TAX AVOIDANCE

One thing is certain, paying more tax than the law requires will not improve your chances of surviving. Re-arranging client affairs & re-organizing client businesses opens doors to extensive tax avoidance. Every dollar saved drops straight to the bottom line as another dollar of cash, profit, working capital & competitive advantage, and improves your chance of surviving the 21st century.

Latest News on Tax Scams

IRS offers to settle with insurance tax scammers

Since 2014, the list of Dirty Dozen Tax Scams has included “captive” insurance companies. Although the law allows companies to create captive insurance companies to insure against legitimate risk. In that case, the insured company can deduct the premiums it pays for the insurance.

“However, in some “micro-captive” structures, promoters, accountants or wealth planners persuade business owners to participate in scams that lack many of the attributes of insurance.”

The IRS has pursued hundreds of cases against such schemes in Tax Court after auditing the taxpayer companies.  After prevailing in three recent U.S. Tax Court cases, the IRS said it has decided to offer settlements to 200 taxpayers who are currently under exam. The IRS began mailing out time-limited settlement offers spell out specific settlement terms. Taxpayers who don’t receive a letter aren’t eligible for this resolution, the IRS pointed out.

“The IRS noted that it has consistently disallowed the tax benefits claimed by taxpayers in abusive micro-captive structures. While some taxpayers have challenged the IRS position in court, none have been successful to date. The IRS said it would continue to disallow the tax benefits claimed in abusive micro-captive transactions and continue to defend its position in court. The IRS has decided, though, to offer to resolve some of the cases.”

What this means is that there are probably 1000s of these situations out there, but that only a few of them have been audited. Still fewer have been taken to court.

The famous “Son of Boss” resulted in 1,165 tax cases. The IRS is apparently attempting to clear out the individual cases by offering deals. The real target of this effort is to find the advisrrs pushing the illegal schemes & prosecute them. In ‘Son of Boss’ tax fraud case, KPMG pled guilty to tax fraud.

Taxpayers are unlikely to go to prison, but their advisers are likely to.

 

Some tax scams:

KPMG partner David Middendorf

Three former KPMG partners

Son of Boss

IRS Dirty Dozen

Apple: Best Company in the World?

The evidence is pretty clear to me, Apple is the best company in the world. If there was a hall of fame they would be the first inductee. Their computers, iPhones, etc. are arguably the best products in the world. But on the flip side of that, from what I can tell, they are the best in the world at tax avoidance. Whatever you think of their products, that’s a one, two punch that’s hard to overlook.

NEW YORK-JULY 24 – The Apple logo on the glass of the Apple Store, Fifth Avenue on July 24 2015 in Manhattan.

One of the biggest costs any Global company has to deal with is tax. There’s 50 different states and 200 different countries with different tax rates. Apple has been the absolute best at avoiding overseas tax (& state tax) since Jobs returned to Apple in 1997. Maybe longer.

Their overseas tax has essentially been zero for the entire time. They manage that with the techniques we describe in the following services on our website: Intellectual assets, interstate taxation & international taxation. That isn’t a coincidence. Ever since I saw a GAO article about multinationals paying less tax at lower rates than privately owned businesses, I have been studying Apples & other multinationals’ tax practices. Obviously, they are not advertising this stuff, but every now and then something happens that allows me to see behind the curtain. This article resulting from a leak of secret documents from Apple’s attorneys is one of them.

Their famous Double Irish with a Dutch Sandwich cut foreign sales outside the U.S. to zero tax until 2015. That arrangement became public in 2013 when Congress held Congressional hearings and Ireland was forced to alter their taxation practices. They restructured their tax strategies in 2014. If something happens again, they’ll restructure yet again. There’s too much money on the table to be lackadaisical about it.

Note. Apple’s Irish subsidiaries claimed that almost all of their income was not subject to taxes in Ireland or anywhere else in the world. And rightfully so. They were right. The Irish government agreed with them. They did nothing wrong. No charges were ever brought. But the EU got involved and Apple had to abandon the Double Irish tax strategy for (an island of Jersy) tax strategy.

