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DeTaxUS Newsletter CONTENTS:
INTRODUCTION Our Mission is to Abolish the Federal Income Tax
It's election season and all the candidates are making speeches about how concerned they are with the needs of the citizens. Each has an issue or two that he or she is keen on and promises to promote. Each one wants to protect us from injustice and serve us. But as soon as the election is won, they will all jockey for position within the political arena and make whatever compromises are necessary to protect their own positions and secure more campaign contributions for the next election. Very few will deliver on their promises or do anything to straighten out the mess within government at all levels. But here and there across the country there are some fresh voices with bold and daring ideas that, if instituted, might change the course of history. One such candidate is Carla Howell who's running for governor in Massachusetts on her "Small Government is Beautiful" platform. She has spent the past year getting petitions signed by hundreds of thousands of Massachusetts voters to get a ballot initiative on the November ballot to repeal the income tax in Massachusetts. In this she has succeeded. It is now up to the voters to decide whether to continue the state income tax that forces state residents to turn over an average of $3,000 per family to the state each year in addition to all the other state taxes such as property taxes, sales taxes, gas taxes, business taxes, excise taxes and the like. Ms. Howell believes the state budget can be reduced by $9 Billion a year so that no income tax or replacement tax is needed. She's identified enough waste (pork) in the state budget to cut without sacrificing education, protection, and necessary services. Spending by Massachusetts' state government has been growing faster than the economy for over a decade, and she wants to roll that back. Take a serious look at your local, state and federal candidates, and find out what they have done this past year to advance your financial freedom. Are they big spenders or budget cutters? Do they want to free you or control you? Are they for less regulation or more? If you aren't sure where they stand, call them up and ask them some questions. Your vote in November counts. Please, make each vote a vote for liberty. Send your comments to mailto:editor@DeTaxUS.com Warmest regards, Cory Layne "A politician thinks of the next election; a statesman of the next generation." 1. TAX NEWS IRS Update on Results of Tax Shelter Disclosures Sept. 17, 2002 - The Internal Revenue Service reported yesterday that its tax shelter compliance efforts have reaped 1,664 disclosures from 1,206 taxpayers, as of August 2002. April 23 was the end date for the 120-day disclosure initiative that allowed taxpayers to voluntarily disclose to the IRS their participation in tax shelters and other questionable transactions. In exchange for this information, the IRS promised to waive certain accuracy-related penalties that might apply to an underpayment of tax. More.... [Editor: If the income tax wasn't so oppressive, people wouldn't feel compelled to look for ways to shelter their earnings from the tax.] 2. JOKE OF THE MONTH Winning Bid Three contractors were visiting a tourist attraction on the same day. One was from New York, another from Texas, and the third from Florida. At the end of the tour, the guide asked them what they did for a living. When they all replied that they were contractors the guide said, 'Hey, we need one of the rear fences redone. Why don't you guys take a look at it and give me a bid?' So to the back fence they all went. First to step up was the Florida contractor. He took out his tape measure and pencil, did some measuring and said, 'Well I figure the job will run about $900. $400 for materials, $400 for my crew, and $100 profit for me.' Next was the Texas contractor. He also took out his tape measure and pencil, did some quick figuring and said, 'Looks like I can do this job for $700. $300 for materials, $300 for my crew, and $100 profit for me.' Without so much as moving, the New York contractor said, '$2,700.' The guide, incredulous, looked at him and said, 'You didn't even measure like the other guys! How did you come up with such a high figure?' 'Easy,' he whispered to the guide. '$1,000 for you, $1,000 for me, and we hire the guy from Texas!' 3. TAX TIPS
More than 600,000 families, most with low incomes, missed out on $238 million in tax refunds in 2001 because they did not claim child tax credits that were expanded by last year's tax cut, according to a Treasury Department report. ============== Business Entertainment: In order to be a deductible business entertainment expense, a "substantial and bona fide business discussion" must "IMMEDIATELY precede or follow the entertainment" portion (i.e., a business discussion held during dinner in a restaurant, just before or just after attending the theater, makes both the dinner and the theater expenses 50% deductible). But here's the good news! The Tax Court has now defined "immediately" as "ANY TIME DURING THE SAME 24-HOUR DAY." Say you invite a prospect for a round of golf during the afternoon after you make a business presentation in the morning (even if you make the presentation by phone). Even though no business is discussed during golf, the golf expenses are tax-deductible at the 50%. Note: Be sure you record in your expense diary, the "who, what, where, when, why and how much" to comply with the IRS rule that you record the expense within 24 hours of incurring the expense. ============== What if you had a home-based business all year, but you hadn't been keeping track of business mileage or hadn't learned how to convert commuting, shopping and errands into tax-deductible business mileage until recently? Good news! you can use the IRS-approved "statistical method" of documenting vehicle use. Here's how it works… Keep a log with a complete record of every time you use your vehicle for business for 90 CONSECUTIVE days, and divide the business miles by total miles driven during the period, then multiply that business-use percentage by the total miles the car was driven during the entire year since January 1, 2002 to get your total business miles. Multiply that figure by $.365 to get the total amount you can deduct on your Schedule C as business mileage expense. If you are audited you can present just the 90-day log rather than a full year of records. ============== If you work in a business that offers promotional clothing, e.g., shirts or jackets, that have the company's logo or name embroidered or silk-screened on it, you may deduct the cost of the purchase itself AND the cost of laundering or dry cleaning it. The fact that it is permanently attached (as opposed to removable) causes it to fall into the category of "costume," the tax code term for "uniform." "Every new regulation concerning commerce or revenue; or in any manner affecting the value of the different species of property, presents a new harvest to those who watch the change and can trace its consequences; a harvest reared not by themselves but by the toils and cares of the great body of their fellow citizens. This is a state of things in which it may be said