How Some Big Companies Are Skirting the IRS

There’s no question that the IRS is always looking for ways to get every penny they can from the nation’s taxpayers, whether they be individuals or businesses. On the other hand, many taxpayers are also doing whatever they can to cut their tax bills. As for the business side of the equation, many U.S companies are pulling out all the stops to save on their taxes.

In fact, some of the most profitable companies in the U.S. in the Standard & Poor’s 500, have figured out how to completely wipe out their tax bills for the first quarter of this calendar year. So who are these companies and how did they pull it off? There were 13 companies on the list, some of which included Electronic Arts, General Motors, Seagate Technology and Mondelez International.

Although tax rates in the U.S. are often higher than in other countries there are still ways for companies to keep their tax bill much lower than one would expect. So what did these companies do to achieve this prestigious position?

Electronic Arts, for example, was able to report a tax benefit of $30 million because it released deferred tax assets. That decision made it possible for the company to bring in $700 million in cash held overseas without triggering a tax hit.

General Motors, on the other hand, received a $224 million tax benefit due to deductions for stock investments, which the company made in some of its affiliates that are not U.S. based.

By understanding the tax laws and tax breaks available to them, these companies have been able to maximize their tax benefit. If your company is looking for ways to save on its tax bill, then give GROCO a call. We can help you save on your tax bill with the proper planning and accounting. We can also help you with international tax as well as with business valuations. Click here to contact us.

 

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What Happened to California’s Tax Revenue in May?

Where has all of California’s money gone? Ok, so the state isn’t bankrupt or anything like that, but according to recent reports, the state’s tax revenues fell short by 5.5 percent in the month of May. That marks the first time in six months that California’s revenues have not reached expectations.

In fact, that 5.5 percent shortfall equaled $389.1 million dollars in revenue. According to reports, the state collected a total of $6.7 billion in revenues, but income, sales and corporate taxes all failed to meet expectations. Despite the lower than expected numbers, the state is still doing well overall and has exceeded expectations by $1.8 billion so far in 2014.

Meantime, cash reserves are also very healthy overall for the state, coming in at $4.9 billion more than they were projected. However, the news is not all good for the state, as there is still a cash deficit of $8.5 billion. California is covering that deficit by borrowing both internally and externally.

According to reports, the state’s Controller says that California is doing well and that it will not have any problem paying it’s bills. It’s always good news when the government can pay its bills on time. However, it’s not so great when the government relies on the wealthy to foot a large portion of the bill.

At GROCO, we can help you prepare for your taxes any time of the year. We offer tax services, as well as accounting services, business valuations and several other services. Give us a call at 877-CPA-2006 or come in and see us at one of our Bay Area locations. Click here to learn more.

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Could You Pay More to Drink Soda in Berkeley?

We all know that obesity is a problem in our country. Activists and other interested parties continue to work on ways to help curb this growing problem. Indeed, obesity is neither good for individuals or for our country. However, would creating a new tax to help fight obesity be fair? Moreover, would it even work?

Those questions might soon be answered in Berkeley, California, as the city will weigh the possibility of placing an extra tax on sugary drinks, as officials hope to cut back on this growing epidemic.

Although similar measures have been voted down in other locations, city officials will go ahead with their plan to put the measure on the ballot later this year. The decision comes in part because of the results of a recent survey in which the majority of 500 likely voters reportedly favored the move. Meantime, according to reports, politicians in San Francisco are also considering a similar measure.

Although such measures mean well, as they aim to reduce the public’s consumption of junk food and unhealthy drinks, generally voters have not passed these kinds of bills. Even though the goal behind this measure may be an altruistic one, it would still create an additional tax for which families and individuals would have to foot the bill.

At GROCO we feel that people are already forced to pay too much of their hard-earned money to the government. That’s why we’re prepared to help you with any of your tax preparation or planning needs. Click here to learn more or here to contact us.

 

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The IRS is Not a Bully – You can poke a bully in the nose.

This is the third installment of “The IRS is Not a Bully” series, identifying taxpayer concerns and the difficult position in which Congress puts the IRS. Namely, applying ever increasing pressure to operate in ways its founders never intended, until it’s commonly misunderstood and misused; much like the schoolyard bully that seems more like a victim upon closer examination.

Recent events, including a scandal involving bonuses to IRS workers disciplined for misconduct, and struggles keeping up with the increasing number of fraud cases, have focused renewed attention on IRS practices. Without question, the IRS is an important part of our government. The vast majority of IRS employees are reasonable, honest and competent professionals, just doing what Congress dictates.

