Segal, Cohen & Landis Reviews Taxes and Basketball

The Fourth of July weekend was interrupted for many Lakers basketball fans as news broke that Dwight Howard was potentially leaving Los Angeles. Fans and sports commentators waited with baited breath as Howard weighed his options. In the end, Howard decided on the move to the Houston Rockets, despite being offered more by the Lakers. Many asked why he would leave behind a bigger contract in California. The answer could lie in one thing—taxes.

The Lakers offered Howard $118 million over four years, while the Rockets offered $87.6 million over four years, which would be a smaller 4.5% annual increase over his existing contract with the Lakers. A recent Forbes article written by a tax expert notes that taxes do matter, as tax advisers have calculated what Howard would receive after taxes in California (with a 13.3% tax rate), and they have decided that it would end up being a smaller amount than in Houston, as Texas has no state income tax. The Forbes writer points out that it isn’t sufficient to merely take note of who is the highest paid, but rather who is bringing home the most money after the requisite taxes are paid.

Another Texan professional athlete is similarly placed in a favorable position due to the lack state income tax—Tony Romo. Romo, who is the fifth highest paid NFL player before taxes, is the number one highest player after taxes. He is an example of how significant the impact of taxes can be on the highest earners.

Last November, California voters approved the raising of tax rates to the high rate of 13.3%, an increase from 10.3%, on taxpayers earning more than $1 million in income. Some think that such a high tax rate will provide an incentive for athletes and other professionals alike to seek out states with lower tax rates, leaving California for greener (money) pastures.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
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Segal, Cohen & Landis Reviews Enrolled Agents: Tax Law “Forgotten” Professionals

When it comes to tax law or tax issues, three types of professionals come to mind—Internal Revenue Agents themselves, Certified Public Accountants (CPAs), or tax attorneys. The forgotten members of this sector are often enrolled agents.

When faced with a tax audit, enrolled agents, who sometimes work with tax attorneys, may also represent taxpayers with the Internal Revenue Service. Currently, there are around 50,000 enrolled agents practicing in the United States. Unfortunately, these individuals have a few issues that keep them tax law’s hidden professional.

According to a recent article in Forbes, enrolled agents are not licensed by the states, which makes it difficult to advertise and forces them to use other titles other than that given to them by the passing of the test administered by the Internal Revenue Service. The article goes on to postulate that legislation regarding this was meant to protect CPAs, but unfortunately, it was adversely affecting enrolled agents attempting to practice their profession. Proposed legislation would make it possible for enrolled agents to display their titles and advertise, just as tax attorneys and CPAs are able to do.

The article goes on to discuss the advantages of CPAs and Enrolled agents, as they are able to do a taxpayers return and also represent the taxpayer in the event of an audit.

In the event of an audit that goes beyond stage one, it can be beneficial to have an enrolled agent on your side. Audits can often be complicated beyond that stage though, and consulting with an experienced tax attorney who has dealt with many audits may mean the difference in the end.

Segal, Cohen & Landis, LLP is a law firm with the tax professionals with the knowledge and experience to get the best results for taxpayers with tax issues. Not only do they have tax attorneys with decades of experience, they also have enrolled agents in the office who can offer their unique and crucial expertise.

If you are facing a tax issue, simple or complicated, contact your tax professional today to begin the process that could end in a favorable resolution.

Segal, Cohen & Landis, LLP
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews the Bright Side for Pro Golfer Phil Mickelson (Tax-Wise, That Is)

After his sixth consecutive second place award at the U.S. Open, Phil Mickelson may not have been thinking about the tax benefits of his loss, but according to a recent Forbes article that takes a more humorous look at Mikelson’s recent loss, he should have been.

While he may not have won the golf game, Forbes Contributor makes the sly argument that he may have won the tax game, as he goes on to enumerate the various ways in which Mikelson would have accrued a larger tax bill. He points out that Mikelson announced, with controversy following, that he would do what he could to reduce his California tax bill substantially.

