Feb 202017
 

Spain. msn.com

In a wide ranging case of tax fraud that captivated Spain, Princess Cristina was found not guilty of being an accessory to fraud but her husband was convicted and sentenced to more than 6 years in prison. A panel of judges ruled that Cristina, the 51 year old sister of King Felipe, will be required to pay nearly 265,000 euros in fines because the court considers that she indirectly benefited from the fraud.

Her husband, Inaki Urdangarin, was found guilty of evading taxes, fraud and various other charges. He was sentenced to six years and three months in prison and a fine of $545,000 in U.S. dollars. The trial centered on accusations that Urdangarin used his former title, the Duke of Plama, to embezzle about $6 million euros in public funds for the nonprofit Noos Institute.

The provincial court in Palma de Mallorca, in the Balearic Islands, found six other people in the trial guilty, including Urdangarin’s business partner and a former regional president of the Balearic Islands. Ten people in all, including Cristina, were absolved by the court.

In a country mired with corruption scandel’s in politics and business, Spaniards paid close attention to the “Noos Case”., since the first signs of Urdangarin’s involvement emerged six years ago. As the scandal unfolded, former King Juan Carlos decision to abdicate the throne in 2014 was seen as an effort to allow his son Felipe to restore the monarchy’s credibility. When his sister Cristina was indicted, King Felipe cancelled her titles of Duchess of Palma, granted by their father in 1997 on the occasion of her wedding. She and Urdangarin are no longer invited to any official events by the Royal House.

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Feb 192017
 

Wash. D.C. money.com

In his bid for the White House, President Trump promised . Big ones. Lots of em. For everyone. Given that Republicans will control both the House and Senate during at least the first two years of Trump’s administration, the prospects for tax reform have never been better. But the tax cuts may not be quite as large as Trump has touted. The reason: his tax plan is ssen by experts and deficit hawks as just too expensive, potentially costing between $6 trillion and $7 trillion on the high end.

It’s too early to say exactly hos conservative deficit hardliners in Congress will react to Trump’s pricey plans. But Republican leaders in the House have already put forth their own tax reform blueprint, estimated to cost about half as much as Trump’s. There are some top line similarities between the House GOP plan and Trump’s. Among them, a bigger standard deduction, only three income tax brackets and generally lower income tax rates for individuals and businesses. And in the latest iteration of Trump’s tax plan, he already raised the income tax rates he originally proposed 10%, 20% 25%  to conform to those in the House plan 12%, 25%, and 33%.

“But just because everyone buys into the premise of tax reform doesn’t mean they agree on all the details,” said Greg Valliener, chief global strategist at Horizon Investments. His sentiments were echoed by Kyle Pornerlleau, director of federal projects at the Tax Foundation, “They agree on the easy stuff, like having lower rates. But not on the hard stuff.”

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Feb 192017
 

Mexico. tax-news.com

Mexican President Enrique Neito has announced the beginning from Feb. 1st of a 90 day consultation to identify possible improvements in the North American Free Trade Agreement that Mexico could support. The consultations will be used to identify an acceptable negotiating position by Mexico in the opening talks with the United States and Canada. The Mexican Government expects those talks to commence in May this year.

It is emphasized in the brief consultation document that Mexico intends to negotiate subject to a set of principles and targets. Renegotiation should for example, “preserve free trade between Canada, the United States, and Mexico. Trade between the three countries should be exempt from any tariff or quota, as has occurred since 2008.” As the same time, the Mexican government “will speak to strengthen the competitiveness of North America and its regional supply chains, increasing Mexican imports to the United States and Canada, on the basis of healthy competition and the development of higher value added sectors.”

As the global community increasingly becomes more intertwined, tax policy of overseas companies will become more of a central issue facing the negotiations of nations, looking for a more competitive posture for their economies. At the same time, those countries need to be aware the revenue implications of the deals they strike at the negotiating table.

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Feb 182017
 

Alaska. msn.com

The oil industry rout is spurring Alaska to reconsider perks long enjoyed by its 741,894 residents. No income taxes, plus annual dividend checks drawn from the state’s investment earnings. No state relies as heavily on petroleum production as Alaska, and with the price of oil hovering at around $54 a barral–about half the peak in 2014–the government is contending with similar fiscal pressures seen in nations such as Venezuela, Saudi Arabia, and Russia.

