Same-sex couples generally must do twice the work at tax-filing time than traditional husband and wife taxpayers. That's because the federal Defense of Marriage Act, or DOMA, defines "marriage" as "only a legal union between one man and one woman as husband and wife." So gay and lesbian married couples must file separate federal returns even though their states allow for a single joint filing. There's also usually a fiscal cost. Not only do the same-sex couples have to pay tax professionals more for the extra work they do. Some of the couples also face higher taxes by not being…

Today is one of those days that really makes you think twice, or more, about commemorations and the state of today’s world. May 25 is National Missing Children’s Day. It was established in 1983 by President Ronald Reagan. The date was selected because May 25, 1979, was the day that 6-year-old Etan Patz disappeared. Thirty-three years later this week, the New York City police department announced an arrest in this highly-publicized child abduction case. Sadly, Etan’s situation is not an aberration. Thousands of kids go missing every day. Unless you are a parent of a missing son or daughter, there…

Family farms are among the most iconic of American symbols. That's why these patches of agrarian productivity often are invoked in tax fights, most notably by folks who want to do away with the federal estate tax. This tax is often cited, usually incorrectly, as a killer of family farms. Internal Revenue data show that only a fraction of the millions of estates left each year involve farm assets. And the New York Times reported that in 2001 the pro-repeal American Farm Bureau Foundation could not cite a single case of a family farm lost due to the estate tax.…

This post was updated March 30, 2018. When the end of matrimony leads to the start of alimony, each parting partner can feel the tax effects. If you are the ex-spouse getting alimony payments, the money is taxable to you as income in the year it is received. This added income calls for a couple of additional tax considerations for the recipient. In traditional man and woman marriages, this usually meant that the husband made spousal support payments to his ex-wife. But the changing world — including, but not limited to, things like more women working and the nationwide legalization…

You can learn a lot about your neighbors just by walking around the area. Take the kids who live seven doors down from us. Their driveway chalk art prompted a speculative haiku: Hopscotch? Much too tame.These kids are C.S.I. fansor quite macabre. OK, maybe it's me who's the television crime show aficionado. I'm sure (hope!) the children had much less ominous reasons for drawing chalk outlines of themselves. But the line artistry also got me thinking about that inevitable meeting of death and taxes. Yeah, that kind of A to B to taxes thinking tends to happen in what passes for the…

My home state’s governor officially exited the 2012 Republican presidential campaign months ago, but it’s obvious he’s still thinking about a larger political stage. Rick Perry has posted the Texas Budget Compact on both the official governor’s website, as well as on his campaign page. The five-point policy wish list calls for, in part, no new taxes or tax increases in the Lone Star State. Speaking at a transportation company warehouse in Houston earlier this week, Perry said his budget guidelines would “lead to a stronger Texas” and that “each and every member of the Legislature or anyone aspiring to become…

Recent tax policy debate has focused on two proposals: Although these two tax proposals are about different areas of taxation, they share one interesting component. Both are named for a person. Obama was on the road Tuesday (April 10) touting the Buffett Rule, which gets its moniker from financier Warren Buffett. The uber rich Oracle of Omaha ratcheted up the debate over how the wealthy should be taxed with his comments last year about his tax rate vs. that of his secretary. Meanwhile, the current president’s immediate predecessor, for whom our current tax rates are named, was addressing the New…

On March 21, 1963, the most famous U.S. federal prison slammed its doors for good. Alcatraz Island was home to the first lighthouse on the West Coast. That beacon is still there, but The Rock also housed military installations, was the birthplace of the American Indian Red Power movement and remains a bird sanctuary. Alcatraz Island at dawn via Wikimedia But most of us know Alcatraz for one thing, its infamous penitentiary. The facility could hold more than 300 prisoners and thanks to Hollywood everyone knows about Robert Stroud, the Birdman of Alcatraz. Other famous criminals, however, also spent time…

Starting a business is a big move. It also can pay off at tax time thanks to the many deductions an owner can claim as he or she works to make it a success. But a businessman or woman better make sure that those tax breaks truly are for a business that’s started with the intention of turning a profit. One business operator didn’t convince the IRS or a Tax Court judge of his commitment to making money and he ended up owing $3,955.55 in added taxes. The core issue before Tax Court Judge Carolyn P. Chiechi was whether Theodore…

There's a lot of talk about hiring a tax professional during filing season. But you also should get expert help any time of the year when your tax circumstances are a bit tricky. Joe Paterno, the former Penn State head football coach of 46 years, died on January 22, 2012 in State College, Pennsylvania. He was 85. His legacy as the winningest coach in college football was tarnished by his inaction in a sex abuse scandal leading to his dismissal in November, 2011. Shown is a statue of him on the Penn State campus on November 10, 2011. UPI/George Powers…

In noting how a small group of Republicans dared defy the man behind the no-taxes pledge, I quipped “what are they afraid of? That Grover Norquist will egg their houses?” Obviously I was being a smart-ass trying to be funny had pranks on my mind since we had just passed Halloween. I know Norquist wields a lot of power. And his personal support, along with that of his Americans for Tax Reform (ATR), carries a lot of weight on Capitol Hill. Americans for Tax Reform President Grover Norquist speaks during Reuters Washington Summit, Washington, D.C., June 27, 2012. I’ve seen…

It’s OK to consider taxes. That’s the message that 40 House Republicans sent via letter Wednesday to the Joint Select Committee on Deficit Reduction, popularly known as the super committee. Sixty Democrats also signed the letter, which was organized by Reps. Heath Shuler (D-N.C.) and Mike Simpson (R-Idaho). Signatories include GOP presidential candidate Ron Paul (R-Texas) and House Democratic Whip Steny Hoyer (D-Md.). The letter did not include specifics, but rather urges the special deficit cutting committee to consider revenues as part of any plan. Still, the correspondence is significant because the GOP lawmakers, most of whom reportedly had signed…

The gloves have come off in the taxes and deficit reduction fight, but not how you probably expected. A Republican Congressman today blasted anti-tax crusader Grover Norquist, founder of Americans for Tax Reform, and his much publicized demand that GOP members vow not to support any new or increased taxes. Saying so isn’t enough. Grover came up with the no-tax pledge for them to sign. I’m reminded of that first apartment lease that I didn’t read closely enough in my enthusiasm to be out on my own. I was never so glad as the day when that document expired. Norquist’s…

