Tag Archives: Judge Learned Hand

All About Taxes – We know … Most Really Want to Know About ENFORCEMENT ! Great Source Sites

Here are great source sites used for our research and possibly useful as you enter tax season:

As promised last Friday we wanted to share some neat stats and information concerning taxes and the collection of, and the IRS in general.

This is a brief review of the subject matter from our pending 2020 Q2 Newsletter which will hit your mailbox right around tax filing date, and we thought it a good time to share some stats.

We know that when you think of the IRS and taxes you’re mostly concerned with one thing … ENFORCEMENT!

With brevity a concern in this venue, we will drill directly to the enforcement portions of our much deeper and more comprehensive article … again in our Pending Q2 Newsletter.

Enforcement of Tax Collections and IRS Statistics

In dealing with the IRS and tax situations over the past 31 years the one thing that we have found most important is to always respond to the IRS in a timely fashion.

TaxAudit 2018 stats

 

Our general IRS/Client experience over the past three decades has been a very good one. We have found the IRS to almost always be very receptive to information, understanding of mistakes, and even frequently waving penalties and interest …however this last point is not always in stone given certain situations

Amazingly nearly 2/3 of audits, which are almost all done by paper due to the cost of a field audit are not answered, resulting in a claim on the taxpayer. Bottom line, make sure you show the IRS that you’re answering their questions in a timely fashion and expect a paper computer driven notice.

09-18 number of returns audited IRS advocacy

The majority of audits and notifications (AKA CP2000) are created or driven by an income mismatch – said another way, if you earn some income, wages, interest, investments, or some type of capital gains, and you do not get it on your tax return, it’s easy for the IRS to catch, and you WILL get a notification. (CP2000)

Sir Learned Hand, Famous Quote440px-LearnedHand1910a

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

While you hear us talk about tax reducing strategies frequently, (here, here, here ) as we are big believers in not paying any extra taxes, we are also very big believers of being fair and honest with the IRS. Over the years we have been presented with many gray area tax strategies that have almost inevitably not held up against the IRS.

If it sounds too good to be true, it usually is in the end … don’t even think about going there – the IRS will eventually find you, and it will most always be at the most inconvenient time!

Having respect, and mutual admiration for the IRS and its’ enforcers,  but not fearful or conspiracy, is a healthy way to go about your tax responsibility as a United States Taxpayer!

Have a Great “Tax Stats” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

ANOTHER – Year End Tax Planning Tip – Bonus Via W-2 or K1?

This tax tip applies to folks who have enough control of their income to make a decision on how it flows. S Corp owners or the like may find this tip interesting, again we are not recommending, only REMINDING ! See your tax professional for your specific situation.

Bonus Via W-2 or K1

Depending on your situation, you may find it better to have left over income for the year be paid out via your corporation or other entity as non-W-2 income or net income to the corporation. See example below…

This MAY avoid some tax burden, but this technique should not be abused as the IRS may frown heavily on abuse.

Here is a good example: Owner/Employee takes a salary though out the year and funds are left over at the end of the year. Before just taking a salaried bonus, check with your tax professional on what options you may have.judge-learned-hand

Again, REMINDER, not recommendation… never get in the gray on taxes, however there are no gains to be had by paying more taxes than you would otherwise need or better said by Judge Learned Hand:

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.

Hope you have enjoyed our Year End Tax tips, if you have missed any, just go here for a complete, concise list!

Have a great “Well tax arranged” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Not a Patriotic Duty to Overpay Taxes…

Over the weekend I ran into this quote by Judge Hand, a famous US Judge. Given the current time of year, I thought his quote very timely.

By Judge Learned Hand

Judge Learned Hand

Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one’s taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands.”

Have a Great Monday!

JK

PS We will release everyone to file their taxes shortly. Corrected 1099’s are minimal so far this year !!