Tax Law Blog | IRS Tax Attorneys

The IRS (Internal Revenue Service) recently mailed an information package to 130 million households and individuals who regularly file tax returns related to the recently signed Economic Stimulus Payments.

It is important to understand that the tax stimulus payments are not applicable or available to the following individuals:

* Non resident aliens.
* People who are claimed as dependents or eligible to be claimed as dependents on another’s tax return.
* Those individuals that do not have a SSN (social security number).
The IRS (Internal Revenue Service) recently mailed an information package to 130 million households and individuals who regularly file tax returns related to the recently signed Economic Stimulus Payments.

It is important to understand that the tax stimulus payments are not applicable or available to the following individuals:

* Non resident aliens.
* People who are claimed as dependents or eligible to be claimed as dependents on another’s tax return.
* Those individuals that do not have a SSN (social security number).

Please click here for more information.

The Internal Revenue Service (IRS) office serving all U.S. taxpayers living or working overseas is located in Austin, Texas. This office provides U.S. Federal tax assistance to Americans in Japan, and is also the destination for all returns filed from abroad. The IRS office at the American Embassy in Tokyo has been closed since 2004.

The IRS Home Page, www.irs.gov, provides a lot of useful information for taxpayers and should be your first stop for tax questions and forms. In particular, the IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad is an invaluable resource for anyone living abroad or with income from a foreign source.

One point that all international taxpayers should keep in mind is that the United States taxes its citizens on their worldwide income. Even if you are eligible to exclude a certain amount (or all) of your earned income in a given year, you must file a U.S. tax return in order to claim that exclusion. Also, the foreign income exclusion does apply to self-employment tax.

Questions about U.S. state taxes and/or Japanese taxes should be directed to the appropriate agencies. Neither the IRS nor the Embassy can advise you or provide forms for U.S. state or Japanese taxes. More information about Japanese tax issues for foreign residents of Japan is available online here.

President Bush today signed the housing stimulus bill (H.R. 3221, The Housing and Economic Recovery Act of 2008). The House had approved the bill 272-152 and the Senate 72-13.

There are four main tax cuts in the $15.1 billion tax package:

* Refundable tax credit for first time home buyers (10% of the purchase price, up to a $7,500 credit)
* Additional standard deduction for real property taxes for non-itemizers ($500 single/$1,000 joint)
* Expansion of Gulf Opportunity Zone incentives
* Temporary increase in the low-income housing tax credit

The major tax increases in the package are:

* Information returns for merchant payment card reimbursements
* Delay implementation of worldwide allocation of interest until 2011
* Modification of the § 121 exclusion of gain on sale of a principal residence

For futher information on these tax provisions visit the Tax Prof Blog

Certain purchases exempt from state tax; second tax holiday comes in October

The back-to-school tax holiday runs from July 31 through Aug. 3. Certain school supplies including clothing, footwear, computers and computer-related accessories are exempt from state sales tax during this time.

From Oct. 2-5, the purchase of energy- or water-efficient products with a sales price of $1,500 or less per product, purchased for noncommercial home or personal use, will be exempt from state sales tax.

During this period, products with the “Energy Star” designation and WaterSense products will be exempt from the state sales and use tax. For a list of WaterSense products, go to www.epa.gov/watersense.
Source

New York City property tax owners will find out over the next few months whether they will get a 7 percent property tax cut for the second year in a row, Mayor Michael Bloomberg said on Monday.

New York City’s economy is sliding with Wall Street’s profits and the independent mayor tried but failed to persuade the Democratic-led City Council to take back that property tax cut in the new budget that started on July 1. He and the Council agreed they might have to address that issue again in the coming months.
Source

George Bush will leave his successor with the highest national debt in US history, the White House announced today.

The American budget deficit is projected to reach $482bn next year, breaking the previous record high of $413bn set in 2004. White House officials blamed the sagging economy for the new deficit figure, which does not reflect about $80bn in Iraq war costs.

