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Gas Tax And The Bay Area

The Gas Tax

In general, democracy means government rule via the majority opinion of the people. California is currently in the middle of an interesting conflict between the decision of state legislators to raise gas taxes and vehicle registrations fees, and a group of organizers who plan on appealing to what is hopefully a majority of voters to overturn this measure.

Despite having what is already one of the highest motor vehicle tax and fee structures in the country, the legislature and governor contend that an additional 5.2 billion dollars is necessary to address deferred maintenance issues on the state’s surface transportation infrastructure and to fund a wish list of additional new mass transit programs. This money is raised via an additional 12 cent a gallon gas tax, an additional 20 cents a gallon on diesel, up to another $175 on each vehicle registration fee, and an additional 4% tax on sales of diesel-fueled vehicles.

Powerless in the face of large Democratic majorities in the legislature, Assemblyman Travis Allen (R- Huntington Beach) has proposed an initiative that would place the matter in the hands of the voters themselves. This would serve as a test as to whether the legislative majorities do in fact comprise a democratic majority in the larger sense of the word, at least on this one issue of the gas tax.

San Francisco

In the San Francisco Bay area, the gas tax as it currently stands offers a mixture of benefits and drawbacks. Fixing bad roads would be a positive. Enduring the frustrations of large amounts of additional road construction delays while they are being repaired would be less welcome.

Raising California’s already-legendary gas prices even higher imposes a particular burden on the Bay Area’s many less-affluent residents who work in the city but must endure long commutes out to the areas where semi-affordable housing is still in vogue. Improving and expanding mass transit options on the increasingly rickety BART system would no doubt be welcomed by its ridership.

The issue therefore comes down to a choice on several different levels. In a large societal sense, voters may have to decide if the overall benefits to the state’s residents outweighs the loss of 5.2 billion dollars that would otherwise be available to spend on other things. An initiative, if it does in fact make the ballot, will also serve as a referendum on the current management of the state’s transportation affairs.

Since, in all honesty, the state government has short-changed its transportation budget in favor of other priorities for many years, voters may or may not render a verdict as to whether they should be favored with additional money after mis-allocation of the funds already available for decades. They may also choose to ratify that decision to prioritize other matters as being more urgent and bite the bullet in this one instance to catch up.

In a narrower sense, the battle lines may be drawn between the various direct winners and losers of the gas tax itself.

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Legal Marijuana Taxes in California

California Recreational Cannabis Taxes

Recent reports have revealed that the cost of purchasing legal marijuana in California could be high enough to drive away potential consumers — and keep the black market thriving. According to a Fitch Ratings report, taxes for legal cannabis in California could be up to 45% in certain parts of the state, among growers, retailers and customers.

Consumers of marijuana in California must pay a combination of local and state taxes that will vary depending on location. In addition, sellers and growers are also taxed at a specific rate. The consumer tax rate will go all the way up to 24%  including a 15% state excise tax along with other local and state sales taxes.

Taxes for businesses will range between 1% and 20% of gross sales, or $1-$50 per square foot of cannabis plants. Additionally, farmers will be taxed at a rate of $2.75 per ounce of marijuana leaves, and $9.25 per ounce for cannabis flowers.

The Other States

Although California legalized medical marijuana over 20 years ago, recreational marijuana retailers have only recently begun to ramp up their production. The bill to legalize recreational cannabis use in California was passed over a year ago during the 2016 election, but the new legislature does not take effect until January 1, 2018.

It’s worth noting that Washington is the only one of the eight states where recreational marijuana was legalized has a higher tax rate than California, with a tax rate of 50%.

Washington and Colorado have tried multiple different tax structures resulting in conflicting results. For example, in 2015, Oregon began with a weight-based tax of a flat $35 per ounce. However, the state eventually changed this tax structure to a flat sales tax of 20%. Colorado eliminated its 2.9% sales tax, but escalated its excise tax to 15% from its former amount of 10%. This obviously raised the overall tax rate on marijuana.