Once upon a time, the IRS had a reputation for being ethical, organized and ultimately fair – even when loathed. Now it’s often viewed as a collection agency focused primarily on revenue generation. With thousands of IRS employees, simple statistics tell us that a certain number of IRS staff will put personal gain or advancement ahead of fairness. But despite media reports to the contrary, the IRS itself is not a bully.

In his April WSJ article, “IRS Workers Disciplined for Misconduct Were Awarded Bonuses”, John D. McKinnon raised some excellent points while uncovering some real concerns. According to the Treasury Inspector General report, misconduct ranged from misuse of government travel cards and violation of official-conduct standards, to fraud and failure to pay taxes!

This is not a flattering view of any organization. Further, how can citizens know they’re only being asked to pay their fair share of taxes when reports undermine the very integrity of individuals tasked with communicating these messages? Many taxpayers not only complain about the messages, but the messengers, too. Even a mere specter of unfairness or lack of ethics on any part of the IRS can give the general public cause for concern, and possibly, to react in-kind.

Not surprisingly, there just happens to be a corresponding rise in tax return fraud cases too. So, is there more fraud due to the publicity of certain conduct by IRS employees, or is the conduct of certain IRS employees a result of increased tax return fraud? Either way, the IRS is overwhelmed by the millions of potentially fraudulent tax returns and identity theft cases.

The government desperately needs money and views the estimated $300 billion “tax gap” (the difference between taxes collected and what’s actually owed to the government)[3] as rightfully theirs. Unfortunately, more aggressive collection policies only make millions of honest taxpayers being audited feel like they’re being unfairly bullied. But Congress keeps writing tax laws and selecting leaders that seem content to pile more responsibility onto the shoulders of the IRS to squeeze law abiding citizens for additional money – whether they owe it or not – acting a lot like, well, a bully taking lunch money.

Our CPA firm specializes in very complicated and international tax work; so, we have lots of experience helping many clients pay only the taxes owed. If a client wishes to pay less, we invite them to find another CPA firm. We take great pride in helping our clients sleep better at night knowing their proper tax obligations are met, and not a penny more. If they do have the misfortune of being selected for an IRS audit, we can help them with that, too, by having the right answers.

You don’t have to stand for the bully grabbing what it isn’t his to take. Particularly, if you have an expert tax professional that has your back. For more information, contact us at (510) 797-8661 or visit www.GROCO.com.

 

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Try These Five Tips For Tax Savings in 2014

Everyone loves to save on their taxes, especially since it seems like the government never runs out of ways to add to American’s tax bill. So let’s discuss some helpful tips to reduce your tax bill. Although it might be too late to implement these ideas for last year’s return – unless you file an amended return – you can start using them as you prepare for your 2014 taxes.

  • One of the best things you can do to reduce your tax bill is to maximize your retirement accounts. By contributing the maximum to your retirement fund you can save thousands in taxes.
  • Take full advantage of health care savings accounts by again contributing as much as you can to your account. It’s also a good idea to buy a plan on the Affordable Health Care Act exchange. Failing to do so could mean paying a penalty, which is really a tax.
  • If you itemize your tax deductions then don’t forget to write off your state and local sales tax from your federal return.
  • You can also deduct any expenses you incurred for moving if it was for a new job, as long as it was at least 50 miles away.
  • When it comes to a retirement plan, make sure you choose which option is best for you: Traditional IRA or Roth IRA. If you’re not sure, we can help you figure it out.

All tax situations are unique. If you need help with your tax planning for 2014, then contact us at GROCO and we can help.

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Beware the Pump: Another Gas Tax Is on the Way

If you’ve had enough with California’s high gas prices, then you might not want to keep reading, because just when you thought things couldn’t get any worse, they are about to. That’s because when 2015 rolls around California residents are going to have to pay another new gas tax. In fact it’s a double-digit hike and many people aren’t even aware of the increase.

New Gas Tax

However, aware or not, starting next year a new law kicks in that will boost the price of gasoline by 12 cents at the very least. It’s all part of the state’s effort to reduce greenhouse gas emissions. Because this latest increase is aimed specifically at transportation fuels, diesel and gas will likely feel the brunt of the increase. However, the fuel trade market is anything but stable, which means the increase could reach as high as 40 cents a gallon.

Not For Road Improvements

At least the extra money will go to help repair state freeways and other roads, right? Unfortunately no. That’s right, none of the revenue collected from this new tax will go towards road construction or improvement.

When Is Enough, Enough?

This is another example of citizens paying more taxes than they really should. In fact, with this latest increase, California residents could be paying as much as a dollar a gallon or more next year in gas taxes alone. If you need help learning how to save as much of your income in other areas, then GROCO can help. Just click here.

http://www.ocregister.com/articles/new-615000-gas-tax.html

 

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As Property Values Soar In California, So Do the Tax Bills

When it comes to taxes, sometimes it seems like if it’s not one thing, then it’s another. During the recession, when the housing market was taking a hit due to dropping property values, county tax assessors across the state actually dropped property tax bills in effort to help homeowners. However, now that the state’s economy is improving, the state’s budget analyst believes property taxes could be on their way back up.