Barack Obama and senior Democrats in Congress pointed to a different culprit: the billion-dollar tax cuts that Bush pushed through in 2001 and John McCain has vowed to extend if elected president.

“These have been years of unprecedented fiscal irresponsibility,” Obama economic policy director Jason Furman said in a statement.

“Senator McCain is proposing to continue the same Bush economic policies that put our economy on this dangerous path and that will drive America even deeper into debt.”

The national debt fell to $162bn in 2007, bolstered by a rising stock market that triggered increased income tax receipts. The deficit figure rose to $389bn this year.

The last year of budget surpluses in America was 2001, when Bill Clinton left the White House. The rosy budget outlook at the time helped Bush win passage of $1.35bn in tax cuts during his first year in office.

The Bush administration points to the current economic slowdown, fuelled by the fall of the sub-prime housing market, as the factor driving the US debt higher. Tax rebates worth more than $150bn were given to many households earlier this year, adding to the deficit.

The war in Iraq has also had a major effect on the country’s rising debt. A report released this month by the non-partisan Congressional Research Service estimates the Iraq conflict has cost America $648bn - almost as much as the $686bn Vietnam war, in inflation-adjusted dollars.

Republicans in Congress were largely silent at the release of the damning debt figures. But Rahm Emanuel, the No 3 Democratic leader in the House of Representatives, took a caustic jab at Bush. “Mr President, we will be forever in your debt.”
Source

As we all know that taxes play a major role in everyone’s life and they are equally important to be considered. We all know that there certain kind of taxes that are been charged by the federal government as well there are certain tax deductions and tax exemption that are also enjoyed by the people.

It should also be taken into consideration that if you are an eligible student for tuition, education and textbook tax credits, than you can benefit a lot while filing your tax returns. Student should also be cautious while filing their tax returns. A Canadian student gets a tax slip which is known as Tuition and Education Amount Certificate. There are various tax slips like T2202, T2202A, TL11A or TL11C depending on the institute and the course. This tax slips have to be inputted into the tax returns to gain the tax credits. So it should be understood by students that going college can provide you with the fortune and if you do not input these tax slips into the tax return than this would cost hundreds of dollars every year.

Sometimes when people go to some independent tax specialist than they do not know what to do with this educational tax slips or sometimes it is overlooked. So people should be aware about this and how to use the tax slips in the appropriate manner to gain the tax benefit. There are some simple tips that can avoid you making such kind of mistakes:

- You should get the print out of your tax return. This can be obtained by your tax preparer.
- As most of the tax software programs prints the tax summary page, you should make sure that you show the unused tuition, education and textbooks amount in it.
- You should also make sure that in Line 323 your tuition, education and textbooks amount are mentioned.
- To make sure that your tax credits are carried forward every year you should monitor your letter of assessment.
Source
Need Tax Lawyers?

The IRS (Internal Revenue Services) provides various back tax resolution programs to tax payers only after analyzing their financial condition. It is important for the tax payers to be well aware of the tax obligations of IRS before they actually consider solving back taxes.

The simplest way to settle the back taxes is the wholesome payment of tax payer’s back taxes to the IRS. It is quite struggling for the tax payers to avail the information about their tax account. However, Fully Pay Service is there to simplify the task. It provides the accurate payoff amount and its instructions. Moreover, it will regularly follow up with the IRS and ensure about the money transactions.

Offer in Compromise is another way to settle IRS back tax debt. As IRS Offer in Compromise is an effective measure for the tax payers who are not able to pay their back tax dues. It helps to lower down the liability according to the financial conditions of the tax payers.

The next tax settlement option is Installment Agreement that allows the tax payers to pay their back taxes through monthly payments. Besides offer in compromise, installment agreement is another alternative for those who find it difficult to pay their back taxes. It either pays full or half back tax liability to the IRS that depends on the circumstances of the tax payers.

If the IRS is not able to collect the taxes from the taxpayer, then they keep the taxpayer’s account on Currently Not Collectible (CNC) status. With this, the IRS does not undertake collection activity but the tax liability on the taxpayers will be continued. Once, the tax payer will pay off the tax liability, the CNC status will remove from his account.
Source
To find a good lawyer visit the Law Firm Directory.

