ectopistes migratorius), died at the Cincinnati Zoo. On September 7, 1936, "Benjamin," the last Tasmanian tiger (thylacinus cynocephalus), died at Australia's Hobart Zoo. And on June 24, 2012, "Lonesome George," the last living Pinta Island tortoise (chelonoidis nigra abingdoni), died in Ecuador's Galapagos National Park.
On September 1, 1914, "Martha," the last remaining passenger pigeon (
When you think of endangered species, you naturally think of plants and
animals. But the IRS has its own endangered species list (called "listed transactions"),
and that means sometimes even tax strategies go extinct. So, for
example, in October, 2006, the last grandfathered private annuity trust
was formed. On April 10, 2007, most so-called "Section 419(e)" plans
were shot down. Now, could the venerable Swiss bank account (bankum secretus strongius) be next?
Switzerland's banking laws have long made it a crime to reveal an
account holder's name. At the same time, Swiss authorities have
historically refused to cooperate with foreign countries where failure
to report taxable income is concerned. Together, these policies made
Switzerland the banker of choice for Colombian druglords, Sub-Saharan
kleptocrats, Russian oligarchs, and even the so-called "Wolf of Wall
Street," Jordan Belfort.
But recently those protections have melted away like so much Swiss
chocolate sitting in the bright alpine sun. It started back in 2008 when
Bradley Birkenfeld, a mid-level banker, blew the whistle on helping
American taxpayers "forget" to report millions of dollars of interest
income. Birkenfeld's bombshell landed him a 40-month prison sentence and
a $104 million reward from the IRS. A year later, the Department of
Justice fined the biggest Swiss bank $790 million and cut a deal with
the Swiss government, giving them power to force their banks to disgorge
information on American depositors almost on demand. In 2012, an even
stronger settlement required 300 Swiss banks to identify their American
account holders or face their own penalties. Most recently, "Beanie
Babies" creator Ty Warner pled guilty to evading $5 million in tax and
agreed to a $53 million fine — and still faces four years in jail.
And now? Well, some observers say that Swiss banks are actually doing
the IRS's job for them. Better to rat out clients than pay IRS fines!
Banks are pressuring Americans to report their accounts, and even
freezing accounts unless clients can prove they're playing by the new
rules. U.S. attorneys are generally advising clients with secret
accounts to 'fess up now before the IRS finds them and penalizes
them 50% of their balances. At this point, attorneys say, discovery is a
matter of "when," not "if." That message appears to be hitting home.
Since 2009, over 38,000 Americans have come forth and paid over $5 billion
in taxes, penalties, and interest. The once-celebrated Swiss bank
account appears headed the way of the dodo, as far as U.S. tax cheats
Look, we understand that everybody wants to pay less tax. But there's a
right way to do it and there's a wrong way to do it. The right way is to take advantage of hundreds of legitimate deductions, credits, and strategies contained in the tax code and treasury regulations. And it all starts with a plan. We can give you that plan, and it doesn't involve a trip to Zurich or Geneva to visit your money. So call us now to see how much you might be overpaying. And if you really like cuckoo clocks, fine watches, and yodeling, you can take a legitimate trip with the savings!
They say that knowledge is power, and that's especially true with taxes.
So here's a quick quiz to test your tax knowledge in 2014. But look out
— the questions (and the answers) might not be what you expect!:
We'll start with an easy one. Last year's "fiscal cliff" legislation raised the top marginal tax rate to 39.6%. What's the top effective rate?
B. 43.4% (39.6% plus 3.8% Medicare tax)
C. >43.4% (depending on "PEP" and "Pease" phaseouts)
Give up? It's a trick question — all three answers can be correct, depending on your own circumstances!
Alright, let's shift gears a bit. The tabloids love running stories
about celebrities who run into tax trouble. After all, if they make so
much money, shouldn't they be able to afford their taxes? So here's our
next question — which of the following sets of celebrities ran into tax
trouble in 2013?
A. Boxer Manny Pacquiao, rapper MC Hammer, and racecar driver Juan Pablo Montoya
B. Actor Stephen Baldwin, singer Lauryn Hill, and "Beanie Babies" creator Ty Warner
C. Actor Al Pacino, rapper Fat Joe, and "Real Housewife of New Jersey" Teresa Giudice
Well, which did you pick? The answer is, another trick question — every single one ran into tax problems last year!
Okay, final question. We know that tax laws can be impenetrably dense
and hard to understand. So maybe "context" will give you a hint. Which
of these passages is taken from the 2013 fiscal cliff act, and which is
taken from California's workers' comp regulations?