Critics

The recent legislature to legalize recreational marijuana hasn’t done much to ease the controversy among citizens. The debate continues to rage on among politicians, community leaders, and private citizens.

There has been some backlash from different public interest groups and religious leaders regarding the upcoming January 1st landmark. Critics have been outspoken about the message this new legislation sends, and what the long term effects will be to California.

According to Citizens Against Legalizing Marijuana (CALM) has the following to say “We affirm the 2006 FDA finding and vast scientific evidence that marijuana causes harm. The normalization, expanded use, and increased availability of marijuana in our communities are detrimental to our youth, to public health, and to the safety of our society.”

While the critics have certainly been loud, there has also been overwhelming support for the new law. When asked for comment, one business owner in Sunnyvale said “Listen, I don’t touch the stuff myself, but I also don’t think it’s any of my business what other people do with their lives. The studies I’ve seen suggest that marijuana

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IRS Extends Certain Tax Deadlines For Bay Area Fire Victims

As wildfires continue to ravage the Bay Area and other California counties, taxes are not foremost on the mind of most victims. With a variety of tax deadlines rapidly approaching, the Internal Revenue Service (IRS) has announced a tax extension for individuals affected by the ongoing disaster.

This relief will take the form of an extension of all tax-related filing and payment deadlines starting from October 8, 2017 to January 31, 2018. This means that any deadlines between October 8 and January 31 are pushed back to the later date for this year only, amounting to approximately an extra three months for victims to get their documentation in order. This includes the deadline for making quarterly estimated tax payments, which was January 16, 2018 before the extension was announced.

In addition, tax penalties for late deposits and federal payroll excise taxes are waived for those in the affected areas during the first 15 days of the disaster period.

Businesses and individuals residing in the following California counties are eligible for this extension: Lake, Butte, Napa, Nevada, Mendocino, Yuba, and Sonoma. Additional counties may be added to the affected area in the future. Residents with IRS addresses of record in these areas will have the extension automatically applied, requiring no direct action on their part. Any eligible individual who receives either a late filing notice or late payment notice despite this announcement can call the phone number printed on their document to have it abated.

Firefighters and other relief workers who do not live in the affected area but have spent a lot of time on relief work there may also qualify for this extension. Such individuals should contact the IRS at 1-866-562-5227 to claim their benefits, as it will not be applied automatically. These relief workers must be affiliated with a recognized government agency or charitable organization in order to qualify for this extension.

Individuals with a primary residence outside the affected area maintaining a residential or commercial presence in the affected area may also qualify for the extension by calling the number above. This is likely the smallest group of eligible taxpayers though.

Taxpayers in the affected areas also receive an additional extension if they had previously filed an extension for last year’s tax returns. Tax-exempt organizations on extension through November 15, 2017 and individuals with an extension through Monday, October 16 2017 now have until January 31, 2018 to submit their returns. However, this is a filing extension, not a payment extension. Payments on 2016 tax returns will still be keyed to the original due date of April 18, 2017.

Tax law offered some relief for disaster victims before this extension was announced. For example, victims of the Bay Area fires may choose to claim any uninsured and/or unreimbursed property losses related to the wildfires in either the year the damage occurred (2017) or the year prior (2016). These are called “casualty losses” and pertain to a broad variety of natural disasters, including hurricanes. Additional tax information for

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IRS To Block, Suspend Returns Without Health Insurance Information

The IRS has something to say about Obamacare. 

As debates rage and tensions rise in Congress over the state of healthcare and whether or not the Affordable Care Act, commonly known as Obamacare, will stay in place, or face another repeal attempt, the American public now has something else to consider. The disclosure of health insurance information is an absolute requirement.

The Internal Revenue Service has announced they will be more vigilant in checking whether filers had health insurance for the filing year. In fact, they will suspend and refuse to accept any filings that do not indicate whether taxpayers had insurance. This disclosure has been required since Obamacare went into effect, but now the IRS is stressing the importance of compliance.

