Page 10, Portland Observer, February 6, 1986
Taxpayers becoming aware of tax shelters
Sheltering taxes has become big
business in America. Robert A . Stran
gler & C o m p an y, a w ell-kno w n tax
shelter research firm , reports that
over $8 billion was spent in 1983 on
lax shelters and that the trend is
growing. Tax shelters are the oroduct
o f special tax preferences and tax
breaks sanctioned by Congress to
stimulate the nation's ecom my and
to achieve certain socially desirable
goals. For example, a Congressional
Budget O ffic e study showed that
a substantial amount of the funds for
low-incom e housing during the past
two decades came from investors in
real estate tax shelters. These (ax
shelters have flourished because o f a
number o f special tax preferences for
builders of low-income housing. Thus,
with the exception o f a few “ abusive
(ax sh elters,” tax shelters are p er
fectly legal an d , in many cases, so
cially desirable.
The controversy that lias long sur
rounded tax shelters is that in the
past their use has generally been con
fined to high income individuals and
large corporations. H ow ever, more
and more modest and middle income
taxpayers are becom ing aw are o f
tax shelters and are using them to
reap tremendous tax savings.
At the forefront o f the movement
to educate middle and modest income
taxpayers o f the advantages o f tax
shelters is Donald Stevenson, a Black
attorney practicing in Cleveland, Ohio.
According to M r. Stevenson, a former
Internal revenue Service tax lawyer,
“ Modest and middle income taxpay
ers can reduce th eir taxes through
the same tax sheltering principles used
by high incom e taxpayers and the
large corporations. A tax shelter, in
its broadest sense, is nothing more
than a co m b in a tio n o f tax breaks,
deductions, and credits. By putting
together a co m b in a tio n o f 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 o f
modest and middle income taxpayers
who are benefiting from tax shelters,
millions o f taxpayers are still paying
more taxes than they are legally re
quired to pay, according to the N a
tional Tax Research Institute, a tax
payer advocacy organization based in
Cleveland, Ohio.
There are tw o reasons why the
average taxpayer pays more taxes
than legally requ ired. The first is
the complexity o f the tax laws. The
Tax Code contains over 50,000 d if
ferent provisions. Since the first in-
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In parts of France it was once considered good for
the crops for the farmer's wife to be tossed in a blanket.
•
Some people once believed they could cause it to
rain by drumming on a kettle in imitation of thunder,
and sprinkling water with a bunch of twigs.
•
During a lifetime, the average human heart beats
2.5 billion times
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come tax law in 1913 the Tax Code
has evolved into a conglomeration o f
convoluted mumble jum ble. The tax
laws have become so confusing that
even the Congressmen w ho passed
them d o n 't understand them fu lly .
Yet, hidden in this maze ate hundreds
o f special tax benefits and lax breaks
fo r the modest and m iddle incom e
taxpayer.
The inck is knowing how and where
to find them. There is no section in
the Code entitled. “ Tax Breaks Espe
cially For the Average Taxpayer —
Look Here!” Going to the IRS won’t
help. It is not in the business o f saving
taxpayers m oney. T h e average ac
countant or lax preparer who does tax
work for only four months out o f the
year is not likely to know about most
o f these special tax breaks. O nly tax
lawyers or accountants who specialize
in taxes know about these lax breaks.
U n fo rtu n a te ly, they are too expen
sive for the average taxpayer.
The key to benefiting from these
tax breaks is becoming fam iliar with
the fine points o f the tax laws. This is
not as onerous as it may sound. There
are a number o f good tax seminars
that the taxpayer can attend. M any
local community colleges offer excel
lent income tax courses. In addition,
there are a num ber o f outstanding
tax guides on the m arket to day.
These range from very basic for the
tax novice to very com plex fo r the
more astute taxpayer. These guides
range from $2 to $40 The lim e and
effo rt invested in understanding the
tax laws is m iniscule com pared to
the resulting tax savings.