A. "Notwithstanding any other provision of law, any refund (or advance
payment with respect to a refundable credit) made to any individual
under this title shall not be taken into account as income, and shall
not be taken into account as resources for a period of 12 months from
receipt, for purposes of determining the eligibility of such individual
(or any other individual) for benefits or assistance (or the amount or
extent of benefits or assistance) under any Federal program or under any
State or local program financed in whole or in part with Federal
B. "In the case of covered OPD services furnished on or after April 1,
2013, in a hospital described in clause (ii), if— (I) the payment rate
that would otherwise apply under this subsection for stereotactic
radiosurgery, complete course of treatment of cranial lesion(s)
consisting of 1 session that is multisource Cobalt 60 based (identified
as of January 1, 2013, by HCPCS code 77371 (and any succeeding code) and
reimbursed as of such date under APC 0127 (and any succeeding
classification group)); exceeds (II) the payment rate that would
otherwise apply under this subsection for linear accelerator based
stereotactic radiosurgery, complete course of therapy in one session
(identified as of January 1, 2013, by HCPCS code G0173 (and any
succeeding code) and reimbursed as of such date under APC 0067 (and any
succeeding classification group)), the payment rate for the service
described in subclause (I) shall be reduced to an amount equal to the
payment rate for the service described in subclause (II)."
Drumroll, please . . . the answer is, it's another trick question
— both examples of sterling prose appeared in the fiscal cliff law!
(Quit complaining about the trick questions — it's a tax quiz, after all!)
Don't be upset if you didn't get all three questions right. (Nobody else
did, either!) Fortunately, there isn't any real money at stake. But
that won't be true come April 15. So call us now for the plan you need to come up with the right answers in 2014!
2014 is here, and it's time for New Years' resolutions. Americans across
the country are pledging to lose weight, quit smoking, exercise, and
find new jobs. Some of them will succeed, others will lose faith before
the first snowmelt. (Want to make a fortune? Open a gym that turns into a
sports bar on February 1!) So we thought we would take this opportunity
to suggest some resolutions to the folks who determine how much tax we
Congress: Put the Tax Code on a diet.
According to one count, our tax code runs nearly 4 million words.
That's four times the words in all the Harry Potter books put together,
with none of the magic and wizardry. (You may think we work a
version of the "obliteration charm" when we save you thousands in tax,
but we assure you there's nothing supernatural involved.) We say it's
high time to put the Tax Code on a diet — and if that doesn't work, try
bypass surgery. We can raise just as much money for the government
without dragging down the economy the way the tax code does.
The problem, of course, is that there's no agreement in Washington to
accomplish anything so ambitious. Our current Congress is widely
considered to be the least productive in history, at least if you
consider "bills passed" to be the right measure of productivity. House
Speaker John Boehner has said that Congress should be measured by how
many bills they repeal — if he's serious, maybe he can start with
nightmares like the Alternative Minimum Tax, the Earned Income Tax
Credit, and the passive activity loss rules.
Back in 1986, Ronald Reagan cited the following language from the tax
code (defining private foundations, if you're curious), to help make his
case for comprehensive tax reform: "For purposes of paragraph (3), an
organization described in paragraph (2) shall be deemed to include an
organization described in section 501(c)(4), (5), or (6) which would be
described in paragraph (2) if it were an organization described in
section 501(c)(3)." Congress has passed a dozen "tax simplification"
laws since then, and the language Reagan cited still remains. (Congress
must have spent their time working on the really confusing stuff!)
IRS: Focus on customer service. Fighting IRS red tape makes a
trip to the DMV look like a stay at a five-star hotel. The average hold
time to speak to someone at the agency rose to 17 minutes in 2012, but
the percentage of callers who actually get help fell to 68%. Mail is
even slower — nearly half their correspondence takes more than 6½ weeks
to answer. No private-sector business would accept those kinds of
The problem here is that the IRS simply has an impossible job. They don't make
the tax laws, but get blamed for them just the same. They don't get the
budget they need to do their job, but get blamed for falling down on it
just the same. (For Fiscal 2011, the IRS collected $2.52 trillion in
tax with a budget of just $11.8 billion, which makes a pretty phenomenal
return on investment of 214:1.) Few members of Congress want to be
known for giving the IRS more money. But funding for basic
technology and customer service shouldn't be nearly as hard a case to
make as funding for more aggressive enforcement.
As for us, we're resolving to bring you even better, more proactive tax advice. That process starts with a comprehensive plan
to take advantage of every deduction, credit, and strategy you legally
deserve. If you don't already have one, maybe you should make getting
one your resolution for 2014!