San Francisco anti-Trump Tax March

image of a microphone in front of a protesting crowdThousands of protesters in San Francisco, the Bay Area and across the nation participated in an anti-Trump Tax March this past Saturday. The demonstrations were part of a larger effort to persuade the recently inaugurated 45th President of the United States to release his annual tax returns.

Crowds began forming early on Saturday afternoon at the Civic Center Plaza in San Francisco, and at 3pm PST the march down Market Street to the Embarcadero began. There was a large rally in front of City Hall that lasted for approximately one hour, at the end of which protesters began chanting anti-Trump slogans such as, “Hey hey, ho ho, Donald Trump has got to go!”

Other attendees held signs that read, “Drop your tax returns instead of bombs” and “Lesbians love taxes, Donald. Show us yours!” Even San Francisco Rep. Nancy Pelosi (D-CA) made an appearance at the rally and started a chant of her own: “Donald Trump, who do you owe? We must know!”

Before rhetorically asking Trump, “Why are you so chicken?” to cheers from the largely partisan crowd, Pelosi pointed out that each week Democrats introduce new legislation aimed at forcing President Trump to release his annual tax returns. Pelosi claimed that 100% of Democrats vote to approve the legislation each time, but as of yet there have been insufficient Republican votes for the measure to pass.

Jane Kim, San Francisco’s city supervisor, also spoke at the rally in front of City Hall. Kim said that the demand for Trump to release his federal tax returns is about more than President Trump himself. She said U.S. citizens want the rich to be held accountable because of the ever-increasing income and wealth gaps. “I’m not afraid to call Trump an enemy of this state,” Kim said to the audience. “We, the American people, want to know: Was our president honest?” she added.

Any tax attorney in San Francisco can tell you that U.S. Presidents are not legally required to publicly release their annual tax returns, although each President since the early 1970s has done so voluntarily. Trump said prior to his being elected that he would release his returns after a federal audit was completed, but he has also said that voters aren’t interested in the details of his state or federal tax returns. Tuesday, April 18 is the filing deadline to file tax returns for this year (it’s normally April 15 but that date fell on a Saturday this year) and the anti-Trump Tax March attendees are insisting that Trump release his returns by the close of business on Tuesday.

Many protesters decided to attend the rally in San Francisco, not just to support the movement calling for the President to release his annual tax returns, but to call into question his business ties and potential conflicts of interest that may arise during his presidency. Menlo Park resident Diane Walter made the trip to San Francisco for the rally. Walter readily admits she is not a fan

Read More

2017 Tax Refund Delays

image of cash and tax documentsLife as a tax lawyer during refund season can become a little hectic, and this is especially true this year. Indeed, updates to the IRS tax code instigated a warning from the Internal Revenue Service that certain taxpayers may experience delays in receiving their 2017 tax refunds.

So where is the delay coming from? In 2015, Congress passed the “Protecting Americans from Tax Hikes (PATH) Act of 2015“, and the section of the law that focuses on refunds goes into effect this year. Consequently, the IRS must wait until February 15, 2017 to issue refunds to taxpayers who claimed either the earned-income tax credit (EITC) or the additional child tax credit (ACTC).

The ACTC and EITC are both refundable tax credits, meaning that if the amount of the claimed credit is larger than the amount of taxes you owe, you receive a refund. Even if you don’t have any tax obligation when you file, you can still get a tax refund by claiming these refundable credits.

In order to claim either the EITC or ACTC, you must have earned wages in the year your tax return is for. For tax purposes, these wages are usually reported on a form W-2 or form 1099-MISC, which employers are required to provide to taxpayers by January 31.

Employers used to be able to wait until the end of February if filing on paper, or the end of March if filing electronically, to submit these forms to the government. However, if taxpayers filed their returns early they would have done so before the IRS had even received those same forms from employers. The gap in time for reporting wage information has left open an opportunity for fraud, effectively giving scammers or identity thieves the chance to file phony tax returns before the IRS could catch on.

