Just as art imitates life, the financial world mirrors the population’s habits. In addition, this logical trajectory includes the Internal Revenue Service – no matter what Americans get up to, the IRS will create a procedure to govern and legitimize it. It’s interesting to note that these bastions of financial civility engage in practices that, when performed by an individual, seem a little distasteful and maybe even desperate. It just goes to show that presentation is truly everything.
Take, for example, a gentleman who has a love for the ponies. When he gets a hot tip, he marches to the pawn shop, sells one of his few valuable possessions, goes to the track and lays his money down. If all goes well, he returns the next day and (for a small free) retrieves his property. While pawn shops are legal, the activity itself is predatory and vaguely unwholesome. In addition, selling memories out of desperation is depressing. When one uses the word “pawn shop,” there is an element of the shady clearly implied.
However, when a financial institution uses the term “repurchase agreement,” hardly anyone pictures a dusty, dim market of broken dreams. This is odd, as there is no difference between the two concepts. A repurchase agreement is a way to raise short-term cash by selling government securities to another party and buying them back, usually the next day, at a higher price (Investopedia.com). Sound familiar? While pawn shops see brisk business, their more affluent sibling, the repo market, enjoys $2 trillion to $4 trillion worth of trades each day (Brookings.edu) – pawn is popular, no matter what color the collar is.
Also similar to pawn shops, the buyer is protected if the seller can’t come up with the money to actually get the stuff back; the securities act as both the product being sold and the collateral for the loan (Investopedia.com). The buyer agrees to sell back according to the contract payment schedule, but before that, she/he is the legal owner. If the seller ends up going bankrupt, the buyer isn’t required to wait for the courts to make decisions before reselling the securities (Investopedia.com).
Pawning things out of necessity is bad, but not listening to your mom is worse. We were taught that, if you lend money to a relative, you may as well consider it a gift when you hand it over. If that lesson didn’t stick, the IRS is here to reiterate it. Say you lent your sister a boatload of money. She promised to pay you, you spit on your palms and shook. But. She didn’t pay you and now you wonder if you can deduct that amount on your return. No, no you can’t. Because you had a sneaking suspicion that you’d never see that money again, the IRS says that you have to consider it a gift and you’re not allowed to deduct it as a bad debt (IRS.gov). However, if you do things the right way, you might be able to deduct a “maximum of $3,000 per year in bad loans against ordinary income” (Creditcards.com). While a family member might be wounded when you pull out the promissory note, payment schedule, collateral description and interest rate (Marketwatch.com), these will allow you to deduct. Basically, the IRS needs proof that you never intended your loan to be a gift. Bury them in paper and deduct away!
Presentation is what it’s all about; with enough big words and legal-sized paper, the most questionable undertakings can attain an aura of legitimacy. If Fortune 500 companies can make “pawn” sound good, just think what you can do!
No matter how much you pretty it up, Bourke Accounting doesn’t want you to pawn your stuff. If you make another loan to your sister, your Bourke Accounting rep will be happy to notarize the terms for you. Bourke Accounting’s priority is helping you to keep as much as you can. You can’t take it with you, but Bourke wants to make sure you enjoy while you’re here.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Whether you force art or a fart, the result is the same: you end up with s**t – Someone Smart
A tax return prepared by Bourke Accounting follows a linear script: W2 wages, interest income, child credit, etc. If you end up owing $17,000, your Bourke pro will feel bad, but those capital gains will still shine proudly on your Schedule D. Likewise, you probably won’t attempt to claim your healthy – but unemployed and TikTok addicted – 30-year-old son as a dependent because it wouldn’t make sense to the storyline. Even though we might want it to go a different way, sometimes the story is just the story.
For example, Old Yeller has a terribly sad ending. The book would be pointless if, instead of a shotgun blast, Yeller got a rabies shot and everyone had a picnic. PETA might complain about the trajectory of events, but Old Yeller would mean nothing without the poignancy of reluctant responsibility and loss.
Art and breathing have a lot in common: forcing or restricting either results in catastrophic events. With this in mind, it’s plain that the recent rules implemented by The Academy of Motion Picture Arts and Sciences are just, well…bad. Recently, the Academy has released a list of requirements that movies will have to adhere to if they want to even be considered for an Oscar during the 2024 season. However, these rules have nothing to do with masterful dialogue, interesting plots or innovative cinematography. Sadly, these rules have nothing to do with art at all.
