Lesson from the Credit Suisse Fine

       Romeo Cerutti is a Swiss and Italian citizen who once practiced in California. Seems that when poor Credit Suisse got news that federal prosecutors were hot on their trail for their role in assisting Americans to evade US taxation in Switzerland they decided to send their general counsel to meet with the land sharks at the Justice Department. I am sure that Mr. Cerutti is a well-trained attorney and extremely effective as general counsel but going to Washington to meet with the Justice Department is not for the uninitiated. The New York Times reported quoting him as asking prosecutors to:  “Please don't do this.” Okay, I will admit that when the cell phone law first past I was an easy victim. I was driving. The phone rang. It was a client. I answered it. The county policemen parked at the roadside took note and then took chase. Lights flashing, the whole shebang. I finished my call as the officer sashayed up to my window. Certain that I would only receive a warning I inquired about the chief of the county police with whom I had gone to high school. The officer replied that he did in fact know him and that he was doing well. I felt more comfortable. But I did notice that he began writing in his ticket book. It's then that I recalled using the Cerutti defense: “Ah come on, please don't do this”. The ticket at the time was $130 I paid it promptly and billed the client for the telephone call. Having represented a number of clients charged with tax fraud and tax evasion  before both the Internal Revenue Service and Justice Department I would have told Mr. Cerutti, the “please don't do this defense” does not work. Credit Suisse was forced to plead guilty to one count of conspiring to aid tax evasion. It also admitted that its bankers enabled clients to easily evade the American taxes over many years. Eric Holder, Jr., the United States attorney gloating somewhat, said that “When a bank engages in misconduct this brazen it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as happened here”. The bank has agreed to pay fines of $2.6 billion for their role. At the moment, the bank has not been required to turn over the names of the unfortunate American account holders. Practitioners would be wise to advise clients that it may in fact be time to come clean and participate in the limited amnesty program the IRS now provides. For background on that program See a fine article on the subject: T. David and S Novak “The Undisclosed Foreign Bank Account, The Practical Tax Lawyer, ALI-CLE, April 2014.

The Key to Happiness

People are spending their lives chasing success often at any price. When all is said and done and the riches are amassed, they sit back and wonder why they are still unhappy. This is not a new phenomenon. Even our beloved constitution has got it wrong. " Pursuit of Happiness" sounds like chasing it is what we Americans are all about in 1790 as today. So where is this elusive happiness to be found.?The answer is in your own behavior and the activities you choose to undertake. Much has been written on the subject but people seem to refuse to believe that their happiness is within their own control. So what to do? Consider these happiness generators:

+      Cultivate Optimism

+     Express Gratitude

+      Avoid Over Thinking and Social Comparison

+      Practice Acts of Kindness

+      Nurture Social Relationships

+      Learn to Cope

+       Learn to Forgive

+       Increase Flow Experiences

+     Savor Life’s Joys

+      Commit to Your Goals

+      Take Care of Your Mind

+      Take Care of Your Body

A Poem in Defense of Lawyers

A Poem in Defense of Lawyers

Everyone loves to hate that lawyer man,

A visit to him can cost a couple grand;

But when it hits the proverbial fan,

By your side who will stand?

“It's just for the money" makes us so blue,

Lawyers actually care what happens to you;

Ask yourself when something occurs that's truly bad,

Do you call your lawyer or your mom and dad?

“They have no feelings, hearts of stone,

Insensitive, tough is how they've grown"

Not a word of this is true,

But how else could we deal with you?

 

We lawyers hear all the dirt,

About the pain and how you hurt;

We judge not how you made your life a mess,

We argue and sue to get redress.

Say what you want ifs and buts,

But lawyers have often shown their guts;

Remember, it was lawyers too,

Who helped create the ole red, white and blue.

So when next you pray on bended knee,

Thank the Lord we will work for thee;

Perhaps another fifteen round bout,

Trying hard to bail you out.

As for me, I'm still proud,

To be a member of this crowd;

And when I go to my eternal rest,

I’d like to think I had done my best.

From "Here's Rhyme In Your Eye"  a collection of poems by Ted David

Tax Advantages of Being a Grandparent

  The number of grandkids living with their grandparents has increased over 50% in the last 10 years. According to the U.S. Census this amounts to about 7 million people. Should you find yourself in such a position you will be comforted to know that there are some tax advantages. These include: the filing status of head of household, which is more economical than single status; being able to claim the exemption for your grandchild and qualifying for the earned income credit. There are also advantages with regard to paying educational expenses, and of course of medical and dental costs. In most cases, in order to accrue these tax benefits your grandchild must be under 18 years old. The IRS website has helpful guidance.

