News

IRS, DOJ Crack Down on Tax Violators

The IRS and Justice Department tax lawyers are pressing efforts to combat tax fraud, identity theft and offshore tax evasion, WCYB reports. With the April 15 tax filing deadline fast approaching, the DOJ says it is aggressively pursuing tax violators, despite forced spending cuts. Kathryn Keneally, assistant attorney general for the Tax Division, said government prosecutors achieved a 95 percent success rate in all civil and criminal cases they litigated in the past year.

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Income Tax Ban to Go Before Voters

A proposed constitutional amendment to ban a state income tax in Tennessee passed the House on Monday and will go before the voters next year, the Memphis Daily News Reports. The chamber voted 88-8 in favor of the measure, sponsored by Republican Rep. Glen Casada of Franklin. The amendment would also ban payroll taxes by the state or local governments.

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Taxpayer Relief Act Affects Estate Planning

In his Tennessee Bar Journal column this month, Knoxville lawyer Eddy R. Smith explains how estate planning is affected by the American Taxpayer Relief Act of 2012. Read his column and review the related chart showing the combined federal estate tax and Tennessee inheritance tax exposure for estates through 2016.

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Fiscal Cliff Averted, New Tax Laws in Place -- Are You Ready?

Now that the so-called fiscal cliff has been averted, join John Burns and Ralph Levy from Dickinson Wright as they discuss how the recently enacted American Tax Relief Act of 2012 will affect you and your clients. Among its many provisions, the act raises most income tax rates, raises capital gains and dividend rates, sets a new top estate and gift tax rate, extends a number of tax breaks and provides for permanent AMT relief. The pair will discuss these and other issues during a one-hour webcast on Monday.

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State Income Tax Ban Sent to Senate

The Finance, Ways and Means Committee voted 9-1 Tuesday morning to send constitutional amendment Senate Joint Resolution 1 to the floor of the state Senate, permanently banning a tax on personal income or a payroll tax in Tennessee. Sen. Douglas Henry, D-Nashville, cast the only vote against the amendment, stating he is against income tax in principle but believes a payroll tax is different, the Tennessean reports.

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Cleveland and Bradley County Citizens Receive Free Tax Preparation

The Cleveland City Council will partner with the IRS for the sixth year to operate the Volunteer Tax Assistance (VITA) program, which provides free tax preparation services to citizens of Cleveland and Bradley County whose household incomes are $51,000 or less. There will be four VITA sites located at the South Cleveland Community Center, Bradley Baptist Association, Kmart, and Lee University. 

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Outgoing Lawyer Critical of Knox Tax Collections Move

Knox County is changing the way it collects delinquent taxes, and the the outgoing delinquent tax attorney calls the move a misguided short-term approach with long-term ramifications. Under the plan, the Knox County Law Department will take over much of the legal duties in the Knox County Trustee's Office. Learn more on Knoxnews.com.

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Memphis Councilmen Propose Tax Increase for Pre-K

Memphis City Council members Shea Flinn and Jim Strickland will present a proposal to increase the city sales tax rate one-half percent in an effort to raise $27 million annually for Pre-K education and $20 million more to fund a city property tax reduction, the Memphis Business Journal reports. The increase would put Memphis sales tax rate at 2.75 percent, the highest rate allowed under state law. Combined with the state tax, shoppers would pay 9.75 percent on purchases.

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'Fiscal Cliff' Creates Flood of Work for Attorneys

The uncertainty of the ongoing “fiscal cliff” negotiations has resulted in a flood of work for attorneys as their clients try to plan for the future, the National Law Journal reports. Due to the potential for changes in tax rates, Medicare taxes and capital gains taxes, businesses are looking to accelerate income before the year ends to avoid uncertainty in 2013. Attorneys are presenting their clients with different year-end scenarios to prepare them better for the future.

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Tax Prep Firm and Affiliates Face More Legal Action

The U.S. Attorney’s Office in Middle Tennessee filed a civil injunction suit in Nashville against Fields Mo' Money Taxes, making it the latest affiliate of the Memphis-based Mo' Money Taxes tax preparation firm to face legal action. The Justice Department issued a news release stating the suit alleges defendants Toney Fields and Trumekia Shaw “intentionally prepare and file fraudulent federal income tax returns to obtain improper tax refunds for customers.” It says the firm defrauded the federal government of more than $5million in 2011. The Nashville Business Journal has the story.

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Hotel Tax Law Up for Senate Review

The Tennessee Hospitality Association is seeking to amend a hotel tax law and require online travel companies to pay more in taxes, a measure that would add more than $1 million to annual tax revenue. The trade group argues that online travel companies have a competitive advantage because they pay taxes in a discounted room rate rather than the retail rate. It believes that changing the language of the state law will level the playing field. The Nashville Business Journal has the story.

