(Reuters) – Are high-income Americans gaming Social Security? The Obama administration wants to go after the wealthy for “aggressive” moves to “manipulate” their Social Security claiming decisions, according to the fiscal 2015 budget released by the White House earlier this month.
The administration hasn’t offered much elaboration, but a White House official, speaking on background, confirmed to me that the target is a benefit claiming strategy known as file-and-suspend – a twist on the more straightforward strategy of delayed filing to earn a higher monthly benefit down the road. Although it’s technically available to anyone, the White House thinks the strategy is being used to unfair advantage by high-income seniors and wants to shut it down because of the added benefit cost it imposes on the Social Security program.
It’s been reported that some of these entrepreneurs are doing business in cold, hard cash lugging bags around even to pay taxes. And of course, as volumes continue to rise, there be more money in more bags—a dangerous scenario by any measure. Of course, banks are heavily regulated by the federal government, which still has laws on the books banning not the sale but even the use of marijuana. Taking in and storing money from pot dealers sounds like the textbook definition of a criminal enterprise.
This isn’t just an inconvenient gap between what’s legal in one place and illegal in another. It’s a chasm the size of the Grand Canyon.
However, the feds have finally stepped up. The U.S. government just issued rules that, for the first time, allows banks to legally provide financial services to state-licensed marijuana businesses. There are still strict penalties against certain infractions: distribution to children, trafficking by cartels, shipping to states where marijuana isn’t legal, and so on. Short of those restrictions, however, financial services providers doing business with these businesses “may not” be prosecuted.
Family businesses often have intimate histories and complex cultures that are hard for outsiders to understand. Families today are often more complicated and less traditional than they once were.
Family businesses have several other issues that work against the successful continuation of the business. Fortunately, with focus and planning, most of these can be easily overcome by paying attention to the details.
All states that impose sales taxes also require purchasers to remit use tax on any taxable purchases if sales tax is not paid. Many, if not most, consumers are unaware of the use tax and, therefore, do not comply. It is almost impossible for state taxing authorities to enforce these laws with respect to individual consumers (but businesses often are audited for use tax).
COLUMBUS, Ohio—Two lawsuits disputing the constitutionality of Cleveland’s unique way of taxing visiting professional athletes have been referred to mediation, the Ohio Supreme Court announced Tuesday.
In their lawsuits, former Indianapolis Colts center Jeff Saturday and former Chicago Bears linebacker Hunter Hillenmeyer allege that Cleveland unfairly charges visiting players higher municipal income taxes than other out-of-town workers.
Players on the Denver Broncos and Seattle Seahawks, who will face off in the NFL title game at MetLife Stadium on Sunday, will be subject to a special tax levied on athletes who visit the Garden State. In fact, every state with a professional sports franchise, with the exception of Texas, Tennessee, Florida, Washington and the District of Columbia, imposes the so-called jock tax.
As professional athletes’ salaries continue to escalate, several revenue-strapped states seem to be looking to the athletes for a solution. Tax authorities are tightening enforcement of their existing personal income tax laws, and that has left some pro athletes feeling like they’re in the crosshairs of overzealous auditors. That’s why two NFL players are crying foul . . . and taking one major city to court.
Here’s what happened
Former Indianapolis Colts center Jeff Saturday and former Chicago Bears linebacker Hunter Hillenmeyer have each filed a separate lawsuit against the city of Cleveland, Ohio, accusing tax authorities of applying an unfair method of taxation to their incomes.
This method, they say, results in tax liabilities that are considerably higher than the more common method of calculating what is known as the “jock tax.” In response, Cleveland representatives say the method the city uses is “certainly reasonable.” Changing to the more standard method would cost the city about $1 million per year in tax revenue.
Cleveland needs the money because the admission, sales and liquor taxes weren’t enough from the game?