Analyzing the outcome if he had won, Mikelson would have earned the generous sum of $ 1.44 million; instead, as a second place finisher, he earned $696,000. By failing to win the big prize and score the extra $743, 896 in winning revenue, Mikelson also avoided having to pay $76,100 in his state of California income tax.

Last fall, voters approved an increase of 3% to the tax rate, solidifying its place as the highest rate in the country.

In addition to the tax rate issue, the Forbes contributor pointed out that such a win would possibly have included opportunities for lucrative sponsorship deals. High taxes would have inevitably been imposed on any earnings from his sponsors.

Although he may not have won the big prize on the golf course, he can (possibly) take solace in his tax bill.

Segal, Cohen & Landis, LLP
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

The Law Offices of Segal Cohen and Landis reviews the Ernst and Young Case

The tax world is often very difficult to understand due to its various rules and regulations. Sometimes, these rules do not immediately make sense. This leads to difficulty in preparing taxes. As such, having a tax lawyer is crucial to paying taxes. Tax law offices are fully immersed in the regulations established by the Internal Revenue service. Therefore, a tax lawyer can make the process of paying taxes quick, easy, and legal.

Naturally, any working American will seek ways to minimize their tax payment, which can best be done through the use of a tax lawyer. Tax avoidance, or the way that an individual or a tax attorney can legally reduce taxes, is helpful in many cases. Unfortunately, even with this benefit potentially provided by tax lawyers, there are those who choose to evade taxes. This is highly illegal and often results in jail time, especially if there is no tax lawyer around to help. When an individual evades taxation, they are willingly missing out on an opportunity for a tax lawyer to take care of some of their needs. It’d be much better for an individual to just contact a tax attorney and create options. Unfortunately, this is not always done, as demonstrated by recent activity within Ernst and Young.

This particular situation involved senior tax partners who evaded taxes for many years. Because they were discovered, they will face prosecution. It is important to take note of the difference between tax partners and tax lawyers. Tax partners are mostly familiar with only the payment of taxes. Tax lawyers, on the other hand, have been trained extensively to deal with exceptions and special conditions. Tax attorneys are much more useful in creating options, while tax partners are usually limited to the knowledge of their day-to-day jobs.

Perhaps if one of these tax partners had contacted a tax lawyer, they would have discovered a way to legally avoid a portion of their tax payment rather than revert to evasion. Instead, they must face their situations on their own without the help of professional tax lawyers. Since a tax lawyer specializes in creating more options, neglecting to contact one is a big mistake. Regardless of the complexity of taxation calculation, tax attorneys are essential in understanding the process behind payment.

In this case, Ernst and Young found that its senior tax partners had been advocating tax evasion procedures amongst themselves for several years. While not likely, it is possible that one of these partners simply did not know they were violating IRS regulations. This brings up another interesting point: if there is any uncertainty, then you are better off contacting a tax lawyer to set up an appointment to discuss taxes. A tax attorney can point out areas in which an individual can save money. More importantly, tax lawyers can recognize areas where the client may be bordering on legality. Tax attorneys can then give advice to prevent the consequences from IRS.

As a result of this scandal, Ernst and Young had to make a large payout to avoid its own prosecution. However, even this large sum did not cover the damage caused by the corrupt individuals. This “settlement” was probably made possible only through the use of multiple tax attorneys. Since tax lawyers are great at presenting information to the court in an appealing manner, such news would not be very surprising.

Tax lawyers and tax attorneys are always available and ready to help. They can point out everything you need to know about taxation. If you are not doing well financially, tax lawyer and tax attorneys can help find a way out of the situation.

The taxation world is a warzone; it is best to be armed with a good tax lawyer.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews the Foreign Income Exclusion

According to a recent article in Forbes, Robert Wood discusses whether or not an individual qualifies for Foreign Income Tax Exclusion, which allows individuals who qualify to collect money tax-free.

The primary source for information regarding this matter is a case, James F. Daly and Candace H.Daly, wherein the Tax Court ruled that the couple did not qualify for the exclusion, even though the husband worked primarily overseas in Iraq and Afghanistan. The ruling stated that although he worked in those countries, his tax home remained the United States.

