the close of their tax year.
Fulfilling his campaign promise to increase taxes on US multinationals, Pres. Obama Attacks Businesses. His goal is to hamper US businesses by taxing income earned in foreign countries as if it were earned in the US. "If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama overtly threatened Banks and businesses. Even though this creates even greater incentives for businesses to leave the US, Obama is pretending to "do something."
The Obama Administration's new Labor Secretary, Hilda Solis, screamed to Union workers "You can rest assured that there is a new sheriff in town." Solis proclaimed at a recent AFL-CIO conference that she is going to radically step-up enforcement of the anti-employer wage and hour laws. Even though the Bush Administration started a record number of Fair Labor Standards Act (FLSA) claims over the past few years and jaw-dropping wage and hour settlements (the average hovering around $24M), Solis is set to hire 250 new wage and hour field investigators. Further, President Obama hopes to increase the Depart of Labor funding for 2010 by $600M. In short, the government is pushing for a major overhaul of wage and hour law enforcement to attack more small businesses.
The government declared more than 70% of employers are estimated to be routinely violating wage and hour laws. Businesses should call their lawyers now to make sure they …
The Stock Market has rallied since March 10. Is this a short term improvement in a Bear Market? Unless we see some positive progress in the real economy, the stock market cannot sustain the upward movement. The economy is lousy with construction at a low and many small businesses recording their worst year ever in 2008 continuing into 2009. One major reason the economy remains stalled is taxes are rising rapidly in individual states and the federal government to support government spending like drunken sailors. Amid all of the bailouts, the backstops, the guarantees, and the ongoing promises of aid, we are seeing a dramatic decline in federal and state government revenue (because of the bad economy). It is just worrisome to see more and more promises from the government against the backdrop of such a weakening economy! When will people learn that if you tax something you get less of it and if you subsidize something you get more of it? Let's stop more…
Smaller companies were audited 41 percent more often in 2007 than in 2005, and companies with $10 million to $50 million in assets were 29 percent more likely to be audited in 2007 than 2005, according to a study by Syracuse University's Transactional Records Access Clearing House. Meanwhile, the TRAC study showed that companies with more than $250 million in assets were nearly 40 percent less likely to be audited than in previous years. Click Here for the full article.
[4/21/09 – 10:14] In a 5-4 decision this morning, the United States Supreme Court announced a major change to the law related to the search of a motor vehicle following the arrest of a recent occupant. In Arizona v. Gant, the Justices ruled that police may search a motor vehicle following the arrest of a recent occupant only if the arrestee is unsecured and within reaching distance of the passenger compartment at the time of the search. The Court also ruled that a search for evidence inside the vehicle following an arrest will be considered constitutionally valid only when it is reasonable for the police to believe that evidence relevant to the offense triggering the arrest might be found within the vehicle. The facts in Gant involve a driver who was stopped by the police and arrested for driving on the revoked list. The police removed him from the vehicle, and secured him inside of a police car. The police then conducted a search of the vehicle incident to t…
The American Recovery and Reinvestment Act of 2009 (ARRA) provides individual taxpayers potential net operating loss (NOL) deductions. The IRS has provided opinions stating the ARRA applies to individuals. An “Eligible Small Business” can elect to carry back a 2008 NOL for up to five years. The IRS has broadly interpreted the definition of such businesses. Call Ronald J. Cappuccio, J.D., LL.M.(Tax) at (856) 665-2121 if you need some guidance on the NOL changes.
On this day in 1866, the Republican-majority 39th Congress overrode a veto by the Democrat president, Andrew Johnson, to enact the 1866 Civil Rights Act. Every Democrat in Congress voted against it.
The purpose of the 1866 Civil Rights Act was to defend African-Americans from their Democrat oppressors in the post-Civil War South. There, Democrats had enacted black codes to impose near-slavery on African-Americans who had just been emancipated by the Republican Party's 13th Amendment.
Senator Lyman Trumbull (R-IL) wrote the 1866 Civil Rights Act, which conferred U.S. citizenship on former slaves and other African-Americans. The law guaranteed African-Americans "full and equal benefit of all laws and proceedings for the security of person and property, as is enjoyed by white citizens." Republicans thereby granted African-Americans the right to own property, engage in business, sign contracts and file lawsuits.
Not satisfied with the draconian civil tax penalties for having an unreported foreign bank account, Congress is trying to make Foreign Tax Crimes a Money Laundering Offense - (subsec. 2(g) of the Fraud Enforcement and Recovery Act of 2009) (S. 386). This means if a US citizen does not reveal a foreign account it could be subject to an expensive prosecution and 20 years in Federal Prison!
The IRS is starting to prosecute UBS customers with Swiss and Offshore accounts that have not reported them. On March 28, the IRS issued a directive making this a high priority.
If you are thinking of buying books or consulting services from someone that sells "Asset Protection" by using "secret" offshore accounts and bearer stock, check with your tax lawyer before your do anything!
Filing the revised IRS form 990 is a big burden for Non Profits. Many non-profits are now being required to maintain more sophisticated records and to do complex tax compliance. I anticipate Nonprofits and Churches will be subject to heightened IRS scrutiny and IRS and State Tax audits. Click here for an interesting article.
From 2005 to 2007 the IRS increased audits of the smallest companies - those with assets under $10 million. Internal Revenue Service investigations increased a whopping 41 percent. This is part of the government's attack on small business by the IRS and other government regulators. See the full article.
The Congressional Budget Office has reported the Economic Stimulus Bill pushed by Pres. Obama will actually hurt the US Economy and lower GDP in the long run:
Most of the budgetary effects of the Senate legislation would occur over the next few years. Even if the fiscal stimulus persisted, however, the short-run effects on output that operate by increasing demand for goods and services would eventually fade away. In the long run, the economy produces close to its potential output on average, and that potential level is determined by the stock of productive capital, the supply of labor, and productivity. Short-run stimulative policies can affect long-run output by influencing those three factors, although such effects would generally be smaller than the short-run impact of those policies on demand.
In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as wou…
Instead of an immediate, permenant tax cut which would allow people to spend and invest their own hard earned money, President-elect Obama is proposing a massive increase in government expenditures (and ultimately taxes!) The Washington Post reports:
The package is expected to cost roughly $800 billion over two years. Obama has set ambitious goals for the plan, including a doubling in the production of alternative energy, modernizing 75 percent of the nation's federal buildings, making 2 million homes more energy-efficient, computerizing health records in five years and providing an immediate tax cut of up to $1,000 for most Americans. Obama’s own expert report says: Because it takes time to carry out new spending programs authorized by legislation, we expect the jobs created by spending on infrastructure, education, health, and energy to be concentrated in 2010 and 2011. At the other extreme are funds to protect the most vulnerable, which are generally spent promptly, and tax incent…