This is about as important as it can get. Without out the billions they saved in overseas tax, Apple would never have become the most valuable business in the world. Neither would Google, Facebook, Caterpillar, etc. have achieved their massive valuations. I refer to Apple and other multinationals as businesses rather than a companies, because each of them have multiple companies under their umbrella. No multinational is a single company.

A leak of secret corporate records reveals some interesting things. By quietly transferring trademarks, patent rights and other intangible assets to offshore companies, global businesses cut their tax bills dramatically. Also, Apple’s attorneys mailed 14 questions for their attorneys’ offices in the Cayman Islands, the British Virgin Islands, Bermuda, the Isle of Man, Guernsey and Jersey, asking them to “confirm that an Irish company can conduct management activities . . . without being subject to taxation in your jurisdiction.” Apple also asked for assurances that the political climate would remain friendly: “Are there any developments suggesting that the law may change in an unfavorable way in the foreseeable future?”

For more interesting tax information you probably don’t know, visit our website [https:/elliscpafirm.com] or our blog [https:/bizztrategy.com].

We do the same things, absent agreements with tax jurisdictions for privately owned companies. If you qualify, you could save hundreds of thousands of dollars a year. Or, if you’re not that big, you could save thousands or tens of thousands of dollars. Apple saved billions.

 

 

Predatory Taxation

The U.S. Code is divided by broad subjects into 53 titles. Title 26 is the Internal Revenue Code,  commonly referred to as the tax code.

The tax code is unique among all codes. The other 51 codes stand as they were written, one code is reserved and 50 of these codes are stable. The tax code is the exception. No other code is continually interpreted by government agencies (IRS) or court cases. Only the tax code. The tax code is unique in this respect. It’s a living, breathing body of law continually reinterpreted administratively and by the courts.

To a lesser extent, state tax codes are subject to the same phenomena.

That is not a bad thing. The constantly changing nature of tax codes opens the door for strategists like me to legally keep your taxes under control. But predatory practices sometimes make temporary advances. But so far, they have always been stopped.

Even if a tax professional would learn the entire 77,000 page to the tax code, in a year there would be so many subtle changes, they wouldn’t recognize it. That means everybody has to be very careful how they deal with federal & state tax authorities.

Predatory taxation happens from time to time.  Here is an example of how the Supreme Court responds. Our republic is safe.

Every tax authority, at one time or another, takes a predatory stance. When that happens, people without hundreds of thousands of dollars to fight a hostile and predatory stance can be destroyed. This happens more than it should.

Personal animus for clients or professionals defending their clients causes predatory behavior more than you might expect. The IRS took a dislike to one of my clients for some unknown reason. I didn’t even let him talk to the IRS. Never-the-less, they disallowed a $100,000 deduction and wouldn’t back off. We pushed the issue all the way to the courthouse steps before the IRS relented. Finally, outside the tax court doors, ten minutes before the case was to be heard, the IRS attorney relented. Had it been the revenue agent, that never would have happened.

Our strategy was to drop the case rather than spend hundreds of thousands of dollars fighting to save $100,000 in tax. That’s the position predatory taxation puts you in. And believe me, every IRS revenue agent knows all about how the game is played.

Our only defense against that treatment, is the Supreme Court.

As far as I can tell, revenue agents aren’t subject to disciplinary action for being overly aggressive with taxpayers. They may claim they are, but I’ll never believe them. Your only recourse is court, and most taxpayers can’t afford that option.

A recent decision on predatory taxation reassures us the Supreme Court has our backs against predatory taxation.

States can be predatory just like the IRS. In my mind, the state of California is the most predatory.  It is so bad that the CA tax authorities have been losing cases in the CA Supreme Court over CA’s attempt to push more & more into interstate taxation. This particular Supreme Court case does not involve CA, but it does close a loophole that predatory states were using to push more into predatory areas.