Some nut jobs, folks who need lives, conspiracy theorists believe Kenneth Lay is living the good life on some faraway tropical island. They just don't buy that Lay, the former chief of Enron, died just weeks after being found guilty in May 2006 of 10 counts of fraud and conspiracy related to the collapse the energy company he founded. Lay's death meant that he didn't have a chance to appeal his convictions, so they ultimately were thrown out. And the erasure of the jury verdict meant that Lay's family (and if you go along with the fake death theory, the…

Texas can continue to impose its $5-per-customer fee assessed strip clubs that serve alcohol. The so-called pole tax does not violate the clubs' free-speech rights, according to the Texas Supreme Court. The legal battle has been underway since 2007. That's when the state's Sexually Oriented Business Fee Act took effect. The law imposes the extra charge on establishments that offer exotic dancing and serve alcohol. Although the fee is based on the number of customers, the businesses must pay it. If I had to guess — and guessing is what I'd be doing since I haven't visited a strip club…

When Indiana decided to use its tax laws to lower the boom on puppy mills, there was great hope that such efforts would spread nationwide. Under the Hoosier State's jeopardy tax assessment law, a state court filing alleging a breeder owes delinquent income and sales taxes would allow the state to seize the business' taxable assets. In these cases, that's puppies and dogs. The Indiana Tax Court, however, has ruled that this tax dog won't hunt. Judge Martha Wentworth found that the actions of the Indiana Department of Revenue and Attorney General exceeded their authority by using jeopardy tax assessments…

The wonderful comedienne Lucille Ball was born on this day, Aug. 6, 1911. To celebrate this 100th birthday, Google’s home page and doodle today is a vintage television set that plays clips (just “turn” the channel knob) from her classic I Love Lucy television program. Ball and her then-husband Desi Arnaz were ground breakers in the TV industry, both on the technical and comedy fronts. One of the greatest compliments the hubby ever paid me was the time after listening to a convoluted and, yes, ill-advised scheme (I can’t even remember for what now), he shook his head, sighed and said,…

Many of you are at the same point in your lives as I am. As you're joining the "of a certain age" club, you also have an older parent whom you're helping out in any way you can. That's what New Jersey resident Anthony Olivo was doing. He provided nearly full-time care to his mother from 1994 to 2003, basically giving up his legal practice during those years. Following his mother's death, Olivo became administrator of her estate. He filed a tax return for the estate and claimed a deduction of $1.24 million as a debt he said the estate…

Now that Casey Anthony, the 25 year-old Florida woman accused of killing her 2-year-old daughter Caylee, has been acquitted of that charge, she can focus on the $68,520 tax lien the IRS filed against her earlier this year. Visit msnbc.com for breaking news, world news, and news about the economy The IRS alleges that Anthony, who was cleared earlier today of the most serious charges but was convicted of four misdemeanor counts of lying to police during investigation of her child's disappearance, owes Uncle Sam the money for earnings in 2008. That was the year that her daughter went missing.…

I’m not trying to become the next doomsday prophet, but as I read the newspaper over breakfast this morning I was certain that the apocalypse is near. I agreed with David Brooks. In today’s New York Times, conservative columnist Brooks makes no secret of his frustration with the way Republicans are handling the debt and budget negotiations. Basically, they don’t know how to declare victory and move on. As Brooks notes, GOP leaders have forced Democratic counterparts to: That last point, says Brooks, is “an astonishing concession.” But rather than take such a win and move on, preventing the catastrophic…

It’s been a crazy June 14. But I couldn’t let the day pass without a nod to the Stars and Stripes, and especially to my little brother. As long-time readers of the ol’ blog know, this day is special to me not for the Red, White and Blue reasons, but because it was my younger brother’s birthday. We lost him at a much too young age. But I often remember his good heart, disarming smile and the time when he was a preschooler who thought the all the flags flying on this mid-June day were in celebration of his birthday. They…

I’ve been to enough cultural events to know that there is a very wide range of what is deemed artistic. The hubby and I have some heated interesting discussions after each museum exhibit or live performance we attend. A gentleman’s club in Latham, N.Y., is hoping that such divergent opinions on art will work to its tax advantage. So far, though, Nite Moves has run into some tough critics in its effort to convince the tax and legal communities of the artistic merits of its offerings. The club contends that it shouldn’t have to collect sales tax on the fee…

Actor Wesley Snipes, currently serving time in federal prison for three misdemeanor convictions of failing to file tax returns, better get comfortable. He's stuck there for a while. The U.S. Supreme Court today rejected Snipes' request for a hearing on whether he was tried in the wrong place. Snipes argues that he was a resident of New York (and New Jersey and California) at the time of his 2008 trial in Ocala, Fla. The justices aren't going to examine where the actor, best known for the films "White Men Can't Jump" and the "Blade" vampire hunter trilogy, officially used to…

A taxpayer's out-of-pocket expenses while doing volunteer work with a qualified charity generally are tax deductible, as long as the individual can prove the expenditures if the IRS asks. That's the costly lesson a cat lover learned when she claimed more than $12,000 in expenses incurred on behalf of a nonprofit that works with feral felines. The U.S. Tax Court subsequently slashed many of the allowable charitable deductions that were in excess of $250. The reason for the dramatic tax deduction reduction? Insufficient record keeping. Cat lady's case: Jan Elizabeth Van Dusen claimed $12,068 as a charitable contribution deduction on her…

Roni Deutch, a California tax attorney known nationally as the Tax Lady thanks largely to her cable television ads, is bankrupt, out of business and facing state charges that she cheated clients out of $34 million. The California Attorney General's office last August filed suit against Deutch alleging that she and her law firm "regularly violate California law while preying on consumers who cannot afford to pay their tax liability and are facing collection actions by the Internal Revenue Service (IRS)." The complaint by then-California AG Edmund Brown, Jr., charges that Deutch falsely promised clients that she could help them…

When it comes to padding deductions, unreimbursed employee expenses might seem to be an easy one. You picked up some office supplies here. You attended a work-related conference there. Your boss never paid you for those out-of-pocket costs. So you simply add the work-related expenses to the rest of your miscellaneous itemized deductions and voila, you've overcome the 2 percent of adjusted gross income threshold. Your Schedule A deductions are a bit bigger and your tax bill is a bit smaller. Whoa up there, cowboy. Or cowgirl, as was the case in a recent Tax Court ruling. Cheryl Lynn de…