Dumping artistic integrity like a murder victim on the side of the highway, the Academy has introduced an alternative concept of censorship. Starting with the 96th Oscars, movies with dreams of winning best picture will have to “meet inclusion standards both on camera and behind the scenes” (NYTimes.com). At first glance, this sounds good: everyone’s invited to the party! Sadly, it’s not like that. Let’s say you’ve written a heartbreaking, well-written screenplay about four Irish boys growing up hard in South Boston. Well, unless one of those boys is a girl or an Alaskan Native, don’t even bother trying for the gold because you haven’t a chance.
Don’t despair! You still have a chance with your four Irish boys if your storyline is “centered on an underrepresented group” (Etonline.com). So, if you make one boy “deaf or hard of hearing” (Oscars.org), you meet the A3 Academy Standard for Main Storyline! You only have to meet two of the four requirements, so if the deaf kid is also gay (A2 General Ensemble Cast requirement), you have a contender right there! You can argue that your story has nothing to do with a gay, deaf Irish boy, but if you want that naked gold guy, it does now.
Inclusion is a beautiful thing; holding visual artistry and autonomy hostage is the exact opposite. When external forces dictate guidelines for acceptable art, the organic nature of the thing is destroyed. Art should not have politics or agendas and, sometimes, you just can’t shoehorn a blind Amish transsexual into a coming of age buddy film.
Boycott the Oscars. Boycott the attempted murder of art.
Bourke Accounting bookkeepers and tax preparers don’t tell nonsensical stories. Bourke Accounting professional stick to the truth and don’t care who has a problem with it. If you want returns and payrolls that mirror reality, come to Bourke Accounting. If you want forced documents that were created under duress, the Academy’s number is in the book.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Even for the uninitiated, raising a kid looks like hard work. In earlier years, parents had to make sure their kids didn’t stick anything too metallic into anything that held too much electrical conductivity. Now, parents have to keep kids safe from predators, real and virtual, protect them from unseen viruses and try to explain just what is going on in the world (without scaring them into agoraphobia). No doubt about it, parents have a lot on their plate.
But all is not lost! Because the IRS puts people first, it has created child credits, tax breaks and guidance for parents out there claiming kids. In fact, there must be a group of IRS agents sitting in a room right now deciding how to address every contingency known to humankind. Here are just a few examples of how the IRS is working for parents at this very minute:
1) Kidnapped children. Since no one wants to think about kidnapped kids, the IRS has done it for us. Naturally, the first thing a taxpayer will consider, after receiving a ransom note, is the tax implications of their child’s dependent status. However, if two requirements are met, tax breaks are available with ease. The first condition is that the child must be kidnapped by a non-family member; local law enforcement can help with this. Note that little Billy following the Grateful Dead with your brother, Uncle Freedom Stone, won’t count. The second requirement is that, before the date of the abduction, the child would have had to live with the parent for more than half of the year (EITC.IRS.gov). If both conditions are met, the parent is eligible for the regular child exemptions. So, uh, yeah. There’s that.
2) The American Opportunity Tax Credit (AOTC). We know the importance of educating our future professionals and this credit helps to ensure that kids are in the know. The program allows a credit of 100% of the first $2,000 of education expenses paid for each eligible student and 25% of the next $2,000 (IRS.gov). While this is helpful, there are, of course, stipulations in place. For example, the student must be working towards a degree or some other credential, the student must be enrolled at least part time, ATOC can’t be claimed for more than four years and the student must not have a felony drug conviction at the end of the year (IRS.gov). So, if little Billy (he gets around) engaged in some sexy bank robbery, he’s good to go. However, if Billy sold a couple of funny cigarettes to a narc, well, no school for you, Billy. While no one believes in rewarding bad behavior, it’s rather interesting that assault, stalking, etc., are not considered deal breakers, but dust in a baggie is. It would seem that non-violent offenses don’t warrant second chances. The IRS perhaps made a mistake here – as education is one of the only deterrents against criminality, maybe they’d like to revisit this issue.
