Clark may have been shy, but she was no miser. She spent most of her life in a 42-room coop at Fifth Avenue and 72nd Street, said to be the largest parkview apartment in the city, and worth an estimated $100 million. (She left in an ambulance in 1988 and never came back.) She owned a 21,666-square-foot mansion called “Bellosguardo,” or “lovely view,” on 23 acres overlooking the Pacific in Santa Barbara, CA. (She stopped visiting sometime in the 1950s, and reportedly turned down a $100 million offer to sell it to Beanie Baby founder Ty Warner.) And in 1952, she bought a 22-room mansion on 52 acres in New Canaan, CT. (She added a new wing to the house and hired caretakers to live on the grounds — but never spent a single night there herself.)

Huguette had so little contact with the world that some people wondered if she was actually still alive. It turns out she spent her last 22 years in a series of ordinary rooms at New York hospitals. She had few visitors during this time, and little contact with anyone outside these facilities. But her few contacts included her attorney, Wally Bock, and her accountant, Irving Kamsler. And that’s where Clark’s Gilded Age story begins to tarnish.

Clark was worth half a billion dollars at her death. She left the bulk of her fortune to charity, with smaller bequests to her longtime nurse ($30 million), her goddaughter ($12 million), and her attorney and accountant ($500,000 each). You would think she’d be able to pay her taxes, right? But property records show the IRS filed four liens for unpaid taxes — $1 million in 2006, $1.1 million and $41,000 in 2007, and $7,400 in 2008. Even worse, according to a Probate Court filing, the pair had let unpaid federal gift taxes and penalties accrue — to the tune of $90 million!

It turns out both the attorney Bock and accountant Kamsler have a history of questionable conduct. When Bock’s former law parter Donald Wallace died, after revising his will six times in the last few years of his life, Bock and Kamsler wound up inheriting $100,000 in cash each — plus Wallace’s Mercedes and his Upper East Side apartment. They even collected $368,000 in fees on the $4 million estate! And, just by the way, Kamsler is also a convicted felon and registered sex offender, who pled guilty in 2007 to attempting to disseminate indecent material to minors in an online “chat room.”

As Huguette Clark’s bizarre story reminds us, money really can’t buy happiness. Our job, of course, is to help you pay the minimum tax allowed by law. But before you ask us what we can do to help you pay less, ask yourself how those savings will improve your life. Are you working to put your children through college? Build security for your retirement? Or are you looking for life’s little “extras,” like traveling in style? Those are the real benefits we work to give you — not just numbers on your annual IRS “scorecard”!

The first part of Coburn’s report focuses on direct payments like Social Security and Medicare benefits, unemployment benefits, and farm subsidies. (NBA star Scottie Pippen, rocker Bruce Springsteen, and billionaire broadcaster Ted Turner have all gotten federal farm subsidies.) But Coburn also heaps his scorn on specific tax breaks that he calls a “reverse Robin Hood style of wealth distribution.” He claims he’s not interested in raising rates on anyone. And he cautions against demonizing “those who are successful.” But he does want to means-test benefits, close loopholes, and limit deductions that pamper millionaires with “unnecessary welfare to create an appearance everyone is benefiting from federal programs.”

Oklahoma Senator Tom Coburn

• “Subsidizing Millionaires’ Mansions”: For 2009, 143,441 out of the 235,413 taxpayers reporting incomes over $1 million claimed mortgage interest deductions, averaging $30,995 each.

• Rental Expense Deduction: 69,074 of those million-dollar earners claimed a total of $12.5 billion in rental property expenses, including mortgage interest, cleaning and maintenance, and depreciation.

• Gambling Losses Deduction: Finally, 8,225 of the top earners reported a total of $4.2 billion in gambling losses.

Coburn’s points seem reasonable at first glance. Does Oprah Winfrey really “need” a tax break for her $50 million California mansion? Should Vegas high-rollers count on us to bail them out when the dice come up snake eyes? On closer look, however, his objections may not hold up. The mortgage interest deduction, for example, is already limited to interest on $1 million of “acquisition indebtedness” on a primary residence and one additional residence, plus $100,000 of home equity indebtedness. Coburn would ditch the deductions for second homes and home equity interest, and drop the overall cap to $500,000 of indebtedness. But critics respond that over 11% of American homes are valued over $500,000, and limiting the deduction would cut home prices off at the knees at a time when they need all the support they can get.

Coburn’s objections to deducting rental real estate expenses and even gambling losses seem to make less sense. Paying tax on gross rents and gambling winnings? Rental real estate losses are already limited by “passive activity” rules. If millionaires can’t deduct their rental real estate expenses, they won’t invest in real estate at all. That would drag prices down in the same way as limiting mortgage interest deductions. And gambling losses are deductible only to the extent of gambling winnings. Is it fair to tax anyone, millionaire or not, on gross winnings without letting them net out losses?

