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No One Likes Paying Taxes
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March 8, 2010

In a speech last May, President Obama said, "Nobody likes paying taxes . . . . And yet, even as
most American citizens and businesses meet these responsibilities, there are others who are
shirking theirs." He was referring to offshore tax havens and other loopholes that wealthy
Americans often exploit to reduce their tax burden. But it doesn't take moving money to
Switzerland to avoid paying taxes. If history is any guide, 2010 will be a year in which many
Americans use a few simple methods to reduce their tax liability, which could potentially cost the
government billions of dollars.

This year is the last before the expiration of tax cuts originally put in place by the Bush
administration. If Congress allows these tax cuts to expire, as the president supports, in 2011 the
top marginal tax rates will increase from 28, 33, and 35 percent to 31, 36, and 39.6 percent.
Although it is not certain that tax rates will go up, many wealthy Americans are looking at 2010 as
the end of the party. "Everybody thinks taxes are going up and tax breaks are being eliminated.
Everybody's thinking this, and they're planning for it," says Lance Wallach, a New York author,
lecturer, and financial consultant who advises high net-worth clients, including entertainers and
athletes. His phone is ringing off the hook with questions from clients about how they can take
advantage of this year's rates relative to 2011's.

One of the most popular strategies is moving income from 2011 to this year. Usually, accountants
encourage clients to postpone income so there is less income taxed in one year. But in 2010, the
incentives have flipped. "This is the exact opposite. Accelerating your income makes 100 percent
sense," says Wallach.

Creative maneuvering. This would not be the first year taxpayers have pursued this strategy. In
1992, Bill Clinton was elected president with promises to raise taxes on wealthy Americans, which
Congress did in 1993, boosting the top marginal rate from 31 to 39.6 percent. In late 1992, many
taxpayers, expecting rates to be higher the next year because of Clinton's victory, moved more
income onto 1992's tax return to avoid paying more with the higher rate. Robert Carroll, an
economist at a Washington research organization called the Tax Foundation, estimates that about
$20 billion was shifted and paid at the 31 percent rate rather than the 39.6 percent—meaning
there was about $1.5 billion that the federal government did not collect in revenue.

Something similar could happen this year. "Anyone who has flexibility with income is going to try to
shift their income," says Carroll. An example of flexibility would be a business owner who gives
himself or herself a bonus in December 2010 rather than January 2011.

There's also an incentive to delay tax deductions. For example, state property and income taxes
can be deducted from federal income tax returns. Wallach says he is recommending that clients
hold off on paying those taxes until next year, so that the deductions can be cashed in at the higher
rate.

Some may choose to delay charitable gifts for the same reason—charitable giving is tax
deductible, so some taxpayers may decide to hold off on a gift they would make in 2010 and
instead give a larger amount in 2011. "What we know from history, if the taxes go up, people will
delay their giving," says Nancy Raybin, chair of the Giving Institute, an association of nonprofit
consultants. But Raybin says such delays usually are not significantly damaging to charities
because people will often just push a gift forward a few months—from December to January, for
example. "If there's a 12-month delay, it could be a problem. But if a donor is just delaying one
month, it's not a big problem," she says.

These tax-avoidance strategies will probably be a one-time deal for those who pursue them. A
study by economist Austan Goolsbee, currently a member of the Council of Economic Advisers,
found that the 1993 drop-off in reported income was temporary. Income bounced back in following
years. If tax rates appear to be steady after 2011, accelerating one's income or delaying
deductions is no longer advantageous. But taxpayers will continue to look for ways to reduce their
liability—they just need the time and money to find the loopholes. Wallach says most of his clients
will adjust to higher tax rates with his help. "For the very sophisticated people, there will always be
loopholes," he says, such as deducting travel and entertainment expenses. "None of my clients
pay more in taxes than a schoolteacher." For issues like these Wallach has various websites
including www.taxlibrary.us .

Lance Wallach, National Society of Accountants Speaker of the Year and member of the
AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, financial
and estate planning, and abusive tax shelters.  He writes about 412(i), 419, and captive
insurance plans. He speaks at more than ten conventions annually, writes for over fifty
publications, is quoted regularly in the press and has been featured on television and radio
financial talk shows including NBC, National Pubic Radio's All Things Considered, and others.
Lance has written numerous books including Protecting Clients from Fraud, Incompetence and
Scams published by John Wiley and Sons, Bisk Education's CPA's Guide to Life Insurance and
Federal Estate and Gift Taxation, as well as AICPA best-selling books, including Avoiding
Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does
expert witness testimony and has never lost a case. Contact him at 516.938.5007,
wallachinc@gmail.com or visit www.taxaudit419.com.

The information provided herein is not intended as legal, accounting, financial or any type of
advice for any specific individual or other entity. You should contact an appropriate professional
for any such advice.


"LANCE WALLACH" is the nation's leading expert in these matters and how it all relates to
you and the IRS. Mr. Wallach testifies as an
"expert witness" in cases involving these
plans and his side has
never lost a case. Lance and his team of insurance, legal, and
accounting professionals, as well as former IRS agents, have saved his clients hundreds
of thousands of dollars in anticipated IRS penalties.

Call the
"Tax Resolution Offices" of Lance Wallach now for a FREE 5 minute telephone
consultation. Let us deal with the headaches so you don't have to!

We help clients with:
  • "IRS audit defense"
  • "IRS tax penalties" relating to "419e plans"
  • "412i plans"
  • "employee benefit plans"
  • "corporation income taxes"
  • "listed transactions"
  • abusive "tax shelters"
  • "IRS appeals"
  • "IRS Offer in Compromise"
  • "tax settlements"
  • "benefit plan" reviews
  • "insurance company plan loss recovery"
  • "benefit plan" remediation for profession practices and small business corporations,
  • and "IRS audit defense" representation.

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The IRS Dog's Pack Practices Nationwide

Don't waste any more time chasing your tail!
“abusive tax shelter help” "tax letter" "irs letter" "irs letters" "irs determination letter" 419e 412i 6707a "form 8886" "listed transactions" "abusive tax shelter assistance" "irs penalty
abatement" "expert witness irs" veba "expert witness services" "expert witness irs help" "pension audit" "Grist Mill Trust" Benistar "SADI Trust" "Beta 419" "Millennium Plan" Bisys
"Creative Services Group" "Sterling Benefit Plan" "Compass 419" Niche  "Sea Nine Veba" 419 412i 419e "expert witness insurance" "welfare benefit plans" "419 plan help" "expert
witness irs" “abusive tax shelter help” “irs appeal” “tax resolution services” “insurance expert witnesses” “pension plan audit” “tax preparer penalties” “tax audit defense” “business
tax audit” “tax penalty abatement” “irs tax problems” “circular 230” “retirement tax shelters” “health insurance fraud” “employer insurance fraud” “irs trouble” “unfiled tax returns”
“unfiled taxes” 419 412i "listed transactions" "form 8886" 6707A "tax shelters" "IRS audit defense" "expert witness irs help" "welfare benefit plan help" "419 plan help" "irs penalty
abatement"  "fight the irs" "412i retirement plans" "tax resolution services" "irs problem solvers" "how to avoid irs audit" "abusive tax shelter help"
Call 516 - 938 - 5007
or
email: wallachinc@gmail.com