IRS Taxed goodie bags at The Oscar's

[DansDarkSide]

IRS puts bills in Oscar goodie bags

Thursday, August 17, 2006; Posted: 11:31 a.m. EDT (15:31 GMT)

WASHINGTON (AP) -- Movie stars enjoying the lavish gift bags handed out at this year's Oscars will get some decidedly unglamorous notices: don't forget to pay tax on the windfall.

"There's no special red-carpet tax loophole for the stars," Internal Revenue Service Commissioner Mark Everson said Thursday.

The Academy of Motion Picture Arts and Sciences, in an accord with the IRS, agreed to pay taxes due on gift bags handed out through 2005.

But responsibility for paying taxes on this year's swag falls on the recipients.

The agreement marks the beginning of an IRS effort to reach out to the entertainment industry with reminders that award show gifts and promotional giveaways are considered taxable income.

The value of the gifts must be reported on a celebrity's tax return. That includes gift certificates or vouchers if they've been redeemed. The gifts count as income because the IRS does not believe they were given "solely out of affection, respect or similar impulses."

Celebrity gifting has become more lavish as marketers try to harness some star power to advertise their goods. The giveaways often include luxury trips, jewelry and electronics.

George Clooney donated his Oscar swag bag to United Way. It fetched $45,100 at auction, benefiting the United Way Hurricane Response and Relief Recovery Fund. Clooney may be eligible for a tax deduction.

The bag, given to presenters at the 78th Annual Academy Awards, included a BlackBerry 8700c, a Kay Unger kimono and a cultured Tahitian-pearl necklace. Clooney also took home another prize -- best supporting actor for "Syriana."

The Internal Revenue Service said it is not conducting a special audit initiative in this area, but questions about gift reporting might arise during an examination of an individual's tax return. Donors giving gifts to celebrities will be reminded to fill out special informational forms reporting the gifts to the IRS.

$45,100 per bag. I like the movies they make but they make why to much money to be getting all of this free stuff. Im glad the IRS is taxing this maybe the Award shows will stop giving away this stuff to people that already have it.

[discombobulate]

I can bet that each bag had less than $45,100 worth of items in it. When selling George Clooney's tootherbrush, worth $15, it would fetch thousands on eBay. It's an auction, the bags aren't worth the amount that one would be auctioned for.

It makes sense to tax it though.

[DansDarkSide]

Yea I quess i didnt notice that.

But still the Academy awards just gave them this "BlackBerry 8700c, a Kay Unger kimono and a cultured Tahitian-pearl necklace" just wonder what must be in the one's that the Oscars give out.

[waltky]

IRS warns about phishing scam...

IRS Issues Warning on Wildfire Scam
Friday, Nov. 02, 2007 — People should be on the lookout for a new e-mail scam soliciting donations to California wildfire victims in the name of the Internal Revenue Service and the U.S. government, the IRS said Friday.

The tax agency said the bogus e-mails appear to be a "phishing scheme" that tries to trick recipients into revealing personal and financial information that can be used to steal a person's assets. The IRS said it does not send e-mails soliciting charitable donations and never asks people for the PIN numbers, passwords or other secret information for credit card, bank or other financial accounts. People "should avoid opening any attachments or clicking on any links until they can verify the e-mail's legitimacy," IRS Deputy Commissioner for Operations Support Richard Spires said in a statement.

The agency said the scam e-mail urges recipients to click on a link which opens on a fake IRS Web site. That site includes a link to a donation form which requests the recipient's personal and financial information. The IRS said it also believes that clicking on the link downloads malware, or malicious software, onto the recipient's computer. That software will steal passwords and other account information it finds on the victim's computer system.

It urged those who received the scam e-mail to help the IRS shut down the operation by forwarding it to phishing@irs.gov, using instructions found in "how to protect yourself from suspicious e-mails or phishing schemes" on the genuine IRS Web site, Internal Revenue Service. Since the mail box was established last year, the IRS has received more than 30,000 e-mails from taxpayers reporting almost 600 separate phishing incidents.