Although most of us won't have to worry about the federal estate tax, regardless of what it finally looks like pending Congressional action or inaction, almost everyone needs a will. The "Your Money" column in today's New York Times examines four will-writing software programs and found that getting legal counsel to draft your last will and testament is usually a good idea. Even even though the four programs that reporter Tara Siegel Bernard used — Quicken Willmaker Plus 2011, LegacyWriter, LegalZoom and BuildaWill — made drafting a will easy, Bernard says she "still needed a lawyer to help decode some…

Charles Raymond Wheeler has been adamant for years more than a decade that he doesn't owe taxes on military retirement payments he's received. The IRS disagrees. And this week, a federal Tax Court judge decided that Wheeler has taken quite enough of the legal system's time with his frivolous arguments for not paying the taxes and his continual stalling techniques in court. U.S. Tax Court Judge Mary Ann Cohen imposed the maximum $25,000 penalty against Wheeler. In her ruling, Cohen noted that in refusing to send in his 1040s, Wheeler relied on "a variety of repetitious and frivolous arguments. ……

The continuing tales of two actors facing tax trouble have recently taken quite different turns. Wesley Snipes, convicted in 2008 on three misdemeanor counts of failing to file a tax return, doesn't have to go to jail yet. He was sentenced later that year to three years in federal prison, but has been free while appealing his case. U.S. District Court Judge William Terrell Hodges has overturned an order that Snipes report to prison on Sept. 2. The new court order says that Snipes is a free man indefinitely, that is, "pending further order of the court." Apparently feeling like…

A federal court in Ohio has extinguished the charitable tax deduction hopes of an Ohio couple who donated their home to their local fire department so it could be burned as part of a training exercise. The problem in this case was not the controlled arson issue that caught everyone's fancy, but rather basic tax law requirements in such pricey donations. The court's finding means that James and Lori Hendrix of Upper Arlington, Ohio, now owe the IRS an additional  $100,590 in tax, plus interest and penalties. The problem with the donation the Hendrixes made back in 2004 was, according…

Since it's the weekend, how about some more news on another actor who had a run-in with the IRS? On Friday, the 11th Circuit Court of Appeals in Atlanta determined Wesley Snipes' three-year sentence to federal prison was proper. Snipes was acquitted of the more serious federal tax fraud and conspiracy charges, but found guilty in 2008 of failing to file tax returns. The IRS said that the action film star's failure to file had cheated Uncle Sam out of around $17 million in taxes. Snipes' attorneys had appealed his sentence, arguing that it was "unreasonable." The 36 months of jail time…

The IRS says that the NFL champion New Orleans Saints didn't pay income taxes on an $8.5 million payment the franchise got from the state of Louisiana in 2003. The Saints say the state money was nontaxable "working capital" that was part of 10 years of "inducement payments" given to the football team. The U.S. Tax Court is now refereeing the dispute. The tax court case, reports Forbes magazine, focuses only on the 2003 tax year, but "news reports and bond financing documents concerning the Superdome say such large payments have been made regularly. A similar tax treatment position taken…

Sorry, people. It doesn't matter that other people used tax software and ended up filing incorrect returns, even if one of them is the Secretary of the United States Treasury. It's still your, other taxpayers' and Treasury Secretary Timothy Geithner's ultimate responsibility to properly calculate and file your taxes. When you don't, regardless of who you are and which tax filing method you used, the IRS is well within its rights to demand that you pay your accurate tax bill and any associated penalties that errors might have caused. The TurboTax excuse: You remember the Geithner case. During his Senate confirmation…

Aaron Zeff had no idea he was a tax delinquent until two IRS agents showed up last week at his Sacramento car wash. The amount the IRS says Zeff didn’t pay back in 2006: 4 cents. So the IRS sent two people to collect four pennies? Actually, the bill was a bit bigger. Over the last four years the unpaid tax debt had grown to $202.35 thanks to interest and penalty fees. Zeff thought he had paid all taxes due from his business, Harv’s Car Wash. And he has no idea how that 4 cents the IRS says he didn’t…

Attention online shoppers. States are moving forward in their efforts to collect sales taxes on items purchased from remote retailers.   This week, the Virginia Senate approved a measure that would require Internet retailers to collect the Old Dominion's 5 percent sales tax.  Virginia lawmakers say they are justified in demanding their version of the so-called Amazon tax, named after the popular online retailer, because the Seattle, Wash.-based company has two facilities in Northern Virginia. The bill goes further, however, by also citing presumed nexus, or physical presence, in the state based on a company's agreements with affiliates.  In this…

The highest court in the Lone Star State has agreed to consider whether the state's $5 charge on strip club patrons violates the First Amendment right of free expression. How nice. The decision to take the case came just in time for Valentine's Day. At issue is whether the so-called "pole tax" unfairly singles out for regulation nude dancing in clubs that serve alcohol. Last summer, the 3rd Court of Appeals in Austin agreed, by a 2-to-1 vote, with a state district judge's decision to strike down the law. "While nude dancing 'falls only within the outer ambit of the…

Joe Francis, founder of the soft-porn Girls Gone Wild video empire, has lost a round in his effort to regain control of $22 million the IRS seized. Last month, Francis filed suit in federal court in Los Angeles against the federal tax collector contending that the agency improperly issued a jeopardy assessment against him. The action effectively freezes Francis out of access to the millions held in two brokerage accounts linked to the video entrepreneur. Jeopardy assessments, which essentially amount to immediate seizures, are typically used when the IRS believes such action is the only way to preserve assets to…

The credit card bills with Christmas charges are starting to show up and, like millions of other shoppers, the hubby and I spent much of our holiday budget at virtual storefronts. Such dot-com spending habits are of great interest to state tax departments. I've blogged before about cities and states going after online operations, as in Chicago's tax lusting after eBay and StubHub transactions. But the favorite tax target of most state revenue offices is Amazon. The Seattle-based seller collects sales tax in just a few states. Last year, however, the quest for more money prompted several revenue-hungry state legislatures…

