Tuesday, June 14, 2011
The “Tax Lady” of late night television fame, Roni Deutch, announced over the past weekend that her tax resolution firm is bankrupt and will be shutting down. Deutch’s business declined sharply in recent months in light of a litany of criminal and ethical charges. The charges stem from complaints by angry clients that her firm charged them thousands of dollars and then did nothing to resolve their tax issues. According to former California Attorney General Jerry Brown, who brought the initial charges against Deutch, the firm collected money but only resolved about 10% of clients’ issues. Compounding the damage, as soon as charges were filed, Deutch’s firm began a massive document destruction project in an attempt to cover their tracks. Courts stepped in to bar any further obstruction of justice, but the most significant damage was to the clients she promised to help. There are hundreds of people out there promising tax resolution assistance, but there is a lot more to it than just collecting a fee.
The bankruptcy announcement coincides with Deutch’s surrendering of her California law license and return of fees collected since January 2011. The lawsuits against Deutch have called for her to return more then $34 million in fees to customers, but it remains to be seen whether those refunds will ever be made. In the mean time, former clients who still have outstanding issues with the IRS are encouraged to seek professional advice, as the IRS debts will not go away on their own.
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November 2010
The midterm elections have changed the Congressional landscape. In the 112th Congress, Republicans will control the House of Representatives and will pick up seats in the Senate as well, although Democrats will continue to control the upper chamber. These changes will reshape the House-Senate tax-writing committees.
According to the latest reports, Chairmanship of the House Ways and Means Committee, currently held by Sander M. Levin (D-MI), will be held by Dave Camp (R-MI), and Democratic representation on the Committee will likely drop. On the Senate side, Max Baucus (D-MT) will retain Chairmanship of the Senate Finance Committee, but the Democratic-Republican makeup of the Committee will be altered.
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On Oct. 29, Treasury’s Office of Tax Policy issued a report making the case for the Code to be changed to permit 100% expensing under Code Sec. 179 for a limited period of time. The report analyzes the President’s proposal, made back in September (see ¶ 1827 ), that businesses be eligible to fully deduct qualified capital investments through the end of 2011. The change would be retroactive to Sept. 8, 2010. (Presumably, that means the change would apply to property acquired and placed in service after that date.)
According to the Treasury report, the President’s proposal would:
- … Put an additional $150 billion in tax relief in the hands of businesses over the next two years – for a total of $200 billion in relief when combined with expensing provisions in the Small Business Jobs Act.
RIA observation: Under the Small Business Jobs Act, increased Code Sec. 179 expensing ($500,000 limit, with $2 million investment based phaseout threshold), and the ability to expense up to $250,000 of qualified real property, apply for tax years beginning in 2010 and 2011. The Small Business Jobs Act also revived 50% bonus depreciation for property placed in service in 2010. See Weekly Alert ¶ 40 09/30/2010 for details. - … Provide tax cuts to 2 million businesses, small and large.
- … Allow businesses to receive deductions up front that they would otherwise receive over several years, encouraging investment now, while also allowing much of the reduced revenues to be recouped in future years. The net cost of the proposal is expected to be less than $30 billion over ten years.
- … Push down businesses’ average cost of capital on new investments from 7.18% to 1.68%. This reflects a reduction in the rate of return a business must expect, before taxes, for it to choose to invest, thus expanding the range of investments it would be willing to make by the end of 2011.