Tax Time Getting Near

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The time that many people fear is soon approaching. Due to the bad economy last year, many people have not been able to put away enough money to pay their taxes this year, and so there is a scramble to find enough money in time.

 

Now would be a good time for the government to be a little more forgiving, when people are suffering from financial hardships. But the truth is far from that. In various states and provinces, the tax agencies are hiring additional collection agencies and extra muscle. New tax legislation allows for ruthlessly collecting their pound of flesh. The expression, paying an arm and a leg could become more than just an expression.

Of course the people who deserve to pay more taxes are unlikely to be affected by the new tax legislation. And by that I mean the CEOs of the investment banks, insurance and other financial institutions. They have probably moved all their ill-gotten bonuses out of the country by now and covered their tracks. You can no more trust they will pay their fair share of taxes than you can get them to stop flying their corporate jets while normal people are getting their cars repossessed.

Frustrated over taxesFor a lot of employees, their employers normally collect taxes at source, and remit them to the government. Where that is the case, the employees are usually ok. With a few extra deductions, they can end up getting some money back, which quickly goes to pay back the credit cards. Some employers however, have been slow in remitting taxes last year due to cash flow issues, or have gone bankrupt last year. If you worked for such a company, the government may come after you for the missing income tax.

For the self employed, it helps if you have made some payments throughout the year. It also helps to keep up to date on the various qualifying deductions and tax exemptions, since due to the recent changes in legislation, they may no longer apply. Although our sources say that they cannot legally back date any changes in qualifying tax deductions or exemptions, it would help if you contact a suitable tax attorney to see where you stand.

Another alarming trend has been the move away from paper filing to electronic or e-filing of tax returns. This has freed up a lot of agency employees and allowed the redirection of staffing levels to additional auditors and collections staff. A number of states have contracted with the mafia and other various underworld organizations for training in advanced collection techniques.

Tax Fraud / EvasionIn preparation for the coming wave of tax related prosecutions, the federal government has set up a number of makeshift detention centers, to hold the overflow of convicted tax offenders. This was originally planned for use in controlling the H1N1 outbreak, by detaining the infected, but most of them have either died or returned home now.