Wesley Snipes isn’t done with the IRS yet, or I guess it would be more accurate to say that the IRS isn’t done with Wesley Snipes yet. Snipes asked the IRS to compromise on his tax debt of $23.5 million. I wonder how much of that is penalties and interest. Snipes offered to pay about $840,000. The IRS refused the offer, saying it could reasonably expect to collect about $9.5 million. Snipes took the dispute to the Tax Court, which sided with the IRS.
According to an item in Forbes about Snipes and the Tax Court case, Snipes has been working as an actor since his release from prison. I guess he’s just going to have to keep working until he can make a better offer to the IRS.
I read the Tax Court’s decision. If you want to read it, it’s linked in the item I linked to above. I find it interesting that the Tax Court’s decision makes no mention of the fact that Snipes did prison time for not filing tax returns – the same tax returns that would have reported the income that resulted in the tax he hasn’t paid. I suppose that fact wasn’t mentioned because it wasn’t relevant to the question that the court was asked to decide.
IF A WAY TO AVOID TAX HAS BEEN “BLESSED” BY THE COURTS OR THE IRS, THEN WHO, EXACTLY, IS BEING “TRICKED?”
Wow, there is sure a lot of discussion about the limit placed on the deductibility of state and local taxes by the Tax Cuts and Jobs Act, and the related regulations recently issued by the IRS. I wrote about those regulations on August 30, pointing out that the regulations will limit or disallow federal deductions for payments for which the taxpayer receives a state or local tax credit. The effect will be to undo measures put in place by certain states that would treat otherwise non-deductible state and local tax payments as charitable contributions.
If you want to read some scholarly analyses about how all this works or doesn’t work, and how it should or should not be changed, here are some links:
And here’s a link to a report on what I would call a decidedly non-scholarly, political attack on the proposed regulations:
As you can see, the links are all from the TaxProf Blog. Of course, you can go and read the source papers, if you’re so inclined.
It seems that many more enlightened countries have a national consumption tax. Such taxes are also known as value added taxes or “VAT” and are more colloquially described as national sales taxes.
In a discussion about why there is no national consumption tax in the United States, I learned something I hadn’t heard about before. According to the scholar who researched the question, in the 1970s and 1980s, American lawmakers supported such taxes, but those lawmakers either abandoned the idea or were ”ousted from political office.” That wording suggests that those lawmakers’ support of a national consumption tax resulted in electoral defeat for those lawmakers. That shouldn’t come as a huge surprise, should it?
PROPOSED IRS REGULATIONS WOULD DENY FULL FEDERAL INCOME TAX DEDUCTION FOR STATE TAX CREDIT DONATIONS
This is an outgrowth of the uproar over the limit placed on the deductibility of state and local taxes by the Tax Cuts and Jobs Act. I wrote about it here and here.
As a result of the limit on deductibility of state and local taxes, some states adopted changes to their tax codes to treat state and local tax payments as charitable contributions, in order to preserve the deductibility of those payments on taxpayers’ federal income tax returns.
The IRS has now responded by proposing regulations that will limit or disallow entirely deductions for payments for which the taxpayer receives a state or local tax credit.
The IRS news release is here.
Of course, this change isn’t going to affect just the deductibility of stat and local tax payments. It’s also going to affect state tax credit donations to actual charities. In other words, it will mean that my tax credit donation to the food bank won’t be a deductible donation on my federal tax return anymore.
Thanks a lot, high tax states (they’re the ones who were so insistent on preserving federal deductibility for the high taxes their residents pay).
A STRATEGY FOR AVOIDING THE INCOME LIMIT FOR ROTH IRA CONTRIBUTIONS HAS SUPPOSEDLY BEEN ENDORSED BY AN IRS OFFICIAL
I’m not endorsing it, but an IRS official supposedly has. It’s a strategy for making Roth IRA contributions indirectly, by first contributing to a conventional IRA, then converting the conventional IRA to a Roth IRA, as a means of avoiding the income limit for contributions to Roth IRAs. The details are in a Forbes article posted last week.
At least one opinionator thinks it’s the latter:
“tax evasion is pervasive among the rich, deserving athletes or idle rentiers alike. Why? Not because they are evil people or impervious to the consequences of their actions, but because they are wooed by a global tax evasion industry….”
That’s from a New York Times editorial, quoted at the TaxProf Blog.
Remember, claiming that you don’t have to pay federal income tax is only going to get you in trouble. Just ask the IRS.
Go to deconcinimcdonald.com, where you’ll see a link under Recent News that takes you to my latest Tax Law Special Report. There you can read my comments on why I think there should be more opportunities for tax-advantaged savings, and why I think those opportunities can and should be provided without the creation of yet another set of tax rules.
While I’m on the subject, here’s a link to a recent post on the Tax Foundation’s site that makes some of the same points that I made in my Special Report.
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.