Press Release: Legal Lines with Locke Meredith
David Gunn, Show # 80
Attorney Locke Meredith discusses with Tax Attorney, David Gunn, various kinds of taxes as well as the IRS and what they are looking for in tax returns.
Gunn is a board certified tax attorney as well as an estate-planning specialist. He explains in detail how our tax system works. All income you earn is taxed, except a few exclusions. Income is taxed on the Federal and State levels. Federal goes up to thirty-five percent, with state going up to six percent. In America, you pay what is known as a marginal tax rate, meaning that the amount and percentage of your income that you are taxed on is dependent upon how much income you make. More income means a higher percentage that is taxed, while those earning very low income may not be taxed at all. In addition to income tax, there are property taxes, sales taxes, rental taxes, etc. Another tax we face is death taxes. Currently in Louisiana, if you die, your inheritance above two million dollars is taxed at forty six percent.
The IRS is how the government collects taxes. They have lately been expanding their efforts in order to do more audits. This will hopefully render them more of the money that people owe in taxes, thus keeping the pressure down on Congress to raise the taxes even higher. Income taxes in America are done on a self-assessment basis. This means we are all required by law to file them, however we voluntarily comply with it. When the IRS asks to review your taxes, an audit, it is not up to them to prove that what you reported was wrong, but instead up to you to prove, using documentation, that what you reported was accurate. The IRS suspects many professionals are not filing any tax returns as of lately, which they are very concerned about. Individuals caught in this situation could face more than a year of jail time in Federal Prison.
The IRS has specific issues that they use to examine cases each year, with the twelve most important known as the “dirty dozen.” These change from year to year. The internet is proving to allow more cases of fraud with the tax system. A fraudulent return is defined as a tax return where someone has intentionally overstated their deductions or understated their income. Fraud can carry jail time and a seventy-five percent penalty. If the IRS contacts you to discuss your taxes, Gunn recommends responding and meeting with them as soon as possible. Once you do get audited, and the IRS asks you to pay more taxes, you have several options. You can pay it, you can ask them to reconsider and look at additional evidence, or you can send it to the appeals division. Here a fresh set of eyes will have a look at it. If you are still not happy at this point, you have two court options. Option one: you can file a petition with the tax court to have them re-determine how much you owe, without paying the tax. Option two: you pay the tax and then go to Federal District Court to try and get a refund.