As the economy continues to struggle, Washington gridlock intensifies — just look at the bickering over the payroll tax cut extension, which both parties say they want. And the 2012 presidential election draws near, we can expect to hear more rhetoric like Coburn’s. What do you think? Do tax breaks for millionaires offend your sense of fairness? Or should millionaires get to take advantage of the same rules as the rest of us?

Dixie eating a 1040 Tax Return

Now that you’re all grown up, you’ve got a different set of assignments you have to turn in. Few of them are more important than your annual tax return. Of course, even grownups sometimes forget their homework. But the IRS won’t be buying that school kid whine!

Take supermodel Christie Brinkley, for example. Earlier this month, the IRS filed a lien for $531,720 in unpaid taxes against the “Uptown Girl’s” $30 million country estate in swanky Bridgehampton, NY. That unpaid balance, of course, is also subject to interest compounded daily and a 0.5% monthly late payment penalty. Brinkley’s publicist told E! Online that she “was surprised to hear today that a tax lien has been filed, and has instructed her team to resolve the matter immediately.” Brinkley herself stated that “I have been, and remain focused on my whole family as both my parents navigate serious health issues.”

At least Brinkley is facing the music willingly. Rapper Bow Wow — who must not think his “real” name (Shad Gregory Moss) gives him the street cred he wants — is putting up more of a fight. In November, the IRS filed a $91,105.61 lien against him for taxes dating back to 2006, when he was just 19 years old. But Bow Wow isn’t taking this one lying down, declaring “we all know not to believe anything the media writes or blogs.” And Bow Wow isn’t the only rapper to run afoul of the IRS. In August, Beanie Sigel pleaded guilty to failing to file tax returns for three years in a row. (Prosecutors believe he owes up to $700,000 more in unpaid taxes dating back to the 1990s, but the statute of limitations has run out.) And in July, Ja Rule earned 28 months of federal housing for failing to file returns for tax losses from 2004 through 2008.

Rappers aren’t the only musicians who don’t always pay their taxes. Back in April, the IRS hit former Black Sabbath frontman and reality star Ozzy Osbourne with liens totaling over $2 million for unpaid taxes from 2007, 2008, and 2009. Ozzy’s wife Sharon took to the “twitterverse” to admit her finances had gone off the rails. “You can’t rely on anyone but yourself,” she tweeted. “You have to be on top of your own business affairs. My fault…lesson learned.”

And musicians, in turn, aren’t the only celebrities who don’t pay taxes. Former Green Bay Packers left guard Frederick “Fuzzy” Thurston dominated the frozen tundra of Lambeau Field from 1959-1967, then opened a chain of restaurants called the Left Guard after retiring. He and his partners withheld taxes from their employees’ paychecks — just like they were supposed to — but they didn’t actually pay the bill. Way back in 1984, the court flagged him with a $190,806 penalty for “roughing the IRS.” With interest, that bill has grown to $1.7 million. Federal marshalls even seized his Super Bowl II ring commemorating Green Bay’s 33-14 victory over Oakland to help pay!

Of course, our job is to make sure you don’t need excuses for not paying your taxes. Proper planning is the key to making that bill affordable, and making sure you don’t ever have to tell the IRS that the dog ate your homework!

From an IRS audit prospective, this means that the door will be open to analyze data much further to determine where they may be able to effectively find compliance problems (aka get more money from you). If they have the electronic accounting file, they can review the audit trail to see if anything was changed after the transaction was originally entered. They can tell how often you update your records. They can also see all deleted transactions. The problem is that they can start asking a lot of questions that are really out of the scope of what may have originally selected your returns for audit.

Here is the Q&A from the IRS on requests for electronic software records. http://www.irs.gov/businesses/small/article/0,,id=238525,00.html

Check out Question #6 from the IRS:

Q6. How will the electronic data be used?
A: Most accounting software programs can generate a large number of pre-set reports. Each report can be modified to fit the examiner’s needs. When working with these reports, the examiner can “drill down” to the underlying data and documents to further investigate items, as appropriate. The software also allows the examiner to test the integrity and veracity of the accounting records in making a determination as to the reliability of the records for examination purposes. However, the examiner may still need to request other documents when such records are necessary to properly test a return item or issue.

Wow I really think this will help speed the audit along and I especially like the “further investigate items, as appropriate.” That sounds so fun!

How about Question #12 from the IRS:

Q12. The accounting software backup file can contain transactional data for several years that are outside the scope of the audit. What, if anything, will the IRS do with that information?
A: If IRS is given a backup file that includes data for years not under examination, IRS will not utilize that data during the examination of the current year. If based on the results from the current year examination a decision is made to expand the scope of the! examination to prior or subsequent years, the taxpayer will be notified. The records may be utilized after that notification.