As part of the PATH Act, employers are now required to submit forms W-2 and 1099-MISC to the Social Security Administration on the same date that taxpayers receive their forms. By delaying the refund issue date to February 15, the IRS will be able to confirm accuracy of both the employer and taxpayer information. Additionally, the rise in identity theft has motivated the IRS and state tax authorities to establish extra fraud safeguards, which can result in additional review time. Despite potential delays, the new law’s requirements should overall mean more safe and accurate refund checks.

It’s important to note that for affected taxpayers, the IRS has to hold the entire refund, not just the portion associated with those credits, until at least February 15. Regardless, the IRS anticipates issuing most refunds in less than 21 days, which nearly any tax lawyer would agree is an expedient time frame.

If you would like more information on the status of your refund, check out the “Where’s My Refund?” tool available on IRS.gov. Taxpayers can check the status of their refunds within 24 hours after the IRS has received an electronically filed tax return or four

Read More

San Francisco Supervisor Proposes Robot Tax

two robots face to faceOne mention of robot-centered job automation is enough to send shivers up the spine of most workers who depend on these jobs for their livelihood. Many see the changes happening right before their eyes—automated supermarket checkouts, self-driving cars and touchscreen restaurant ordering is eliminating many jobs. While this is bad for workers, it’s great for manufacturers and large scale businesses who save substantially on the cost of labor. One San Francisco politician has proposed the notion that these companies should have to pay for the privilege of their vast cost savings. She wants to tax robots.

What at once seemed extreme is now becoming more attractive to workers, especially those hard hit by the new robot economy. A proposed Universal Basic Income, or UBI, would serve as a base salary that would allow everyone to enjoy a living wage. Now many want to tax the robots—a move that would stop companies from dumping their entire workforce and replacing them with artificial intelligence.

San Francisco Supervisor Jane Kim thinks that a tax on robots would allay a lot of the fears of the knowledge industry workers in Silicon Valley who fear that a robotic takeover would mean financial ruin for them. Bill Gates agrees, theorizing that a tax on robots would serve to slow down the inevitable robot labor force takeover, while providing much needed revenue for those in human centered careers like child care and nursing.

This sentiment is a bit surprising coming from someone like Gates, since Microsoft is one of the major manufacturers of artificial intelligence systems. Gates is not alone in his thinking. Kim says that her idea to impose a tax on robots stemmed from a fear that job automation would create a chasm between the have and the have-nots.

Those who had been previously dependent on unskilled labor and lower wage pink collar jobs would find themselves impoverished and without a way to earn a living. Kim is developing an advisory committee to brainstorm about ways to make the best use of the proposed automation tax. Her committee will include the most influential leaders in academia, healthcare, unions and the tech community. She hopes to raise awareness of how the expansion of robots in the workplace would have a ripple effect across industries, from trucking to finance, hospitality and healthcare.

While the plan would not stop the inevitable switch to robot labor, a system that taxes robots would help to slow the job displacement and allow employees to make smooth transitions.

One of the major objections raised to the idea is that it can be hard to define what constitutes “harmful” automation. While a robot may cost one worker part of a job, it could also free that worker up to engage in more productive activity, bringing with it financial value.

While Kim does not think that her automation tax idea would be a panacea, she does believe it is a step in the right direction for San Francisco, and the entire country. She

Read More

The Top Five Red Flags That Can Trigger An IRS Audit

With tax season coming to a close, many filers are dreading the arrival of April 15 and the terrifying prospect of an being audited. Many taxpayers will hit “send” on their returns, then agonize over whether they have filled out their deductions correctly or accounted for each penny earned. Understanding what red flags commonly trigger an IRS audit is the best way to avoid this possibility.

1. Failing to Report Taxable Income

When you earn more than a certain amount of income each year, you are required to report it to the IRS, regardless of how it is earned. This amount varies from year to year, but in past years, the limit has been $600. You are required to report your wages earned from work, any income from small business and even income from illegal activities. Failing to report this income—especially if you have reported it in past years—can trigger an audit.

