Obamacare Travesty In Tax Court
The executive summary of that nightmare is that the McGuires indicated that they were not responsible for a shared responsibility payment because they had paid for health insurance. They didn’t report anything about the premium credit, because they did not get Form 1095-A.
The IRS, of course, did know about the credit and now having their income determined that they did not qualify for the $7,092 credit and increased their tax liability by that amount. As is routine the IRS threw in an accuracy penalty.
American Living In Canada Loses First Round In Fight Against Harsh IRS Penalty
Form 5471 is titled Information Return of U.S. Persons With Respect To Certain Foreign Corporations. It makes it sound like Mr. Dewees was into really big stuff, but that was not the case. Mark Feigenbaum, the attorney, gave me a short course in Canadian tax planning. The corporate rate is much lower than the individual and there is relief from double taxation. So you can get a significant deferral by trapping income in a corporation. Because of that lots of very small businesses that would be flow-through entities or disregarded in the US are organized as corporations in Canada. Besides his employment income, Mr. Dewees had some side consulting income. He used a corporation for the consulting income because that is what a lot of people do in Canada.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.