Everyone should read the article to understand the predatory nature of tax authorities when they are not kept reined in by close observation and regulation.  Predatory taxing authorities are very powerful and very scary.

Here’s the link to Forbes. The Forbes article is well written, interesting and even brings Roman law into play as the originators of the NEXUS issue that interstate taxation is based on. As it turns out, NEXUS is a Roman word. Subsequent quotes are from the Forbes article.

“Typically, a state government will enact a statute that identifies who it will tax and what it will tax.  When it comes to taxation of trusts, there are several moving parts. There is the person who created the trust.  There is the beneficiary. There are the assets and income of the trust. And, there is the trustee. Each might be located in a different state.  It would seem that four different jurisdictions are licking their chops for tax revenues. This is where “nexus” comes into play.’

There were several long standing Supreme Court rules the states were ignoring. I’m not going to repeat them here, but you can read the article. I am going to continue quoting from the article below.

“In spite of these long-standing rules — upon which there is about 150 years of US Supreme Court rulings — some states attempt to tax without sufficient NEXUS.  Unless a taxpayer protests and asserts there is not sufficient NEXUS, the state gets away with it. And, often, the dollar amount in play is too little to fight for.  But, occasionally, there is enough money in play and the taxpayer victim fights. (I use the harsh term “victim” because these states offend our cultural sense of fairness and equity when they pull this stuff in light of the US Supreme Court’s long standing position.)”

“In recent years, taxpayers who have asserted a lack of nexus and due process have won . . . with their own states’ supreme courts overturning the states’ offending statutes.  But, this has occurred one state at a time. What taxpayers and tax planners have wanted was a newer US Supreme Court ruling that left no doubt . . . involving a state that had a ridiculously weak case . . . to finally put the issue to rest.  North Carolina gave it to us.”

“And this is where predatory states got involved. Generally, trusts the taxes that were levied against trusts using inappropriate methods violating state NEXUS rules did not involve enough money to justify bringing expensive suits. And even when the tax justified a lawsuit, the case was brought in state court. So while this issue was working it’s way through state courts, other states were still being taxed in a predatory manner. ”

Finally two cases found their way into the Supreme Court and the issue was decisively decided unanimously. Sotomayer wrote the unanimous opinion.

 

 

 

Court of Appeals Reverses Tax Court Decision re Stock-based Compensation

Court of Appeals 9 (CA 9) upholds stock-based compensation cost-sharing reg again

(From RIA)

Altera Corporation and Subsidiaries v Commr., (CA 9 06/07/2019) 16-70496

The Court of Appeals for the Ninth Circuit, reversing a Tax Court decision, has upheld the validity of a reg under Code Sec. 482that requires controlled entities entering into qualified cost-sharing agreements (QCSAs) to share stock-based compensation (SBC) costs. A dissenting opinion rejected the reg, for similar reasons as those in the Tax Court decision.

Background-allocation of income and deductions among taxpayers. Code Sec. 482 authorizes IRS to allocate income and expenses among related entities to prevent tax evasion and to ensure that taxpayers clearly reflect income relating to transactions between related entities.

Under Code Sec. 482 in the case of any transfer or license of intangible property between controlled entities, IRS may allocate income, deductions, credits, or allowances between the entities to prevent the evasion of taxes or to clearly reflect income. Congress amended Code Sec. 482 in ’86 to provide that consideration for intangible property transferred in a controlled transaction must be commensurate with the income attributable to the intangible. Background-allocation of income and deductions among taxpayers. To achieve a clear reflection of each entity’s income, IRS considers what each entity’s income would be had the controlled entities been dealing with each other at arm’s length. (Reg. § 1.482-1(b)(1) ) In Xilinx Inc. and Subsidiaries, (2005) 125 TC 37, the Tax Court rejected IRS’s Code Sec. 482 treatment of employee stock options under a taxpayer’s cost-sharing arrangement with its subsidiary.

