The 1980 film “Airplane!” Showed a disturbed former fighter pilot, Ted Striker, who was forced to get into the cockpit to land an airliner.
This was a comedic version of older films that asked panicked passengers if anyone on board knew how to land the plane.
A frequent theatrical plea for expertise: “Is there a doctor in the house?” Was always met with the handy doc who took care of the emergency.
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Most people have no idea how to land an airliner or attend to the needs of a patient suffering from a medical emergency far from a healthcare facility. But I think we can all see the importance of the problem.
Experts clearly know more about their subject areas than a layperson. This applies to plumbers, cable TV service providers, vehicle service technicians and tax advisors. This does not mean that the layman cannot sense that something is wrong.
Tax law provides that “gross income” includes income from any source. In the late 1970s, the IRS became increasingly concerned that employers were developing their own “rules” for taxing fringe benefits.
Airlines that offer free or discounted travel, hotels that offer free or discounted rooms, retail stores that offer discounts, and others decide for themselves whether or to what extent a benefit for the beneficiary employee was taxable income.
In 1984, Congress decided to clean up the taxation of fringe benefits. First, the law made it clear that any benefit was taxable unless the law said it wasn’t. Second, the law expanded the list of items that are legally excluded from income.
The purpose of the 1984 amendments was to make it clear to tax advisors what taxable income is. Some confusion remains, but for smaller dollar amounts.
How many free meals can be offered before the employer is required to report income? How significant can a Christmas present be before it becomes taxable? Limited confusion remains for such items.
I have no personal knowledge of what the Trump Organization did with its fringe benefit program.
If the facts reported in a recent indictment are true, then tax law has been violated. Not maybe. Not: “Well, tax laws are too complicated.”
This GP can later say that the patient has suffered ST segment elevation myocardial infarction. The common people just saw that something was wrong with their heart.
The tax advisor could throw around “chunks of code” explaining the taxation of benefits. Ordinary people should at least notice something strange about the organization of society.
A man lies unconscious on the floor of a restaurant. A passenger notices that the aircraft’s engine is burning. Do we need to understand the cause of either of the two emergencies to know that there is a problem?
Many say this is a political hit. If the facts in the indictment are true, that conclusion applies only when the apparent fraud is too little to be prosecuted. A media lightning bolt claims that it involves the use of a company car.
It is not. There are two company cars. A luxury apartment with furniture and paid utilities. Private school lessons. Income paid as an independent contractor to support retirement savings. Hiding income from city and state income tax.
Let’s say you get a great job and pay $ 300,000 a year. The employer provides cars for you and your spouse. You pay for your mortgage, taxes, insurance, and utilities. For your children’s private school lessons.
A schedule is drawn up showing that the various personal expenses total $ 123,000. The employer “reduces” your salary to US $ 177,000. Your W-2 form shows a wage of $ 177,000. You pay $ 177,000 in taxes. The employer deducts $ 300,000.
You are not a tax expert. But do you see an engine on fire? An unconscious body on the floor? Should the authorities consider the problem too small to provoke a response?
There is a history of tax evasion against known people. Leona Helmsley. Wesley Snipes. Yes, even Jersey Shore’s “The Situation”. No political hits. Just an efficient way to scare the common people.
You can agree or disagree with my opinion on this. Just not because the tax question is too complicated. When is a body or fire too small to react to?
James R. Hamill is the Director of Tax Practice at Reynolds, Hix & Co. in Albuquerque. He can be reached at [email protected].