A Great Tax Attorney is Ken Sheppard who services all 50 states.

The Senate today passed, by a 72-13 vote, the housing stimulus bill (H.R. 3221, The American Housing Rescue & Foreclosure Prevention Act).  The House on Thursday had approved the measure by a 272-152 vote after President Bush earlier in the day dropped his veto threat and urged Republicans to support the bill.  There are four main tax cuts in the $15.1 billion tax package:

* Refundable tax credit for first time home buyers (10% of the purchase price, up to a $7,500 credit)
* Additional standard deduction for real property taxes for non-itemizers ($500 single/$1,000 joint)
* Expansion of Gulf Opportunity Zone incentives
* Temporary increase in the low-income housing tax credit

The major tax increases in the package are:

* Information returns for merchant payment card reimbursements
* Delay implementation of worldwide allocation of interest until 2011
* Modification of the § 121 exclusion of gain on sale of a principal residence

Contact IRS Tax Attorney Ken Sheppard. He is an Experienced Tax Lawyer who services all 50 states.

Cross-border tax disputes are usually channelled through the “mutual agreement procedure”, an informal negotiation between the tax authorities of the states involved. Arbitration has been suggested as an alternative, and is starting to be instituted. Arbitration will probably be a good “stick” against over-long mutual agreements, but it also seems to exhibit “carrot” features, such as finality, independence and greater taxpayer support.

This article describes the developments and analyses the options that countries face. In the Australian context, the transfer pricing litigation environment and the FIN 48 accounting standard are considered, and the author calls on the Australian government to invite submissions on the prospect of arbitration clauses in Australia’s tax treaties.
Source

Winghunter was asking about a version proposed earlier this year by Fred Thompson, a plan which mimics one first put out by the House Republican Study Committee. But the idea is essentially the same: Individuals would figure their liability under both the regular income tax and a simplified lower-rate alternative and pay whichever is less.

TPC has concluded that such a Thompson-like tax system would reduce federal tax revenues by an eye-popping $7 trillion over 10 years. But, getting back to Winghunter’s question: What would that do for the economy?

The short answer is nothing good. A conventional lower-rate structure would boost growth, but only if it is financed, either by spending reductions or tax increases. It happens that CBO has just released a report that looks at the economic effects of a much more modest plan—permanently indexing the Alternative Minimum Tax and extending the 2001 and 2003 tax cuts. It estimated that unless these tax cuts are paid for, deficits would reach 5 percent of GDP by mid-century and 18 percent by 2082. Eighteen percent of GDP happens to be about what we collect in total tax revenues each year. Hello Argentina.

In this study, CBO director Peter Orszag says the economic consequences of such a flow of red ink are literally unimaginable. As he put it, “projected deficits would grow to levels well beyond the range for which economic models have been developed.” Diane Rogers over at economistmom.com has a nice take on this.

Of course, some on the Right may try to dismiss Orszag’s analysis since he used to work in the Clinton Administration and at The Brookings Institution—a think tank Winghunter dismisses as “liberal.”

Trouble is, Orszag’s analysis is essentially identical to what CBO was saying 5 years ago, when its director was Doug Holtz-Eakin, a highly-respected conservative economist who is now John McCain’s chief economic adviser. This is what he said about the impact of tax cuts that are not financed:

“Sustained and rising budget deficits would affect the economy by absorbing funds from the nation’s pool of saving and reducing investment in both the domestic capital stock and foreign assets… As a result, the growth of workers’ productivity would gradually slow, real wages would begin to stagnate, and economic growth would tend to taper off. If that situation continued long enough, rising deficits could actually lead to a sustained contraction of the economy.”

So, no problem. All we need to do is find a way to cut $700 billion-a-year from the $3 trillion federal budget. Until we do, it is pretty clear that tax cuts of this magnitude are nothing but bad for growth.
Source