Not only does the hubby read the ol' blog, he acts on its suggestions! Sometimes. One of my Christmas gifts yesterday was Tax Stories, the book edited by TaxProf Paul Caron. I had mentioned it in my Holiday gifts for tax geeks post earlier this month with a parenthetical note to my sweet spouse. Thanks, dear! In addition to editing the publication, Caron wrote the introduction, Tax Archaeology, in which he concludes that the problematic results in the book's 10 Supreme Court federal income tax cases underscore that "perhaps the fault lies…in our income tax itself." "Instead of chastising the…

The year is winding down. You're trying to gather of all your receipts. (Yeah, I know, next year you'll institute that record-keeping system). But some paperwork is missing. What can you do? You might want to check out a 79-year-old rule regarding the estimation of tax deductions. In 1930, a federal court ruled that a famous actor, playwright and producer could deduct entertainment expenses based on estimated expenses, rather than having to produce detailed records of each expenditure. The holding in this case became known as the Cohan Rule. Yep, Cohan as in George M. As in the man most…

Don't you just love tax coincidences?In my post Don't hate me because I'm rich that went up earlier today, I mention state taxes targeting millionaires as part of the current anti-wealth trend.Now I discover (thanks to TaxProf Blog) that rich Californians are going to have to live with their state's 1 percent tax on annual incomes in excess of $1 million. The extra collections are designated to fund state mental health services.The tax, known as Proposition 63, was approved by voters in 2004. Craig and Sally Jensen challenged the tax, notes Courthouse News Service, suing to recover a portion of their…

The first Monday in October kicked off a new U.S. Supreme Court term. While everyone is anxiously awaiting the first bench pronouncements from new Justice Sonia Sotomayor, one thing about this Court is already abundantly clear. These justices aren't very interested in hearing tax matters.The publication Tax Analysts (subscription required) reports that on its opening day, the Court denied certiorari in a number of federal and state tax-related cases. "Certiorari Denied" basically means that the Court has declined to hear the case and will let the prior ruling stand. Amid the tax cases refused by the Supreme Court, several with…

Finally! The end to our tackiest national tax nightmare is near."Girls Gone Wild" founder Joe Francis apparently has reached a plea agreement with federal prosecutors so we should be hearing much less about his tax troubles.According to published reports, Francis will plead guilty this afternoon in a California court to filing false tax returns (and one count of bribing Nevada jailers for food; really), receive credit for time (301 days) already served in connection with the tax charges and pay $250,000 in restitution.Any outstanding tax liabilities allegedly owed by Francis or his companies from 2002 to 2008 will be handled…

What happens when you run out of other people's money? If you're facing federal fraud charges, you have to resort to a public defender. That's the case for Texas financier R. Allen Stanford, who's charged with bilking investors out of $7 billion. In addition, the IRS says Standford owes $226 million in taxes. Unfortunately for Stanford's former clients and Uncle Sam, Stanford apparently doesn't even have enough money to pay his defense attorney. So that lawyer, Dick DeGuerin, has told the court he wants to withdraw. Stanford's second choice for legal representation, Robert Luskin, a Washington lawyer and former counsel to White House…

A prostitute by any other name is a "performing artist." Or so says a now-fired ACORN worker.An independent, conservative filmmaker and a colleague, posing as a Congressional-wannabe friend to a prostitute (this scenario alone creates a whole other set of questions…), visited the Baltimore office of Association of Community Organizations for Reform Now (ACORN), which was created to help inner city communities and their residents.But I suspect  that such creative renaming of the world's oldest profession, along with some suspect tax advice, is not exactly how most community groups try to help their clientele. Bad, by all definitions, tax advice:…

I admit it. I'm a sucker for lists. And easy news hooks. So the first thing that came to my mind on 09-09-09 was the nine states that don't tax wage income.Everyone probably already knows that my native state, Texas, along with Alaska, Florida, Nevada, South Dakota, Washington and Wyoming don't have any income tax at all. But two others also don't tax wage income. They are New Hampshire and Tennessee.However, the Granite and Volunteer States do collect taxes on the dividends and interest their residents earn.State tax luck runs out: Folks who live in a state with some type…

As despicable as Joe Francis' business is, you've got to give him credit for chutzpah. Outlandish efforts also seem to be what the Girls Gone Wild (GGW) founder looks for in his tax attorneys.Francis is awaiting trial on federal tax-evasion charges that he hid business income in offshore companies and deducted millions in phony business expenses. When Francis' trial starts this fall, his attorneys will try to convince jurors that all those write-offs were OK because Joe is the business. And since Joe is GGW, everything he does is business related and therefore legally deductible. Or, as Joe Kristan of…

Delaware officials hoping to make easy money off sports bettors will have to revise their gaming plan.A Third Circuit Court of Appeals panel says Delaware's proposal to offer single-game bets on all major league and college games violates a 1992 federal ban on sports gambling. Because of that, the court issued an emergency injunction against the practice.Delaware officials had hoped to have the single-game system operating by Sept. 1. Now, however, they'll have to rely on parlay betting on professional sports. As I understand it, with this system you pick, for example, the Cowboys and Redskins and they both have…

Crime reportedly doesn't pay, but Uncle Sam recently handed out $250 checks to almost 4,000 jailed felons.The payments were mistakenly issued as part of the American Recovery and Reinvestment Act, popularly known as the February 2009 stimulus law. Under the Making Work Pay credit portion of the new law, workers have seen a smaller amount of payroll taxes withheld from their paychecks. But folks who don't have jobs also got a stimulus benefit. Separate $250 checks were sent to 54.4 million beneficiaries of Social Security, veterans and federal railroad payments. And some of those check recipients are behind bars. Excuse…

Massachusetts' use tax is in the news again, as that state's highest court ruled today that the state can't collect taxes from a New Hampshire retail chain that sells tires to Massachusetts residents."The Legislature may, of course, enact such a presumption, but in the absence of any such statutory authorization, it is error to rely on a presumption that tires sold to a Massachusetts resident outside the Commonwealth were actually used in the Commonwealth,'' according to the court's decision.The case arose when, in 2003, a Massachusetts auditor found 313 invoices in a sample of sales records at three Town Fair…

