There is a new estate tax law that affects tax years 2010 thru 2012. For 2010, the estate can elect whether to opt out of estate taxes. Depending on the circumstances, you might want to opt out of estate taxes and instead carry a cost basis over to the beneficiaries.
For tax years 2011 and 2012, there is an estate and gift tax exemption of $5M. The tax rate above the $5M is 35%……That’s a pretty stiff penalty for dying, if you ask me. The estate tax exemption is portable but only if the first spouse dies after 12-31-10. The election should be made on the first spouse’s estate return, but there should not be a return filed…Huh?
This gets a bit confusing. You need to consult a tax professional if you are faced with filing an estate return for a loved one.
From Foxnews: Lithonia, GA. — Federal officials say they’re investigating issues surrounding investment seminars hosted by a metro Atlanta megachurch after some former members say they lost their retirement savings.
U.S. Secret Service spokesman Mark Ritchie said agents have seized laptops from employ-ees at New Birth Missionary Baptist Church in Lithonia. WSB-TV first reported details of the federal probe.
Ritchie says the IRS is the primary federal agency involved, and the Secret Service is assist-ing the IRS and DeKalb County police. DeKalb police Lt. Pam Kuntz said the department forwarded its information to the Securities and Exchange Commission.
Ten former church members are suing New Birth and Bishop Eddie Long, saying they con-spired with others to defraud them through “wealth-building” seminars and sermons. New Birth spokesman Art Franklin declined to comment on the lawsuit.
This summer, the State Legislature and Governor of Louisiana passed a law that bans individuals and businesses from transacting in cash if they are considered a “secondhand deal-er”.
House Bill 195 of the 2011 Regular Session (Act 389) broadly defines a secondhand dealer to include “… Anyone, other than a non-profit entity, who buys, sells, trades in or otherwise acquires or disposes of junk or used or secondhand property more frequently than once per month from any other person, other than a non-profit entity, shall be deemed as being in the business of a secondhand dealer. ”
The law then states that “A secondhand dealer shall not enter into any cash transactions in payment for the purchase of junk or used or secondhand property. Payment shall be made in the form of check, electronic transfers, or money order issued to the seller of the junk or used or secondhand property…”
The broad scope of this definition can essentially encompass everyone; from your local flea market vendors and buyers to a housewife purchasing goods on ebay or craigslist, to a group of guys trading baseball cards, they could all be considered secondhand dealers. Lawmakers in Louisiana have effectively banned its citizens from freely using United States legal tender.
Full story here.
The answer is like most answers to tax questions…… Well, it depends. There are now two prevalent types of bankruptcy. Chapter 7 is a liquidation process established for non-consumer debt. The Chapter 13 bankruptcy is a consumer debt reorganization.
Tax debt can sometimes be discharged under a Chapter 7 bankruptcy. There are several cri-teria the debtor would need to meet. One criteria is that there has not yet been a lien filed by the IRS. If this is the case, old taxes can be discharged as nonpriority general unsecured debts – just like a credit card. If there is a lien, the lien remains and must be paid when the debtor sells property.
Tax debt can sometimes be reduced under a Chapter 13 bankruptcy. The Chapter 13 usually allows the debtor to settle debt for pennies on the dollar. All existing debts must be paid off within 5 years. Under Ch. 13, liens can be “valued” to the debtor’s equity in property at the time of the filing.
Bankruptcies can be very complicated, and anyone considering this should get qualified legal advice. The rules would depend a great deal on one’s particular situation.
The United States has recently sued Judy Grace Sellers to bar her from promoting an alleged scheme involving fraudulent tax refund claims. The government’s amended complaint for a civil injunction alleges that Sellers, of Chipley, FL, helps her customers create false documents to support a fraudulent “Secured Party Creditor” argument. According to the lawsuit, this argument maintains that the federal government has created a “strawman” for each U.S. citizen and an account exists at the Treasury Department for the strawman. Sellers allegedly assists her customers in preparing documents to obtain funds from their Treasury accounts.
