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A few days ago in a email news post I made reference to the fact that the Haiti disaster is currently a qualified disaster says the IRS (http://www.irs.gov/newsroom/article/0,,id=218615,00.html).

And I mentioned in that email, the IRS was rumoring that people would be able to take a deduction for donations to Haiti on this year’s (2009) tax return – rather than having to wait until you file your 2010 tax return. Certainly this would be a huge incentive for people who desired to donate money to the people of Haiti to help them get back on their feet! Are you feeling the pressure of today’s taxes? Right now you can get $100 off your tax return for Cary NC Tax Prep needs!

As it turns out, the rumors I heard and that you may have read are TRUE! On January 22nd, the IRS adopted a special tax relief policy that allows contributions for the Haiti disaster made after January 11, 2010 and before March 1, 2010, will be taken from your 2009 tax return. Or, you could choose to take the deduction to your 2010 tax return instead, on the chance that in case you didn’t want to take advantage of the wonderful incentive to help the world community.

The people of Haiti are hurting quite a bit. Earthquake disasters cannot be avoided, and are well, disastrous. Earthquakes and other types of natural disaster create huge levels of destruction and widespread loss of homes. Entire families don’t have access to food or clean water. In many cases these families don’t even have the capability to acquire any level of stable living environment without the help of relief organizations (funded by donators like you!). Do your part right now and donate whatever you can to help the people of Haiti. I would greatly appreciate the added donations, and I’m sure every one of the struggling people in Haiti would appreciate it to!

Stay tuned for more articles and information regarding tax season, taxes, and Haiti!

http://www.marccpa.com

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

1861 – After Lincoln was put in office, southerners walk out of Congress and form the Confederacy with a rewritten constitution to curtail the power of their new country to tax.

1862 – The beginning of US income tax is levied to help finance the rising massive costs of the Civil War. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!

1872 – The income tax gets struck down.

1894 – Congress creates an income tax as a result of southerners complaining that excessive reliance on tariffs pushes up the costs of imports for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.

1895 – The US Supreme Court holds the idea that the 1894 income tax law conflicts with the US Constitution’s bars on levying direct taxes.

1913 – Ratification of the sixteenth Amendment takes that bar away and Congress establishes an income tax system.

1917 – World War I financial needs push up taxes, with the biggest rate reaching seventy-seven percent in 1918.

1924 – Publicating the names of taxpayers and the amount of taxes they owe fails to achieve the goal of enforcing payments and the practice is dropped.

1942 – Prior to World War II, the lowest income level for paying income tax excluded most wage earners. However, the cost of the war bumped the threshold down the income ladder and put the top rate to ninety-four percent prior to the war being over.

1943 – In order to force compliance from the hugely increased number of taxpayers, Congress institutes tax withholding from wages, which basically turned employers into tax collectors.

In the 1940s Justice Jackson of the Supreme Court, former chief counsel to the IRS, gloated about how law-abiding Americans were in reporting their income taxes. It was an honor system – there were very few informational returns. Tax resisters were few and the underground economy was of little significance.

1962 – IRS Commissioner Caplin stated “no other nation in the world has ever equaled this record of voluntary compliance. It is a tribute to our people, their tradition of honesty, and their high sense of responsibility in supporting our government.”

1982 – Chief Justice Neely said – “cheating on federal and state income tax is all pervasive in all classes of society; except among the compulsively honest, cheating usually occurs in direct proportion to opportunity.”

Stay tuned for Part 3 of the Timeline of US Tax Policy!

http://www.marccpa.com/

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

Ah…. finally an event in history clearly about oppressive taxation. Was the Boston Tea Party a protest against the British tax on tea, as we were all taught? No, not at all. The colonies had continuously been boycotting English tea for five years prior to the Boston Tea Party! They had instead smuggled in Dutch tea and were doing quite well. There was tea for all and no British tea tax paid. Naturally, the British didn’t like this boycott. So, the British forgot the duties at home. The Parliament allowed British tea merchants to disregard the import tax of getting the tea into England and then pass the savings along to the colonies as they sent the tea over and thereby sold British tea at a price lower than the Dutch smuggled tea. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!

