Tuesday, January 21, 2014

IRS Eyes New Tax Filing Approach for 2014

Courtesy Invest-Smart.org

By Joe Garza

Just like other laws, tax laws change, get more complicated, and change to benefit (and disappoint) different taxpayers. In the coming year, you will most likely to see a few adjustments to income tax, including adjustments for inflation, new regulations for same-sex partners, and some punishments for {not paying for health insurance either through a private provider, or the federal government. One defining characteristic of the '14 legislationtax season may be its several-week delay, courtesy of the U.S. government's shutdown back in 2013. But, this year will also mark the beginning of a completely different type of national tax change — not only the amount we pay, but in the way we file.

2014's New Federal IRS Tax Guide

Not long ago, the Internal Revenue Service announced the release of a “newly revised comprehensive tax guide,” or, as some people call it, Publication 17: a resource that aims to assist people file their taxes this year. This guide touts greater interactivity and tips for “tax-saving opportunities.” Among the inclusions made to the new IRS guide is educational material on the American Opportunity Tax Credit which affects college students and their guardians, and also Earned Income Tax Credit and Child Tax Credit.

Distributed by the IRS since the 1940’s, the new release of the tax guide will still contain info on how to report income, capital gains and losses, IRA’s (Individual Retirement Accounts) and fundamental educational material. However, at nearly 300 pages, it's highly unlikely that many taxpayers will have the time to use the publication in its entirety. Considering the growing complexity of Federal income tax, it comes as no surprise that the IRS posts almost daily updates to forms and instructions on their website.

Less Face-to-Face Interactivity

The new IRS policy demonstrates a huge transition away from face-to-face interaction, with many more online resources to help people get through their taxes.

Tighter IRS budgets — courtesy of sequestration 2013 — mean there are far fewer resources available for in-person tax submission help. In lieu of a human being, those filing taxes will be directed to a multitude of online resources, including over 13,000 official partnering (volunteer) sites, and resources on IRS.gov - like the IRS 'Free File' program. Even very inquiries are now handled online or through one of the IRS' various hotlines. With such online assimilation becoming so ubiquitous, it makes sense that a branch of the government would begin to offer more of its material in the form of online material.

A Shift Toward Web Accessibility

While the lack of walk-in help will probably be frustrating for some people, some will be relieved to know they can take care of more tax-related problems online than ever. Now, taxpayers can view and authenticate their tax forms online. The IRS will also continue to give Employee Identification Numbers via its website. To avoid handling taxpayer inquiries concerning the status of income tax refunds over the phone, the IRS will now handle all related questions online as well.

Thursday, January 2, 2014

Attorney Joe Garza Looks at Supreme Court Case Invilving Halliburton Co.

Leading Oilfield Services conglomerate Halliburton just requested that the US Supreme Court reconsider the 1988 case, Erica P. John Fund v. Halliburton - To clarify, the Erica P. John Fund (the “Fund”) is among the oil giant's shareholders. The EPJ years-old litigation with Halliburton is based on the accusation that Halliburton "fudged" some very important information involving Halliburton's shareholder activities, like overstating income and reducing perceived liabilities. Because of this, EPJ has attempted to have its suit against the defense recognized as a class action, a form of lawsuit which is enacted on behalf of a particular group who have suffered from similar injuries. A class action lawsuit allows the Fund to represent all shareholders of Halliburton stock, effectively increasing the dollars on the table in the suit.

NY Times recently included a relevant analysis of the case the Court will have to decide in the case, should it agree to hear the case. The Times publication illustrates how many securities fraud lawsuits revolve around the concept of “reliance”, meaning that the litigation - or in EPJ's case, the shareholders acted in reliance of the organization's (potentially) illegal activities. The Supreme Court has a vast interpretations of "reliance". To show reliance, an involved shareholder doesn't need to read a prospectus and the fraudulent statements it contains. Rather, courts consider any allegedly criminal statements made by a corporation (and accepted by the public) that has any bearing on the financial value of the business and is thrown into the total price of the the corporation's securities. The court justifies this view on the ground that markets will price securities using all available information, an idea that is largely accepted in the field of finance. Still, although most investors do not typically crucially review financial records and prospectuses released by the companies in which they invest; plaintiffs involved with the suite can still show “reliance” as long as they can prove that they have acquired securities of the company. As more and more shareholders are capable of proving reliance, class action suits become easier to take to court.

In defense's request to the Supreme Court to review the case, Halliburton has hinted that it will contest that the court’s traditional interpretation of reliance is far too loose. Halliburton will say that the Supreme Court should interpret reliance as requiring shareholders to do more than simply purchase securities; for example, they could require plaintiffs in the CAL to review a financial statement or fraudulent prospectus. This kind of a contention will likely see some enthusiastic backing from the greater business community.

As the Times article points out, '12 four justices in an unrelated case suggested that they would be willing to overrule the former, nebulous meaning of “reliance.” If the Court agrees to hear Halliburton’s case, the obvious question will be about whether the company can muster a necessary fifth vote from the Court.

More by Attorney Joe Garza