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Criminal Penalties for Sales Tax Audits

Recent changes in the law have significantly broadened the conduct and increased the penalties for criminal state tax violations. Given these changes and the State Comptroller’s increased enforcement efforts in this area, businesses need to understand where they may have exposure and how to limit it.

What used to be a routine civil sales tax audit may now lead to a criminal prosecution. These cases have generally resulted in felony convictions. Examples of some of the prosecutions can be found at the State Comptroller website at www.window.state.tx.us/about/cid.
I. Changes in the Law
Recordkeeping Requirements. Taxpayers now must keep their records open for inspection for at least four […]

Tax Strategy for the Week (August 22nd,2013)

First Time Homebuyer – Buy or Rent?
Tax Issue

Home ownership is a dream of many Americans. Whether it is economically more beneficial to rent or buy depends on many variables, including whether home values are rising or falling, how long the individual plans to stay in one location, and whether or not the individual is willing to take on the responsibility of maintaining the upkeep on a home. However, the tax benefits available to homeowners can provide significant savings. The advantages of owning or renting are different for everyone so each individual’s situation needs to be evaluated before making the […]

Tax Strategy for the Week (August 16th, 2013)

Last Money
Tax Issue

A retired taxpayer with sufficient income and assets often seeks ways to maximize the estate that will be left for heirs. The impact of taxes plays a major role in planning for the distribution of estate assets.

Applicable Tax Law

Gain on investment value within a permanent life insurance policy is not taxed as long as the gain is left within the policy.
Death benefits on a life insurance policy are generally paid to the beneficiary free from income tax.
If the cumulative premium payments exceed certain amounts specified under IRC section 7702A, the policy will become a Modified Endowment Contract […]

Tax Strategy for the Week (August 9th, 2013)

Low Income Housing Tax Credits
Tax Issue

Many taxpayers are aware of tax benefits of investing in real estate. Taxpayers can create a tax loss be depreciating the property. However, the loss on rental real estate is limited to $25,000 per year ($12,500 for Married Filing Separately). This loss is then phased out for taxpayers with modified AGI of more than $100,000.


The phaseout of the losses can be problematic for taxpayers affected by this. The benefits of investing in real estate are lessened.


Applicable Tax Law

 The Department of Treasury issues tax credits to the states for low-income housing developments. State agencies then […]

Tax Strategy for the Week (August 2nd, 2013)

Equipment Leasing Programs
Tax Issue

Taxpayers often have the desire to have investments earn high current income while paying little or no income tax on that income. This is especially true for taxpayers with higher income. These investors are also looking to diversify assets to reduce risk.


Applicable Tax Law

Equipment leasing programs are usually set up as limited partnerships. Investors have limited liability and the general partner manages the investment.
As a limited partnership, income and losses flow through to the individual investor. Because the investor does not materially participate in the partnership, the deductions of losses of the partnership are limited to […]

Tax Strategy for the Week (July 26, 2013)

Buying vs. Leasing a Vehicle
Tax Issue


When it comes time to purchase a new vehicle, the process of haggling over price and negotiating financing overwhelms many consumers. In addition, many shopper struggle with the decision of whether they should lease a vehicle or buy it. Unfortunately, one size does not fit all. The answer depends on the specific needs and priorities of each consumer.


Applicable Tax Law

A taxpayer using his or her own vehicle for business purposes can ordinarily deduct expenses related that vehicle using either actual expense or a standard mileage rate.
When the actual expense method is used and the […]

Tax Strategy for the Week (July 19, 2013)

Tax-Exempt Bond Investing
Tax Issue

 Taxpayers pay tax on the interest income earned on taxable investments. Often the interest income is left to reinvest in the interest-earning investment. Therefore, the taxpayer is paying tax on interest earned even if the earnings are not being withdrawn and used for living expenses.

Even if the taxpayer is withdrawing the interest earnings and using this for living expenses, the interest earnings are subject to income tax. Taxpayers may be foregoing tax-free income and also may be earning a lower net rate of return on the investment when the effect of taxes is computed on the […]

Tax Strategy for the Week (July 12, 2013)

Funding a Roth IRA With a Variable Annuity
Tax Issue


Both IRAs offer an investor tax-deferred growth. Contributions to Roth IRAs are made on an after-tax basis. Distributions of these contributions are not taxed to the taxpayer or the beneficiary. Qualifying distributions of the gain in a Roth IRA are tax free to the Roth IRA owner or the beneficiaries. However, if no gain above the basis in a Roth IRA exists, there is no tax benefit to having a Roth IRA.


Because of stock market volatility and historic low interest rates on bonds and bank products, investors are looking for places […]