3) Kids in contention. So, you have one kid and two parents who think each is deserving of the neat tax prizes. The kid stayed an equal amount of time with each parent. Both parents paid an equal amount for the child’s upkeep. The parents hate each other and won’t agree to an alternating year compromise. Who gets the kid? The parent with the most money. If everything is equal, the parent with the highest adjusted gross income is the tiebreaker winner (IRS.gov). One would think that the less affluent parent would be victorious, but no. If you hate your ex, this should be incentive enough to ask for that raise…
As hard as parenting is, aren’t you glad there’s a Nanny McPhee-type helper in the IRS office? For every scenario, there is a tax regulation and your IRS representative is eagerly awaiting your query!
If you’d like to avoid the three-hour hold time, your Bourke Accounting expert has the answers, too. Bourke Accounting tax preparers are well-versed in child exemptions and the rules to utilize them. Not only that, but your Bourke Accounting representative offers hospitality, cookies and Red Bull, things suspiciously absent when dealing with the Internal Revenue Service.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
It’s September! And you all know what that means, right?! It’s time to deck the halls, light the menorah and plan your Karamu menu! It’s time for stores and car companies to fast forward through time and space (past the less lucrative holidays) to get to those sweet, sweet December festivals! While Bourke Accounting isn’t the type of establishment to stock scary Halloween masks next to brightly lit Christmas trees, there is something you should know about the upcoming months.
In the not too distant future, you are going to start receiving pleas from established charities and benevolent organizations – and, whether you’re religious or not, giving to those less fortunate is always in season (especially during the cold months). However, since the virus has touched down, there’s more people who could benefit from charities rather than finance them. Is there a way to help everyone all at once this holiday season? Maybe a little.
At this point, you know that the Tax Cuts and Jobs Act raised the standard deduction to the point where it doesn’t make sense for most Americans to itemize their deductions; in fact, less than 15% of citizens receive any sort of benefit from itemization now (TheConversation.com). For those who aren’t going to exceed $24,800 (married filing jointly) or $12,400 (single filer) in deductions this year, there is now an added incentive to give a little this season.
After the introduction of the TCJA, there was a noticeable decline in charitable donations from taxpayers (Kiplinger.com). Although this makes one question the concept of genuine altruism, it seems that some lawmakers have realized that just asking for charitable help isn’t going to cut it during the age of Corona. So, in March, the Coronavirus Aid, Relief and Economic Security (CARES) Act changed the rules a bit. Now, even non-itemizers are allowed to write off $300 ($600 for jointly filed returns) for charity donations.
Before anyone gets any fancy ideas, this write-off is meant for cash gifts only (Philanthropy.com) – so don’t try to donate a broken $15 scooter and expect the full deduction. Also, even though the IRS has been busy recently, don’t think that our bean-counting pals aren’t still watching. Like always, donations must be given to qualified charitable organizations; this means that giving your adult brother pizza and beer money won’t count. Also, and, just for kicks, make sure that you save your documentation reflecting the gift amount. The chances that auditors will bother to investigate a $300 deduction are slim, but you can never predict when there will be a slow day in the IRS office.
Although this new rule is an enticement to give, it’s not going to alter anyone’s tax return very much. Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, points out that, for those in the 10% tax bracket, the difference would be about $30 (CNBC.com). We all know that it’s better to give than to receive, but, sadly, there aren’t that many Americans who will be able to make use of this incentive this year.
If you can donate this year, that’s great – you’ll help a lot of people. Keep in mind, however, that a lot people can also be helped with time and talent, too. It’s not always about money…
Bourke Accounting believes in charity and helping their fellow people. Bourke Accounting also believes in knowing all of the new regulations that can alleviate some tax burdens. During good times and bad, your Bourke Accounting tax preparers and bookkeepers are the professionals with the big hearts. Happy (Premature) Holidays!
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Sarah: That’s not fair!
Jareth, The Goblin King: You say that so often. I wonder what your basis for comparison is.
Labyrinth, 1986
At Bourke Accounting, Bill has a sort of hands-off, trial by fire, mentoring approach. Consistent with this philosophy, he handed me a book chock full of the new tax changes birthed by the Tax Cut and Jobs Act of 2017. While Bill is, no doubt, charmed by my blogging abilities, I believe he is serious in his request that I learn a thing or two about taxation in general. More importantly, I have a suspicion that there will be questions later. So, I am reading The Book and taking notes.
Having worked for accountants in the past, one of my jobs was chasing down people with home offices and employee expenses. I was that chirping nuisance asking for square footage used, percentage of utilities, meals and entertainment, etc. So, imagine my surprise when The Book told me that W-2 employees are no longer able to deduct unreimbursed work-related expenses, including home office expenses, on their returns.