The Affordable Care Act requires individuals to purchase health insurance or pay a penalty for not being insured. There was a long public discussion about whether that penalty is actually a fee or a tax. Call it either; the penalty gets calculated into the taxes owed or the refund received at the end of every tax year.

The tax penalty is $695 for adults and $347.50 for children who are not covered, or 2.5 percent of the adjusted gross household income – whichever number is higher. Skipping the part about health insurance during the filing of taxes will no longer be tolerated. The tax agency says the move is meant to encourage compliance with the individual mandate part of the law.

This new policy has been announced as Americans begin to think about their tax returns and how much they may be paying or receiving once all the math is done. Anyone who counts on an annual tax refund will need to make sure all the proper health insurance information is disclosed and documented.

On the IRS form 1040, there is a line that requires filers to mark whether they had health insurance for the filing year. Checking the box that indicates there is no health insurance in place will lead filers to another box where they are required to disclose what excludes them from the individual mandate. Or, they can simply acknowledge the penalty for not having health insurance and pay the tax.

Some of the acceptable reasons for not having insurance and being exempt from the mandate include: homelessness, eviction, bankruptcy, a death in the family, and a lack of access to any affordable plans. There may be documentation required for filers who believe they are entitled to an exemption.

The IRS announced this move by sending an online notification to professional tax accountants and attorneys, telling preparers that filings would not be accepted if they neglected to include this information. The IRS noted that this could lead to delays in the processing of refunds, and said the measure would apply to returns that are filed electronically as well as paper returns.

This may bring a new dimension to the attempts by Washington to overhaul the nation’s healthcare system. The individual mandate is one of the

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Forest Whitaker’s Tax Troubles

People often get surprised when they hear about celebrities being punished for tax evasion. One might assume that celebrities with all their popularity are treated differently from other citizens, however our tax attorneys can tell you that nothing could be farther from the truth. For the IRS, everyone is the same and it treats each case purely based on its merit. No inch given, no quarter asked for. The laws are the same for everyone.

That is why it didn’t come as a major surprise when the IRS recently rejected star actor and director, Robert Whitaker ‘s plea that he be allowed to pay back overdue taxes in installments. The tax irregularities in the case of the Award-winning actor have been going on since 2013. Since the court felt that neither the actor or his representative agencies seemed to show any intent that they would ultimately pay up or showed any solid evidence that they could pay the dues, the court ruled in favor of the IRS.

Whitaker and his spouse Keisha’s joint income tax return for 2013 reported a gross income of $1,491,974. The tax liability reported was $426,812. However, only $10,579 was sent as his wage withholding. The actor is also reported to have added another $4,500 as tax payments. The IRS on its part assessed the taxes on Whitaker’s 2013 tax returns on December, 2014. This was not an audit done by the tax collection agency. It was an investigation into tax returns. Subsequently the IRS sent a ‘intent to levy’ notice to the actor.

After receiving the notice, a Collection Due Process hearing was requested by the actor’s representative. The representative cited reasons of the actor’s movie business not doing well, as well as Whitaker’s need to project a lavish lifestyle, for holding onto his position as a leading Hollywood star, which is the only way he would be able to pay his tax dues, as reasons for letting Whitaker pay his tax dues in monthly installments.

The IRS meanwhile checked on Whitaker’s tax liabilities for 2014. It found out that the actor’s wages in the year amounted to $ 1, 865,077 but his reported tax withholding was a mere $2,267. For the tax collection agency, things were seemingly going from bad to worse in this particular case. So, it asked the actor that he better improve his tax withholding, without which he can forget about negotiating an installment deal.

The actor then proposed a 72-month installment plan at $20,000 per month to clear off his IRS liabilities to the tune of $1.2 million, for 2013 and 2014. The IRS wanted the actor to pay $40,000 per month, while also paying his 2014 taxes for the deal to be fixed, which his representative did not agree to.
Subsequently Whitaker reported an income of about $2.5 million for 2014 with a tax due of over $800K. The IRS then made an easement of the actor’s income tax returns for 2014. However, the IRS officer was not aware

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