Former Congresswoman convicted of tax fraud

Corrine Brown, who had represented her district in Florida for nearly 25 years, has been convicted of tax fraud and other charges in connection with a “charity” allegedly set up to provide scholarships to underprivileged youth.  Out of more than 800,000 raised for the “charity”, one scholarship was awarded of $1,200.  Large amounts of the donations were deposited into her personal accounts and those of her associates.  Sometimes tax cheaters get caught.  If you have any questions regarding the tax obligations of legitimate charities, contact a competent tax professional such as an Enrolled Agent or CPA.

Tax break for pet owners?

I can’t tell you how many times over the years I have been asked if veterinary costs are deductible for your pets.  Well, a bill has now been introduced in California that would give a tax credit of 50% of costs for vet bills for your pet cat or dog.  AB 942 was introduced last month.  Roads and bridges all over the state are crumbling from the recent storm damage, the state is facing severe funding shortages for pensions but at least pet owners may have something to smile about if this bill passes.

Don’t believe everything you hear.

This morning I was listening to a home improvement show on the radio and they spent several minutes explaining various tax credits available for doing certain home improvement projects related to energy efficiency.  Just one problem.  All of those credits expired on December 31, 2016.  There is still a credit available for installing solar systems, but the remainder of the energy related credits for hvac, insulation, windows etc. no longer exist.  Moral of the story: don’t get your tax advice from a salesman, instead rely on a competent tax professional such as an Enrolled Agent for your tax questions.

Trumps tax returns

It seems that there is a certain group of people obsessed with the idea of obtaining Donald Trumps tax returns.  This group seems to have been reanimated last week when Rep Bill Pascrell (D-N.J.) wrote a letter to the chairman of the House Ways and Means Committee requesting that they use their authority to request Trumps returns and review them for potential conflicts of interest.  I have seen several articles claiming that congress has the authority to review and release confidential tax information without the taxpayers consent, but they are just plain wrong.

There are certain committees of congress that have the authority to review confidential tax information but not to release it without the written consent of the taxpayer or taxpayers involved.  Here’s the wording of IRC section 6103(f) which deals with the subject.

(f)Disclosure to Committees of Congress

(1)Committee on Ways and Means, Committee on Finance, and Joint Committee on Taxation

Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

2017 Standard Mileage Rates…and other IRS stuff

IRS has announced that the standard rates for mileage for 2017 are 53.5 cents per mile for business use, 17 cents per mile for medical or moving expense, and 14 cents per mile for medical. In a separate announcement, they have stated they will begin processing 2016 tax returns on January 23, 2017. Many due dates are changing for forms and tax returns also. Here’s a link to a blog I wrote for the BBB with more information.

Tax Court rules “cash for keys” payment is not ordinary income.

Cash for keys payments have become fairly common in cases of struggling homeowners facing foreclosure.  To avoid a lengthy and expensive foreclosure process, many lenders offer a cash incentive to homeowners to vacate the property quickly and to leave it in good condition.  Often these lenders issue a 1099-Misc to the homeowner showing that the payment is nonemployee compensation which would be taxed to the individuals as ordinary income subject to self employment tax.  In TC Summary Opinion 2016-74 the tax court again confirms that this treatment is not correct.  In the above case, the CPA for the taxpayers included the payment as part of the sales proceeds of the property and not as ordinary income.  The IRS disagreed and assessed additional taxes against them so they went to court.  The tax court agreed with the position taken by the CPA and not the IRS.  Cancellation of debt income is a complex tax issue.  It pays to have competent tax advice from someone such as an Enrolled Agent or CPA if you are facing this issue.

Giving Tuesday

Let’s see, we just had Thanksgiving, then Black Friday to spend our money at stores, Cyber Monday to spend online, and next comes Giving Tuesday if you still have any money left.  Here’s a link from the IRS with some information about tax deductible donations.  If you have any questions regarding what gifts are deductible, let us know.