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The Augusta News-Review February 9,1985 Tax attorney tells taxpayers how to benefit from tax shelters Sheltering taxes has become big business in America. Robert A. Strangler & Company, a well known tax shelter research firm, reports that some of $8 billion was spent in 1983 on tax shelters and that the trend is growing. Tax shelters are the product of special tax preferences and tax breaks san ctioned by Congress to stimulte the nation’s economy and to achieve certain socially desirable goals. For example, a Congressional Budget Office study showed that a sub stantial amount of the funds for low-income housing during the past two decades came from in vestors in real estate tax shelters. These tax shelters have flourished because of a number of speical tax preferences for builders of low income housing. Thus, with the exception of a few “abusive tax shelters”, tax shelters are perfectly legal and, in many cases socially desirable. The controversy that has long surrounded tax shelters is that in the past their use has generally been confined to high income in dividuals and large corporations. However, more and more modest and middle income taxpayers are becoming aware of tax shelters and are using them to reap tremendous tax savings. At the forefront of the movement to educaste middle modest income taxpayers of the advantages of tax shelters is WASHINGTON, D.C.—Racism can no longer be used by Blacks to sanction inaction in addressing Black family and community needs, according to Dr. Douglas Glasgow, Vice President for Washinton Operations for the National Urban League. Glasgow said in 1985 Blacks must move from “notions of philanthropy” or “dependency” to reality of greater self reliance by the year 2000. “We cannot deny much of what has been said about the growing Being Black in America: A Real Picture Remember your first real history lesson. 7 PHOTOGRAPHED BY KEITH HALE An award-winning Black photographer, Mr Hale is currently on staff with the Chicago Sun Times. Over the years his work has appeared in major publications, including EBONY and ESSENCE. The photograph below is of Mr Hale's daughter and her great-grandmother. RNk * A • I 1 F 11 Z qljfc-' '"W •< * aiS.* JawT- ' - *•'••> 'X" >£Sl jjk ..s IE ■teir *• W»nhi aTi ir. * ■F jfa Lb < i w W BHBRx *->• - 1 -T»V . V® LmH Donald Stevenson, a Black attor ney practicing in. Cleveland, Ohio. According to Mr. Stevenson, a former Internal Revenue Service tax lawyer, “Modest and middle income taxpayers can reduce their taxes through the same tax sheltering principles used by high income taxpayers and the large corporations. A tax shelter, in its broadest sense, is nothing more than a combination of tax breaks, deductions, and credits. By putting together a combination of these, you can build yourself a nice little shelter. A tax shelter doesn’t have to be complicated or elaborate to save you money.” Despite increasing numbers of modest and middle income tax payers who are benefiting from tax shelters, millions of taxpayers are still paying more taxes than they are legally required to pay, accor ding to the National Tax Research Institute, a taxpayer advocacy organization based in Cleveland, Ohio. There are two reasons why the average taxpayer pays more taxes than legally required. The first is the complexity of the tax laws. The Tax Code contains over 50,000 dif ferent provisions. Since the first income tax law in 1913 the Tax Code has evolved into a conglomeration of convoluted mumble jumble. The tax laws have become so confusing that even the Congressmen who passed them Blacks must become more self reliant to survive sense of dependency allowed to ferment in some sections of the Black community”, Glasgow told his audience at the Martin Luther King, Jr. Center for Social Change in Atlanta. In a Jan. 12speechhe recalled the advice of the late Dr. King who said, “We must not let the fact that we are victims of in justice lull us into abrogating responsibilities of our own lives. In this period of social change Black must come to see that there is much they can do for themselves about their plight.” Citing statistics that indicate Page 2 don’t understand them fully. Yet hidden in this maze are hundreds of special tax benefits and tax breaks for the modest and middle income taxpayer.. The trick is knowing how and where to find them. There is no section in the Code entitled, “Tax Breaks Especially For the Average Taxpayer-Look Here!” Going to the IRS won’t help. It is not in the business of saving taxpayers money. The average accountant or taxpreparer who does tax work for only four months out of the year is not likely to know about most of these special tax breaks. Unfor tunately, they are too expensive for the average taxpayer. The key to benefitting from these tax breaks is becoming familiar with the fine points of the tax laws. This is not as onerous as it may sound. There are a number of good tax seminars that the tax payer can attend. Many local community colleges offer excellent income tax courses. In addition, there