It is no wonder that the Daly’s attempted to utilize the income exclusion, as it is a “great benefit” that allows income of up to $97,000 to remain tax free. In order to meet the criteria though, the individual must either be a U.S. citizen that is a resident of one or more foreign countries for an uninterrupted amount of time that includes one full tax year; or a U.S. citizen who is a present in a foreign country (or countries) for 330 in 12 consecutive months.

Unfortunately for the Daly’s, the Tax Court ruled that the Foreign Income Exclusion was not applicable to them, despite the fact that waivers have been granted in some cases.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Important Tax Dates in June

A recent article in Forbes highlighted important tax dates that taxpayers should be aware of when dealing with the Internal Revenue Service in the month of June.

The first date taxpayers should keep in mind is June 3rd. According to a press release by the IRS, the victims of the Moore, Oklahoma have been granted tax relief. The relief is granted to businesses affected by the late May storms. The businesses have until June 3 to make federal payroll and excise tax deposits. For all other businesses, these particular taxes are due on or after May 18 and before June 3.

A date with broader consequence for taxpayers is the second IRS furlough day. On this day, one of five scheduled to occur this summer due to budget cuts, all IRS offices will be closed—including any hotlines, Taxpayer Advocate Offices, and taxpayer assistance centers. All employees are off without pay on this day, meaning no correspondence or calls will be answered. Tax Returns will not be processed on this day, nor will their receipt be acknowledged. The furlough affects extend to even the online resources, including the refund tracking tool and the payment system—both of which will not be functioning on that day. Unfortunately for taxpayers, the furlough day does not affect any deadlines. All deadlines remain the same.

For those taxpayers who were out of the country on April 15th, their automatic two-month extension for their federal income tax return expires on June 17th. Taxpayers must provide documentation that they meet the requirements for the late filing, including proof that they were either living out of the country and their main place of business was also out of the country, or they are serving in the U.S. military outside of the United States.

June 17th is also the date that estimated tax payments are due for both individuals and corporations.

Taxpayers with signature authority or any interest in a foreign financial account should be aware of the June 30th deadline if they are required to file an FBAR. If you have any questions regarding whether or not you are required to file an FBAR, it is best to contact your knowledgeable tax professional.

The article notes that any other payments required by any agreements are due when designated.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews IRS Appointment of ‘Risk’ Officer

Risk Officer Named
Risk Officer Named

In the wake of the controversy surrounding the IRS’ targeting of conservative groups for increased scrutiny, the newly appointed Acting Commissioner, Daniel Werfel, has quickly taken action in response to calls for increased scrutiny of the IRS itself.

Werfel has appointed David Fisher in the capacity of chief risk officer and adviser. Fisher has many years of experience in the fields of financial management and internal controls during his time in several administrative capacities at the Government Accountability Office, according to an email sent internally by Werfel. The GOA is the investigative arm of Congress. His responsibilities included overseeing all internal operations as they related to budget, financial management, human resources, and other such areas.

While at the Internal Revenue Service, Fisher will be responsible for mitigating risk and improving internal controls. The intent of such internal oversight is to restore integrity to the IRS.

According to Werfel, Fisher has been highly regarded as a man of integrity and accountability throughout his career. These qualities are essential to the man who will not only be responsible for internal oversight, but also for advising Werfel on any proposed policy changes.

The IRS has found itself in hot water in recent weeks, as it faces multiple congressional investigations—the result of a revelations regarding the targeting of conservative groups that applied for tax-exempt status during an 18-month period from 2010-2012.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Possible IRS Commissioner by Obama

Appointing New Commissioner
Appointing New Commissioner

Daniel Werfel is expected to be named by President Obama to replace Acting Commissioner Steven T. Miller, according to various news outlets. Miller tendered his resignation to President Obama a few days ago.

Background of the expected Acting Commissioner

Mr. Werfel was previously named Controller of the Office of Federal Financial Management of the Office of Management and Budget by President Obama in 2009. Before his appointment to this position, he had served in a few different roles at the Office of Management and Budget—including Deputy Controller, Chief of the Financial Integrity and Analysis Branch; budget examiner in the education branch of the office, and as a policy analyst in the Office of Information and Regulatory Affairs.