2. Claiming Unusual or Large Deductions

While many people make small donations to charity in the form of personal checks, making too large of a donation can trigger an audit. Many taxpayers use donations of cars and clothes to get a larger deduction than they’re entitled to. The IRS will examine your return more closely if the amount of your charitable donations are out of proportion to your income. If you earn $30,000 a year and claim a deduction for a $10,000 donation, it doesn’t take a tax lawyer in San Francisco to tell you that the IRS might come knocking.

3. Claiming Too Many Meals and Other Incidentals

It is not unusual for employees to have expenses that their employers do not reimburse, but having too many of these deductions can raise red flags on your tax return. If you are claiming deductions for meals, trips and entertainment, be ready to explain how these relate to your work. Make sure to save all of your receipts in case you are faced with an interview with the IRS.

4. The Home Office Deduction

A huge chunk of the millions of entrepreneurs and self-employed professionals in the U.S. work from home. For many of these people, however, claiming the home office deduction can be enough to have your tax return flagged by the IRS. Remember that the only amount you can claim as a home office deduction is the portion of your office that is used for your home business. If you use your home office for personal reasons, you may not be able to deduct that portion from your taxes.

5. The Alimony Deduction

One of the most surprising things that the IRS is cracking down on is alimony deductions. The payer of alimony is allowed to take a certain deduction, but only if certain conditions are met. Without a divorce agreement that outlines the terms of alimony, the IRS will deny you the deduction and any credits that come along with it. Both the payer and the recipient have to report alimony payments on their taxes and

Read More

Doctor Slapped With Huge Fine After Granting Business Loan

Title graphicOne prominent physician in Texas is in hot water after lending cash to a struggling business to cover its payroll. Dr Robert McClendon was slapped with a $4.3 million penalty from the IRS after the move, and is facing felony charges for non-payment of payroll taxes.

While the case may seem clear cut and dry, it is not. Dr. McClendon owned the failing business and one of his employees started embezzling funds from the company. McClendon was the owner of Family Practice, a company that provided medical services.

He hired a CFO, Richard Stephen, and within a few years, the company was more than $10 million in arrears to the IRS. It was later discovered that Stephen was not making the necessary payments to the employees and using the funds for his own purposes. When Dr. McClendon discovered the fraud, he jumped to its rescue and loaned the company $100,000 in order to pay the salaries of his workers. Stephen eventually plead guilty to felony fraud charges in the case. However, his admission of guilt did not stop Dr. McClendon from being implicated in the tax fraud.

Family Practice eventually went out of business and used the bulk of their profits to pay off the debt. It was then that he made the hefty $100,000 loan to cover his employees’ payroll, but neglected to pay the taxes on the loan. The IRS assessed a “responsible person” penalty on Dr. McClendon and declared that his failure to pay was willful. Dr. McClendon offered that while he was a responsible person, his failure was unintentional.

Despite his claims, the IRS did not buy his story. They slapped him with a huge fine of more than $4 million. Dr. McClendon is currently in the process of appealing the ruling.

This is not the first time the IRS has cracked down on business owners for failure to pay taxes. The IRS is extremely strict when it comes to a willful failure to pay, and will often take aggressive collection measures including seizing assets, wage garnishments or bank levies. In some cases, the IRS may often shut the business down to stop the bleeding.

Dr. McClendon found out the hard way that no good deed goes unpunished. n/a

How Trump’s Tax Reform Impacts High Tax States

With the recent announcements by the Trump administration that tax reform is on the way, one of the proposals with the newer and simplified tax plan is the elimination of various deductions in order to close some loopholes and even things out for the masses. One of...

Warriors To Bring Millions in Tax Revenue to San Francisco

The Chase Center Accommodations The Golden State Warriors will soon be shooting hoops at their new $1 billion arena, located in the Mission Bay neighborhood of San Francisco. The Chase Center will officially open for the 2019-2020 season. In fact, San Francisco Mayor...