But what people would sell this British tea?

They did it through loyal British merchants located in the colonies. But will the colonists buy the cheaper British tea even though it had a tax? Yes. So much so that the result was loyal British merchants were getting all the business and a tax was still be paid to England. Obviously the colonists didn’t mind the tax very much; they ended up receiving cheaper tea. However, the non-British MERCHANTS didn’t enjoy this gig. The British merchants, with the help from England, had essentially created a monopoly on tea sales. The colony merchants thought it was only a matter of time before many monopolies would be created with an identical mechanism and they would be forced out of business. Go here if you want help with a modern-day Tax Return in Raleigh, NC.

So, a group of MERCHANTS who appeared to be Indians, boarded a boat containing British tea and tossed it into the water. Was this a crowning moment in American tax protest? Not at all. The Boston Tea Party was viewed as the meaningless desecration of private property at a period when private property was viewed as very important. This Boston Tea Party was extremely looked down upon and didn’t sit well with the colonists. Ben Franklin was abhorred and told the merchants that complete repayment would be paid immediately to the owners of the tea. However, it turned into war.

However, the colonists would soon learn that masses of warships, battalions of redcoats, and cannons were a lot more terrifying than a couple tax collectors. The funny part is, America won the war, primarily due to the fact that England realized it was too expensive to fund war so far from England. BUT after the war, America had huge debts and taxes, and even with representation they were going to be huge.

Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and Slavery and the Civil War.

http://www.marccpa.com/

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

So the question remains, what happened with taxes in the United States?

US tax makers have been collecting what they have sown for a long time. Our honor system has been trumped by a system in which every tax payer is under surveillance because of the strong threat of evading their taxes. In other words, consent has been replaced with compulsion. Honor has been replaced with spying on citizens. If you are feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!

In the 1950s, there wasn’t a bank in the US that told the IRS about customer affairs, interest rates went unreported, withdrawals of money were not reported, and nothing that went through accounts were photographed. Also, real estate transactions weren’t reported, stock transactions were not reported, dividends were not reported, income from other sources (Form 1099) was not reported, and US Customs did not require a declaration of the amount of money carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.

It was an honor system, and it worked. The erosion that happened over the previous fifty years to the present is that anything of any fiscal significance is now reported.

Adam Smith said that taxes will be evaded and tax laws shown no credence when there is a general suspicion of much unnecessary expense and a lot of misspending of tax revenue. In other words, $500 toliet seats, huge grants to study the sex lives of ants, etc.

For the sake of catching a few tax resisters and evaders in the 1950s Congress made a tax monster of the US tax system that more and more taxpayers attempt to evade. As a general rule, widespread tax evasion is a sure sign that a government’s tax system is bad. People will pay taxes, even income taxes, if the rates are reasonable.

Thanks for reading! Stay tuned for more updates!

http://www.marccpa.com/

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

From 1868 to 1913, about 90% of the national government’s income was derived from tax on alcohol and tobacco. While the Civil War was occurring the government instituted a brief income tax, but it wasn’t until 1913 that the sixteenth Amendment permitted Congress to tax incomes “from whatever sources attained.” The initial 1040’s were due on March 1, 1914. No money was taken from paychecks and none was sent in with the return. Every taxpayer’s computations were calculated by IRS field agents and a bill sent to the taxpayer on June 1st.

1766 – Leaders of the colonies met to extinguish British taxes in place by the Stamp Act. This Stamp Act Congress, which it was named, was the start of the American independence movement and the birthplace of the United States.

1782 – The first Congress under the Articles of Confederation formed. This Congress did not have any taxing powers.

1789 – Americans granted a newly formed Congress the ability to tax. Without taxing powers, the initial Congress of the United States barely survived seven years prior to being dubbed a failed attempt; the second Congress, with taxation powers, is still going strong after almost 300 years. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!