So they probably won’t expand the scope of most audits, right (Sarcasm)?

For most clients that we see, their Quickbooks file does not contain all of the transactions necessary to complete their tax return until we clean the file and enter adjusting entries. Many Quickbooks files we see have significant problems like negative accounts receivables, large balances in their undeposited funds account, and negative accounts payable entries. If the IRS gets their claws into these types of files, I foresee that they will be digging much further and causing a lot more time and money to be spent because audits will last longer and require more documentation and research.

So what is a business owner to do to protect from this unnecessary evil? Here are a few items to consider:

1. Business owners should stop and think about their own skills. Are their books and records really something they would want to turn over to the IRS in their current condition?
2. Most business owners are trying to use Quickbooks to manage their check book or maybe their receivables. If so, let’s talk about other solutions that may even be more effective. There are receivables-only solutions that can help more effectively collect money and expedite the collections.
3. Is this really an effective use of the business owner’s time?

Our firm offers solutions to remove the burden of bookkeeping from the owner and allow them to concentrate on making money and growing their business. We use professional accounting software systems that are not compatible with the IRS electronic accounting systems. The records will be accurate from the start and good planning for taxes can occur all throughout the year. We generally can assist owners with this process and show them how they can save more money than it costs to have this service.

Let us show you how it can be a win-win situation for you and if you are the lucky recipient of an IRS audit notice, we can make the process much smoother and less costly than letting the IRS dig aimlessly!

For more information, you can visit the NC Department of Revenue website.

Small business owners are the backbone of America. According to the US Small Business Administration, small businesses represent 99.7% of all employer firms and employ over half of all private sector employees. Small businesses have generated 64% of net new jobs over the past 15 years. In addition, small businesses produce 13 times more patents per employee than large firms, and their patents are twice as likely to be among the one percent most cited patents.

The enormous risk that small business owners take and the countless hours that small business owners pour into their business often result in little to no reward, yet they push on any way.

One way to celebrate the Mom & Pop Business Owner is to commit yourself to shop in their stores and eat in their restaurants on this special day.

How else do you plan to celebrate Mom & Pop Business Owner day? Let us know!

In this short video, I explain the major provisions of the new gift card rules.

To read the final rule, as issued by the Federal Reserve, click here (opens as .pdf.)

Text Summary:

Signed into law on June 4, 2008 by Governor Mark Sanford, the South Carolina Illegal Immigration Reform Act (“SC Immigration Act”) began on July 1, 2009 for private employers with 100 or more employees. All businesses that have employees – even as few as one – must begin to abide by the provisions of the act by July 1, 2010.

To insure compliance with the SC Immigration Act, the South Carolina Department of Labor, Licensing and Regulation will perform audits of employers. It will also investigate complaints against employers. In addition for being required to notify Federal and State agencies responsible for the enforcement of immigration law, there are stiff monetary penalties for failure to abide by the provisions of the law. If an employer fails to follow proper procedures for verifying worker eligibility, they will be fined a minimum of $100 and a maximum of $1,000 – per employee. If you are a small business who cycles through a fairly large amount of workers, this could become quite costly. If an employer knowingly or intentionally employs an illegal alien may get his license suspended or revoked. During the period that the license is suspended or revoked, the employer is not allowed to employ any employees. As you can see, this law can quickly put you out of business if you fail to abide by its provisions.

If you have any questions or comments, please let me know.

A major problem with the bill is that it is so far reaching.  It goes far beyond regulating companies such as AIG and Goldman Sachs.  As the bill is currently written will require any business that asses late fees OR allows customers to make payments in more than four installments to be treated under the same terms as AIG, Freddie Mac and Goldman Sachs.    This could have huge ramifications for small businesses – many of whom assess late fees on their past due receivables or who offer payment arrangements for their customers.  Given all of the other increased tax and regulatory burdens bearing down on small business – this is yet another that we do not need.    Not only is this going to be an increased burden on virtually every business in America, it will create yet another government bureaucracy that will give taxpayers a very poor return on the tax dollars it waste to establish and maintain the monstrosity.

According to Senator DeMint, one of the hardest areas to be hit will be healthcare – particularly orthodontists and their patients.  Currently, the cost of braces are typically done through a payment plan with the orthodontist.  Under the proposed law, this payment plan will come under the jurisdiction of yet another government bureaucracy – the new Consumer Financial Protection Agency which is slated to regulate all of these transactions.

Senator DeMint states that “the banking regulation bill was supposed to crack down on Wall Street, but it’s just another power grab that’s going to hurt Main Street doctors, dentists and small-town businesses. And, certainly the families who struggle to find ways to pay for their doctor bills.”