According to the amended complaint, this scheme, also called the “commercial redemption” scheme, involves Sellers’s customers filing fraudulent tax returns with false IRS Forms 1099-OID. The government alleges that the forms falsely claim huge amounts of tax withholding and that the returns claim large tax refunds based on the false withholding amounts. I am not sure why they are pursuing her civilly and not criminally. Civil suits are typically limited to contract law.
Sellers’s customers have allegedly filed federal income tax returns claiming false refunds exceeding $6 billion. The amended complaint states that, in 2008, Sellers referred some customers to Teresa Marty for assistance with the Form 1099-OID submission process. The complaint alleges that, in 2009, the U.S. District Court for the Eastern District of California barred Marty from preparing federal tax returns for others as a result of her participation in the Form 1099-OID scheme.
Claiming bogus tax refunds based on false Forms 1099-OID is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers.
Mark D. Leitner was sentenced to 30 months in prison after pleading guilty in July to filing false liens against federal law enforcement employees and corruptly endeavoring to impede and impair the Internal Revenue Service (IRS), the Justice Department announced. Northern District of Florida Senior District Court Judge Lacey A. Collier presided over the hearing at the U.S. District Court in Pensacola, Fla.
Leitner apologized for filing false liens against the former U.S. attorney for the Northern Dis-trict of Florida, the former clerk of court and numerous assistant U.S. attorneys, department trial attorneys and an IRS Criminal Investigation special agent involved in a 2010 tax fraud prosecution against Leitner.
Leitner was previously a defendant in a criminal trial, United States v. Hirmer, et. al., in the Northern District of Florida in March 2010. During that jury trial and after the jury returned the guilty verdict, Leitner publicly filed false maritime liens against the property of the prosecutors, investigators and court personnel involved in the criminal trial. The liens falsely claimed that Leitner was owed $48.489 billion from each individual. On five of the seven false liens, Leitner publicly disclosed individuals’ correct social security numbers and other personal identifying information. Leitner also filed and mailed numerous harassing and frivolous documents to the courts and personnel involved in this case.
Leitner will serve this prison sentence consecutive to the five-year prison sentence he received for his 2010 tax fraud conviction.
A few Sundays ago, hundreds of pastors preached about American politics, flouting a decades-old law that prohibits tax-exempt churches and other charities from campaigning on election issues. The sermons, on what is called Pulpit Freedom Sunday, essentially represent a form of biblical bait, an effort by some churches to goad the Internal Revenue Service into court battles over the divide between religion and politics. “There should be no government intrusion in the pulpit,” said the Rev. James Garlow, senior pastor at Skyline Church in La Mesa, Calif., who led preachers in the battle to pass California’s Proposition 8, which banned same-sex marriage. “The freedom of speech and the freedom of religion promised under the First Amendment means pastors have full authority to say what they want to say.”
Participating ministers plan to send tapes of their sermons to the I.R.S., effectively providing the agency with evidence it could use to take them to court. But if history is any indication, the I.R.S. may continue to steer clear of the taunts. “It’s frustrating,” said Erik Stanley, senior legal counsel at Alliance Defense. “The law is on the books but they don’t enforce it, leaving churches in limbo.”
Supporters of the law are equally vexed by the tax agency’s perceived inaction. “We have grave concerns over the current inability of the I.R.S. to enforce the federal tax laws applicable to churches,” a group of 13 ministers in Ohio wrote in a letter to the Treasury secretary, Timothy F. Geithner, in July. Marcus Owens, the lawyer representing the Ohio ministers, warned that the I.R.S.’s failure to pursue churches for politicking violations would encourage more donations to support their efforts, taking further advantage of the new leeway given to advocacy groups under the Supreme Court’s decision last year in the Citizens United case.
None of the churches involved in previous pulpit Sunday events have received anything beyond a form letter from the I.R.S. thanking them for the tapes, Mr. Stanley said. “They haven’t done anything to clarify what the law is and what pastors can and can’t say,“ he said.
