Improving Economy Brings More Funds to State Coffers

States across the US lost out on billions of dollars in valuable tax revenue over the past few years, but they’re now recouping a bit more as the economy starts picking up.

An improving economy combined with enhanced collection efforts led tax collection to increase by $62 billion for all 50 states in 2011. The US Census Bureau recently released data showing the severe revenue shortages stemming off.

Nine states increased tax collection by more than 10 percent. The highest states: North Dakota at 44 percent and Alaska at 22 percent. California’s tax collection rose 17 percent, edging out New Mexico and Illinois at 15 percent.

Some states, like North Dakota and Wyoming, owe part of their increased tax revenue to pumping out more oil. But other states, like Illinois, owe part of it to raising taxes.

Individual income tax collection rose in all but eight states to a combined total of $259 billion. Sales tax collection rose just over eight percent to a combined $240 billion, and corporate taxes rose by more than nine percent to just over $40 billion total.

But whether they raised oil production or tax rates, states are getting more serious about taxpayers paying up. As state coffers shrink, collection efforts expand to recoup revenue for budgets.

Wealthy taxpayers, corporations and cash-based businesses are typically prime targets for state tax authorities. Those in their cross-hairs can be the subject of an audit and find that they owe back taxes.

A tax attorney can help businesses and individuals from becoming the subject of an abusive tax audit and possibly obtain a favorable resolution deal. And although you may not be able to pump oil out of your backyard to pay a tax bill, with the right help you could be in a much better position to repay it.

Even Top Golden State Politician Can’t Avoid Taxman

Average Joes commonly think that politicians have it easy. They get to work the system, make connections, and avoid certain things, like taxes.

But tell that to former California Lieutenant Governor Abel Maldonado, who now finds himself in the middle of a tussle with the IRS over $470,000 in disputed taxes.

Maldonado’s no stranger to Golden State politics. Former governor Arnold Schwarzenegger tapped him to serve as “LG” after  several years in the state legislature. He’s now running for Congress in California’s Central Coast, and his tax dispute surely won’t help his campaign.

Maldonado’s tax troubles aren’t uncommon for businesses around the country. Citing errors in deduction and depreciation calculations, the IRS is going after extra money owed by his family business that includes a farm and equipment rentals.

Trying to avoid more political fallout, the former state Senator and Assemblyman filed papers to dissolve himself from the family business. He cited the way the companies were legally structured made him individually liable for its taxes.

But it’s not the first time he and his family have run into tax trouble.

Protesting, they paid more than $110,000 in back taxes in 2010. That originated from a dispute over pickup trucks and whether they were for business or personal use. The IRS even put a lien on Maldonado’s 6,000-acre family farm in Santa Barbara County.

But if there’s any less for regular taxpayers, it’s that even politicians can run into trouble with the IRS. And if the IRS puts liens on a politician’s business, imagine what they can do to the rest of us without friends and connections in the Capitol.

Whether it’s your business or you as a taxpayer who owes a back tax debt to the IRS, hiring a tax attorney or seasoned tax professional will help you reach an outcome that’s fair, and can sometimes save you thousands off your tax bill. That’s something a few select public officials could learn from.

Highly-Sought NFL Quarterback Pays Less in Centennial State

In one of 2012’s biggest sports deals, star NFL quarterback Peyton Manning signed a $96 million, five-year deal with the Denver Broncos. Released by the Indianapolis Colts to free up some capital, Manning was courted and sought by multiple teams.

One of those teams was the San Francisco 49ers, and when Super Bowl-winning quarterback Eli Manning’s older brother looked took a pass on the team from Northern California, anti-tax activists sought to turn his football deal into political football.

Activists at the California Taxpayers Association are using Peyton Manning’s deal to highlight California’s tax rates and highlight Gov. Jerry Brown’s proposed tax measure to increase taxes on the wealthy.