With an economy in recession, Alaska has burned through $13 billion in savings over the past four years and if facing a $3 billion shortfall for the year that starts in July. An emergency fund is projected to run dry in Mid 2018. And without a fix, S&P global ratings, warns that it may downgrade the state’s bond rating again, which would raise borrowing costs for projects like natural gas pipeline aimed at reviving the economy. “It’s a quantum shift in people’e thought process,” said Randall Hoffbeck, the state’s revenue commissioner.

Alaska, which became a state in 1959, reaped an average 84 percent of its revenue from oil production from 1980 to 2114, according to a report from the State Office of Management and Budget. With prices down, Alaska has slashed its budget nearly in half since 2013 and reduced public payrolls to where they were in 2002. Even so, next year’s deficit in the $4.3 billion budget equates to about $4,000 per resident.

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Feb 182017
 

Wash. D.C. msn.com

The carried interest loophole basically applies to high income taxpayers only. Venture capitalists, hedge fund managers and partners in private equity firms are eligible for special tax treatment based solely on their occupations. The carried interest loophole is a variation on the capital gains tax benefit. Paid compensation in these professions is considered a distribution of investment fund profits, which is called carried interest. Because this income is regarded as an investment profit rather than a salary or wage, it’s taxed at the long tern capital gains rate instead of the regular income tax rate, which can be significant for those in high income tax brackets.

For example, a $1 million salary would be subject to the 39.6 percent plus a 3.8 percent net investment income tax, which would come to $434,000. However, if that salary is considered carried interest, that same $1 million would be subject to only the top 20 percent capital gains rate plus the 3.8 percent net investment income tax, which would come to $238,000.

The mortgage interest deduction for middle income earners can benefit high income earners even more at tax time. For example you generally need a high income to get a mortgage for $1 million, but if you’re paying interest on a mortgage that large, you’ll have more interest to deduct than a taxpayer who pays interest on a $350,000 mortgage. The IRS only allows mortgage deductions on up to $1 million in loans to buy or repair a home.

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Feb 162017
 

Wash. D.C. msn.com

A New Jersey congressman says a rarely invoked 1924 law could be used to examine President Trump’s tax returns for possible conflicts of interest and Constitutional violations. Rep. Bill Pascrell, a Democrat who serves on the Ways and Means Committee, has asked the committee’s chairman, Rep. Kevin Brady of Texas, to order the Treasury Department to provide tax returns to the committee. Brady’s office did not respond to a request for comment.

After privately examining returns–Pascrell is seeking 10 years worth–the committee could decide to share them with the full House, which would in effect make them public. The 1924 law gives congressional committees that set tax policy the power to examine tax returns. It was used in 1974 when Congress looked at President Nixon’s  returns, and in 2014 when the Ways and Means Committee released confidential tax information as part of its investigation into the IRS’s handling of applications for non-profit status.

Trump said during the campaign he would not release his returns because he was being audited. After the inauguration, adviser Kellyanne  Conway said he would not release them because the public did not care. “This isn’t for the Democrats or the Republicans, and its not to embarrass anybody,” he said. “This is to make sure the American people know the facts, and if are conflicts, they need to be resolved.”  “We know that the President has business interests in China, the United Arab Emirates, Russia, Suadi Arabia, and Taiwan, also in Turkey and the Philippines.”

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Feb 162017
 

Wash. D.C. IR-2017-11

The IRS urges Native American taxpayers to look into the Earned Income Tax Credit and correctly claim it if they qualify. EITC and the Child Tax Credit greatly reduce poverty for working families. The EITC is federal income tax credit for working people who don’t earn a lot ($53,505) or less and meet certain eligibility requirements. Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund. EITC can mean up to a $6,269 refund for working families with qualifying children. Workers without a qualifying child could be eligible for a similar credit up to $500. On average, EITC adds $2400 to refunds.