Before the TCJA, besides home office deductions, if employees had expenses in excess of 2% of their adjusted gross income, well, they could just write those right off (Barrons.com). It’s been argued that, since the TCJA increased standard deductions, most people wouldn’t be affected by this change, so it was nothing more than an academic argument anyway. Uh, yeah, sure, that might have been true – at least, before the virus made the scene.
Even with the relaxation of lockdown rules, there are still a lot of people working from home now. Whether commandeering playrooms or kitchen tables, out-of-pocket expenses have been incurred; after all, Special Princess Palace Kingdoms don’t just magically transform into 9-5 professional workspaces. Many employees have had to upgrade internet service, buy chairs that won’t destroy their backs and incidentals like printer ink. Would all these expenses top their standard deduction? Maybe, maybe not, but these employees are still using their own money to outfit a workable, satellite office. The standard deduction is great for a future tax return, but what about right now?
One option for these homebound employees is an accountable plan. With this sort of an agreement, employees can bill employers for their expenses. The employers can then deduct for expenses they pay back to the employees (Investopedia.com). However, there are no federal rules saying a company has to do this, unless these expenses push a “worker’s income to below the minimum wage” (Barrons.com). Another option would be for Congress to allow W-2 employees to specially deduct employee expenses for a limited time, separately and in addition to the standard deduction. It could happen…
The world is more unfair than usual these days and it’s up to the powers that be to do what they can to level the field a bit. Hey, Congress, let’s get creative and funky! As the workers are the economy, there should be incentives and rewards put into play.
With changes coming fast and heavy these days, it’s nice to know that your Bourke Accounting bookkeepers and tax preparers are keeping up. No matter what insane alterations are on the horizon, Bourke Accounting experts will have the answers to all of your questions. It’s probably a sick obsession, but – lucky you – Bourke Accounting specialists live for this stuff.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Randomly, someone will ask for my Facebook username. When I respond that I’m not on Facebook, I am met with a look that suggests that I might be a visitor from another dimension. Likewise, people find it odd that I work for Bourke Accounting and distrust the stock market. To me, there is no difference between high stakes Vegas roulette and stock trading. Even if you know a company and have tracked its progress for years, it’s still a gamble; all it takes is a CEO’s indictment or a natural disaster and the stock is worthless.
Much like my distaste for Facebook (and the broken relationships and altercations caused by the platform), I realize that my avoidance of the stock market isn’t completely logical. Generally, if you know what you’re doing, have a good financial professional in your corner and don’t do anything too risky, it’s possible to create an impressive portfolio. However, that important detail of understanding what stock trading entails is ignored by some new investors.
Studies have discovered that Millennials have gotten involved in the market in a big way, with nearly seven in ten currently invested in something (NYPost.com). While it’s great that this generation is planning ahead, it doesn’t always end with young investors sailing off into the sunset on a brand-new yacht.
On June 12th, the parents of 20-year old Alexander Kearns found a post-it note inviting them to turn on his computer. On the computer, they found a suicide note. Kearns had been using Robinhood, a trading app, and, when he saw a negative cash balance of $730,165 (CNBC.com), he did something very rash. In his note, Kearns questioned why Robinhood would allow a kid with no income to become so heavily in debt. Kearns also admitted that he had no idea what he was doing (Businessinsider.com). To make a tragic story worse, Kearns didn’t understand what he was looking at. While Robinhood can’t give the details of Kearns’ account, he didn’t owe almost a million dollars; his balance was “due to complex options trades,” which would have settled over the following days, but left a temporary balance in the meantime (Businessinsider.com).
Kearns’ family has vilified Robinhood for not offering an explanation or customer service options when Kearns received the negative balance notification (Businessinsider.com). In addition, Robinhood has been accused of making an app that resembles a video game as opposed to a stock trading tool with real-life repercussions. For example, every time a trade is completed, users get a little party, complete with confetti shooting all over (Kiplinger.com). Regarding customer service, users say that they’ve waited weeks for an answer in the Help section, it’s nearly impossible to get a person on the phone and emails go unanswered (Businessinsider.com). While a seasoned trader could probably get by with this level of customer service, rookies like Kearns are left to flounder in the dark.