Tax Bill Dropped

The good news was that during the recession homeowners saw their property tax bill dip by an average of $1,600, while commercial properties saw an even bigger reduction at $7,500. The bad news is that local government property tax revenues dropped about $7 billion during that time period.

Government Wants Its Cut Again

Now that the economy is on the upswing, local governments want to see that money return. The tax reductions that were enacted during the recession are being rescinded, which means property owners are about to see another hike in their property tax bills. In fact, some homeowners might see an increase of as much as 20 percent.

Keep as Much as You Can

Taxes can seem never ending, which is why it’s always a good idea to get the help of an experienced tax professional who can help you keep the maximum amount of your income as possible. At GROCO, we can help with all of your tax needs.

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Five Tax Items to Be Ready For This Year

Although the most recent tax season is over one can never truly put his or her tax-planning hat completely away for the year. With tax laws and regulations always in flux, you have to make sure that you’re prepared for the upcoming tax season. It will be here before you know it. Although there shouldn’t be any major surprises for 2014, there are some things to keep in mind in order to make sure you get the most out of your return. Let’s take a closer look.

  • It appears that the federal government will wait longer than usual to renew any temporary tax provisions, which means it could take longer for you to plan for 2014.
  • Don’t miss out on the simplified home office deduction if you are self-employed and run your business out of your home.
  • Pay close attention to any ongoing IRS troubles or any new tax reform, which could have an effect on your 2014 taxes.
  • Make sure you know the latest regulations for tax preparers, as the IRS appears to be ready to regulate them a lot in 2014.
  • Take full advantage of the benefits of inflation tax adjustments.

There are a lot of things you can do to prepare for the 2014 tax year, including contacting the experienced tax professionals at GROCO. We can help you with all of your tax planning needs. Just come in and see us or give us a call at 1-877-CPA-2006.

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Simple Strategies for Avoiding an IRS Audit

Does the fear of an IRS audit keep you awake at night? Although most people will never have to worry about an IRS audit, those who have been through the process can tell you that it’s something they only hope to experience once.

If you’ve never been through an audit that means you must be doing something right. However, if you’re concerned that at some point the IRS might choose you, there are some things you can do to prevent an audit, or at least decrease the probability of being selected.

  • Tell the truth when you file your taxes
  • Get organized and keep detailed records
  • If you’re self-employed keep track of everything
  • Avoid unreasonable deductions and keep track of all of them
  • Try to avoid fluctuations in your income
  • Don’t make too many charitable donations
  • Let a professional prepare your taxes

It’s impossible to completely rule out the possibility of an IRS audit, but by taking these measures you can greatly reduce your chances of being chosen for an audit. If you feel like the IRS might single you out for an audit, then contact the professional CPAs and tax advisors at GROCO for help.

We have helped thousands of individuals and businesses from all walks of life, including many who have been audited by the IRS. We can help you, too. Just click here to contact us, or call us at 1-877-CPA-2006. You can also click here to read more about each of these audit-avoiding strategies.

 

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Five Tips for Planning Your Taxes for Next year

Summer is almost here and that means people are getting ready to enjoy outdoor activities like BBQs & swimming and hiking & fishing. It’s also a great time to start thinking about your taxes for next year. What? It can’t really be time to do that, can it? Well, when it comes to tax planning, it’s never too early to get started.

Even though, it’s only May and the tax deadline for last year was only a month ago, there are several things you can do now to get ready for next year. So let’s take a look at some of those things.

  • First, you should stay organized. That means putting all of your important tax documents in one safe place, so you have them all ready when tax time comes.
  • Be aware of how life changes can change your tax status. For example, should your marital status change, or you welcome a new child to your family, these can alter your tax bill. Changes like these can mean a update to your Form W-4 is necessary.
  • Many people just claim the standard deduction on their taxes, but now might be a good time to consider itemizing. You can start taking an inventory of any possible deductions that have already occurred or will occur later in the year.
  • Stay informed on any possible tax changes announced by the IRS. Either check their site regularly or subscribe to their email list.
  • Consider hiring a professional tax preparer. It’s always a good idea to get a little help from an experienced tax professional, like GROCO.

Even though it’s still early in 2014, it’s never too early to start thinking about your taxes. If you have any questions about your tax planning, then contact us at GROCO at 1-877-CPA-2006. Need help with accounting? We do that too. Click here to learn more.

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