California’s highest earners could send 13.3 percent of their income to Sacramento if Brown’s measure passes (the top rate currently stands at 10.3 percent). Colorado’s top tax rate stands at much smaller 4.63 percent.

Whether the tax rates played a role in Manning’s decision isn’t known, but the CTA estimated that without endorsement or other income he’d pay only $4 million of his $96 million in state income tax playing for the Broncos.

If he became a 49er, he’d pay either $8.9 million or $11.5 million in state income tax, depending on whether voters give Gov. Brown’s proposed tax measure the nod.

No matter which team he ended up playing for, whoever signed Manning was set to take on a big risk, but with a big reward. The 37-year old star quarterback missed the entire 2011 season after having his third neck surgery in less than two years.

But Manning will reap much reward playing in Colorado. The state is ranked the 39^th lowest tax burdened state in the country, according to the Tax Foundation. He would have ended up with even more money playing for the Miami Dolphins. Florida has no state income tax.

You may not be a star quarterback, but the IRS could treat you like one with the right representation. Finding yourself in the gridiron with a team of IRS agents isn’t fun, but hiring a tax attorney or tax professional will make it more likely that you’ll score a couple financial touchdowns of your own, which is a tax break everyone could

Number of State’s Upper Earners Drop Sharply

They call California the Golden State, but some of the richest Californians are heading for a place less golden.

State officials released a new report on taxpayers in California and the results don’t look good. The number of Californians earning more than $500,000 declined dramatically from 2007 to 2009 as the economy stalled, leaving fewer wealthy to tax in a state that focuses more and more on taxing them.

In the 2009 tax year, 98,610 Californians had an adjusted gross income of $500,000 or more, down roughly a third from just more than 146,000 in 2007. The 2009 figure represents just over a half-percent of the 14.6 million returns filed to the state’s Franchise Tax Board in 2009. Altogether, they paid 32 percent of income taxes.

It’s likely bad news for Gov. Jerry Brown, who’s pitching a tax plan to voters that targets the state’s wealthiest, along with an increase in the sales tax.

Whether the report is due to an exodus of the wealthy is hard to determine, but 2009 saw a drop in incomes. California’s top individual tax rate of 10.3 percent is the third-highest in the nation behind Hawaii and Oregon.

If you’re in the “1 percent” and are seeing your taxes rise, not paying them isn’t an option. The IRS and State authorities always keeps tabs on the big fish, so if you owe back tax debt make sure to hire a tax attorney to help you avoid a wage garnishment or bank levy and have a ‘golden’ outcome.

Major Tax Implications to Arise

With 800 million users across the world, Facebook is perhaps one of the most successful websites the Internet has ever seen.

And when the Menlo Park-based company goes public, the site borne in a dorm room is set to have major tax implications after its initial public offering (IPO) is released.

For starters, founder Mark Zuckerberg’s taxes are set to rise to $1.5 billion in May after the company’s shares begin their public trading. Zuckerberg was granted stock options in 2005 as part of his compensation, and once they’re exercised after the IPO he’ll get to buy them for the 2005 price. The difference between that and the post-IPO price is considered taxable income and is likely to be worth billions.

Sacramento politicians have also gotten into the mix. With a ballpark figure of $500 million in state tax revenue from Facebook’s IPO, Republicans in the legislature used the expected windfall as an excuse to defriend the governor’s proposal to raise some taxes.

It’s no surprise Facebook’s IPO has become political football. The popular website sees major activity, with about half its users logging on every day. That’s a lot of potential eyeballs viewing its internet ads, which generate a lot of income and a lot of taxes to pay.

After Facebooks shares start selling on the stock market, more people in Silicon Valley will rise to the top tax bracket. But you don’t have to be a Silicon Valley millionaire to owe back tax debt to the IRS.

The IRS’ collection action is the extreme opposite of a friend request. If you owe back tax debt, hiring a tax attorney can increase your chances of avoiding a wage garnishment or tax lien and obtaining a tax settlement that works in your favor.