Source

See also:

Big tax reforms: Who'd pay, who'd save
November 2 2007: What AMT repeal and a surtax on high-income filers would mean for everyone's tax bill.

If a tax-system overhaul proposed last week were to pass into law, there would be a substantial redistribution of the tax burden. Those with incomes over $500,000 would bear the brunt of that shift, with tax bills that could grow by between 6 percent and 10 percent in 2008, according to an analysis by the Tax Policy Center of a proposal introduced last week by House Ways and Means Committee Chairman Charles Rangel (D-NY).

Currently, those making more than $1 million pay 18 percent of all federal tax revenue. Under the Rangel proposal, their share would rise to 20 percent. Those making between $500,000 and $1 million account for 6.7 percent of all tax revenue; their share would rise to 7.1 percent. For all other income groups, their share of the federal tax burden would remain the same or go down. Those making between $100,000 to $200,000 will see the biggest drop, from 25.4 percent to 24.3 percent.

The Tax Policy Center estimates that 57 percent of tax filers (86 million households) would get a tax cut under Rangel's bill in 2008, while 2.4 percent of filers (3.6 million households) would pay higher taxes. Rangel proposed repealing the Alternative Minimum Tax (AMT) and imposing a surtax on high-income taxpayers to pay for that repeal. He also proposed a higher standard deduction for everyone and more generous tax credits for low-income tax filers.

MORE

[waltky]

House blocks AMT...

House Passes $80 Billion Tax Relief Bill
Friday, November 09, 2007 -- House Democrats on Friday pushed through an $80 billion bill to block the spread of a dreaded tax on middle-income people.

The White House and Republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained that it would never become law. The 216-193 vote to "patch" the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it. What is certain is that if Congress and the White House do not reach a compromise by the end of the year, anywhere from 21 million to 25 million middle-income taxpayers will be hit by the AMT, costing them as much as $2,000 in extra taxes.

The AMT was created in 1969 to ensure that a very small number of wealthy people could not use tax breaks or deductions to avoid paying any taxes. But it was never indexed for inflation, and every year the AMT draws in more middle-income taxpayers. This year some 4 million people were subject to the tax. Congress has recently responded with annual fixes or patches to limit those affected by the tax while searching for a way to eliminate it. House Ways and Means Committee Chairman Charles Rangel, D-N.Y., last month outlined a plan to repeal the AMT, at a cost of $831 billion over 10 years, but acknowledged that action on his proposal is a long way off.

Friday's bill would extend AMT relief for one year, at a cost of about $51 billion. It includes another $30 billion in largely popular tax relief measures, including expanding the child tax credit, providing a property tax deduction to some 30 million families and extending a tax exemption for the combat pay of military personnel. It extends several dozen targeted tax breaks due to expire at the end of the year, including a deduction for college tuition, a deduction for teachers' out-of-pocket expenses and deductions for residents of states that do not have income taxes. Others benefit winemakers, employers of Katrina victims, contributors to charities and state lawmakers.

MORE

[waltky]

`... making up the difference by closing a loophole on offshore funds that now escape taxation.

Senate passes fix for alternative tax
December 6 2007: Lawmakers vote 88-5 to block tax increase on 25 million Americans, but breaks with House's approach by not taking steps to make up for lost revenue.

WASHINGTON -- The Senate voted Thursday to block a looming tax increase averaging $2,000 for millions of taxpayers after Senate Republicans succeeded in thwarting a Democratic plan to also raise taxes on investors. The Senate bill, passed 88-5, provides a one-year fix for the alternative minimum tax but without matching the cost of the tax relief with new tax revenues. Without the fix, an estimated 25 million people would be subject to the higher AMT tax, up from 4 million in 2006.