If school hasn’t started in your neck of the woods and you’re looking to squeeze in a last-minute vacation, Uncle Sam might be able to help.Specifically, the tax code could be a good travel companion. Robert D Flach, better known on the Internet as The Wandering Tax Pro, chose his nom de blog because between his regular tax work, he likes to hit the road. And, being a tax pro, he likes to let the feds help him pay for his journeys.Now such tax help in covering travel costs is not without its rules. To be able to write off…

Discussion of drug taxes provokes a variety of reactions. "Crazy" is the usual comment about state efforts to wring some tax dollars out of drug dealers. "Useless" is another frequently uttered word in connection with controlled substances and taxes.But in Tennessee, the state's highest court has pronounced the final word: "Unconstitutional." In late July, the Tennessee Supreme Court deemed the state's so-called "crack tax" invalid because it exceeds the state's constitutionally defined taxing authority.The Unauthorized Substances Tax was enacted by Volunteer State lawmakers five years ago. It required individuals holding marijuana, cocaine and other illegal drugs to buy tax stamps…

So now, Sonia Sotomayor waits to see if she'll be taking a seat on the country's highest court.Her U.S. Supreme Court confirmation hearings are over, but the verdict from the Senate Judiciary Committee has been put on hold by the panel's leading Republican until July 28.Don't ask me to explain the arcane rules that allow such procedural delays. It's the Senate and I'm just finishing up my first cup of coffee. Suffice it say that the judge who hopes to become the first Latina on the Supreme Court has to wait a bit longer for that to become official.And despite…

While I've been concentrating on ways to improve the IRS at my Taxpayer Advocacy Panel meetings this week, the real world has been continuing on its merry way outside our conference room. One event of note is the Senate questioning of Supreme Court nominee Sonia Sotomayor. I haven't been able to watch any of the hearing, but The Caucus has been live blogging the proceedings.In connection with her nomination to the country's highest court, I also wanted to remind you of my June 29 post on the judge's dearth of tax rulings, Supreme Court reverses Sotomayor case.Yeah, I know, writing…

Bernard Madoff is heading to jail for the rest of his life. And the victims of the largest-ever Ponzi scheme got some measure of vengeance from the 150-year prison sentence handed down for the faux financier yesterday.But what about their money?There's all sorts of wrangling going on over who owes whom what and how to get it. Before all's said and done, this process likely will join the ranks of the longest legal battles.One of the targets is the Securities and Exchange Commission (SEC).As Joe Nocera notes in his his New York Times blog Executive Suite, some victims of Madoff’s…

The Supreme Court has ruled that white firefighters in New Haven, Conn., were unfairly denied promotions because of their race. The case has received special attention because Supreme Court nominee Sonia Sotomayor was part of an appellate panel that issued the ruling that was today overturned. Legal experts say the 5-to-4 High Court ruling could alter employment practices across the country and make it harder to prove discrimination. Sotomayor on taxes: Capitol Hill is obviously paying close attention to all of Sotomayor's prior rulings, not just the high-profile ones. Those in the tax world, however, don't have a lot to examine. "Sotomayor has…

Watch out businesses, out-of-state state tax collectors just got a boost from the country's high court.The U.S. Supreme Court today decided against hearing an appeal from out-of-state companies that Massachusetts officials say owe it taxes.As I mentioned about a month ago in Money-hungry states, cities tax trolling, Bay State tax collectors set their sites on credit-card giant Capital One Financial. Massachusetts officials said that since the Virginia-base company made beaucoups money from cardholders who live in their state, Cap One should fork over more than $2 million in taxes to the Massachusetts treasury. The Department of Revenue was emboldened by…

I bet it's not often that "no interest" is used in connection with adult entertainment. But that's a key phrase in a Texas Court of Appeals ruling last week that upheld a lower court's finding that the state's so-called "pole tax" is unconstitutional. Texas officials today said they are appealing the ruling that the $5-per-customer admission tax on certain sexually-oriented businesses violates the First Amendment. The Associated Press reports that lawyers for Texas Attorney General Greg Abbott and Comptroller Susan Combs have asked the Texas Supreme Court to overturn the ruling invalidating the tax. The appellate court ruling that struck…

The United States Tax Court is one way for taxpayers to dispute an IRS decision. In addition to ruling on amounts that the IRS says are due, the Court also has jurisdiction to, among other things, make certain types of declaratory judgments, order abatement of interest charges and award administrative and litigation costs.While the Tax Court isn't the starting point for most tax disagreements, sometimes it does become the best ultimate avenue for tax issue resolution. Unfortunately, it combines the two things that tend to give most of us our worst nightmares: taxes and the legal system. Both are complex…

Helio Castroneves, the two-time Indianapolis 500 winner and Dancing With the Stars champ, will be back on the race track this weekend. A Miami federal jury acquitted him of six tax evasion charges this afternoon. Castroneves' sister, Katiucia, was cleared of the same charges. The siblings' lawyer, Alan Miller, also left the courthouse a free man. Jurors did, however, deadlock on the conspiracy charge against the brother and sister. There's a chance that federal prosecutors could push for another trial on that charge. But don't bet on it. Helio, Katiucia and Miller had been accused of using Panamanian and Dutch…

Finally catching up this afternoon and wanted to pass along the definitive word on same-sex marriages and Iowa taxes. Joe Kristan writes the Tax Update Blog for Roth & Company, PC, based in Des Moines. Joe says that the Iowa Supreme Court ruling (blogged about here) will make little tax difference to most of the state's same-sex couples. "The Iowa tax system allows married couples to file 'separately on a combined return,' giving them each a run up the brackets," writes Joe. Get the rest of the filing details in Joe's post, Same-sex marriage in Iowa: The tax stakes.

