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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 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 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 Therefore, the taxpayer is paying tax on interest earned even if the earnings are not being withdrawn and used for living expenses.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 […]