are a number of outstanding tax guides on the market today. They range from very basic so hte tax novice to very complex for the more astute taxpayer. These guides range from $2 to S4O. The time and effort invested in Understanding the tax laws is miniscule compared to the resulting tax savings. high Black unemployment, more Black children are having children, increasing numbers of single patented, females headed and poor families, Glasgow said the socio-economic condition of Blacks and the nation’s poor has worsened in the past four years. “Blacks stand onthe recipe of economic annihiliation. The suf fering of Black and disadvantaged people demands immediate atten tion”. Glasgow challenged the notion put forth by Charles Murray in When Grandma used to sit you down and talk about her life she wasn’t just telling tales. She was following a long line of Black historians who passed their precious know ledge from generation to generation using the most expressive instrument created. The human voice. This knowledge is power. Because when you know where you come from you know who you are. Our grandparents knew this. So did W.E.B. Dubois, Sojourner Truth, Carter G. Woodson and Martin Luther King. They also knew how important it was that this knowledge continue to be handed down. Black History Month is a reminder for us to learn from the past, because it positive ly 'affects the quality of our future. Anheuser-Busch appreciates this fact. We have an ongoing commitment to forging part nerships with Black organizations across the country which are involved in preserving the Black cultural heritage. And we’ve brought Black history into the community through our Great Kings and Queens of Africa art collection. A real picture of being Black in America includes all of us. The future rests on people of all races working together to make our common reality one we can all be proud of. Building a future in partnership with the community. U ANHEUSER-BUSCH COMPANIES Anheuser-Bust h Companies is the parent company <>l Anheuser-Busch, Inc. brewers of Budweiser • Mu helob*. Mxhelob- Light. Budweiser. Light, Natural Light and Busch. beers MISCONCEPTIONS OF THE TAX SYSTEM Another reason why the average taxpayer pays more taxes than legally required is misconceptions about how the tax system works. One common misconception is that the IRS has been given authority to collect taxes. To do this, it must interpret the law. It cannot make law. Thus, a taxpayer has the right to disagree with the IRS and to go to court to settle the dispute. More and more taxpayers are saving taxes by going to court, par ticularly the Tax Court, to set tle disputes with the IRS. The Tax Court has very informal procedures similar to those in a typical Small Claims Court for small tax cases. The taxpayer may represent himself or herself in these procedures. In addition, the taxpayer need not pay the disputed tax upfront before going to court. Many persistent taxpayers representing themselves have been successful in Tax Court. If the tax payer thinks he or she stands a bet ter chance with a sympathetic jury, the taxpayer can go to a US. District Court. However, the tax payer has to pay the disputed tax and sue the government for a refund. Another misconception involves the distinction between “tax evasion,” which is illegal and “tax avoidance,” which is perfectly legal. Here is how Judge Learned “Losing Ground” that the 60’s poverty programs are the cause of the deteriorating Black economic condition. “For the past four years the American public has been led to believe that the social programs of the 60s hurt poor and Black people and had no measurable im pact on improving the conditions of poverty. The social programs of the 60’s achieved exactly what they were developed to achieve”. Glasgow said the social programs never sought to alter economic condition by reviving ADVERTISEMENT FORBIDS Sealed bids from food service vendors will be received by Concerted Services, Inc., Elderly Services Program, until 4:00 p.m. at the time legally prevailing in Waycross, Georgia on February 25, 1985 for the preparation and delivery of noon day meals for the project year July 1, 1985 through June 30, 1986 for the following programs: 1. Nutrition Program for the Elderly 2. Home Delivered Meals Program 3. Adult Day Rehabilitation Program Specifications for the above named programs can be obtained from the Elderly Services Program Director, Concerted Services, Inc., 201 State P.O. Box 1965, Waycross, Georgia 31502, telephone (912) 285-6083. Public Opening of the Sealed Bids will be held at 4:00 p.m. on February 25,1985 at the above address. The right is rseserved to reject any or all bids. ADVERTISEMENT FOR BIDS: Sealed bids for Nutrition Program for the Elderly, providing five (5) day a week meal service, July 1, 1985 through June 30, 1986, will be received until 4 p.m., March 1, 1985 at Northeast Georgia Area Planning and Development Commission, 305 Research Drive, Athens, Georgia 30610. Bid openings will take place at 9 a.m., March 4, 1985 in the NEGAPDC Conference