with some truth that laws are made for the few not for the many." 4. PLANNING for 2002 A Tax Break for the Rich Who Can Keep a Secret By DAVID CAY JOHNSTON (New York Times) ABSTRACT - Some Americans are delaying taxes on their stock profits for years or decades--or, in some cases, never paying at all; deals are perfectly legal but only if one has $5 million of stocks and bonds and promises to keep it secret; executives and investors with $5 million of stocks and bonds contribute at least $1 million of their stock in single company to pool into which others in same situation contribute their own shares; in return they receive shares of partnership that owns pool; when they are ready to withdraw from pool, partnership gives them not their original shares or cash but instead shares of variety of stock held by pool; as result, someone with too much money in one stock can quickly diversify into more balanced portfolio; unlike other investors, who have to pay taxes on profits when they sell stock, no taxes are owed on profits of shares contributed to pool (M) More.... [Editor: Wherever there is a tax law, there is a tax loophole.] 5. RESOURCES Setting up a Non-Profit Organization? Sandy Deja has a website with free information about how to prepare the 1023 package. Non-Profit She's got about 50 pages of solid information to walk you through the entire process. There's also some good information on TaxMama's Non-Profit Resources page TaxMama "I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious." -- Thomas Jefferson 6. EDITORIALS and ARTICLES
PORKER OF THE WEEK AWARD
Congressman Joel Hefley (Washington, D.C. - July 25, 2002) "We are privileged in this country to have five former presidents living and making valuable contributions to our nation. What many people may not realize is that in addition to providing former presidents with pension benefits and security protection, taxpayers also pay $3.39 million annually to maintain presidential offices. "Former President Clinton's rental expenses cost taxpayers $436,000 and the office expenses of Presidents Ford, Carter, Reagan and Bush combined cost $528,000. We are also seeing drastic increases in miscellaneous services available to presidential offices. Former President Clinton received $80,000 for "other services" last year, which is roughly five times the amount that former President Reagan used; six times the amount former President Bush used and eight times the amount of former President Ford. "Yesterday the House debated a massive appropriations bill for the U.S. Treasury Department, which provides the money to presidential offices. I offered an amendment to reduce presidential office allowances by 10 percent, or $339,000, to reflect the budget tightening that is occurring in family budgets across this country. I know that these offices provide important and necessary services to our country, but I think a 10 percent reduction is fair and appropriate. "This country is recovering from an economic downturn and all Americans are being asked to tighten their budgets. This effort should extend to government employees and agencies, even our former presidents. The presidential office allowance budget gets my 'Porker of the Week' Award." ============== Will Massachusetts repeal its income tax? For years people who love liberty have been fighting battles chosen by the advocates of big government. That's what's happening in Massachusetts right now. On Nov. 5, citizens there will vote on whether or not to repeal the state income tax entirely. More …. Mass Tax ============== If they can do it in Massachusetts, we can do it in the other 40 states that have income taxes. If we can do it state-by-state, we can do it at the federal level as well. Like the Berlin Wall, we can tear it down brick-by-brick until we are free from this affront to liberty. We are still a long way from our goal. In addition to making Congress aware of our anger and frustration with this oppressive tax system, we have to hold them responsible for the out-of-control excessive spending which they authorize in our names. Regardless of all the patriotic fervor since 9-11, the War on Terrorism has been very costly, both in money and lives, for the little result it has produced. If anything, we are more hated by more people around the world than ever before. Those who wept and mourned with us last fall and jumped to our defense when we decided to retaliate have, for the most part, abandoned us in our current efforts to escalate the war by attacking Iraq. Whether we go it alone or engage the rest of the world, it will be an expensive proposition with little chance of achieving its goal of reducing the danger of future terrorist attacks. As long as we are perceived by many as the bullies of world, there will be people who hate us enough to want to destroy us or at least damage us. Eisenhower warned us to "beware the military-industrial complex." The only ones who benefit from war are those who make their living as warriors or those who provide the weapons and equipment used by the warriors. For a while the labor force benefits by increased jobs and higher wages. But the long-term costs of war are more widows and orphans, more physically and mentally damaged people (both military and civilian), more powerful governments, higher taxes, more regulations and restrictions, less freedom to travel (the list of countries off-limits to American tourists is growing), and less liberty overall. Peace, lasting peace and open trade, is the only answer for all the ills of the world. When we truly do "pound our swords into plowshares," the world, and America especially, can divert its resources to solving problems like illiteracy, crime and poverty rather than policing the world to replace one tyrant with another and enforcing embargos. Research dollars can be spent on conquering diseases and hunger rather than developing the next more powerful bomb or missile to subdue some nation with lesser weapons. Call, write or email your congressman and senators today. You can look up contact information for your Congressman and Senators at: Cory Layne P.S. Your comments and suggestions are welcome. We will try to respond to all of them personally and will include a selection of them in future newsletters and on the DeTaxUS website. Send email to: Editor P.P.S. Let us know how you feel about the income tax. Your opinion is always welcome. You can join our online forum to discuss tax issues by going to: DeTaxUS Forum P.P.P.S. You can help by sharing our vision with other over-taxed Americans. DISCLAIMERS: The information contained herein is general in nature and is not intended as legal, accounting or tax advice by DeTaxUS, Inc. The reader should seek professional guidance prior to taking any action based upon this information. DeTaxUS, Inc. shall have no obligation to inform the reader of any changes in tax laws or other which may affect the information provided. Portions of this newsletter may have been extracted from articles received for republication. Credit is given where the author is known. Unsigned articles and information gathered from government publications and websites are accepted as public domain. Copyright© 2002 by DeTaxUS, Inc. Copyright
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