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adam gingery, Author at Invest Smart https://invest-smart.org/author/adamgingery/ Asset Protection and Investment News Tue, 26 Sep 2017 21:02:24 +0000 en-US hourly 1 https://wordpress.org/?v=6.2.4 Attorney Joe Garza Says EU Tax Rules Should Reflect Corporate Earnings https://invest-smart.org/attorney-joe-garza-eu-determined-make-u-s-corporations-pay/ Fri, 15 Apr 2016 22:58:57 +0000 http://invest-smart.org/?p=1421 European Union officials announced on Tuesday plans to curb corporate tax avoidance strategies among large companies operating within European borders. Up to $80 billion in taxes went unpaid last year, according to the European Commission, and leadership has decided it is time for corporations like MacDonald’s and Amazon to start paying their fair share of taxes.

The new rules would require large corporations to more actively report where they generate profits, and more importantly, where they pay taxes on those profits. “It’s common sense,” said Dallas-based tax attorney Joe Garza. “If you make a substantial amount of profits within a county’s borders, you should owe taxes in that country.”

This ruling on the part of the European Commission, the enforcing branch of the European Union, comes on the heels of several tax avoidance scenarios on the part of American Corporations in Europe. Starbucks lost an EU ruling in which both the Netherlands and Starbucks were told their tax deals were illegal; Starbucks was essentially ordered to pay millions of euros in back taxes, although no actual penalties were enforced.

Starbucks isn’t alone, as Alphabet, Google’s parent company, has paid $260 million in settlement to the EU. According the Business Investor’s Daily, many experts believe Alphabet should pay far more than that.

There is still a long road ahead for these rulings to be translated into effective legislation. Business Investor’s Daily reports that there is still a years-long process ahead before corporations will be held accountable for the new rules:

“The EC statement Tuesday said that the next step is submitting the proposed new rules to the European Parliament and the Council of the EU for discussion, a process that could take months or years, analysts said. If adopted, all 28 EU member states would then have to translate the rules into national legislation.”

The phenomenon of “stateless income,” or profits made without any tax allegiance, has come under fire in the last year as many corporations have found ways around millions in taxes. Strategies like the “Double Irish” and the use of shell companies in tax havens are gaining increased scrutiny, especially in light of the recent Panama Papers scandal.

“It makes no sense to blame the corporations,” adds Garza. “Their job is to make money for their stock holders. The fault mostly lies with the poor regulations and U.S. tax laws that encourage such behavior to occur.”

 

 

 

 

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Do IRS Budget Cuts Mean Fewer Audits? https://invest-smart.org/irs-budget-cuts-mean-fewer-audits/ Mon, 15 Feb 2016 16:54:12 +0000 http://invest-smart.org/?p=1415 The IRS has learned to live lean since 2010, and no one seems to be complaining. At least, no one who makes less than $1 million dollars.

Budget slashes, enacted throughout the last five years¹, have reduced the IRS to a shell of its former self, and the powers-that-be must pick and choose their audits carefully. Naturally, high earners enjoy a higher likelihood of falling into The Taxman’s sights.

According to The Wall Street Journal, 2015 marked the lowest rate of taxpayer audits in ten years—an astonishing .84%—while the percentage of audited millionaires rose by 2.5%. 2014 saw 7.5% of millionaires audited; 2015 raised the percentage to 10%².  

IRS Commissioner John Koskinen cites the fact that the IRS now operates on its lowest budget since 1998, but there’s an added catch—there are now 27 million more tax returns to file than in the late 90s³. As a result, taxpayers experienced more frustration than usual trying to get IRS representatives on the phone in 2015. The cuts certainly present a mixed bag of results; here is the simplified version.

 

  • One-fifth of the IRS budget has been cut since 2010.
  • Last year marked a ten-year low in personal taxpayer audits—less than 1%.
  • Last year also presented historically bad “customer service.”
  • With fewer resources, the IRS must carefully choose whom it audits.
  • The lucrative target, $1 million dollar earners and up, reached a new high in audits—10%.

In reality, the worst result to the average American taxpayer is a prolonged wait on the phone—”Such cuts have made it nearly impossible for many taxpayers to reach the agency with questions,” said John Koskinen, as cited by CBS News. “Fewer than half of the calls placed to the IRS were answered in fiscal [year] 2015, and callers who did get through waited on hold for an average 23 minutes.”

While the thought of calling the IRS probably hasn’t crossed your mind, the additional 2.5% percent chance that high earners will be audited—from 7.5% to 10%— means your accountant should get busy soon. One in every ten millionaires? Those aren’t odds to be joked about.

The most insidious result of the budget cut remains: corporations and individuals engaging in tax fraud will have increasingly high chances of escaping unscathed. With corporate tax avoidance experiencing unprecedented levels of success, perhaps this isn’t the right time to wish for sweeping IRS budget cuts.

At any rate, American high net worth individuals are now the object of IRS affections.

 

  1. http://www.cbpp.org/research/federal-tax/irs-funding-cuts-continue-to-compromise-taxpayer-service-and-weaken-enforcement
  2. http://fortune.com/2016/02/23/irs-audits-millionaires/
  3. https://www.irs.gov/uac/Written-Testimony-of-IRS-Commissioner-Koskinen-before-the-House-Ways-and-Means-Committee
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