Wow! Who would have predicted that Iowa would have a more liberal approach to same-sex couples than California? We are indeed living in interesting times. Just in case you didn't hear, the Iowa Supreme Court today issued a unanimous decision that the Iowa statute limiting civil marriage to a union between a man and a woman violates the equal protection clause of the state's constitution.The decision strikes the language from Iowa Code section 595.2 limiting civil marriage to a man and a woman. It further directs that the remaining statutory language be interpreted and applied in a manner allowing gay…

Limiting Free File participation on the basis of income is fine.So says a U.S. District Court judge, who last week dismissed a class action lawsuit that was filed in 2007 against the Free File Alliance. That's the group of tax software vendors who provide free software and electronic filing to low-income taxpayers via a special IRS Web page. Also named in the lawsuit were Intuit (TurboTax's manufacturer), H&R Block Digital Tax Solutions (maker of TaxCut) and the Internal Revenue Service. Stacie Byers and Deborah Seltzer initiated the class action suit on the grounds that Free File was artificially restricted to…

By all accounts, Ruth and Bernard Madoff were inseparable. Married nearly 50 years, they worked in the same office and ended most days dining together, just the two of them, at a favorite New York City restaurant.But in December, when Madoff admitted that his multibillion-dollar hedge fund was an elaborate Ponzi scheme, Ruth reportedly was as shocked as the rest of the world.”One day, she was married to a stock-market genius, the next she was married to one of history’s great con men,” write David Segal and Alison Leigh Cowan in today’s New York Times.Could the long-time wife of a…

The man who helped popularize the “starve the beast” philosophy toward government has decided to try to work from within, at least temporarily. Essentially, adherents to this fiscal-political strategy say that by reducing the amount of money coming into the government, that is, by dramatically cutting taxes to effectively create budget deficits, the “beast” of federal government will be forced to shrink via program cuts. Of course, that leads to the battle over just which programs and services to put on this tax starvation diet. Most who support this approach tend to target federal social programs, such as Social Security,…

“The only thing that hurts morethan paying an income tax is not having to pay an income tax.”– Lord Thomas Robert Dewar  …Yes, that Dewar. The Scottish whiskey distiller. The man whose namesake beverage is probably imbibed in large quantities around April 15. But his observation is sobering. And worth considering as the presidential campaign heads into the home stretch. During these last nine days, the perennial political specter of taxes will be invoked as something more terrifying than any Halloween demon. Don’t get me wrong. I don’t like paying taxes, especially when my planning has been a bit off…

Race fans know Helio Castroneves as a winning, exuberant Indy car driver. Television fans know him as the winner of the 2007 season of ABC’s Dancing with the Stars. Now the two-time Indianapolis 500 champ has a less stellar item to add to his resume: indicted tax evader. Earlier this month, a Miami federal grand jury (Castroneves lives in South Florida) found there was enough evidence to hand up an indictment against the 33-year-old driver on charges of conspiracy and six counts of tax evasion. He allegedly failed to report to the IRS about $5.5 million in income that federal…

A Massachusetts funeral director has won a round in his latest legal battle to eliminate burial fees imposed by the state’s cities and towns. What the municipalities call fees, contends Paul F. Silva, are really taxes in disguise. The Massachusetts Appeals Court agrees, ruling that the burial permit fees charged in the three towns named in Silva’s suit are "improper taxes." "A municipality should not be able to justify an otherwise invalid tax merely by providing an accounting of expenses," said the Court. Silva, a funeral director at Silva-Faria Funeral Homes in Fall River and Somerset, had already won a…

Yeah, that headline looks like it came straight out of weekly News of the Weird, but it’s true. Plus it’s much catchier than "Demutualization tax battle finally ends." Both are accurate. The decision more than two decades ago by insurance companies to demutualize and the accountant who for most of that period fought the IRS over the tax consequences to individual policy holders due to that corporate shift has been resolved in favor of taxpayers. And some folks now might finally reap the tax refund rewards of accountant Charles Ulrich’s efforts. Demutualization details: For all of us non-insurance folks, here’s…

Two attorneys have come up with what is probably the first tax comic book. Get Smart (About Special Manufacturing Deductions) is the creation of Jeffrey M. Tolin, tax principal and  senior tax advisor for the entertainment industry at Ernst & Young, and Michael H. Salama, vice president for tax administration and senior tax counsel with the Walt Disney Company. At the Web page for Loyola Law School, Los Angeles, where Tolin is an adjunct professor in the school’s Tax LLM program, the graphic novel is described as a parody of the classic television show Get Smart. It blends, say the…

Yeah, I’m tired of Wesley Snipes, too, but at least this time the news about his tax fraud conviction is good for the rest of the taxpayer public. Snipes has been ordered by a federal district judge to pay $217,363.75 to cover the government’s prosecution costs. Here’s the itemized bill: $2,456.40 for daily trial transcripts $193,716.98 for scanning, printing and numbering documents $21,052.19 for witnesses $138.18 for certification and copying of trial exhibits The court-ordered amount is $40,323.99 less than the bill Assistant U.S. Attorney M. Scotland Morris had submitted. The big difference is in connection with witness-related fees. Now…

It  sounded like a good idea. Pay $20,000 to get out of a $300,000 tax bill. Unfortunately, it wasn’t an offer in compromise arrangement from Florida construction company owner Randy Nowak. Rather, it was the amount Nowak allegedly offered a hitman to kill the IRS agent who was auditing him. However, the guy Nowak thought was a gun for hire was an undercover FBI agent. In addition to trying to avoid the $300,000 that the audit indicated he owed, Nowak allegedly was worried that the examination process would reveal the $4 million he had stashed in offshore accounts. Now Nowak…

Wesley Snipes has been granted court permission to leave the United States in order to work on a couple of films. As blogged about here, the action film star asked for the travel OK to head to London and then Bangkok in connection with movie roles. Snipes, just in case you’ve forgotten, was convicted in March of three misdemeanor counts of failing to file returns on $13.5 million in earnings. He was sentenced to three years in federal prison, but has been free on bail while appealing the conviction. Judge William Terrell Hodges signed off on the work travel request…

Earlier on this July 4th, the issue of taxation and representation was broached in connection with levies on fireworks purchases. It also came up after the change on July 1 of Washington state’s tax system from origin-based to destination-based for shipped goods. That means that taxes now will be collected based on the location of the buyer, not the location of the seller. The change was made, say Washington officials, because Evergreen State brick-and-mortar retailers that collect the state’s sales tax are losing business to out-of-state retailers that don’t charge buyers the tax. As you might suspect, many Washington residents…

Action film actor Wesley Snipes wants out of the country. Not permanently. Just for a few months to make some more movies. But since Snipes was convicted in March of three misdemeanor counts of failing to file returns on $13.5 million in earnings, he has to get permission from the court. The next month, Snipes was sentenced to three years in federal prison, but he has been free on bail while his appeal works its way through the courts. Last week Snipes’ attorneys filed a formal request with the Florida federal court that would allow the actor to travel this…