1792 – Alexander Hamilton persuades Congress into passing an excise tax on whiskey to increase earned income for the government and curb drinking. On the western frontier alcohol was the basic medium of exchange, and the 25% tax was a bit difficult to deal with. By 1794 the area was openly in rebellion. The forerunner of the Internal Revenue Service was spawned to give the tax enforcement. Go here if you want help from a modern-day CPA firm in Raleigh, NC.

1832 – The national debt that remained after the Revolutionary War and the War of 1812 is finally accounted for and paid. The South sees no reason to continue high import taxes that raise prices for Southern consumers and increase the number of industrial monopolies in the North.

1850 – John C. Calhoun of South Carolina warns Congress that the South could leave the Union because heavy taxation in the South raised funds that were spent in the North, causing a great change in wealth from the South to the North.

Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!

http://www.marccpa.com/

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862

Can there be a doubt about this topic? Of course the American Civil War was about the slavery issue… wasn’t it? Well actually, one of the most popular myths in our history is that the Civil War was started because of the slavery issue and that Lincoln, the Great Emancipator, fueled a terrible struggle to sever the chains of bondage that shackled over three million black Americans. Right before the war, the South had all it could have wanted.

In 1860, the South controlled the Supreme Court and Lincoln and Congress were beginning the process of passing a constitutional amendment to keep slavery forever! What happened?

Let’s rewind the time back to the year 1832. By 1832 the national debt left from the War of 1812 had been re-paid and the South did not see a need to keep up the exorbitant import taxes which appeared to only jack up prices for the South’s consumers. Either the South had to pay high import taxes on imported goods or it purchased Northern manufactured goods at excessive prices. Either way, Southern funds transferred to the North. To say the South was not content with this arrangement would be an understatement. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!

Consequently, in 1832 a convention was held in South Carolina to nullify these federal import taxes. The convention decided the tax was unconstitutional and gave the governor the power to to defy the enforcing of these taxes instituted by the national government. It looked like a civil war was in the making. Mild tempers won over, however, and the Great Compromise of 1833 lowered import taxes over the subsequent several years to levels the South could tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.

Over the next few years, however, Northern commercial and manufacturer companies forced into Congress new taxes that again stressed Southern planters and allowed Northern Manufacturers to become rich once again. In 1850, John C. Calhoun, the South’s greatest exceptional spokesman, delivered a speech to Congress. It spoke of three grievances of the South that may cause secession from the Union and war. The first two had to do with fears about the erosion of power of the South in general and the the power of state government as well.

The third, and really the only concrete grievance, was about taxation. In Calhoun’s eyes, national import taxes was a targeted legislation against the South. Huge amounts of taxes on the South created money that was used in the North. The center of economic life in the country was shifting strongly to the North. Calhoun spoke of secession if the taxes were not lowered. But what about the slavery issue? Well, during his run for the presidency in 1860, Lincoln repeatedly said he would not do anything about slavery in the South. Truly, most Northerners didn’t really care about enslaved blacks, any more than they worried about the Indian in the West or impoverished illiterate workers in factories. By and large many black slaves got better treatment and better compassion than their counterparts in the North. Lincoln, actually, promised Southern plantation-owners that fugitive slaves would be caught. The Congress and subsequently the Supreme Court (Dred Scott decision) further affirmed that slavery was not going anywhere.

However, right as Lincoln was elected and Congress came together in 1861, they enacted more high import tariffs. Slavery was not the issue – higher import taxes were. In his inaugural address Lincoln said he would collect the customs in the South even if there was a secession!

Fort Sumter, near the entrance of the Charleston Harbor, began filling with Union troops to enforce the collection of the new taxes. The Civil War began in 1861 when South Carolinians shot at the federal garrison at Fort Sumter. The conflict had been brewing for years – but it was not about slavery. It was about tax policy.

2 years later, Lincoln issued the Emancipation Proclamation, and then only following several military defeats, as the last resort to rally the North behind a noble cause. With respect to the slave issue – most Northerners did not care much about black people in bondage, any more than they cared of Indians to the west or poor uneducated peasants in the factories. For the most part, many black slaves received better treatment and greater compassion than their impoverished counterparts in the North.

That’s it for the History of Taxes Series!

http://www.marccpa.com/

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