Search for the Tax Fairy leads to federal prison. The Tax Fairy, in the imagination of believers, appears in the form of magical legal maneuvers that make your taxes all go away. Your drinking buddies may even claim to have seen it, or that their tax guy knows her.
It can hurt when you find that there is no Tax Fairy. It must hurt for one South Dakota surgeon. From RapidCityJournal.com:
Friends and family described Dr. Edward Picardi as a compassionate, highly skilled surgeon, but the accolades failed to spare the doctor a five-year prison sentence for income tax evasion on Tuesday.
Despite the good the Sturgis man was proclaimed to have done in his life, Picardi, 56, is the same man a federal jury convicted of 13 felonies last October, U.S. Chief District Judge Jeffrey Viken said when he sentenced the doctor.
Picardi was charged with income tax evasion after an exhaustive federal investigation of his financial practices spanning 10 years from 1999 through 2009. He used an elaborate network of dummy corporations and several foreign banks to divert thousands of dollars in income.
The indictment says the scheme was hatched with the aid of a Maryland attorney who set up a phony employee leasing scheme to suck taxable income to shell companies, which the surgeon tapped for cash as needed. This worked fine, until one day it didn’t, and now it’s a five-year unpaid vacation, plus tax, interest and penalties.
There is no Tax Fairy.
Jana Luttenegger, Disclaiming an Inheritance (Davis Brown Tax Law Blog). Sometimes it’s better estate planning to turn down an inheritance and let it go to your kids or some other beneficiary. But you have to do it right:
Most importantly, the disclaimer must be made before you accept any benefit in the gift, and it must be an unqualified disclaimer. (No, you can’t have a party at the house and then decide you don’t want it.) Once the disclaimer is made, it is irrevocable — you can’t change your mind. If you properly disclaim, the property will pass as if you predeceased (you do not get to direct where the property goes).
Arden Dale, A Strategy for Business Owners to Avoid Investment Tax (Wall Street Journal:
Financial advisers have a simple question for some of their clients who own businesses: Are you an active or passive owner?
For the clients whose businesses are set up as S corporations, the answer is crucial if they want to avoid paying a new 3.8% tax on their income.
Joseph Thorndike, A Lost Age of Fiscal Heroes? Not So Much. (Tax.com):
The looming debate over the federal debt limit is a depressing reminder that we’re living in the Age of the Manufactured Crisis. And it encourages a sort of political nostalgia – a yearning for that bygone era when tough lawmakers made the tough decisions that kept federal debt at manageable levels. Well, sorry to tell you, but there were never any fiscal heroes.
Just politicians who show by their actions that they are happy to spend us to Greece.
Jason Dinesen, Same-Sex Marriage, Community Property, And Multi-State Income — Part 1. ”Indeed, some of the most complicated tax returns I’ve ever prepared have been for same-sex couples that moved from California (a community property state) to Iowa (not a community property state) during the middle of the year.”
Clint Stretch, Will DOMA Issues Doom Tax Reform? (Tax.com)
Howard Gleckman, The Joint Committee’s Report on Tax Reform: Must-read for Policy Geeks:
Think of it as the ballpark program you pick up before a baseball game. You can watch the game without it, but it is much more fun if you can keep score and know a little something about who plays for the visiting team.
Except much less interesting than baseball, and the players are uglier and less skilled.
Joseph Henchman, Senate Approves Expanding State Tax Authority on Internet Sales (Tax Policy Blog)
David Brunori, Go Big or Go Home — Tax Reform in Maine (Tax.com)
Russ Fox, California Leads the Way (as Worst State for Business). Iowa is 23rd in the rankings in Chief Executive Magazine.
Jack Townsend links to an Article on Prosecuting Tax Professionals to Leverage Deterrence
Patrick Temple-West, Airline industry’s tax troubles, and more (Tax Break)
Robert D. Flach, GETTING READY FOR SUMMER – FILLING OUT FORM W-4 FOR A SUMMER JOB. With excellent advice about using a Roth IRA for your hard-working kid’s summer work.
The Critical Question: How Difficult Is It to Count Tax Words? (Jim Maule)
But maybe he won’t anyway. Maybe Mitt Romney Can Recommend a Savvy Tax Planning Professional for Al Gore (Going Concern)