People shouldn’t expect to get rich overnight with the stock market. People should also know the very real risks associated with trading. Finally, new traders shouldn’t try to learn by trial and error – it never hurts to contact a professional with any problems. Perhaps the most disturbing factor of Alexander Kearns’ story is that, had he just asked questions, he wouldn’t be a cautionary tale now.
Bourke Accounting experts are no strangers to the stock exchange. While Bourke Accounting pros aren’t stockbrokers, they can explain the terms and implications to those just starting to invest. In addition, your Bourke Accounting tax preparer can help you to choose the right investment product for your unique situation. And, no matter what, remember that you’re a lot more important than the numeric value on your bank statement.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
At this point, we know that the IRS is back to work. We also know that, after a scathing report by the TIGTA regarding the IRS’ negligence in auditing the super-wealthy, the IRS is here to crack some well-heeled skulls. Well, the TIGTA wasn’t quite done with the mathematically inclined – off-the-rack – suits. It seems that the TIGTA has a big issue with the IRS’ handling of marijuana dispensaries.
Whether you think marijuana is the Devil’s lettuce or God’s most generous gift, it can’t be argued that there’s a lot of money involved surrounding the blameless little herb; in 2017, $4.7 billion was collected in Federal taxes from 29 states (QZ.com). That seems like a nice chunk of Chronic change, so what problem could the TIGTA possibly have?
The TIGTA doesn’t think that the IRS is giving enough guidance to Mary Jane manufacturers. The TIGTA’s biggest complaint is that the IRS isn’t explaining Section 280E of the tax code properly. Section 280E was introduced in the 1980s “as a way to block cartel kingpins from writing off yachts and fancy cars” (Marijuanamoment.net). This section says that businesses are not eligible for most tax deductions if they make their money from a drug that falls under Schedule I, which weed does (Marijuanamoment.net). As an aside, marijuana and heroin are in the same category. Really. Now, 280E makes sense when dealing with kingpins, but state-legal dispensaries, while reporting all of their income, aren’t allowed to deduct rent, wages and the normal expenses that come with a brick and mortar shop (Wecannca.com). Since the indica industry can’t deduct, this means that their tax rate is somewhere near 70 percent (Marijuanamoment.net).
The fact that sativa stores can’t use banks also has the TIGTA demanding assistance from the IRS. Since marijuana is still considered naughty under Federal law, “banks risk charges of aiding and abetting a federal crime or money laundering” (Publicfindlaw.com) if they decide to work with dispensaries. Because of this, it’s almost a completely cash industry. Incidentally, since these businesses have to pay taxes in cash, the IRS has had to build “cash rooms” to hold these payments (Marijuanamoment.com). While the IRS demands total transparency from dispensaries, a lot of mistakes can happen when dealing strictly with cash. At this point, the IRS is offering no education regarding how to keep things legal in a folding money world.
When the TIGTA recommended that the IRS work with the Small Business commissioner to “develop…specific guidance…for taxpayers that report Schedule I related activities” (Marijuanamoment.net), the IRS said, “Nah, we’re not gonna do that.” The IRS disagreed with the suggestion and said it had other priorities that needed to be addressed before “developing that specific guidance” (Marijuanamoment.net). I don’t blame the TIGTA for getting a bit snarky. Every agency wants every business to follow the law, but that’s sort of hard for taxpayers when they don’t know what’s required.
Quasi-legal weed is still in its infancy and there are bound to be some problems. Section 280E should be abolished to allow dispensaries to act as any other corporations. Barring that, the IRS owes it to these very lucrative cash cows to at least provide the rule book.
Bourke Accounting bookkeepers and tax preparers know all about small business and self-employment. While weed isn’t legal in KY yet, just like with all new changes, your Bourke Accounting pros already know the rules to keep you in compliance. Whether it’s new standard deductions or reefer returns, your Bourke Accounting specialists never stop learning for you.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
No one likes to think about what would happen to them if rational decision making was no longer possible. An accident or the evil march of time can steal more than our physical mobility. At Bourke Accounting, everyone has a plan to make sure that their wishes are honored in a worst-case scenario (except for me, but I’m still pretty sure that I’m indestructible). While having a will is an important first step, it’s not the only step. Documenting what you want to happen after you’re gone is great, but what if you haven’t quite left the building yet?
