Some Millionaires Request a Tax Increase

Evidenitly a group of millionaires have sent a letter to President Obama, Senate Majority Leader Reid, and House Speaker Boehner requesting that their taxes be increased.  There are already opportunities for those who wish to make a gift (above and beyond tax obligations) to the US government.  Gifts can be made in different ways, for instance directly to the treasury.  Rest assured, if you make a gift to the US government, it is considered a charitable gift and therefore deductible. 

HT: Tax Prof Blog. 

Bleak May Jobs Report

According to recently released unemployment data, the economy added only 54,000 jobs in May of 2011 and half of those jobs can be attributed to new McDonald's hires. That means that only 27,000 non-McDonald's jobs were added, which translates roughly into 1 new job per American city.  Now that is a bleak jobs report. 

First-time home buyer credit: buyers actually losing money?

According to this SmartMoney article, the recent $8,000.00 cash incentive for first-time home buyers has ended up resulting in home price declines of more than twice that much.    

The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.

Looks like just another example of the unintended consequences that arise from government incentive programs.  Government gets more of what it subsidizes and the consumer gets a higher price.      

The importance of immediately fixing a lost tax exemption.

Under the basic federal income tax rules, all income derived by an individual (or business entity) is taxable.  This general rule applies to all entities unless those entities can demonstrate that they qualify for a specific exemption.  Therefore, once a charity loses its exemption (e.g. § 501(c)(3) status) it will owe tax on all of its income.  Additionally, a deduction of a charitable donation made by a donor may be jeopardized and depending on the situation, a corporate officer or director could be held liable for the charity’s failure to file appropriate returns or to pay tax.  

My organization has lost its tax exempt status, what do I do now?

All too frequently, § 501(c)(3) organizations lose their tax exempt status for failing to make proper filings or otherwise failing to meet the various requirements of the IRS.   In essence, they have failed to operate their charity in accordance with their exempt purpose.  Depending on the situation, the organization can either re-file for tax exemption by completing a new Form 1023, or it can make a request for reinstatement of the previous tax exemption.  If possible, a charity should pursue a reinstatement request to avoid the headache of having to go through the Form 1023 process, although the reinstatement process may not be available to certain charities in certain situations.