TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Increasing Foreclosure Rates Foreclosures were up 57% from March of last year. Approximately 1 in 538 houses in the U.S. are in foreclosure. Nevada has the worst rate with 1 in 139 homes in foreclosure. California has a 1 in 204 foreclosure rate.Nevertheless, since the bulk of the ARM loans were made in 2005 and 2006, the market is clearing out the problem loans through foreclosure, selling, or walking away.

IRS is Increasing Audit Rates The IRS is greatly increasing the rate of tax audits on higher income taxpayers and businesses. The audit rate started dropping in 1998 because of restructuring at the IRS. It bottomed in 2000, when just 0.5 percent of individual tax returns were audited but doubled that rate by 2007, to 1 percent. Audits of the Wealthy. Audits of those who make more than $1 million a year jumped 84 percent from fiscal 2006 to 2007, according to IRS figures. Those taxpayers have a 9 percent likelihood of being audited. That's nine times as much as the average taxpayer. Small Business Audits. But when it comes to businesses, the IRS is stepping up audits on smaller and mid-sized firms. The IRS targets sole proprietorships that report income on Schedule C with a 6 percent chance of getting audited. "We have increased our focus on mid-market corporations - those with assets between $10 million and $50 million," the IRS said in a statement.

IRS Warns of Scams by Tax Return Preparers! The IRS Reports : "Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true." If you have any questions about promises by a tax return preparer, call Ronald J. Cappuccio, J.D., LL.M. (Tax) at (856)665-2121.

New Jersey Government at the Bottom The Pew Center reports that New Jersey has an extremely poorly run government. Except for Rhode Island and New Hampshire, New Jersey government scored among the worst in the US. That is no surprise to taxpayers who have suffered years of high tax and wasteful spending big government.

Housing Sales Drop 13% House Sales for 2007 fell 13%, to mark its biggest yearly decline in 25 years. Also, median prices FELL by 1.8% nationwide. That was the first national decline in the 40 years that home sales have been tracked! Many economists say that the last time prices fell like that would likely have been in the years that followed the Great Depression in the 1930s.

The Courier Post published my commentary about Ron Paul: Saturday, January 5, 2008 Re: "Republican Ron Paul offers a different choice and new ideas" (Perspectives, Dec. 28). U.S. Rep. Ron Paul, R-Texas, is the only candidate running who actually represents the America of our founding fathers. He promotes more individual choice, the right for you to control your life, not the government controlling you and taxing you into penury. Let's stop the "yes, but" Republicans and the "tax-and-spend" Democrats from overriding the Constitution in the name of "patriotism" or some favored social program. Paul represents a new freedom for all Americans from an overbearing federal government. That is why I am voting for Ron Paul in the Republican Primary. Thank you. RONALD J. CAPPUCCIO Cherry Hill Click Here for the full article.

Lottery Winners Lose! The 11th U.S. Circuit Court of Appeals in Atlanta ruled Dec. 19 that Bertucci and the others around the country who sold their winnings to investment companies must pay income taxes on the lump sum they received instead of lower capital gains taxes. Click Here for more details.