Recently, I came across a weird article about the “Free Britney Spears Movement.” I assumed that Ms. Spears was facing arrest after maybe attacking another car with rain gear, but it’s more complicated than that. Beginning in 2007, Spears started to lose the thread – divorce, publicly shaving her head, losing her kids and ending up in rehab/psychiatric hospitals made for a few bad years. Because of her erratic behavior, Spears has been “held under a conservatorship since 2008,” with her father, Jamie Spears, originally appointed as sole conservator (Elle.com). Her father, who petitioned the court, has testified that she is suffering from early onset dementia (Yourtango.com), which, of course, could be a side effect of being sold to the Disney Channel at age 11.
If you don’t know, a conservatorship is a “form of legal guardianship of an adult” (Smartasset.com). These are granted when the courts decide that a person no longer understands what’s going on, can’t take care of basic needs and might harm her/himself or others. While there are a few different types, Spears is under a temporary (yeah, 12 years temporary), financial conservatorship, meaning that it’s meant to last for a specific time period and that she has no control over her estate or financial and personal assets (Businessinsider.com). As she is worth millions, Spears’ fans believe that the fair princess is being held captive by her nefarious and greedy father.
So now, as the stunning result, there are fans brandishing “#FreeBritney” signs outside of courthouses. As the internet is pure logic incarnate, fans are convinced that Spears is begging for help using hidden messages in her social media posts; they are decoding them and many have come to the conclusion that she is being held captive, as well as being trafficked (Yourtango.com). In one TikTok post, Spears twitches in and out of frame, twirls around and looks somewhat unhinged. Seriously, at any time, you expect her to turn into the scary little dead girl from The Ring. I’m sorry, Britney, but the others will have to save you – I’m just not understanding your message.
The Spears Saga is indicative of the importance of future planning. As Spears is experiencing, someone she wouldn’t have chosen has had power over her daily life for years. Don’t think this couldn’t happen to you if you fail to make decisions now (you know how your little brother spends all of his money on Hot Wheels cars? Yeah, he could be making your stock picks). Before the court makes a choice for you, it’s important that you have Power of Attorneys in place. A Medical POA will allow someone to decide how your medical treatment goes; likewise, a Financial POA will give a certain sober someone the authority to handle your cash and assets. And remember, you must be of sound mind to sign a POA, so avoid the rush and plan your future today!
Your life is your own. If you want to be extra-special sure that it stays that way, plan ahead. Not only will this protect your interests, it will ease the burden for your loved ones – no one wants a knock-down drag out in the emergency room.
Bourke Accounting experts can’t protect your from falling anvils, but they can offer you financial guidance. Besides being extraordinarily knowledgeable, Bourke Accounting pros have the sensitivity and time to act as a sounding board. Bourke Accounting specialists won’t make up your mind for you, but they will make all of your decisions a lot clearer.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Bill dropped the most recent Kiplinger Tax Letter on my Bourke Accounting desk this morning. I was working on something about staying safe for a fun summer (I’ll have to try again, I was boring myself), so I decided to take a break and see what ol’ Kiplinger had to say. “Well, I’ll be dipped,” I said to myself when I reached the end of the pamphlet. The IRS is back in town.
While a few states have already opened their offices, Kiplinger reports that all IRS offices are slated to open on July 13 (Vol. 95, No. 13). Maybe it’s just me, but the idea of closed and dark IRS offices – stained coffee makers gently rotting amid the dustmotes – was very unwholesome to me. Now I feel better that the IRS is open for business, but I know of one group who won’t.
Back in January, I told you that the IRS doesn’t have enough workers to perform as many audits as they’d like. Well, either a lot of agents were trained over quarantine or priorities have changed; starting July 15 (two days after they reopen), the IRS will “start examinations of several hundred high-net-worth taxpayers” (WealthManagement.com). Why the sudden interest in the Bill Gates of the world? Not being an economist, I have two theories anyway. My first theory is that the IRS had its feelings hurt when the recent Treasury Inspector General for Tax Administration’s report accused the organization of failing “to address high-income non-filers” (WealthManagement.com). This study estimated that 34% of these high-end taxpayers owed “an estimated $45.7 billion in taxes” (WealthManagement.com) for the years 2014 until 2016. When Big Daddy TIGTA slaps your nose, you feel it.