Read More

San Francisco Company Offers Employees “Delocation” Package

San Francisco neighborhoodWhile most new employees enjoy relocation packages that allow them to move closer to their jobs, the team at Zapier are getting just the opposite. In response to sky high rents and housing costs in San Francisco, this innovative tech firm is doling out $10,000 payments that will allow their staff to work remotely in locations outside of San Francisco.

What Prompted This Move?

Because of a housing crunch in the Bay Area, many families find it hard to afford homes near work. This causes commuting woes for employees who find themselves having to make long treks into the office every day. Zapier, a tech startup, wants to eliminate this problem. The firm’s management is offering a $10,000 “delocation” package to new employees who agree to stay on with the company for a year or longer.

Zapier’s co-founder Wade Foster posits that this move will make it easier to recruit top talent who might otherwise find living in San Francisco cost prohibitive. Although many are attracted to the tech scene there, they simply cannot afford to enjoy the quality of life they want for their families. He acknowledges the housing problems that the city faces and thinks that his moves will give his employees the peace of mind of knowing they can keep more money in their pockets without having to shell out big bucks for rent and mortgages.

The company’s 80-person staff all work remotely, and Foster hopes to expand his new delocation program to his entire team. The move reimburses moving expenses of up to $10,000 for the first three months of the the move. In return, employees are expected to stay in their jobs and serve the company for up to a year.

Programs like this may find traction in other cities as well. Housing shortages and high rent prices affect families in cities like New York, San Jose, Los Angeles and Boston, making it harder for companies to enjoy fresh talent and take advantage of skilled intellectuals from colleges and universities in the area.

With so many new graduates facing steep college loan repayments and crushing debt, it can be hard for them to survive, even on six-figure salaries. In my time as a tax lawyer in San Francisco, I’ve seen rent skyrocket, and traffic multiply exponentially over the years. It’s no surprise to me that a cutting edge tech firm like Zapier would craft a creative package to attract top talent. The delocation program is underway and Foster expects that it will be a shining success.

How Trump’s Tax Reform Impacts High Tax States

With the recent announcements by the Trump administration that tax reform is on the way, one of the proposals with the newer and simplified tax plan is the elimination of various deductions in order to close some loopholes and even things out for the masses. One of...

Read More

Todd Chrisley Accused of Dodging Taxes

According to recent reports, Todd Chrisley might not “know best” when it comes to paying taxes. The star of the popular reality show “Chrisley Knows Best” is being accused of dodging taxes and living lavishly at the expense of Georgia taxpayers. The state has opened up an investigation into the star’s finances and are trying to determine just how much he owes.

Local network WSB-TV started the initial probe, claiming that Chrisley was not paying his share of state taxes despite court filings in which he claimed to be a Georgia resident. On his federal tax forms, he claimed to be a resident of Florida.

The claims are especially shocking because of the lavish lifestyle that is the cornerstone of Chrisley’s show. Now authorities believe that the lifestyle has been paid for by the show’s watchers and residents of the state of Georgia.

In an interview with the Atlanta Journal Constitution, Chrisley’s oldest son says that the star has a history of “stretching the truth.” Kyle, who is estranged from his father, is actively participating in the investigation into his father’s finances. Kyle claims that his father is hiding money and has a habit of not paying his creditors.

Kyle says that his father believes he has more money than he actually does, and is reluctant to give it to anyone—including Uncle Sam. He even claims that his father forced the children to pretend they were residents of Florida, including instructing them to get their drivers licenses in the state in order to establish false residency. His wife Julie substantiated the claims and insists the family never lived in Florida.

More details are emerging an the investigation is expected to last until the truth about the star’s finances and residency is revealed. The star adamantly contends that he has paid his fair share of taxes and is not guilty of wrongdoing. Mr. Chrisley would be wise to find a good tax lawyer to help him sort out these allegations.


