Tax Relief for "Superstorm" Sandy

Hurricane Sandy roared ashore last week, interrupting our regularly scheduled election already in progress. And yes, I'll be addressing election results shortly, especially as we get more guidance on what to expect for your taxes. But I’m impressed, as always, with how a natural disaster brings out the best in Americans, and I’m pleased to see both Democrats and Republicans joining together to help those most affected by the storm.

The IRS gives generous tax deductions to help make our own generous charitable gifts go further. So this week I’m writing to help you make the most of efforts you might make to support storm victims — or any other year-end charitable gifts.

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15, 25, 28, Hut!

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There's no denying that amateur sports, especially college football, are big business. Together, the 15 top-grossing teams score over $1 billion in revenue, with the University of Texas Longhorns alone generating $71.2 million in profit.

Numbers like that would normally make the "receivers" at the IRS smile. But college football is different. The big Division I schools that sponsor the most competitive teams are all tax-exempt. And the IRS loses again on a juicy revenue stream that's unique to college sports -- required donations, sometimes totaling twice the cost of a season ticket, that fans make to the school to secure those seats.

Back in 1986, boosters couldn't deduct the contributions they made specifically to secure sports tickets. But Louisiana Senator Russell Long, who sat on the Finance Committee, met with lobbyists who argued that his home state

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Watching Out for the Cliff

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Ordinarily, I use these posts to discuss fun items related to taxes and finances. I know that you can read the usual boring articles about the usual boring tax topics pretty much anywhere else. And most of you are happy to let me worry about "the details."

Every so often, though, I need to discuss more serious issues, even if it's just to let you know that I’m on top of them. That's the case today with the so-called "fiscal cliff" -- Federal Reserve Chairman Ben Bernanke's clever term for what happens on January 1, when a bunch of current tax rules expire, and some new rules take effect. Here's a quick rundown of what to expect:

  • The Bush tax cuts expire. That means the top rates on ordinary income goes from 35% to 39.6%; the top rate on capital gains goes from 15% to 20%; and the top rate on qualified dividends jumps from 15% to 39.6%. Much of the debate over tax rates focuses on

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Duh!

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Today's wired world has most of us drowning in information. Twenty-four-hour cable news networks, instantaneous online updates, Facebook, and Twitter are constantly assaulting our senses. Much of what passes for "news" is really just noise — the latest statistical fluctuations in the presidential polls, for example, or the comings and goings of your favorite Kardashian sister. But every so often, we learn something so surprising that it rocks us to the core and causes us to re-evaluate everything we thought we knew.

Three professors have just revealed that sort of earth-shattering information in the newest issue of Accounting Review. They analyzed data from 5,000 corporations over 17 years from 1992-2008 to answer an age-old question: "Do IRS Audits Deter Corporate Tax Avoidance?" And here's their startling conclusion -- make sure you're sitting down to read it: when audit rates go up, so do taxes!

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Department of Worst Nightmares

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Last week, I wrote about a recent report issued by the Treasury Inspector General for Tax Administration ("TIGTA") -- an independent board that works to prevent and detect fraud, waste, and abuse within the IRS and related entities. I was amused to learn that 70 federal agencies owed $14 million in unpaid employment taxes on their employees' wages -- and 18 more agencies hadn't even filed their employment tax returns. But I was more surprised to learn that the IRS can't take any effective action to collect those outstanding balances.

While I was busy bringing you the news about Uncle Sam's "Get Out of Jail Free" card, the TIGTA was busy issuing another report that I knew you'd

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Latest Government FAD

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If you don't take care of your taxes, you risk some pretty expensive fines and penalties. Some of those amounts are fixed, like $89 per partner per month for failing to file your partnership return. Others are based on the actual tax due, like the 10% penalty for failing to file employment taxes. If the IRS has to come after you, they can slap liens on your home or other property. They can impose levies to pluck back taxes from your paycheck, your bank account, or your retirement plan. They can even seize your assets and auction them to collect their pound of flesh.

Having said all that, would it surprise you to learn that there's someone with a "Get Out of Jail Free" card for not paying his taxes? Would it surprise you even more to learn that it's Uncle Sam himself?

The Treasury Inspector General for Tax Administration ("TIGTA") is an independent board that oversees the IRS. Their job is to audit, investigate, and inspect the tax system itself, as well as to prevent and detect fraud, waste, and abuse within the IRS and related entities. Last month, the TIGTA issued a report with a bland and vague title: A Concerted Effort Should Be Taken to Improve Federal Government Agency Tax Compliance. But that deceptively bureaucratic name masks a pretty outrageous conclusion: