There are two easy and convenient options for obtaining copies of your federal tax return information — tax return transcripts and tax account transcripts by phone or by mail.

A tax return transcript shows most line items from the tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules. It does not reflect any changes you, your representative or the IRS made after the return was filed. In many cases, a return transcript will meet the requirements of lending institutions such as those offering mortgages and student loans.
A tax account transcript shows any later adjustments either you or the IRS made after the tax return was filed. This transcript shows basic data, including marital status, type of return filed, adjusted gross income and taxable income. The IRS does not charge a fee for transcripts, which are available for the current and three prior calendar years. Allow two weeks for delivery.

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Senate report blasts Dallas firm for offshore services for the masses

11:30 AM CDT on Sunday, August 13, 2006

By BRENDAN M. CASE / The Dallas Morning News

For $2,500, a Dallas-based financial services company offers customers the privileges of offshore transactions that were once reserved for the super rich.

A corporation in Belize, a trust in the Bahamas and two offshore accounts, with either banks or brokerages, are all included in Equity Development Group's Complete Offshore Package No. 1.
NYT
From left: Haim Saban, Robert Wood Johnson IV and Michael C. French testify about offshore arrangements.

“Our mission is to make 'going offshore' simple, convenient, understandable and affordable,” according to the company's Web site.

“The average person assumes that domestic options are their only options,” company founder Samuel Congdon says elsewhere on the site.

Such efforts to bring the offshore world to the masses, or at least to lesser millionaires, have earned Equity Development a place in a scathing U.S. Senate report on offshore tax havens. The report said the offshore industry fuels widespread tax avoidance worth up to $70 billion to the U.S. Treasury.

“Over the last six years, EDG utilized the Internet to provide about 900 mainly American clients, many of relatively modest wealth, with the type of offshore services previously available primarily to high-net-worth individuals,” according to the Senate report, Tax Haven Abuses: The Enablers, the Tools and Secrecy.

Mr. Congdon, 33, and his Dallas lawyer, James Lynn, declined to be interviewed for this article. “Nothing personal,” Mr. Congdon said. “On the advice of counsel, we're declining interviews.”

The Senate report did not accuse Equity Development or Mr. Congdon of specific legal violations but suggested that clients may have used offshore vehicles to break the law.

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July 10 (Bloomberg) — For the last decade, a lower U.S. tax bill has been one of the major perks Mark Welles has enjoyed as an American living and working in Hong Kong. Now, those savings have vanished with the stroke of a pen.

Welles, the 46-year-old head of Asian sales at TradeCard Inc., says his taxes will increase by more than $30,000 this year because of a last-minute change to a law passed in May that extended the 15 percent rate on dividends and most capital gains. He's asking his employer, a New York-based technology-services firm, to make up the difference.

``I'm in the process of educating our human-resources folks about this,'' he says.

More than 300,000 Americans living abroad are facing a $2.1 billion tax increase over the next 10 years. While the new law increases the amount of foreign-earned income that can be exempted from U.S. taxes to $82,400 from $80,000, it also for the first time imposes taxes on housing, educational and other subsidies that are commonly provided by employers to expatriate workers.

U.S. workers will continue to get a tax credit for taxes paid overseas, and the change will have little effect on those residing in high-tax countries. Hardest hit will be Americans who work in places such as Switzerland, the Persian Gulf, some Asian countries and the financial centers of the Caribbean, where taxes are lower than in the U.S. and housing costs — often subsidized by employers — are higher.

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Why form a California Corporation?

There are many advantages to forming a California corporation for your business. First and foremost is the liability protection of your personal assets. When you form an incorporation it helps separate your personal assets from that of your business. A legal corporate entity exists separately from its owners or shareholders. Typically, shareholders are not liable for the debts and obligations of the corporation or from any litigation where the company is the defendant. In a partnership or sole proprietorship, the creditors can go after the owners personal assets if the companies assets are not enough to settle a claim.

Limit your Personal Liability by Forming a Corporation

When you form an Incorporation in California, you form a separate entity from the owners of that company. Therefore, when a California Corporation is named in a lawsuit, there are legal provisions and UCC Code to protect the owners, directors, shareholders, and employees from personal liability. If you operate your business without the protection of a corporation, you can find yourself personally liable for any and all debts and obligations of the business.

Other advantages of forming a Incorporation are:

* The life of a corporation is not dependent on its owners, or it possesses the feature of unlimited life. If an owner dies or wishes to sell their interest, a California Corporation will continue to exist and do business;
* Like a corporation, a LLC will provide limited liability for its owners.
* Ownership is easily transferable, as long as it does not conflict with securities laws.
* And finally, under certain circumstances, forming an incorporation for your business can reduce taxes.

Corporate Debts - Who is Liable?

A California Corporation, if operated correctly, is a separate legal entity from its owners. If the company has a debt it can not pay or a claim from a lawsuit, the California corporation is responsible for that debt and not the owners. This is not the case for a sole-proprietorship, a limited-partnership, or a general partnership, where the owners are directly responsible for the debts and obligations of the company. In California, if you plan on having a store, employees, or sell goods you need to be protected by rights afforded to either an LLC or a Corporation. If anybody is to become seriously injured as a result of being in your store, working in your store, or using the items your sell, your company could find itself in a serious lawsuit. You must keep in mind, that you will be held responsible for any debts or obligation that you personally guarantee.

What is required to Maintain Corporate Status?

California Corporations have directors, owners, shareholders, and employees. Most states require only one person, who can hold all positions, to form a corporation. To properly operate your California Corporation you are required to hold and document the minutes of annual shareholders and directors meetings. You must be careful that your personal and corporate funds are not commingled. You should take extra care to avoid paying obligations of your company with your personal assets, and personal debts with your company assets. If you fail to maintain a very clear distinction between your corporate entity and your personal assets, the courts can find you liable for corporation debts. A requirement for this separation is having a distinct federal tax id number and a distinct bank and checking account from your personal assets. You want to be certain not to use your social security number on your bank account, credit card, or on signed contracts.

How do I set up a company as a subchapter S corporation?

Once you have established your corporation according to your states requirements, you elect S corporation status for federal tax purposes by filing Form 2553 (PDF), Election by a Small Business Corporation. Several requirements must be met before you can elect S corporation status.

by Joyce M. Rosenberg
Associated Press
May 2006

Accumulating records and documents is an inevitable part of running a small business. Paperwork turns into stacks of folders and eventually, filing cabinets that take up increasing amounts of space.

If you have the urge to start throwing out your company's old records, be aware that this is a task to be done very judiciously, or you could find yourself without crucial papers when unexpected litigation or tax questions come up. Better yet, you might want to think about preserving some of your old records electronically, saving space but still holding on to the documents you need.

Before you start a big purge, you also need to be aware of the laws in your state, such as statutes of limitation on contracts, or regulations that require members of certain professions to keep some documents for a specified amount of time. You should also be aware of any federal laws, which of course include tax laws, that apply to your business.

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The New York Times
May 16, 2006
By DAVID CAY JOHNSTON

President Bush is scheduled to sign into law tomorrow an extraordinary deal for high-income people with retirement savings accounts.

By paying $1 in income taxes before the taxes are due, these investors may be able to avoid future taxes equivalent to $3.50.

The deal is a one-time opportunity in 2010 for anyone to convert a conventional individual retirement account, where taxes are deferred until money is withdrawn, into a Roth IRA, where investment gains are tax-free. Conversions are now limited to people who make less than $100,000 a year.

One expert, the first of what is expected to be a herd promoting Roth plans, is showing how modest sums put into Roths can produce an enormous bounty over time.

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by Joyce M. Rosenberg
Associated Press
May 2006

Although tax season can be a painful time for small business owners, it does give them an opportunity to reassess how they run their companies. Whether it's how they keep their books, or how high their expenses are, they've probably discovered during the course of working on their returns that some changes are in order.

Cash flow is one of the biggest problems that owners discover at tax time. Many find they don't have enough funds on hand to pay their tax bills, and they have to scramble to come up with the money.

Gregg Wind, a certified public accountant with Wind Bremer Hockenberg LLP in Los Angeles, said a cash flow crunch is particularly a problem for new businesses.

"They're treating cash as 100 percent usable, when they should be saving money for taxes," Wind said.

Some small business owners regard all the profits as their own compensation, but aren't looking out for contingencies. Wind suggests owners draw a salary out of their companies' profits, but leave money with the business to be sure they can cover their taxes.

A cash flow shortage can also result from poor accounting. Many business owners find at tax time that their books have mistakes and omissions that, when corrected, result in less available money than they expected.

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5/3/2006 2:44:00 PM

To: National Desk

Contact: Jim Manley or Rebecca Kirszner, 202-224-2939, both of the Office of Senate Democratic Leader Harry Reid

WASHINGTON, May 3 /U.S. Newswire/ — Senate Democratic Leader Harry Reid today issued the following statement on President Bush's tax plan to put multi-millionaires ahead of middle-class families.

A fact check on President Bush's tax plan follows below.

“Earlier this week, Republicans offered a pittance of a rebate to gas consumers and the American people saw the plan as the gimmick it was. The Bush Republican tax plan is just like the Bush Republican gas rebate plan. Bush's tax plan offers next to nothing to average Americans while giving away the store to multi-millionaires. The tax reconciliation bill giveaway on capital gains and dividends will do much more for ExxonMobil board members than it will do for ExxonMobil customers. America can certainly do better than that.”

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There are many federal and state statutory prohibitions regarding efforts you take to deter creditors.

Whenever you employ an asset protection technique, you must be careful not to trigger prohibitions against fraudulent transfers. A fraudulent transfer occurs whenever you transfer your property in an effort to stop a legitimate creditor from taking the asset, in order to satisfy a legitimate debt. Further, if you transfer your property away while you know of the existence of a creditor, or have reason to know that a potential creditor exists, such a transfer may be considered fraudulent. The transfer could be undone, and you could be charged with a crime and face fines, restitution orders, probation or incarceration.

Many attorneys are reluctant to assist people in certain asset protection schemes because of the fraudulent transfer rules. An attorney who participates in a fraudulent transfer scheme can be regarded as a co-conspirator in the fraud, and can be subject to the same penalties as his/her client. By creating a statement of solvency prior to the proposed transfer, you can protect the transaction from being labeled as fraudulent. Also see “comment” about asset protection following being sued.

Business In The Beltway
Janet Novack, 03.01.06, 4:00 PM ET

Washington, D.C. -

Last month, when the Internal Revenue Service estimated that Americans underpaid their federal taxes by $345 billion in 2001, it didn't create much of a stir. Sure, that's a lot of money--equal to a 16% noncompliance rate--but it's not much larger than previous estimates of the “gross tax gap.”

Buried in the report, however, was a new and startling number. The IRS estimated, based on special research audits conducted on 2001 returns, that individual taxpayers reported just 57% of their business income. That's a marked decline from 1988, when the IRS last did intensive research audits. Based on those audits, the IRS had estimated taxpayers reported 70% of their business income.

Moreover, unincorporated sole proprietors, (folks who list their business receipts directly on a Schedule C attached to their 1040s) reported a pitiful 43% of their 2001 income, the new report showed. “When you have Schedule C compliance at just 43%, that's a shocker,'' says Nina E. Olson, the IRS' national taxpayer advocate. She considers reducing the tax gap a matter of ”fundamental fairness“ for those who do pay all they owe--plus, she figures, an average $2,200 ”surcharge" for the noncompliance of others. [Read More!]