Room. Specifications are available from NEGAPDC’s Area Agency on Aging. Bids from minority owned/operated firms en couraged. ADVERTISEMENT FORBIDS Sealed bids will be accepted by the Middle Flint Area Council on Aging, Inc. in its offices located at 409 Rees Park, Americus, GA 31709, until 2:00 p.m. E.S.T. March 1, 1985 for the provision of prepared meals for the Title 111 Nutrition Program for the Elderly. Detailed food vendor specifications may be obtained from the office of the Middle Flint Area Council on Aging, Inc. 409 Rees Park, Americus, GA ,1709 (912) 924-1739. A public opening of the sealed bids will be held in these offices at 2:00 p.m. E.S.T. March 1, 1985. The Council reserves the right to reject any or all bids. E.O.E. Hand descirbes tax avoidance; Over and over again courts have said there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everyone does so, rich and poor, for nobody owes any public duty to pay any more than the tax laws demand; taxes are enforced exac tions not voluntary contributions. The U.S. Court of Appeals for the Tenth Circuit made it clear in the case of Jones v. Grinnell that “it is a well settled principle that a taxpayer has the legal right to decr ease the amount of what otherwise would be his taxes, or avoid them altogether, by means which the law permits.” There are numerous ways a middle or modest income taxpayer can legally reduce his or her taxes, according to Mr. Stevenson. To illustrate, last year he and his wife earned over SIIO,OOO. Using only a handful of simple legal tax breaks they paid less than S2OOO in taxes. In this new book, “Tax Shelters Are For Everyone,” Mr. Steven son explains hundreds of tax avoidance techniques especially for modest and middle income tax payers. Here are just a few of these techniques. —Convert nondeductible per sonal expenses such as entertain ment, vacation, and education, in to deductible business expenses: —Deduct portions of the cost of and recycling the institutions put in place early to help in the struggle to achieve economic parity. He praised the MLK Center as a sterling example of the impact that Black institutions can have in recording the lives of the Black community. “The survival of Black people will remain in question unless we rebuild Black institutions,” He urged Black professionals to use their expertise to reorder the American economic order. But he cautioned that because Blacks lack the captial base to begin rebuilding Black in- the family car, house, and home computer by establishing a part time business using these assets: —Hire family members; —Shelter income through IRA or other retirement plans; —Take charitable contribution deduction fdr used clothing and furniture, and volunteer servicves contributed to a charitable organization; and —Shelter income through bonds and other tax-free income. Mr. Stevenson warns over zealous taxpayers to watch out for illegal tax shelter schemes. “Sometimes there is a thin line between tax avoidance and tax fraud.” Unfortunately, too many middle and modest income tax payers are getting involved in fraudulent tax schemes. “We are finding that the tax shelters promoters are moving to these middle income groups”, says IRS Commissioner Roscoe Egger. “We have the potential for some real serious personal problems. In dividuals get mesmerized or taken in or whatever by the siren song of a tax shelter promotion that soun ds great”. In his book, “Tax Shelters Are For Everyone,” Mr. Stevenson describes illegal tax shelters to avoid. Tax Shelters Are For Everyone (750 pages) is available from SES Publishing, P.O. Box 14997 Public Square, Cleveland, Ohio 44114 for $9.95 plus $1.95 postage and han dling. stitutions they must reeducate Congress to become the catalyst by providing resources to underclass poor into the nation’s labor force or to create mass entry of the poor into the market economy. Glasgow said Blacks have the capacity to change the Black market dynamics or labor force tradition to ensure the elimination of the economic dependency by the poor. “The social philosophy that rationalized poverty, making it a palatable social condition”, he added. He said while the social programs removed the more “ab ject” facets of poverty and “humanized” it, the programs were not designed to infuse the development of these instruments of social change and human developemnt. We must help government see that rebuilding our institutional capacity is as important to survival of Black America as the U.S. in vestment in Chrysler was impor tant to building the security of hte nation’s economic fabric. He said Black America is not asking the government to maintain its poor nor to invoke policies which were insensitive to its plight. But Glasgow called on Blacks and other Americans who seek a just place in our nation to mobilize at the state and local levels to reorder the opportunitysystems of this nation’s economy. | Support I I UN£f J CHILD-SIZE SS RELIE * fiSfegTHEDORCOL"; PEDIATRIC mM FORMULAS : ■EI i ; 198 S DORSEY LABORATORIES DIVISION OF SANDOZ. 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