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September 2012 Archives

State Senator Proposes Property Tax Law Change

The state of Texas has more than 1,000 school districts. According to the Texas Education Agency there are 9,232 public schools, with 333,164 teachers serving 4.8 million public school students. Of those schools, 76 percent are Title I Schools (Improving the Academic Achievement of the Disadvantaged), 15 percent of students in Texas are in limited-English Proficient Programs and slightly more than 50 percent of students in Texas schools are eligible for free or reduced lunches.

IRS Tax Lien Filed Against Cameron County Commissioner

In previous posts we have warned our Texas readers that the Internal Revenue Service is being increasingly vigilant in tax collection matters. Offshore accounts are no longer safe from IRS tax examiners. High-income taxpayers are being audited and when the IRS believes a mistake has been made, the fines and penalties begin their steady accumulation.

Texas Wind Industry Could Blow Away With Loss of Tax Credit

Sweetwater, Texas, lies directly west of Dallas-Fort Worth and east of Midland. It boasts slightly less than 12,000 souls and recently has seen a growth in the wind energy industry. Where only oil derricks may have broken the horizon a decade or so ago, now wind turbines turn in west Texas. The tax base has grown from $500 million in the county in 2000 to $3 billion today.

Hobby Losses vs. Business Deductions : A Cattery

In DKD v. Commissioner, decided by the Eighth Circuit on July 17, 2012, the Court of Appeals upheld a Tax Court decision denying expense deductions to a taxpayer who ran an award-winning kitten breeding business. DKD, an Iowa corporation that was run out of the home of its owner and manager, Debra Dursky, was primarily engaged in the business of information technology consulting. However, the corporation also operated a cattery that was in the business of breeding, showing, and selling pedigree kittens - a business that earned DKD four national championship titles between 2003 and 2005. Nevertheless, the costs associated with taking kittens to national competitions, breeding problems, and inadequate revenues from kitten sales resulted in expenses that exceeded the cattery's revenue by more than $60,000 in each year. Ultimately, though DKD was held to be a valid business because of the income from information technology consulting, all of the expenses deducted from the consulting income for the cattery business were disallowed.

Pleading the Fifth Does Not Protect Your Offshore Bank Records

On August 27, the Seventh Circuit ruled that a taxpayer may not invoke the Fifth Amendment privilege against self-incrimination to resist compliance with a subpoena of offshore bank account records. The taxpayer, known as "T.W.", is being investigated by a grand jury because the federal government suspects he is using offshore bank accounts to hide money and income on which he should be paying U.S. income tax. In response to a grand jury subpoena seeking records kept pursuant to the Bank Secrecy Act, T.W. pleaded the Fifth, claiming that producing the bank records would be a testimonial act that may incriminate him. The U.S. District Court for the Northern District Illinois agreed with T.W., so the government appealed and prevailed.

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