Tax Avoidance – Time To Name And Shame?
Much has been made over recent months about aggressive tax avoidance schemes and the types of companies and individuals who enter into them. As the media has seemingly started to try to ‘name and shame’ those promoting the scheme, as well as some of their higher profile participators (such as Jimmy Carr), is the next step to publicise other individuals and companies who become involved in such strategies? There seems to be a suggestion that those entering into tax avoidance schemes are somehow immoral. But is this a fair assumption to make? Consider the generation of people who have never worked and have milked the welfare system for every penny. Is it fair to name and shame those who have made their money, contributed to the country’s coffers and who want to keep some money back for themselves?
It is widely reported that HM Revenue and Customs (HMRC) loses out on £5billion of revenue a year as a result of tax avoidance schemes and the exploitation of loopholes. Despite efforts to try to stem the flow of such schemes, with specialist anti-avoidance teams in place across the UK, there is no doubt the ’boutique’ firms are still peddling their wares.
The House of Commons Public Accounts Committee has recently reported that HMRC is failing when dealing with the ’boutique’ tax practices in more ways than one. Inefficiency within HMRC when dealing with such matters means that it can take a long time before a scheme can be closed. As such, scheme promoters will use this as leverage when selling schemes to their clients. For the taxpayer, they are sold a scheme on the basis that if it works then they will not pay tax at all. If it fails, then they have delayed paying the tax.
For companies and individuals, this is extremely tempting when it comes to making the choice between making payment to HMRC as required or retaining the funds (even if temporarily) for themselves. Cash flow has become prevalent as the economy continues to struggle.
The committee advised that there needs to be more of a deterrent, for the firms selling the schemes and those entering into them. One suggestion is that the scheme providers and participators should be publicised on a list or ‘named and shamed’. However, there is a strong argument that this is contrary to the rights of the individuals involved.
As well as this, it would be difficult to judge which schemes should be listed. There is a big grey area between normal, run of the mill tax mitigation planning and the aggressive tax schemes which are under fire. Mistakes could be made which could ruin the reputation of those perceived to be involved in ‘aggressive’ tax planning as part of a name and shame campaign. This grey area, whereby people seek to plan for their taxes within the realms and intention of tax legislation, would need to be protected.
Mandy Jones is a highly experienced specialist when it comes to tax planning and so is well placed to offer advice for the likes of taxrebate.co.uk.
Categories: Federal Tax, Income Tax, State Tax, Tax Evasion, Tax Law Tags: finance, money, tax, tax rebate, taxes
Heating and cooling systems get tax credits
The popularity of heating and cooling systems in Maryland homes is rising, and fortunately, homeowners are now able to get rewarded when they file their taxes for 2012, as well as 2013.
It’s tax season once again, and A Supreme Heating and Cooling would like to tell the customers of the tax credit they’re able to receive for the heating and cooling systems in their neighborhood. The tax credit available will apply to homeowners and will allow people to get up to $500 just for having energy efficient heating and cooling systems. The tax credit will work for 2012 and will continue throughout 2013; however, you have to take notice that this tax credit will only apply to energy efficient heating and cooling systems, not every single heating and cooling system around.
If you don’t have an energy efficient heating and cooling system, you would probably like to consider getting one installed by A Supreme Heating and Cooling; they’re a reliable company to turn to for those living in Anne Arundel, Baltimore and Howard Counties.
If you haven’t heard of the company yet, A Supreme Heating and Air Conditioning serves Baltimore, Howard, and Anne Arundel Counties with repairs for a variety of makes and models. They’ve been working proficiently for the last 28 years in the heating and cooling business. A Supreme Heating and Air Conditioning also offers a 24-hour emergency service, giving its customers incredible satisfaction and support.
Categories: Federal Tax, Income Tax, State Tax Tags: avoiding taxes, federal tax, income tax, tax credits, tax law
Why Did My Taxes Get Audited?
If you have recently been notified by the IRS that you are being audited, then you may find yourself feeling stressed out and wondering why this is happening to you. After all, the odds of having your tax return chosen for audit by the federal government are extremely low. However, there are some red flags that the government looks for as they are reviewing tax returns that can dramatically increase the taxpayer’s chances of being chosen for an audit. Some of the most common red flags and reasons for auditing are described in detail in this article. Becoming aware of these reasons can help you to avoid making the same mistake in the future or, if you are reading this out of curiosity, can even help you to avoid being audited in the future.
Being Self-Employed
If you do not have a W2 job that requires you to have your taxes deducted from each paycheck, then there is a larger chance that you will be audited. This is because self-employed individuals do not have taxes deducted from their pay and thus must file to pay quarterly estimated tax payments. Since self-employed workers often work as contractors for various companies and individuals, there may not be an official record of their earnings. As a result, it is easier for self-employed workers to falsely report their income in an effort to pay less in taxes. As a result, the federal government tends to scrutinize these returns quite heavily.
Itemizing and Taking Many Deductions
Aside from being self-employed, itemizing and attempting to take a lot of tax deductions can be a red flag for the government and may lead to an audit. All taxpaying citizens are entitled to some basic deductions, but there are others that are meant for people in very specific situations. For example, college students may be eligible for a number of deductions that can greatly reduce their tax liability and even entitle them to a refund. Attempting to falsely claim these or heavily itemizing may be suspicious to the federal government and could lead to audit.
Being in a Higher Tax Bracket
In general, the government is less likely to audit somebody in one of the lower tax brackets than those in higher ones. This is because the amount of money one could be cheating the government out of is often much, much higher in the higher brackets. However, this does not mean that lying or cheating on a tax return will not lead to an audit for those in lower brackets.
This article was provided by Todd S. Unger, Esq., a tax attorney based in New Jersey that can help individuals and small businesses with all federal tax controversey issues including IRS tax audits.
Categories: Federal Tax, Income Tax, Tax Law Tags: irs audit, irs tax, taxes