Tax Law Archives - Page 28 of 41

Arizona Tuition-credit Practices may Violate Federal Tax Laws

Arizona Republic: “This month, as the tax year nears an end, thousands of Arizonans are expected to donate money to private-school tuition groups and claim a tax credit that reduces what they owe the state. Many taxpayers will recommend that their money go to specific students as scholarships; many tuition groups will honor those wishes. But these taxpayers, and the school tuition organizations that give out the scholarships, may be running afoul of federal tax law.”

A Loss for the Taxpayer but a Win for Gamblers

Taxable Talk: “The Tax Court today looked at the case of a couple who gambled in their local casino, won, but didn’t include the income on their tax return. That they had taxable income is a given, but there’s a very interesting and useful aspect of the decision. During 2005 the taxpayers gambled on the slots at their local casino in Charles Town, West Virginia. For the most part they lost. However, on one lucky day they withdrew $500 from the bank, went to the casino and hit a $2000 slot jackpot, and walked out of the casino with $1600. The IRS sent the taxpayers a Notice of Deficiency for $2000. The taxpayers argued that they should be able to net their losses from their other trips to the casino. That argument fell flat with the Tax Court.”

IRS Releases 10-Year Enforcement Data: Business Audits Down, Individual Audits Up

The IRS released the Fiscal Year 2009 Enforcement Results, for the years 2000 – 20009. The IRS statistics show:

Enforcement revenue up 50% from 2000
Individual audit rate up 100% from 2000
A millionaire is six times more likely to be audited than someone earning less than $200,000
Business audit rate down 15% from 2000
The only businesses with a higher audit rate in 2009 than 2000 are small businesses (< $10m assets). The audit rate of larger businesses (including those with over $250m of assets) is lower in 2009 than in 2000

Here’s the IRS’ summary table

	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
Enforcement $	$33.8b	$33.8b	$34.1b	$37.6b	$43.1b	$47.3b	$48.7b	$59.2b	$56.4b	$48.9b
Audit Rate
Individuals	0.49%	0.58%	0.57%	0.65%	0.77%	0.93%	0.97%	1.03%	1.01%	1.03%
< $200k							0.93%	0.98%	0.95%	0.96%
> $200k							2.57%	2.68%	2.94%	2.89%
> $1m					5.03%	6.10%	5.25%	6.84%	5.57%	6.42%
Businesses	0.69%	0.55%	0.53%	0.49%	0.36%	0.57%	0.60%	0.66%	0.63%	0.58%
< $10m	0.77%	0.60%	0.63%	0.58%	0.32%	0.79%	0.80%	0.92%	0.95%	0.85%
$10m-$50m	11.7%	9.7%	7.8%	6.2%	9.4%	12.3%	14.2%	15.0%	11.7%	10.1%
$50m-$100m	14.7%	12.3%	10.7%	9.8%	12.9%	16.4%	13.8%	11.4%	11.7%	14.3%
$100m-$250m	17.4%	17.6%	16.0%	12.9%	16.9%	17.5%	14.0%	12.1%	12.8%	13.6%
>$250m	31.4%	32.1%	34.4%	29.8%	39.8%	44.1%	35.2%	27.2%	27.4%	25.7%
Exempt Orgs	0.89%	0.61%	0.67%	0.71%	0.67%	0.58%	0.83%	0.87%	0.88%	1.24%

See ABC News “Make Less Than $200K? You Probably Weren’t Audited.

IRS Rarely Audits the Poor

The Tax Lawyer’s Blog: “President Obama has famously defined the rich as those making in excess of $250,000 per year. Well, now we find out from the Associated Press that the IRS rarely audits anyone who makes less than $200,000.”

Comedian Sinbad Owes IRS $8 Million

Detroit News: “Comedian/actor Sinbad’s financial problems just got a whole lot worse. The Benton Harbor native, who emceed Motown Records’ 50th anniversary gala last month, owes more than $8.15 million in delinquent federal taxes and the U.S. Attorney General’s office wants his house sold to help satisfy the debt, according to federal court records. On Dec. 10, an assistant U.S. attorney asked a federal judge to foreclose on several tax liens and determine the 53-year-old comedian (full name Sinbad Adkins) is the true owner of a $1.5 million home in Hidden Hills, Calif.”