How Trump’s Tax Reform Impacts High Tax States

With the recent announcements by the Trump administration that tax reform is on the way, one of the proposals with the newer and simplified tax plan is the elimination of various deductions in order to close some loopholes and even things out for the masses. One of...

read more

Warriors To Bring Millions in Tax Revenue to San Francisco

The Chase Center Accommodations The Golden State Warriors will soon be shooting hoops at their new $1 billion arena, located in the Mission Bay neighborhood of San Francisco. The Chase Center will officially open for the 2019-2020 season. In fact, San Francisco Mayor...

read more

Tax Liens Bring Flint Water Crisis To A Head

Roughly 8,000 Flint, Michigan families are now facing potential tax liens for refusing to pay their water bill due to the city's ongoing water crisis. All residents who are at least six months behind in their payments received notices that failure to pay could result...

read more
Read More

Should I Trust Tax Preparation Software?

financial planner fills out tax paper workLast year, nearly 132 million of tax returns were filed using various tax preparation softwares. However, almost 79 million of those e-filed returns were completed by tax professionals on behalf of their clients.

As a tax lawyer I can tell you that one of the most important decisions that taxpayers ponder each year is whether to hire a tax professional to do their taxes or simply use similar software to file their returns on their own. As Americans age, grow their families, and increase business investments, evaluating when and if we need tax advice can get a bit confusing.

One of the major considerations for many Americans in deciding how to handle their tax returns is the cost factor. Paying a tax professional can be pricey, especially if a return is complex and time-consuming. The IRS estimates the cost of filing a Form 1040 with itemized deductions and a state tax return to be about $270. Meanwhile, tax software is usually available to buy for under $100 or even less with common tax season discounts. Additionally, if a taxpayer’s adjusted gross income lands below $64,000, they can use the IRS’ Free File tool to prepare and file tax returns at absolutely zero cost.

The IRS also estimates that when taking into consideration the time needed to gather records, do some tax planning and filling out and submitting the final return, completing a Form 1040 will take approximately 16 hours. Of course, gathering tax statements for a tax professional will take a bit of time, but once the necessary documents are delivered the time commitment is a fraction of what is needed to complete a return without assistance.

Tax software is perfectly fine to use for single filers without any real investments or changes to their tax situation from the previous year. Even for slightly more complex tax situations like getting married, having children and/or itemizing deductions for the first time, tax prep software is totally adequate.

However, if you bought a home, inherited property, or own your own business, personal tax advice is usually advisable. Although high-end tax software has the capability to take these situations into consideration, it cannot give personal insight into your unique circumstances. A tax professional is experienced in advising their clients about whether to take specific actions now or wait until a better opportunity arises.

The bottom line is that once you sign your tax return, you are completely responsible for its contents. If you do your taxes alone, the IRS can approach you with any questions or issues, even years later. However, by simply filling out a line on your 1040, the IRS will bring any questions to your tax preparer. Even further, you can give certain types of tax professionals the power of attorney to represent you before the IRS.

In the end, how to handle your tax return is completely up to you. However, having a trustworthy tax professional in your corner can make all the difference if IRS issues do arise

Read More

The IRS Owes Taxpayers More Than $1 Billion

brief case full of cashFor many people, January 31 is a time of anticipation. It’s the time when the W2s arrive and millions of Americans can start filing their income taxes. Many will receive a refund from the government that Uncle Sam has been deducted all year from their paychecks. In my time as a tax lawyer in San Jose, I’ve learned that some Americans do not always claim these funds! The IRS has reported that it is holding on to more than $1 billion in unclaimed tax refunds.

In 2013, more than one million taxpayers failed to file taxes and claim their rightful tax refund. Taxpayers have a three year window of time in which they can claim their refunds from previous years. Many are unaware that they are owed refunds, and some fail to file taxes because they are afraid of the legal ramifications—they may have outstanding warrants or old debts.

