California Governor Jerry Brown has been known to rule the state’s budget with a tough grip. Not much has passed or been voted down without him having a hand in the decision. The governor has fought for tax hikes, put the kybosh on new programs that call for more spending and worked tirelessly on building up the state’s rainy day fund. However, someone might have finally cracked the fortress.
Thanks to some new efforts by activists and unions who want tax reform and additional funding in the state, the governor may have to let go of his grip, at least just a hair. That’s because several different attempts from various sources are pushing the governor for various different reasons. For example, the reasons for these new proposals include getting more funding, building a shield against another recession and pushing a political agenda.
One proposal would extend the higher taxes that Gov. Brown himself campaigned for in 2012. Another proposal would change California’s landmark restrictions on property taxes, which could help increase money from commercial interests. Still, another proposal is calling for an oil extraction tax and yet another possible plan would be to increase the cigarette tax levy.
Meanwhile, although the governor has yet to publicly respond to these proposals he has stated before that he does not favor extending Proposition 30, which increased levies on the highest earners and raised the sales tax by a quarter-cent. Brown does not want lower and middle class families to end up paying more in taxes in an effort to stabilize revenue collection.
Accounting mistakes can happen to anyone, whether you’re self-employed, have a small business with just a few employees, or you run a major corporation. However, even when mistakes happen, the consequences can be damaging. When those mistakes, or irregularities, involve large organizations like corporations, banks and financial institutions the consequences can be severe.
Recently, the U.S, Securities and Exchange Commission decided to fine Deutsche Bank for financial accounts that were reportedly misstated as the most recent financial crisis in 2008 and 2009 was reaching its peak. According to reports, U.S. officials stated that the bank undervalued the risk on its books by incorrectly accounting for so-called gap risk as they pertained to LSS trades. The U.S. Securities and Exchange Commission fined the bank $55 million for the alleged improprieties.
Deutsche Bank claimed that it used such procedures because there were no reliable models available at the time to properly measure gap risk. The problem with understating gap risk is that it could make it seem that the bank’s books were actually stronger than they really were. The $55 million fine finally brings to a close a prolonged investigation into the valuation of complex derivatives.
Accounting policies and practices are very important for anyone, but especially public corporations that are under the watchful eye of the Securities and Exchange Commission. At GROCO we can help your company or financial institution, large or small, with all of its accounting needs. Just contact us for assistance by clicking here, or call us at 1-877-CPA-2006.
Just last week we discussed how investors could save a lot of money on taxes from selling expensive collectibles like art. Well now it appears that the Obama Administration is apparently looking to put a stop to this particular tax break. That’s right, it’s another effort by the government to take more money from the rich.
As it stands now, if an art collector/investor sold a painting for $10 million he or she would owe about $2.8 million of that in taxes. However, if that collector turned around and reinvested that $10 million into more artwork, then he or she could actually defer any tax payments on the original sale, thus saving a healthy sum.
However, the Obama Administration is aiming to revise that law, which would limit the amount of capital gains that a person makes from selling real estate to $1 million in which a tax payment could be deferred. The law would also completely kill the same tax break on the sale of collectibles such as art or exotic cars or horses. Should the proposed change be passed the White House estimates that the U.S. Treasury could gain an additional $19.5 billion in the next 10 years that would have otherwise been avoided or at least deferred.
That’s a lot of extra money the government is trying to get its hands on. It will be interesting to see how this plays out and how collectors and investors respond if it does. After all, it could end up costing them millions.
It used to be that tax fraud was fairly cut and dry. Essentially, it involved an individual or company who, for various reasons, tried to purposely fudge on their taxes, either by understating their income or by trying to completely skip out on filing a return. Those practices certainly still exists, despite the IRS’s constant efforts combat them. However, tax fraud as evolved, like everything else involving taxes. What used to be a matter of defrauding the IRS out of money has now turned into a high stakes ploy to cheat the taxman as well as the taxpayer.
Meet the new tax fraud. Now, scammers are not only out to steal money from the IRS, but they are also using other taxpayers to do it. Thus, they are cheating the IRS and they might be cheating you. Scammers use all kinds of tactics to trick people out of their tax refunds, or even worse, steal their identity along with their refunds and any other assets they can get their hands on.