The New "myRA" Savings account

As America ages the concern for adequate retirement savings provided my taxpayers themselves is an important concept.In his State of the Union address, the president talked about creating a new retirement savings vehicle called a “myRA”. This new savings idea is designed to be a simple and affordable “starter” savings account to help low and moderate income taxpayers save for retirement. The president through executive action has directed the Treasury Department to create this retirement savings vehicle. Approximately half of all workers and 75% of part-time workers are not included in employer sponsored retirement plans. The myRA will be available to these employees and is intended to help taxpayers save for retirement. The principal protection of these plans is that the account balance will never go down as such accounts will be backed by the US government similar to savings bonds. There will be no fees associated with contributions and tax-free withdrawals will be permitted at any time. These accounts are to be portable and taxpayers will have the option of rolling them over into private sector retirement accounts. The account will earn interest at the same variable interest rate that federal employees receive through the Thrift Savings Plan(TSP) Government securities investment fund. Taxpayers can start such an account with an initial investment as low as $25 and contributions as low as five dollars can be made through automatic payroll deductions. Participants can save up to $15,000 in their myRA account before transferring the balance to a private sector IRA. These accounts will represent little or no cost to employers since employers do not administer nor contribute to the accounts. A my RA pilot program will begin later this year and will be available nationwide in 2015.

Getting to Success

Success is a destination that most anyone can reach. It's not on any screen and no app yet will get you there. After 40 years of practicing law and 32 years teaching in the University and studying the subject from many angles I here present a road map to actually getting to success:

A positive attitude is essential; Are you a pessimist?

A positive attitude can be learned. (See: Learned Optimism-Seligman)

Set specific goals; use posted notes; create positive affirmations; recite them daily

Watch what you feed your brain; news programs are problem based not solution based.

Obtain self help books and tapes; listen to them in your car; admit the problem is you

Culture a sense of humor

Watch who you associate with; who are your real friends?

Create a "salon"- Hang out with smart people

Write, plan and learn. Keep a journal; Develop your creativity

Do what you love one hour a day for a year; you will be amazed at the results.

Most college courses do not train for success; Seek out those that do! Demand that they be taught!

Take personal control and responsibility for your own success.

Spend 30 minutes a day learning new things

The reality is, most people do not really want to do the work to succeed

IRS Dirty Dozen Tax Scams: #1 Identity Theft

Now that the 2013 filing season has officially begun the IRS has recently published its now infamous “Dirty Dozen” tax scams. An accountant friend of mine was concerned for an official looking correspondence received by a client purportedly from the Internal Revenue Service. I will admit that the fraud in preparing the document had been well-planned and executed. Nonetheless, closer scrutiny of the language and threats used made it crystal clear that it was one of the tax scams the IRS is concerned about. This year's list includes the most important scam development in recent years: Identity Theft. This occurs when someone uses personal information as such as a client’s name, social security number or other identifying information. This fraudulently obtained information is then used to file a tax return and claim a refund. Honest taxpayers often do not discover this problem until they go to file their own valid tax returns. IRS has included on its website entire sections devoted to the problem including a YouTube video. The website also provides information on how to contact the IRS identity protection specialized unit. Along with identity theft is the use of telephone scams. Preying often on elderly taxpayers purported IRS collection agents threaten immediate levy and seizure action on taxpayers bank accounts if payment of an outstanding tax liability is not made immediately by credit card. In a ridiculous attempt to scare people into action and payment these telephone scams often include a threat to revoke the taxpayer’s drivers license. In many cases follow-up calls are made by what appears to be local police officers inquiring about the tax debt and driver information. Return call phone numbers very similar to the real thing are provided with tax scammers ready to answer at the other end. Taxpayers may also receive fake e-mails directing them to a fraudulent though convincing IRS website where valuable personal information is requested. Also included in the list is outrageous claims of free money from tax return preparers. Often the earned income credit is the tool used. Taxpayers should be cautioned that they remain responsible for deductions and credits claimed on their own tax returns even though prepared by what appears to be a legitimate tax return preparer. Of the other dirty dozen, many on the list for several years are: Hiding income offshore, impersonation of charitable organizations, false income expenses or exemptions, promoters of frivolous tax scheme arguments, falsely claiming zero wages or using false forms 1099, abusive tax structures and misuse of trusts.