Before entering the Office of Management and Budget, Mr. Werful practiced law. At one time, he worked as a trial attorney in Civil Rights Division in the Department of Justice.

Werful has a history of bipartisanship, as he worked in the OMB during the Bush Administration, pushing for support on both sides of the aisle.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews U.S. Senate Subcommittee Questioning of Apple

Apple CEO Tim Cook faced tough questions from a United States Senate subcommittee yesterday about the company’s offshore cash. The subcommittee charged Apple with utilizing tax loopholes in order to dodge taxes in the United States. They claimed that setting up offshore subsidiaries were part of the company’s plan to avoid billions of dollars in taxation.

Cook was quick to deny these claims. He countered by saying that the company is detrimentally affected by tax laws that no longer serve the current economic climate, with its multinational companies attempting to move cash from overseas back to the United States.

Cook vehemently stated that the company pays each and every dollar that it owes to the Internal Revenue Service. He noted that the company’s payments may make it the largest corporate taxpayer in the country. He went on to say that Apple is complies with both the law and the spirit of the law. According to Cook, the company does not depend on tax gimmicks or move intellectual property offshore to avoid tax bills from the Internal Revenue Service.

U.S. Senate Subcommittee

The hearing in which Cook testified on Apple’s behalf was called by the subcommittee’s investigation into loopholes utilized by corporations to avoid corporate taxes. Apple is not the only large company to be questioned. Microsoft and Hewlett-Packard were also asked to appear before the bi-partisan committee led by Carl Levin (D-Michigan) and John McCain (R-Arizona). According to the committee, an investigation into Apple yielded information regarding the company’s tax practices—which, purportedly, include shifting billions of dollars in profits away from the United States and into Ireland. This was apparently done with the purpose of taking advantage of a low corporate tax rate of 2 percent or less that was negotiated. The subcommittee said yesterday that such actions had resulted in the avoidance of tax on over $44 billion in earnings.

Subcommittee co-chair Levin remarked that Apple is focusing on taxes it has paid, and not on the vast quantity of tax avoided.

It is important to note, as does a Forbes article on the topic, the Apple has not done anything illegal. Its tax practices are merely an example of how multinational companies are utilizing tax loopholes. Apple remarks in a statement that the United States Tax Code is now antiquated in the digital age. It has simply not kept pace. Like many taxpayers, those leading Apple propose reform for the tax code, asking that it be simplified so that all taxpayers, and those leaders in Congress who preserve and write it, can understand it.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Segal, Cohen & Landis Reviews Mary J. Blige’s Legal Woes

Another Grammy winner finds herself in tax trouble. This time it’s Mary J. Blige, a taxpayer who is familiar with dealing with the tax woes. As a Forbes article recently pointed out, celebrities will often find themselves with tax problems as a result of their large incomes and their complex lifestyles. Celebrities will find themselves removed from the financial handling of their brand, as advisors and handlers will filter information before bringing it to the celebrity.

Ms. Blige found herself with a New Jersey tax bill of over $901, 000 for back taxes, but this time it is the IRS that is seeking payment. According to TMZ, a lien was filed against Ms. Blige for unpaid income taxes in the years 2009, 2010, and 2011. If the lien information is correct, that leaves the singer with over $3 million dollars owed to the IRS.

If you find yourself with a tax lien, there is some information that you should know. Tax liens are not to be ignored. They can encompass all your property—including property that you acquire after it is filed. Tax liens give the IRS priority over any other creditors that might request payment in the event of unpaid debt.

According to the IRS website, the IRS can only file tax liens after a liability is assessed, the IRS sends a Notice and Demand for Payment saying how much you owe, and you fail to address the issue with payment in 10 days.

If you are seeking to have your IRS lien released, the process usually involves two options in most cases: (1) pay the taxes, interest, and liability; or (2) post a bond guaranteeing payment.

If you find yourself in this position though, it is a good idea to speak to a knowledgeable tax professional.

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999