State taxes certainly are a pain for some prominent people. The latest celebrity to run afoul of state collectors is MSNBC’s Keith Olbermann. As the host of the cable TV program Countdown, he regularly cites the screw-ups of others in his "Worst Person in the World" feature. Now Olbermann is catching heat for apparently being one of the worst New York state taxpayers. OlbermannWatch.com, which proclaims that it has been "persecuting Keith since 2004," broke the story that a New York state tax warrant is still outstanding for Olbermann in connection with $2,269.50 in unpaid Empire State taxes. The money…

Aficionados of crime tales, and judging from the popularity of investigative themed shows on TV nowadays, there are a lot of us, might already know that on this day in 1934 the felonious rampage of Bonnie and Clyde came to the ultimate conclusion. The celebrated Depression-era Texas outlaws were killed in a roadside ambush, famously recreated in the Faye Dunaway-Warren Beatty film, outside of Gibsland, La. According to the Texas State Historical Association (as previously acknowledged, we Texans own up to — OK, revel in — our excesses, both bad and good), the duo’s bodies were put on public display…

The U.S. Court of Appeals for the District of Columbia Circuit, by a 2-1 margin, has ruled that the United States discriminates against the blind and visually impaired because our paper currency is all the same size regardless of a bill’s denomination. I think this — the ruling, not the discrimination! — is a good ruling for a couple of reasons. First, while I haven’t yet had any trouble distinguishing between a $20 and a $50, I do need my reading glasses for most tasks. It’s just a matter of time until I’ll need some help paying properly. Secondly, my…

States and municipal bond managers are breathing easier today. The U.S. Supreme Court just ruled that it’s OK for states to exempt the earnings from the bonds they issue, but collect taxes on bonds issued by other states. We blogged about this case back in October and November. Forty-two states offer such exemptions for their municipal bonds. An estimated $2.5 trillion is invested in the municipal bond market. And nearly 500 mutual funds invest in bonds from specific states to take advantage of the tax  breaks. The 7-2 high court decision (Justices Anthony Kennedy and Samuel Alito dissented) overturned a…

As mentioned in my post (here) on Wesley Snipes’ prison sentence for tax evasion, here’s the promised follow up on the monetary penalty portion. Reuters reported that the judge did not fine Snipes, but the IRS still could levy penalties and interest charges in addition to the taxes owed. Meanwhile, according to the Orlando Sun-Sentinel, during yesterday’s sentencing hearing, the actor’s lawyers offered prosecutors checks worth $5 million to pay part of his debt to the government. Prosecutors called the courtroom check presentation a grandstanding move, with prosecutors saying the money was just "a fraction of what he owes." The…

Wesley Snipes latest role will be as a federal prisoner. According to news reports from the Florida courtroom, the actor was sentenced to the maximum three-year prison term for his conviction earlier this year on three misdemeanor counts of tax evasion. Snipes’ attorneys had argued for no jail time and offered dozens of letters from family members, friends and even fellow actors Denzel Washington and Woody Harrelson attesting to Snipes’ good character. The judge obviously was not swayed. No word yet on any fine tagged onto the jail time. Updates will follow as that information becomes available.

Actor Wesley Snipes, convicted of three misdemeanor counts of of tax evasion back in February (blogged here), is to be sentenced today. Federal prosecutors have gone on record in seeking the maximum punishment for the actor: up to three years in prison and a fine of $5 million. Snipes attorneys, meanwhile, have submitted a 70-page sentencing memo (courtesy of TaxProf) to the court arguing for clemency, because, in part, the actor, most well-known for his "Blade" vampire films, "is contrite, promises that he will never again break the law, and respectfully asks the Court to consider not just the jury…

Tax preparers in the Des Moines, Iowa, please be on the lookout for a prospective client who needs, in addition to general filing help, some assistance in getting a replacement W-2 form. And by the way, he might pay you in stolen funds. A man who robbed a convenience store made off with about $115, according to the Des Moines Register. But he left the police a great clue. In his haste to clear the crime scene, he left behind his jacket. In a pocket, officers found  a W-2 form they are sure belongs to the man. The taxpayer named…

Not to kick a man when he’s down, although New York Gov. Elliot Spitzer sure is making it easy, but the New York Times has a good article today elaborating on the role of the IRS’ Hauppauge office in tracking the [soon to be ex?] governor’s alleged payments to the Emperor’s Club prostitution ring. According to the paper in Revelations Began in Routine Tax Inquiry, "… the criminal investigation that discovered the tryst began last year in a nondescript office building opposite a Dunkin’ Donuts on Long Island." Finally, the Howard Johnson’s Motor Lodge across the street from the Watergate…

Notch up another one to the T-men. The IRS was a key player in taking down New York Gov. Elliot Spitzer, the man who made his political name battling high-finance corruption. That’s because it was the money, not the prostitute to whom Spitzer allegedly gave it, that first caught investigators’ attention. It seems that governor’s "suspicious" money movement prompted a bank to call the IRS which then brought in the FBI’s Public Corruption Squad. According to to ABC News, federal agents initially thought Spitzer was hiding bribes. "We had no interest at all in the prostitution ring until the thing…

Wesley Snipes walked away last week relatively unscathed from his tax evasion trial (blogged here). So that naturally got legal minds across the country commenting. TaxProf has a collection of thoughts (here) from tax law professors, including an educator from my alma mater (Texas Tech), one from Houston, and another from the little school down the road in Austin. My, we Texans sure are chatty, but then I guess you already knew that!