These days, out of all the common tax scams that take place every tax season, a third of them involve some kind of identify theft. As early as 2011 the IRS only warned of one such scam of this type. Times have changed and so have scammers. It got so bad this year that the IRS reportedly received about 12,000 complaints every week regarding a phone scam in which a scammer tried to obtain the recipient’s personal information by posing as an employee of the IRS.
The battle will certainly continue as technology advances and scammers come up with new schemes as a rapid pace. In order to avoid these kinds of scams you can always contact the IRS, as well as a trusted accounting and tax planning firm, like GROCO. We can help you prepare for and avoid getting scammed. Give us a call at 1-877-CPA-2206 or click here to contact us online.
Tagged with: IRS
, Tax Fraud
Are you a collector of rare and expensive art? Are you tired of getting hit with high tax bills every time you sell one of your pieces? Anyone who deals with extremely value collectibles like artwork knows how expensive these works can be. At the same time, anyone who tries to profit from his or her collection also knows how much the IRS likes to get its fair share after the sale. However, there is a loophole that can be very valuable to those who buy and sell valuable artwork.
They are known as 1031 exchanges and this is how they work. Many wealthy art collectors can, and do, save millions in taxes by essentially rolling over their profits from selling their collection pieces into buying more art. As the price of high-end artwork continues to rise, many collectors are taking advantage of this opportunity. Instead of paying millions of taxes on their proceeds, collectors turn around and put the money towards adding to their collection.
While some lawmakers frown on the practice, it is perfectly legal and allows art investors to defer taxes on their income from selling art. Many art collectors have found it to be an excellent way to extend the value of their art holdings, while at the same time avoiding letting millions get sucked away by the government.
If you own valuable artwork and you want to avoid paying the high tax bills that come with selling that art, then please contact GROCO today for advise on how to do this. Don’t pay the IRS more than you have to. Call us at 1-877-CPA-2006 or connect with us online by clicking here.
Tagged with: art
, Tax Bill
How did your 2014 tax season go? Was it a success, or did it lack something to be desired? Did you get a nice return, or did you end up owing the IRS more than you expected? Did you make any mistakes when you filed your taxes or discover after the fact that you missed out on a credit or deduction you could have qualified for? Let’s face it, people aren’t perfect and taxes are complicated. Put those two things together and maybe your tax season could have been better.
Important Questions to Ponder
So now that your 2014 taxes are over and done with, maybe now is the time to consider some important changes for next year. In order to do this try asking yourself some of these important questions:
- Do I have the right tax advisor? – Any CPA can file a tax return, but you need to be certain that your CPA understands the tax code inside and out and that he/she gets you the best results possible before and after your return.
- Does my wealth manager understand tax loss harvesting? – While many wealth managers can help you plan for the present and the future, one key ingredient to success is to understand tax loss harvesting and how to use it.
- Do I pay enough in fees? – No one wants to pay more than they have to, but if your hire an accountant on the cheap, you will probably get what you pay for. Paying a little extra to make sure your CPA digs deep enough to find every possible credit and deduction is worth the price.
- Is my team right for me? – Some people have good accountants that also try to help manage their wealth, or vise versa. In most cases, it’s a good idea to have two separate advisors. However, it’s up to you to make sure you put together the right team for your success.
GROCO Can Help
All of these are important questions that you need to ask yourself. If you need help with any of these questions you can contact GROCO. Our team can help you with your investments, tax planning and wealth management. Just contact us online or give us a call at 1-877-CPA-2006 for more help.
While many in the media, as well many lawmakers on the left, would have you believe that the nation’s wealthiest individuals are really good at skipping out on their taxes and that they don’t pay their fair share, the fact is, in most cases, that’s not true. Yes, it is true that many of he richest people in America pay fewer taxes than most of their employees. However, they use perfectly legal means to accomplish that.
So to be clear, while the rich might pay less than some people think is fair, that does not mean they cheat on their taxes. In fact, the rich manage to achieve this feat simply by doing one of two things. They either know how to manage their money and finances very well, or they hire someone to do it for them. Tax planning is an art, and when done right the nation’s wealthiest individuals avoid paying more than they legally have to.