The IRS has identified American Indian communities as a group of workers at risk for overlooking this important credit. To qualify for EITC, the taxpayer must meet certain basic rules and have earned income from employment, being self employed or running a business. There are many reasons qualified individuals and families do not claim the EITC. They may think they are ineligible, not know about the credit or worry about paying for tax preparation services. To get the credit, individuals must file a tax return, even if they do not owe any tax.

Many EITC filers will get their refunds later this year than in past years, due to the effort by the IRS to identify identity theft refund fraud. The IRS cautions taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of February 27th.

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Feb 152017
 

Wash. D.C. msn.com

A proposed import tax floated by the Trump Administration to pay for a wall along the Mexican border could ultimately be passed on to American consumers. White House spokesman Sean Spicer said that the President is considering a 20% tax on all Mexican imports as a way to make Mexico pay for the wall–a demand that prompted Trump and Mexico’s president to scrap a planned meeting next week.

The idea triggered a cascade of criticism and jokes on social media about Americans facing price spikes on avocados and tequila. Soon after, Spicer said the tax was just one proposal to finance the wall. “The point is, American taxpayers are not going to fund it,” he said. In reality, they would because higher taxes on Mexican imports would mean either higher prices for buyers of those imports or higher priced American products if the imports are reduced, politicians and economists warned.

“Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big time bad idea. Mucho sad,” Sen. Lindsey Graham tweeted. Mauro Guillen, global economics professor at the University of Pennsylvania, called the tax idea, “insane”. “What your doing is taxing the American consumer,” he said. “Everything from Mexico will become more expensive. It’s a pretty big tariff.” If prices of Mexican imports rise, U.S. competitors will likely raise their prices. And demand for those products could plummet if consumers can’t find less expensive alternative sources. Trade between the U.S. and Mexico totaled $583.6 billion in 2015, according to the U.S. Trade Representative.

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Feb 142017
 

Arkansas. msn.com

More than a dozen state host special tax free shopping days during the back to school season, so families can sve a little while stocking up on things like pencils, notebooks, and computers. Now some states want to expand the options far beyond school supplies, with measures that could waive the usual sales tax on guns, ammunition, and hunting equipment.

In mid-January, Arkansas State Sen. Bart Hester introduced a bill creating a “Second Amendment Appreciation Weekend” every September, when the 6.5% sales tax would be waived from firearm and ammo purchases. A similar bill was introduced about the same time in Texas, which if approved would make gun and hunting supply sales tax free one weekend every August. Yet another bill put on the table this week in Tennessee would exempt guns and ammunition from sales tax on the first weekend of every September.

Tax free weekends for guns have already become a reality in two states. Mississippi and Louisiana hosted Second Amendment themed tax free weekends in late August 2016, and they’re expected to be annual events. Lawmakers in Texas introduced their tax free bills partly because gun sellers said they were losing sales to customers heading across the border into Louisiana for tax free gun shopping The timing of tax free gun sales weekends has nothing to do with back to school season. Instead, its hunting season that provides the rationale. “September is the beginning of hunting season, and typically, hunting stores start getting their inventory in AUgust,” the owner of one Louisiana sporting goods store owner explained.

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Feb 142017
 

Wash. D.C. money.com

President Trump’s Treasury Secretary said that the new administration will prioritize tax reform, but that it won’t result in a tax cut for the rich. “Any reductions we have in upper income taxes will be offset by less deductions so there will be no absolute tax cut for the upper class. There will be a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it.” Steven Mnuchin said in an interview with CNBC.

It’s interesting because his description of what reform will look like differs from what Trump himself has proposed. In the latest version of Trump’s tax reform plan, everyone would get a tax cut, but the rich would see the biggest cut of all, according to independent analyses. The Tax Policy Center, for instance, found that those in the top 1% would see an average tax cut of roughly $1 million.

As it is, Trump already raised the income tax rates he originally proposed to conform to those in the House plan. But he didn’t go as far as the House plan in terms of limiting deductions. He proposed capping the value of itemized deductions at $200,000 for joint filers. The House plan gets rid of all deductions except those for charitable contributions and mortgage interest. This is hardly the first time an advisor to Trump has said something different than what his boss has espoused publicly.

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