My second theory – again, not based on knowledge – is that this is a plan designed to replace corona-spent cash. Obviously, taxes can’t be raised, no one would support a wealth tax during an election year and, as far as I know, money trees are still a thing of sweet fantasy. Interestingly, these “examinations” of the rich will be hellacious: the IRS is going to look at all businesses (here and abroad), transfers to kids and kin, bank and investment accounts (here, there and everywhere), offshore transactions, family limited partnerships, foundations and estate planning transactions (Kiplinger, Vol. 95, No. 13). Also, the auditors will “employ a matching program to review across different accounts and reporting documents” (Winston.com). Finally, these auditors will be able to “obtain the books and records of any companies in which the taxpayer holds a financial interest” (Winston.com).
If you happen to be one of the lucky high-income audit winners, remember to be kind – all the bigger organizations are picking on your auditor. If you thought the IRS was humorless before, this newly released report probably stole the last giggle from its collective throat. Make sure to cheer your auditor up with a nutritious and tasty snack!
Bourke Accounting tax preparers aren’t hoping that you get audited this year, but they’re more than ready if you do. Besides being conscientious, Bourke Accounting pros have a lot of energy. This will come in handy if the IRS decides to meticulously pick apart the last three years of your financial life. Your Bourke Accounting expert is always available to battle the IRS for you!
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
If income taxes were suddenly abolished, I would be out of a job. Since I like working for Bourke Accounting, and hate job interviews, that would be hard for me. Also, we’d all notice quite a change in our society if taxes were no longer a thing: sure, we’d have more money in our pockets, but no one to call if a stranger, emerging from a dark alley, decided to relieve us of that money.
We understand that taxes are a necessary evil that we simply have to live with. Well, most of us understand that. There are, however, people who refuse to accept the inevitability of our American taxation system. Ladies and Gentlemen, I give you The Tax Protester.
First off, a tax protester should not be confused with a tax resister. A tax resister is someone who refuses to pay taxes because s/he disagrees with something the American government is doing. For example, before women won the right to vote, many Suffrage organizations suggested that, as a form of passive resistance, taxes not be paid. These thoughts were later reflected during the Vietnam war when many protestors, as “conscientious objectors,” decided that they did not want to fund a war that they felt was immoral (En.Wikipedia.org).
Tax protesters are a little different. Tax protesters refuse to pay taxes, “claiming that the tax laws are unconstitutional or otherwise invalid” (En.Wikipedia.org). Naturally, there are some tax protesters who believe that the government “covers up the ‘truth’ about the income tax in order to continue oppressing the people and taking their money” (ADL.org), but we’re just going to slide right past that one.
One argument that tax protesters use is that “money you receive for working isn’t technically income [but] an equal exchange of your labor for fair market wages” (USAToday.com). Because this is a “trade,” there is no “’gain’ to be taxed” (USAToday.com). They concede that taxes should be paid if one sold a lot of stocks or won the lottery, but W2 earnings should be left out of every taxation equation.
Another tax protester rationalization compares paying taxes to slavery. The belief suggests that, since slavery is illegal, so are taxes. Kentucky’s own Rand Paul pontificated that “if we tax you at 50%, you are half-slave, half-free” (USAToday.com). The Internal Revenue Service has never felt this to be a compelling debate issue.
Then there are the folks who have decided that a tax bill doesn’t pertain to an individual, since “IRS correspondence is written in all capital letters” (TheDailyBeast.com). Because of this, protesters feel that a tax bill is really addressed “to a legal entity which shares your name but is not you” (TheDailyBeast.com). Again, the tax courts don’t agree with this defense in the slightest.
Having the tax court disagree with a claim is one thing; however, if the IRS deems you are filing a frivolous argument, you can be fined from $5,000 to $25,000 (USAToday.com). In addition, there’s the chance that the IRS will prosecute for tax evasion – complete with prison and penalties (USAToday.com).
Perhaps I have become complacent, but it seems to me that defiantly refusing to pay taxes is rather like screaming at a cloudy sky because you wanted to go to the beach. It might make you feel better in the moment, but what is it really going to accomplish?
Bourke Accounting bookkeepers and tax preparers don’t want you to go to prison. Your Bourke Accounting pro will listen to you vent about the tax system, but as soon as you suggest some hairbrained scheme, your expert will shut you right down. Your Bourke Accounting specialist wants to keep your good name intact, as well as making sure that you never have to learn how to make a shank.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.