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
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
How To Make Money With Tax Liens From Foreclosures?
According to various sources, Tax Lien Certificates have been said to be the safest investments till now. But most of us don’t know how they work, and that’s why it best to share how one can become financially independent with tax liens. It pays to be well informed, especially when your government is assuring you of a good return on your investment and this should eventually be a good method of making some quick money.
So what are Tax Lien Certificates?
Tax Lien Certificates are bought from the government and taken home. They have proven their worth as a very lucrative and safe investment option, especially in this shaky economy. By investing in Tax Lien Certificates, you invest not in private institutions, but with the governing bodies. When they get paid or when the certificates you buy are redeemable, the check is sent to you for the same from their end. In short, the process is very simple; you invest and you are paid back, the government takes care of it.
What is a tax certificate?
A tax certificate would be an important paper which shows all the unpaid debts of a property owner. If you own property, you are required to pay local taxes. People often default in these payments by not paying their taxes on time while some don’t pay the taxes at all. The local governments face a problem when these funds don’t come in and many utility services run by the local governments end up on the receiving end. These necessary funds are often required to pay salaries to the police, firemen, schools etc, none of which would run and function if our tax money doesn’t reach the government. Imagine no schools, no post offices, no government services, all because we didn’t pay our taxes!!
How it works?
The local county would issue Tax Lien Certificates that you can buy on the delinquent properties you own. And you can buy the certificates over the counter or at auctions; as you will be rewarded well in the long run.
There would be a penalty for paying taxes past due, and paying penalties on delinquent properties would be higher. Hence, delinquent property holders first have to pay the penalties and then pay off their taxes.
Why choose government Tax Lien Certificates?
- They are predictable with their rates and payouts
- You are assured of checks coming in the mail by the government
- These certificates are backed by the Real estate
- You don’t have to deal with brokers and middlemen
- You buy them directly
- Tax Lien Certificates have a priority over everything else, even more than mortgages.
- If you have Tax Lien Certificates, you can make money from the government on the delinquent real estate you own.
So Tax Lien Certificates is it?
Now that you know how Tax Lien Certificates can be beneficial to you in helping make money that you need, ensure that you speak to experts on how to buy them and become independent financially.
Today’s guest post is penned by Adam Anderson. He is a financial expert who likes sharing his view on the latest financial policies and investments in his blog. He says that with the latest development in the online banking sector, getting payday loans has become relatively easy.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags: finance advice, foreclosure help, making money, tax advice, tax liens