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Shakira Tax Troubles: Residence vs Domicile

November 21, 2023 by admin

Tuesday, November 21, 2023 – I recently wrote about the residency vs domicile question for Illinois residents moving to Florida. These taxing authorities do not acquiesce to taxpayers’ stated residency. They do not want to let the tax dollars go to any other jurisdiction. If you want to go to a low-tax State from a high-tax state – be prepared for the State to object.

In that vein: Pop superstar Shakira has avoided potential imprisonment by striking a last-minute deal on the opening day of her tax fraud trial in Barcelona. After nearly five years of maintaining her innocence, she admitted to six counts of failing to pay 14.5 million euros ($15.8 million) in Spanish taxes between 2012 and 2014. The trial, anticipated to last weeks with over 100 witnesses, ended within eight minutes.

Shakira agreed to a suspended three-year sentence and a 7.3 million euro ($8 million) fine, along with unpaid taxes and interest. A guilty verdict for tax fraud is now on her legal record, impacting another ongoing tax case.

The case revolved around her residence during 2012-14, with prosecutors arguing she spent sufficient time in Spain to warrant paying taxes on her global income, even though her official residence was in the Bahamas, where taxes are lower. Spain has pursued high-profile tax evasion cases. And will pursue more, I’m sure.

The Spanish Government alleged fraud – and threatened to imprison Shakira. Even if she believed she was innocent, it’s hard to face jail time if you lose. Innocent people go to jail all the time.

Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649

8 Step Guide To Incorporating Your Business

November 3, 2023 by admin

Friday, November 3, 2023 – Here at Opem Tax Advocates, Inc. we help lots of business owners transition their sole proprietorship into real corporations. The dream of guiding your own company toward success begins with a solid foundation, which is rooted in the systematic process of incorporation. In this column, we’ll review the 8 steps of incorporating a business.

Pick a Name: Your Business Identity

Your business name is more than just a label; it’s an essential aspect of your brand identity. When selecting a name, consider its relevance to your business, ease of recall for potential customers, and its marketing potential. Ensure it’s unique, and not overly similar to existing business names, to carve out your own niche in the market.

Search State Database: Verifying Name Availability

Once you’ve chosen a prospective business name, the next step involves verifying its availability. Most states provide an online database where you can conduct a name search to ensure no other entity is operating under the same or a highly similar name. The aim is to avoid legal disputes and ensure that your business name is distinctly your own.

Complete Articles of Incorporation: Establishing the Legal Framework

Drafting and filing the Articles of Incorporation with the relevant state authority solidifies your business’s legal foundation. This document generally encompasses essential information like your business name, purpose, duration, stock details, and information about the incorporators and registered office. Ensure accuracy and thoroughness to prevent potential legal complications down the road.

Name a Registered Agent: Your Legal Liaison

A registered agent acts as your corporation’s official point of contact, receiving legal papers and government notifications on your behalf. Choose a reliable individual or service with a physical address in the state of incorporation and who is available during standard business hours to manage such important documents.

Pay the Fee: Investing in Your Entity

There’s a requisite fee associated with filing your Articles of Incorporation, which varies by state. Make certain to review your state’s specific fee structure and ensure timely payment to avoid any unnecessary delays or complications in the incorporation process. Remember, filing fees are required yearly. In Illinois, the filing fee is $75.00 minimum.

Obtain an Employer Identification Number (EIN): Your Tax ID

Securing an EIN from the Internal Revenue Service (IRS) is crucial for tax purposes and is typically required to open a bank account under your business name. This unique number identifies your business in the federal tax system and can typically be obtained swiftly online. It acts much like your social security number.

Elect Subchapter S Designation: Navigating Tax Implications

If you choose to opt for Subchapter S designation (S-Corp), ensure to file Form 2553 with the IRS. This election allows corporations to bypass federal income tax, with profits and losses directly passed through to the shareholders. Ensure compliance with all requirements, and consider seeking advice from a legal professional to navigate the complex tax implications.

Open a Business Bank Account: Securing Your Financial Foundation

With your Employer Identification Number (EIN) in hand, the next pivotal step is to establish a business bank account. This is not merely a step towards financial organization but also a crucial move to ensure the separation of your personal and business finances – a distinction that is vital for legal and tax purposes.

Continuing your business by incorporating need not be overwhelming. By systematically navigating through these steps, you fortify your business’s legal and operational foundation, paving the way for a stable and successful future. Good Luck!