If the taxpayer does not claim the funds in time, the money reverts back to the U.S. Treasury. Each year, money sits in the Treasury, waiting for the right taxpayer to lay claim to it. Although the IRS makes every effort possible to locate the owners of the funds, it is often the case that most of it is simply unclaimed.

Why Don’t People Claim Their Refunds?

There are many reasons that people do not claim their refunds from the IRS. Some taxpayers are college students who don’t believe they are due a refund. Others believe that missing the April 15 deadline for filing means that they are no longer entitled to a refund. Still others are incapacitated, housed in hospitals or other institutions. Some people do not know that they have up to three years to claim back refunds, and simply believe that they are no longer eligible.

There are some taxpayers who don’t file tax returns because they are afraid that they will get in trouble with the law. The IRS requires that everyone who earns more than a certain amount of income each year file a return. Even taxpayers who are engaging in illegal activities are required to file a return. These taxpayers may fail to file out of fear of getting in trouble with the law.

The majority of taxpayers who are owed a refund live in Texas, California and Florida. The average amount of unclaimed money owed is $763, with taxpayers in Alaska and Wyoming losing out on the biggest refunds of more than $900, on average.

The Reasons for Refunds

You might be owed a refund if you overpaid your taxes throughout the year or if you failed to claim certain credits like the Earned Income Tax Credit, child tax credit or student education credit. You may also be owed a refund if you failed to file because you thought your income was too low to get money back from the IRS.

Other people are owed refunds because they have dependents that they failed to claim.

The IRS is holding on to the money of

Read More

4 Popular Tax Breaks That Might Be Eliminated

a sack of money changing handsYou certainly don’t need a tax attorney to tell you that tax reform is tough, but our current Congress has their sights set on making some pretty significant changes to the tax system. The new plan proposes eliminating some of the most popular tax breaks that are enjoyed annually by millions of Americans. Let’s take a look at which credits, exemptions, and deductions may be on the chopping block:

Property Taxes

Property taxes currently provide one of the most significant deductions that millions of American homeowners can take on their federal taxes. In 2016, this deduction alone saved homeowners a total of $33 billion, according to the Joint Committee on Taxation. Unfortunately for many who own real estate, this is one deduction that the GOP reform plan seeks to eliminate. Its impact will likely be felt the most by middle class families who own their home, as well as the local school districts who use and rely on these taxes as a way to fund their schools. School districts may have to come up with another way to make up for the loss if this cut does indeed go through in the tax reform plan.

Mortgage interest

This popular deduction is a huge benefit to homeowners who have mortgages. In fact, it was enjoyed by almost 34 million American families in 2016. The GOP plan will keep it, but there may be some changes. Home owners with high priced properties may be on the losing end if the mortgage interest deduction is altered.

State and Local taxes

This category of tax deductions encompasses state and local sales taxes, as well as state and local income taxes. These deductions alone accounted for almost $70 billion in savings for American taxpayers in 2016. For those who itemize their deductions on their returns, losing out on this category could mean a significantly lower tax return than they’re used to receiving.

Tax savings on Health Insurance

Taxpayers who have employer-provided health insurance are currently able to avoid taxes on their policies. Those with an employer-based coverage plan encompass nearly half of all Americans today. With the promise of repealing and replacing the Affordable Care Act, the GOP is also planning changes to these exemptions. In 2016 alone, taxpayers collectively saved billions with the employer based health insurance exemption.

Safe tax breaks

The good news is that there are several popular tax breaks that appear to be safe under the proposed Republican reforms. These include the child tax credit, which helps families with children save billions annually. Deductions for charitable contributions will also be preserved.

The popular Earned Income Credit is also likely to stay, but with some changes to its current form. This credit greatly benefits low income workers, and was claimed in 2016 by almost 30 million households. Retirement savings are also safe, which includes 401(k)s and pension plans.

Overall, the GOP is looking to make some pretty significant changes to the current tax system that could hit working and middle class families

Read More