This morning, both sides in the Wesley Snipes tax evasion trial presented their closing arguments. Now it’s up to the actor’s ostensible jury of his peers. The defense unexpectedly rested Monday without calling any witnesses. Rather than put a string of celebrities on the stand to underscore Snipes’ argument that he simply got bad tax advice, his attorneys opted to rely on the contention that the prosecutors’ case was so weak that they bore the "complete failure of their burden." Courtroom gawkers were no doubt disappointed that the trial was cut short. Among the defense’s potential witnesses were Sylvester Stallone,…

It’s finally showdown time for Wesley Snipes, star of the vampire film series "Blade," who in real life is facing off against the IRS. As blogged about previously (here, here and here), Snipes is charged with conspiracy to defraud the government, filing a false claim for a $7 million refund and failure to file tax returns for the six years starting in 1999. His trial begins today in Ocala, Fla. The actor’s attorneys are expected to argue that Snipes is not actually required to pay taxes. Oh, Wesley! If only it were that easy. Uncle Sam usually wins: Sure, some…

The new year always brings with it changes, especially in the legislative area. Stateline.org has put together a nice compendium of new state laws that take effect today. Here are some key tax-related ones: Massachusetts, which set a precedent last July with the first U.S. law requiring each of its uninsured residents who can afford health care to buy it, now goes a step further. Starting today, every able Bay State resident who hasn’t gotten health insurance will lose a state income tax exemption and get slapped with monthly fines. Texas begins levying a $5-per-customer charge at strip clubs, aka…

The IRS got a very welcome belated holiday gift Dec. 27 when the U.S. Court of Federal Claims ruled that a "Son of Boss" transaction was an effort to avoid paying taxes. It was the first such case to go to trial. The court found that the tax shelter, successor to an earlier scheme known as a bond and options sales strategy (BOSS), generated artificial losses for Jade Trading. The entity was a limited liability corporation allegedly used by Robert Ervin and two of his brothers in 1999 to offset the income taxes due on a $40 million profit from…

Talk about timing. Just as the alternative minimum tax 2007 patch was signed into law yesterday, a Tax Court ruling (129 T.C. No. 18) was issued requiring a married couple to include qualified dividends in the calculation of their AMT liability.Below are the case facts, per the opinion issued by Judge Michael B. Thornton. On their 2005 tax return, Tobias and Gertrude Weiss reported $24,376 in qualified dividends — you know, those earnings that get the preferred capital gains tax rates. But they didn’t include that amount in $265,408 that they reported as taxable income, and upon which they figured…

Ten people have been indicted on federal charges of trying to illegally obtain confidential information on more than 12,000 citizens across the country. The federal indictment, unsealed today in Seattle, Wash., alleges that the owners of the Bellair, Wash.-based BNT Investigations, the company’s office manager and seven associated private investigators across the country posed as others in order to get government agencies — including the IRS, the Social Security Administration and various state employment security offices — to provide confidential information. The year-long investigation dubbed, "Operation Dialing for Dollars," also revealed that some of the individuals posed as representatives of…

It wasn’t a particularly happy Thanksgiving this year for Austin-area resident George Green. Twelve years ago, the former Texas Department of Human Services architect raised questions about construction quality, or rather the lack of it, and claimed contractors were offering kickbacks. Green subsequently was fired, sued under the whistleblower law and won a $13.6 million judgment against the state. But his legal luck hasn’t held up against another government entity: the IRS. Just before turkey day, Green got word that a federal appellate court agreed with the IRS argument that much of his settlement was for punitive damages, which are…

I’ve been searching for responses from the tax software companies named in the class action lawsuit filed against Free File Alliance corporate partners (more on the legal action in this earlier blog post). Not surprisingly, there’s nothing official on any of the major company Web sites. It’s a cliche, but I’m sure the truth, that the companies’ lawyers are all poring over the documents and have mostly muzzled spokespeople. However, I did find a few reply reports and, in the interest of fairness, wanted to share them. Tim Hugo, executive director of the Free File Alliance (this link takes you…

A group of taxpayers who didn’t meet Free File income requirements have decided to recoup their e-filing fees by taking the software companies to court. Two Philadelphia law firms have filed a class-action suit in federal court against the companies that make up the Free File Alliance. They estimate that damages could be billions of dollars. The complaint, filed by Feldman, Shepherd, Wohlgelernter, Tanner & Weinstock and Cooley & Handy, alleges that while the agreement the IRS made with the Alliance companies was supposed to provide free e-filing for up to 70 percent of Americans, only 3.8 million taxpayers filed…

A Pennsylvania woman is suing Kmart over a 12-pack of Angel Soft toilet tissue that cost her $3.99. The shelf price isn’t the problem. Rather, says Mary Bach, the Kmart store where she purchased the TP improperly collected 7 percent sales tax on what is a non-taxable item. Her final register tally: $4.27 — or 28 cents too much. So Bach is taking her case to court. A hearing is set for Oct. 31, at which she’ll be asking for $100 in damages, plus court costs, for violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. It’s not just…

The Supreme Court has five tax cases on its docket for the new term, which began Monday. A couple of them strike me as having the potential to affect "average" taxpayers. First, there’s Kentucky Department of Revenue v. Davis, which deals with the issue of a state providing an income tax exemption for bonds it issues, while continuing to tax interest income realized from bonds issued by other states. This is a standard practice in most of the jurisdictions that have a state income tax. State tax collectors pocket a portion of interest paid on out-of-state municipal bonds, but allow…

The last we heard from actor Wesley Snipes, he was corresponding with an Orlando reporter about tax evasion charges filed against the actor. In that e-mail exchange, Snipes, best known for his vampire hunter Blade movie series, complained that he was being "scapegoated" by the U.S. government "because there’s more public interest in ‘celebrities gone bad’ than ‘rich people being taken advantage of.’" In case you forgot, Uncle Sam alleges that Snipes owes $12 million in back taxes. That sum is due to, according to the indictment, conspiracy to defraud the government, making false refund claims and failing to file…

While much of the eastern half of the country bakes in a late-summer heat wave, many folks no doubt are dreaming of cooler places. Frigid climes also have been the subject of tax fantasies, as some taxpayers have sought to use a cold locale as the basis for a tax break. Remember the fellow who worked at McMurdo Station, Ross Island, Antarctica, and who tried to report his earnings there as foreign income (blogged here)? He was hoping to exclude that amount from his U.S. tax filing. The Tax Court said no in that instance, and has again turned a…

Ted Stevens, the longest-serving Republican in the U.S. Senate, is under investigation by the FBI, IRS and Interior Department in connection with a political corruption case. Federal lawmen on Monday raided the 83-year-old Alaskan’s personal home in the ski resort area of Girdwood. Of apparent interest to officials who served the search warrant are Steven’s ties to an Alaska energy services company, Veco. That company’s chief executive has pleaded guilty to a bribery scheme involving state lawmakers. The Washington Post has published a time line of the Steven’s investigation. Last year, Stevens gained recognition beyond Alaska’s borders when he succeeded…