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Debt Advice May Be Needed For Tax Code Victims With Underpaid Tax

18th February 2011
By Wilmer Irwin in Taxes
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From the Items List, press Control-N. Select Sales Tax Item. Enter a name for the sales tax - something simple is fine, something that makes sense to you. Enter a more detailed description on the next line. Enter the tax rate, and choose the state reporting agency where the tax will be remitted.

Yah, that's what I thought, as I read some of the Internet claims of why Federal Income Tax is supposedly illegal originating from a war tax that was never taken back even after the war ended. Seems to me that many folks are being thrown in jail for this line of reasoning? I do not agree with the stance that Federal Income Tax is illegal, but like most tax payer's I wish it didn't exist, or was lowered substantially.

Finance Minister released the draft of Direct Tax Code (DTC) for public discussions in August 2009. CBDT (Central Board of Direct Taxes) released the Revised DTC discussion paper in June 2010 for inviting further comments on the modified proposals in DTC. Direct Taxes Code 2009 expected to become effective from 1 April 2011, shall replace India's antiquated Income Tax Act, 1961, which is a major step in the direction of much awaited tax reforms in India and which aims to simplify the tax regime radically.

Many folks are upset because each year the tax codes get more and more complicated. This is a huge burden on small businesses, which employ 75% of our workforce and are the life blood of our economy. How did the tax code get so complicated that it takes a very current expert to even figure it all out? And what is the value of such tax code anyway.

The first thing to do is not to panic. I know that's easy to say but if you receive a tax bill and you feel it is either wrong or it will leave you in severe financial hardship you can challenge it. One way to do this is if you think that the HMRC should have already collected the tax, as it had all the required information, you can challenge the demand using 'Extra Statutory Concession' (ESC A19). The circumstances where this can be used are when having provided all information and not knowing of any underpayment you are now receiving a demand 12 months or more after the end of the tax year concerned.

Your Business Commute requires hopping over the mountains frequently? How about a plane to save the miles on the family car, and having your associates meet you at the airport? The airplane is deductible. Take flight lessons or hire a pilot. His wages become deductible and your time is freed up to work and earn more during the flight.

Following the furore and political crisis that followed the elimination of the 10p tax band where millions of employees lost out, the latest action to reduce the impact is to increase the personal tax allowance by 600, for example the emergency tax code of 543L will change to 603L changing allowances from 5,435 to 6,035.

New Direct Tax code proposes safe harbor rules in determination of arm length price. Adoption of Safe Harbour rules, absolves the taxpayers from the burden of a detailed benchmarking analysis for transfer pricing while retaining the onus to maintain documentation for intra-group transactions. It will be interesting to observe the likely form in which the proposed rules would be introduced in India as far as the scope, applicability, extent, documentation and related compliance issues are concerned. Introduction of Safe Harbour Rules is a welcome step, which by provides for certainty, and will help resolve the avoidable disputes between the taxpayer and the tax authorities.

SO WHATS THE CATCH? Only that your newly acquired vehicle will need to be used more than 50% of the time for business purposes. Heres a little more background so youll understand how the Section 179 break works. Ill walk you through steps to complete this process and hopefully reduce your tax liability for THIS YEAR.
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