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Theodore M. David, Chair, Tax Law Committee                       

Current Items:                                                                                    

1) The Crime Season   

2) The Real “Holidays”

 1). Santa’s tiny reindeer clip-clop across your roof. Poor unsuspecting evergreens have been yanked out of the ground and covered by all manner of plastic doodads. Some folks light real candles nightly and pray that they don’t need their fire insurance. Oh, it’s the Holidays!

Once the celebration is over, the pain begins. I don’t mean just paying off all those credit card bills. No, not by a long shot. It’s the start of Tax Season! Now tax administration in the United States is based upon voluntary compliance. Every citizen has the opportunity to step up and deal directly with his or her government. Ben Franklin said a citizen must “Turn square corners.” I think he meant trying your best to be honest. These days behind baseball, football and now soccer is the annual sport associated with filing an income tax return. It is a wonderful game and can be played by anyone with a decent income. No particular training, affiliation or uniform is necessary. Whether you choose to use TurboTax or simply a well-sharpened number two pencil, the result can be the same.

The object of the game is to pay the least amount of tax possible under the most strained interpretation of federal tax law. Those players who are picked up for audit by the Internal Revenue Service Examination Branch are immediately disqualified. To be frank, many accountants are very good at this game and have earned a tidy sum over the years with not a disqualification in sight. Some tax preparation programs actually will give you the likelihood of a civil audit! This is a vast improvement over just guessing what your odds are of surviving tax audit season.

Now let’s be clear about one thing. IRS is well aware of the tax game. They play it too. They use a great deal of smoke and mirrors to convince taxpayers that they are there watching your every move. Those damn computers do, in fact, tend to match up information supplied by payers to items missing on individual tax returns. But in many cases, game players enjoy the suspense associated with not knowing whether they will be caught. In most cases, only a tiny bit of interest and a few dollars worth of penalty make the game worth playing. If interest and penalties were the only tools the IRS could use to get voluntary compliance, I am sure voluntary compliance would go the way of the Sony Walkman.

But there is more to this game! It is the IRS criminal division! Around the holidays, the IRS announces the results of criminal activity and the punishment of tax evaders. It is no accident. It is the IRS’s contribution to the tax game. This year is no exception. Just recently, the IRS declared that in the fiscal year 2022, IRS criminal investigation initiated more than 2,550 criminal investigations, identified more than $31 billion in tax and financial crimes, and obtained a 90.6% conviction rate on cases accepted for prosecution. You can go to the IRS website under the fiscal year annual report and get the details if you have the stomach for it. So do play the tax game but be aware that though the odds are small, there can be some nasty consequences. Enjoy the Tax Season.

2). Now, continuing the theme of honesty and trying to connect it to this Holiday Season, I submit this poem for your jaded enjoyment:

The Holidays

Holidays and conflict go together,

Like ribboned gifts and winter weather;

Christmas cheer with those who rate,

Who sit beside those you hate.

 

There’s snow and tension in the air;

Season’s Greetings yet tempers flare;

Who but Santa survives this blast?

And even he leaves rooftops fast.

 

Bells that jingle that all is well

Try to hide this Christmas hell;

New Year’s soon, toasts on high;

Resolutions to do or die.

 

All is forgiven for those so near

Let’s give them one more year!

The Holidays, thank God, last for but a week,

Then quiet times we are left to seek.

Make the Most of the Holiday……

Questions or Comments   should be sent to:

e-mail: Tdavidlawyer@gmail.com

Written by: Theodore M. David

Current Items:                                                                                    

1) Hurricane Scammers   

2) Adjust Withholding?

3) Annual Turkey Tribute

1). September 28, 2022, was a nasty day for South Florida. What has become known as the largest and strongest hurricane ever to hit Florida made landfall over some really beautiful places like Captiva and Sanibel islands? In Naples, seawater, rainwater and sewer discharge made for an ugly glop they say may take years to remove before things can get back to normal. The losses are in the billions. If you have seen the pictures of a place like Fort Myers Beach, you know the extent of the damage that a nasty hurricane can do. Relief centers were set up almost immediately and neighbors trying to help neighbors were out amidst the devastation. Now I don’t know about your feelings about scammers, but I can guess you feel as I do. The IRS declared October 17-21 to be charity fraud alert week. It seems these lowlifes have been contacting people and fraudulently requesting money donations to help in the Florida relief. Organized charities lose about 5% of their annual donations every year to scammers. This is an international problem and IRS continues to work with global agencies on the issue. IRS says cybercrime is on the rise including attacks on charities, their supporters and beneficiaries. If you are thinking of making a donation to any charity, IRS encourages donors to verify a charity’s tax-exempt status at IRS.gov/TEOS before donating goods, services or money. Fake charities are part of the IRS’s dirty dozen tax scams for 2022. If apprehended, I would suggest taking these fine folks to some of the places that have been hardest hit by the hurricane and allowing neighbors who have lost everything to have a chat with them.

2). The Internal Revenue Service has suggested that taxpayers take a look at their withholding to make sure there will be no surprises during tax filing season in 2023. Changes in withholding will be treated as made during the entire tax year and should avoid any underestimation penalties. The IRS provides a tool at its website called the “tax withholding estimator,” which can help taxpayers determine if they have too much income tax withheld and how to make an adjustment to increase the cash in their own pocket. It will also guide taxpayers to increase withholding or make an estimated tax payment if necessary. According to IRS, about 70% of taxpayers withhold too much every year. This results in a refund which averages about $3000. For some people, this may be a forced savings plan, but it amounts to an interest-free loan to your favorite tax agency.

With regard to 2022 tax returns to be filed in 2023:

• The standard deduction for married couples filing jointly for tax year 2022 is $25,900. For single taxpayers and married individuals filing separately $12,950, and for heads of households, $19,400
• The personal exemption for tax year 2022 remains at 0, as it was for 2021
• Marginal Rates: For tax year 2022, the top tax rate is 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly). The other six brackets are 35%, 32%, 24%, 22%, 12%, and the lowest rate is 10%.

There are new inflation-adjusted amounts that will apply to tax year 2023. The standard deduction for married couples will be $27,700. For single individuals and those filing married, filing separately $13,850 and for heads of household, $20,800. There will continue to be the seven tax brackets but there are increases for inflation at the breakpoints. View them in detail at IRS.gov.

 Thank God You’re Not a Turkey

Wouldn’t it be pleasant

To perhaps be a pheasant?

Or maybe a goose

Out on the loose.

But when leaves turn red,

You’d be filled with dread

If you were a turkey.

Why, if you were a turkey,

You’d be on the phone all day,

Talking with your lawyers,

Having bills to pay

To settle up the life jams,

Waiting for the roast yams.

So when it’s time to dine and sip,

Include this prayer upon your lip:

“Be grateful for all you see

And that a turkey, you will never be.

Thank God for birds* who don’t mind the loss,

When plucked and stuffed

And cooked in sauce.

*It may be time for a soybean alternative. Just ask any turkey what they think.

Be Thankful and Do Some Good

Questions or Comments should be sent to:

Theodore M. David, e-mail: Tdavidlawyer@gmail.com.