Again, they are not cheating they are just being smart. There are several methods the rich, and their tax planners, use to keep their tax bills down. Whether it’s through prudently managing capital gains, modifying your income, using proper borrowing strategies or through tax deferral, all these measures are legal and will keep your tax bill down.
If you count yourself among the nation’s wealthier class and you are looking for ways to save more money on your tax bill, then you should contact GROCO. We have been helping wealthy individuals manage their money and plan for their taxes for decades and we can help you too. Please contact us for more information by clicking here or give us a call at 1-877-CPA-2006.
If you had any less than desirable experiences with the IRS this year then you’re probably not alone. That’s because the top tax agency continues to be plagued by complaints of poor customer service and a general lack of assistance. According to the IRS there’s good reason for that. The agency says it cannot keep up with taxpayers needs due to the continuing budget cuts it has experienced over the last several years.
Because the IRS has less money to work with they have had to reduce their workforce and many people’s calls simply go unanswered. The IRS also continues to get a bad report card when it comes to customer service, because the agency can’t spend as much time training employees and they have a harder time retaining the employees they would like to keep. It all adds up to a lot of unhappy taxpayers and very few signs of encouragement.
It appears that unless the IRS gets a budget boost the problems will not only persist but they will likely get worse. Over the past six years, tax rolls have jumped by seven million new filers. Because of the surge, simply hiring temporary workers to help during the busy season doesn’t work anymore. That leaves taxpayers confused, frustrated and angry. People who need special help seem to be hurt the worst by all of this.
While the IRS continues to claim it needs more money in order to fix the problems, many Republican lawmakers are hesitant to raise the agency’s budget until the nation’s tax code is overhauled and simplified. In other words, the IRS could be waiting for a long time before they see an increase in their budget.
The Republican lead Congress recently passed some new legislation – without garnering much attention at all – that could be a big boon for major donors of political organizations and groups. The bill could protect big donors from having to pay gift taxes on their large donations to these political groups.
The bill, which is headed to the senate, could make way for even more donations in coming years from nonprofit groups that are registered as 501(c) groups, especially in 2016, the country’s next presidential year. Right now, it appears that these big donors rarely pay taxes on their large donations, but as it currently stands the law does not offer specific protection from being assessed with gift taxes. That fact makes some donors a little nervous that the IRS could come knocking.
However, the new piece of legislation that Congress just recently passed would make it clear that gift taxes would not apply to groups that are registered under the Tax Code sections 501(c)4, (c)5 or (c)6. That means most of the big donor organizations that are registered under these sections would be immune from paying gift taxes.
This would obviously be good news for the many ultra-wealthy individuals who are deeply involved in politics and political movements. By having assurances that their donations would never be subject to the gift tax, the amount of money they can donate could increase even more.
Economists, politicians and people in general like to discuss the nation’s economy and where it stands at any given moment. There are many different points that are touched on and several aspects that are used as evidence to make important points. However, one indicator of the economy’s health that can never really be argued is consumer spending.
When spending is up the economy improves, as does the nation’s overall outlook. However, when spending is down, the economy slows and the outlook gets darker. To that end, what does it say about the economy that a lot of people are putting their 2015 tax refunds in the bank, instead of splurging on frills? It means consumers are still exercising caution and taking a wait-and-see approach.
According to the numbers, even though the average tax refund has been up 0.7 percent in 2015, about half of all taxpayers said they planned to save at least some of their refund money this year. That means they are going to be spending less. In fact, that percentage is as high as it’s been since the National Retail Association started conducting its survey 12 years ago.
Many other consumers, almost 40 percent, also said they are planning to pay off some debt when they get their refund check this year. In a separate survey by BankRate.com only 3 percent said they planned to spend all of their refund and 67 percent said they were going to use it to pay off debt.
So, while the news is good that taxpayers are getting a little more back this year, the news for the economy might not be as promising At any rate, with more money being returned to consumers, at some point it should make it back in to the economy. That means even though the boost might not come now, it could still come later.