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AG Says Solar Tax Breaks May Be Unconstitutional

Attorney General Robert Cooper said in an opinion released today that tax breaks for the solar industry may be unconstitutional, the Tennessean reports. The 2010 law that slashed property tax bills for green energy installations was one of three tax breaks backed by former Gov. Phil Bredesen. In the opinion, Cooper said that the tax effectively gives certain business owners exemptions that are not authorized by the state Constitution.

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NY Court Rules Lap Dances Taxable

The New York Court of Appeals ruled Tuesday that since lap dancing does not promote community culture in the way dance such as ballet does, it is taxable the ABA Journal reports. Albany establishment Nite Moves challenged the state tax law when they were ordered to pay $400,000 in back taxes, claiming the law does not make a distinction between “highbrow dance and lowbrow dance.”

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Farmland Tax Law Loophole Benefits Urban, Wealthy

A 1976 Tennessee state farmland protection law originally intended to prevent farmers from being taxed off their land has become a tax loophole exploited by wealthy, urban, estate owners, business icons, and real estate developers, the Commercial Appeal reports. According to the newspaper’s investigation, the Agricultural, Forest and Open Space Land Act, or “Greenbelt Law,” is allegedly rife with abuse as the wealthy receive tax benefits by declaring a woods a timber preserve, a mansion’s manicured lawn a pasture, a future subdivision a farm, and a privately owned country club’s golf course an “open space.”

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Sales Tax Dispute to Be Argued This Week

Oral arguments are scheduled for Wednesday morning in the Tennessee Court of Appeals Eastern Division to settle the sales-tax dispute between the city of Cleveland and Bradley County. The city will continue its argument that the proceeds of the 1967, 1972 and 1982 sales taxes should be divided between the city and county based on the point of the sale as stated in Tennessee Code. The county asserts the proceeds of each local option sales tax should be divided between the two local governments in accordance with the formula established in the 1967 contract, which is based on school population. The Cleveland Daily Banner has the story

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Feds Reportedly Drop Arriola Tax Investigation

Nashville’s NewsChannel 5 reported this week that federal prosecutors have dropped an investigation into whether former Davidson County Clerk John Arriola cheated on his taxes. The news comes six weeks after Arriola resigned his position to avoid prosecution on state charges that he illegally pocketed almost $120,000 for weddings he performed on taxpayer time.

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Disbarred Attorney Involved in Snipes Case

The Tennessee Supreme Court disbarred Sumner County attorney John Pierce Brownlee Jr. earlier this month for participating in a fraudulent business that encouraged clients to avoid paying taxes. Now news has surfaced that Brownlee’s clientele included action movie superstar Wesley Snipes, who is currently serving a three-year prison sentence for failure to file income tax returns. Brownlee was convicted in January 2008 for conspiring to defraud and interfere with the Internal Revenue Service, which caused tax losses of up to $10 million. The Tennesseam has more

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Haslam Asks Congress to Help with Online Sales Tax

More than 21 states have simplified how they collect taxes in hopes of recovering an estimated $20 billion in sales taxes that go uncollected by out-of-state online merchants every year. But the nation's governors say they still need help from Congress. Speaking on behalf of the National Governors Association, Tennessee Gov. Bill Haslam told the U.S. House Judiciary Committee on Tuesday that it is not fair to local businesses that online sellers are not always required to collect and distribute state sales taxes. Read more of his remarks in the Bristol Herald Courier

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Roberts Surprises as Court Upholds Health Care Act

The high court today let stand, in a 5-4 decision, the centerpiece of President Obama's health care legislation, with Chief Justice John Roberts surprising many by casting the deciding vote and writing the majority opinion. His rationale is that Congress under the Commerce Clause does not have the authority to require people to buy insurance — but it does have the authority to tax people who do not have coverage. The so-called individual mandate embedded in the health care legislation, Roberts wrote, "must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable." Read more from NPR and the National Law Journal. Relive the action as it unfolded, from the Blog of Legal Times or read what Tennessee business, health care and political leaders had to say in the Nashville Post.

The Tennessee Bar Association will explore what the next steps will be for the legislation in a July 12 webcast featuring John Voigt of Sherrard & Roe. Learn more or register now.

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Haslam Defends Death Tax Stance to Wall Street Journal

In a March 24 editorial, the Wall Street Journal declared Gov. Bill Haslam "the main obstacle to reform" of Tennessee's inheritance tax. Now Haslam has replied with a letter to the editor of the publication that appears under the headline, "I'm Not the Problem on Death Tax Reform." The News Sentinel has more

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