Moving to Florida From Illinois For Tax Reasons? Better Understand Domicile vs. Residency

November 2, 2023 by admin

Wednesday, November 1, 2023, “Domicile” and “residency” are terms that are often used in legal, tax, and personal identification contexts, and they can have different meanings based on the jurisdiction or the specific situation in which they are used. However, in a general sense, here’s how the two terms differ:
Domicile:

Definition: Domicile refers to the place where an individual has their permanent home and to which they have the intention of returning, even if they are currently living elsewhere. It’s about long-term or permanent attachment to a location.

Intention: A person can only have one domicile at a time, and changing one’s domicile often requires a clear demonstration of intent to abandon the old domicile and establish a new one. This might involve actions like buying a home, establishing social and economic ties, or registering to vote in the new location.
Legal Implications: Domicile can affect issues like jurisdiction for legal actions, marital rights, inheritance, and certain tax obligations. For example, in many jurisdictions, your domicile can impact where your will is probated or how your estate is taxed.

Residency:

Definition: Residency refers to the place where an individual currently lives, even if it’s temporary. Unlike domicile, an individual can have multiple residences in a year.
Duration: Residency can be established more easily than domicile and might be based on a certain minimum duration of living in a place or other criteria.

Legal Implications: Residency can influence where you pay state or local taxes, where you can vote, and where you can claim benefits like in-state tuition at universities. Some places have specific criteria to determine residency for tax purposes, which might differ from the criteria used for other purposes.

It’s important to note that both domicile and residency can have specific legal definitions and criteria that vary by country, state, or jurisdiction. Therefore, when addressing issues related to either term, it’s essential to understand the specific rules and definitions that apply to the relevant jurisdiction.

We put together a checklist of actions you can take to change your domicile. The Illinois Department of Revenue is often aggressive in fighting the transfer of Domicile from Illinois to another state. The checklist is a non-exhaustive list. Conceivably, you can check every box and still be challenged on Domicile. Illinois wants your tax money and is willing to fight to get it. If you would like a checklist, send me an email request. sleahy@it-lawyer.com.

The Trifecta of Trouble: Top Three Reasons Not to Hire Your Accountant For Your Audit

October 10, 2023 by admin

Tuesday, October 10, 2023 – No one likes letters from the IRS – especially when the letter signals an audit! When the alarm bells of a tax audit ring, panic can ensue, and the immediate reaction is to pick up the phone and call: your accountant. Your accountant may have a deep understanding of your financial situation, but think twice before sending them out to represent you. Here are Three reasons hiring your accountant is a bad idea.

Lack of Legal Privilege
Unlike attorneys, there isn’t any accountant/client privilege. That means your accountant may be required to expose sensitive information during an audit. Attorneys are shielded by the Attorney-Client Privilege. This privilege provides a secure environment for you to disclose all necessary information without fear that it might be used against you.

Unfortunately, conversations and correspondences with accountants may be scrutinized in an audit. So, be careful, your accountant may be required to expose your financial dilemmas and strategies.

Training – Law, Negotiation, and Tactics
Your accountant may be a financial wizard but probably doesn’t have the training as an advocate, or negotiator. Remember, IRS Collections and examinations are a whole different area of the tax code than accounting. Tax attorneys possess a deep understanding of tax codes, precedent, and legal argumentation that can make all the difference in challenging the IRS’s claims and presenting a strong defense.
Preventing Conflicts of Interest
Remember, if your accountant was responsible for preparing your returns, they might inadvertently become part of the audit scrutiny. Their work, advice, and any errors or misjudgments they may have made will be under the microscope, potentially placing them in a position to defend their professional competency. If that happens, they may throw you under the bus.

When it comes to audits, don’t play games, hire a professional. You need an attorney with precise knowledge of tax law, negotiation capabilities, and a detached perspective. These qualities can pave the way for a more strategically sound, confidential, and strong defense against audit claims.

In the taxing times of audits (pun intended), remember that the right representative can be the linchpin in safeguarding your financial health against the scrutinizing eyes of the IRS.

If you want more tips, tricks, and info about the IRS go to OpemTax.com – OPEM tax.com and sign up for our Freedom Fighters newsletter. It’s FREE.

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Shakira Tax Troubles: Residence vs Domicile

8 Step Guide To Incorporating Your Business

Moving to Florida From Illinois For Tax Reasons? Better Understand Domicile vs. Residency

The Trifecta of Trouble: Top Three Reasons Not to Hire Your Accountant For Your Audit

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