The Senate vote puts it at odds with the House, where Democratic leaders, under a principle of not adding to the national debt, demanded that the AMT fix be paid for. Last month, the House passed legislation matching the AMT fix and other tax cuts with about $80 billion in new tax revenues. Senate Finance Committee Chairman Max Baucus, D-Mont., said it was not his first choice to pass an unpaid-for bill but "this is our best choice." He said 12 million people in the $100,000 to $200,000 income level alone would be hit by the AMT without the fix, and "we need to stop that from happening."

The bill now goes back to the House, where Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee, suggested making up the difference by closing a loophole on offshore funds that now escape taxation. Senate Majority Leader Harry Reid, D-Nev., said after the vote that he had heard the House would accept the Senate version. But Rangel said the House would "give the Senate another chance to do the right thing and pass responsible AMT relief."

The White House, in a statement, praised the Senate action. "We encourage the House of Representatives to swiftly pass this bill to stop this tax increase and to prevent a costly delay in refunds."

MORE

[waltky]

Senate rejects middle, higher income tax cuts...

Senate rejects some Bush tax cuts, backs others
13 Mar.`08 WASHINGTON - House approves tax increases of $683 billion over next five years

The Senate on Thursday rejected the idea of renewing many of President Bush's tax cuts as all three major presidential candidates interrupted their campaigns to cast their votes. The House approved a budget blueprint that would raise taxes by $683 billion over the next five years. The Senate did embrace Bush reductions aimed at low-income workers, married couples and people with children.

The House budget plan would provide generous increases to domestic federal programs but still is designed to bring the government's budget back into the black by letting all of Bush's tax cuts expire at the end of 2010. That plan passed the House on a 212-207 vote with Republicans unanimously opposing it. The Senate voted 99-1 to extend the cuts for some workers as well as couples and parents. Senators voted 52-47 to reject a move to extend tax cuts for middle- and higher-income taxpayers, investors and people inheriting businesses and big estates.

The votes were mostly symbolic, but they put senators in both parties on the record for when the tax cuts actually expire in three years. Arizona GOP Sen. John McCain, Republican presidential nominee-in-waiting, voted for the full roster of Bush tax cuts. Rivals Hillary Clinton, D-N.Y., and Barack Obama, D-Ill., both voted against them.

'Earmarks' vote expected late today

[waltky]

So shouldn't those making less than 200k pay no taxes??...

They Earn $200,000 and Pay No Taxes
June 15, 2008 - Find Out How These Rich Folks Avoided Paying Any Income Taxes

Death is inevitable, but federal income taxes aren't for an increased number of high-income earners. New IRS statistics show 7,389 federal tax returns with $200,000 or more in adjusted gross income reported no federal income taxes in 2005. That's a 161% jump from the 2,833 comparable returns filed in 2004. Additionally, 4,224 of the over-$200,000 earners reported no worldwide income tax liability on their 2005 returns, the IRS data show. That represents a 75% increase from the 2,420 comparable returns filed in 2004.

The data are the most recent available from the IRS. It shows a rising number of high-income earners have avoided the alternative minimum tax, which was intended to ensure that tax shelters, deductions and loopholes wouldn't exempt wealthy Americans from paying at least some federal income tax. "It's an interesting case study on how people find ways to avoid paying taxes," said Howard Gleckman, a senior research associate and tax blog editor at The Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.

The increases stem in part from two tax law changes, according to the IRS Spring 2008 Statistics of Income Bulletin. Responding to Hurricane Katrina, Washington exempted charitable contributions between Aug. 27, 2005, and Jan. 1, 2006, from the overall limit on itemized tax deductions and the 50% of adjusted gross income limit for such giving. The one-time change wasn't limited to hurricane-related contributions. "There was no excuse for not restricting it to the affected area," said Joann Weiner, a former Treasury Department employee who analyzed the changes in her current job as a contributing editor at Tax Analysts, a non-profit publisher of tax information and data.

More ABC News: They Earn $200,000 and Pay No Taxes