A nother reason why the average
taxpayer pays m ore taxes than le
gally required is misconceptions about
how the tax system works. One com
mon misconception is that the IRS is
always right. The IR S has been given
authority to collect the taxes. T o do
this, it must interpret the law. It can
not make law. Thus, a taxpayer has
the righi 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, particularly
the Tax Court, to settle disputes with
the IR S . The l a x C o u rt has very
inform al procedures similar to those
in a typical Small Claim s C ourt for
small tax cases. T h e 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 C ourt. I f the
taxpayer thinks he or she stand a
better chance w ith a sym pathetic
ju ry , the taxpayer can go to a U .S .
District C o u rt. H o w eve r, the ta x
payer has to pay the disputed tax
and sue the government for a refund.
The U.S. Court o f 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 can
Zimbabwe
Continued fro m Puge I, Cohimn 6)
towns and some o f the streets and
roads, have reverted to their African
names. For example, H arare is now
Harare again after being misnamed
"Salisbury" for almost eight decades
Holidays commemorating the stealing
of Zimbabwe by white settlers in 1890
have been scrapped and instead Z im
babweans now celebrate the Heros of
the African Resistance and the War of
Liberation. Statues o f "Rhodesia's"
arch-racists have been lorn down
and replaced by those of the country’s
Z im b a b w e's , that is) real national
heroes.
The impartiality and responsiveness
of the new justice system and judicial
order were clearly demonstrated late
last year by one unfortunate incident.
Somebxly had dreamed up the noble
idea o f ridding Zim babwe of prosti
tutes. T h e police were ordered to
round up all unaccompanied women
and detain them until they could ac
count fo r their being out alone at
night.
Policed blitzed all the major centers
o f Zim babwe and rounded up thou
sands o f w om en w ho were herded
into deten tion centers. O bviously,
this was not only discriminatory but
also unconstitutional so the women
cried “ Foul!” There was an emergen
cy C abin et meeting; the detainees
were ordered promptly released and
the government issued a public apol
ogy
W ith such a stellar perform ance
during his first term in office, coupled
w ith the abysm al failu re o f all his
w ou ld-b e challengers to mount a
credible challenge, is it any wonder
that Comrade Robert Gahnel Mugabe
finds himself a shoo-in for a second
five-year term?
PERFORMANCE CONTROL
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legally reduce his or her taxes, accord
ing to M r. Stevnson. T o illustrate, last
year he and his w ife earned over
SI 10,000. Using o nly a h an d fu l o f
simple legal tax b reaks, they paid
less than $2,000 in (axes.
In his new book, "T a x Shelters Are
For E veryo n e,” M r . Stevenson ex
plains hundreds o f tax avoidance
techniques especially for modest and
m iddle income taxpayers. Here are
just a few o f these techniques.
— Convert nondeductible personal
expenses such as entertainm ent, va
cation, and education, into deductible
business expenses;
— Deduct portions o f the cost o f
the family car, house, and home com
puter by establishing a part-time busi
ness using these assets;
— Hire family members;
— Shelter income through IR A or
other retirement plans;
— Take charitable contribution de
duction for used clothing and fu rn i
ture, and volunteer services contributed
to a charitable organization; and
— Shelter income through bonds
and other tax-free income.
M r. Stevenson warns overzcalous
taxpayers to v a tc h out fo r illegal
tax shelter schemes. "S o m e tim es
there is a thin line between tax avoid
ance and tax fra u d ." Unfortunately,
too many middle and modest income
taxpayers are getting involved in fraud
ulent tax schemes. " W e are finding
that the tax shelter p ro m o ters are
moving in to these m id dle incom e
gro up s,” says IR S C om m issioner
Roscoe Egger.
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I f you haven't received your fed
eral income tax forms in the mail by
now , you p ro bably w o n ’ t receive
them this year, the Internal Revenue
Service says.
If you do not have your tax forms,
they are available at most libraries,
banks, and post offices, or by calling
the IR S form s order telephone in
Portland, 221-3933 or toll free state
wide, I -800-452-1996.
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