Monday, May 18, 2015
Supreme Court KO's Maryland's "double taxation"; IRS abuses "civil asset forfeiture", as with a case of a NC convenience store owner
The Supreme Court has just ruled a portion of Maryland’s “double taxation” scheme in the case of Maryland v. Wynne, with slip opinion here. Maryland did not allow a deduction for taxes paid to other states for income earned in other states in the “piggyback” portion of its income tax paid in 23 counties and the city of Baltimore. Generally, this tax makes local income taxes higher in the Maryland suburbs than in the Virginia sububrs of Washington DC. The Washington Post has a story by Bill Turque here.
In another story about taxes, the IRS has sometimes seized assets of taxpayers who it believes are trying to circumvent reporting requirements by dividing their deposits into smaller amounts so they aren’t individually reported. The Washington Post story is by Christopher Ingram, here. The DOJ says that this is a civil seizure of property not requiring a criminal charge. Litigation may be prohibitively expensive, and sometimes the IRS makes deals to keep some of the money without litigation (“extortion”). The particular case had to do with North Carolina businessman Lyndon McClellan, who owns L&M Convenience Mart in Fairmont. Much of his business is cash.
In my own circumstances, with an estate, it is very difficult to keep track of some pieces of income and know what is reportable.
I think that the IRS should send taxpayers of copy of what it has received reports on. That would make a checklist that automated software programs (HR Block, RurboTax) could check I have no problem with paying taxes on legitimate earnings according to the law, but it is very difficult to determine how some items should be handled, even with a tax preparer.
In 2008 and 2009 (while Mother was still alive), there was a lot of “pressure” on me to learn to become a tax preparer. This is not my course in life, but I can see the argument. In my position, I have a responsibility to “know”.
Police seizures of cash from motorists are another aspect of the civil asset forfeiture problem.