The Court determined that the then-applicable ’95 regs did not authorize IRS to require the taxpayers to share the spread or the grant date value relating to employee stock options under the agreement. The Ninth Circuit affirmed the Tax Court’s decision that controlled entities entering into QCSAs need not share SBC costs because parties operating at arm’s length would not do so. (Xilinx Inc. and Subsidiaries, (CA 9 3/22/2010) 105 AFTR 2d 2010-1490)

In 2003, IRS issued new final regs on cost sharing arrangements. Under the regs, controlled participants must share intangible development costs in proportion to their share of reasonably anticipated benefits. Reg. § 1.482-7A(d)(2)(ii) (the final rule) explicitly requires controlled parties entering into QCSAs to share SBC costs. SBC includes restricted stock, nonstatutory stock options, statutory stock options, stock appreciation rights, and phantom stock.

Background-determining validity of regs. In Chevron U.S.A. Inc. v. Natural Resources Defense Counsel, Inc., (Sup Ct 1984) 467 U.S. 837, the Supreme Court set out a two-step analysis for a court to apply in reviewing an agency’s construction of a statute that it administers: (1) if the intent of Congress is clear, IRS and the courts must give effect to the unambiguously expressed intent of Congress; (2) if the statute is silent or ambiguous as to a specific issue, the question for a court is whether the agency’s answer is based on a permissible construction of the statute. An agency’s regs are given controlling weight unless they are “arbitrary, capricious, and manifestly contrary to the statute.”

The Administrative Procedure Act (APA) requires courts to “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or “unsupported by substantial evidence.” (5 U.S.C. § 706(2)(A), 5 U.S.C. § 706(2)(E)) In Motor Vehicle Mfrs. Ass’n of United States, Inc. v. State Farm Mut. Auto. Ins. Co., (1983) 463 U.S. 29, the Supreme Court said that Treasury must provide a reasoned explanation for adopting a reg. Specifically, State Farm requires Treasury to articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made.

2015 Tax Court decision. The Tax Court held that Reg. § 1.482-7A(d)(2) was invalid because it failed to satisfy State Farm ‘s reasoned decision-making standard. (Altera Corporation and Subsidiaries, (2015) 145 TC 91)

CA 9 reversed, upholds reg. The Court of Appeals for the Ninth Circuit, on July 24, 2018, reversed the Tax Court and upheld the reg. It said that IRS’s rule-making complied with the APA, and its reg is entitled to Chevron deference. A dissenting opinion would have rejected the reg, for reasons similar to those of the Tax Court. (Altera Corporation and Subsidiaries v. Comm., (CA 9 7/24/2018) 122 AFTR 2d ¶2018-5068)

One of the judges that was part of the majority in the case died after oral arguments in October 2017 but before the decisions were released in July 2018.

CA 9 withdrew its opinion. The Ninth Circuit withdrew both the majority and dissenting opinions filed on July 24th, allowing time for a “reconstituted panel” of judges to confer (i.e., with a new judge taking the place of the deceased judge).

CA 9 upholds the regs again – The court first held that the reg did not exceed the authority delegated to IRS under Code Sec. 482. The court also explained that Code Sec. 482 does not speak directly to whether the IRS may require parties to a QCSA to share employee stock compensation costs in order to receive the tax benefits associated with entering into a QCSA.

The panel held that the Treasury reasonably interpreted Code Sec. 482 as an authorization to require internal allocation methods in the QCSA context, provided that the costs and income allocated are proportionate to the economic activity of the related parties and concluded that the regulations are a reasonable method for achieving the results required by the statute. Accordingly, the regulations were entitled to deference under Chevron.

Finally, the reg at issue was not arbitrary and capricious under the Administrative Procedure Act (APA). The court found that while the rulemaking process was less than ideal, the APA does not require perfection. The court found that the IRS understood Code Sec. 482 to authorize it to employ a purely internal, commensurate with income, approach where comparable transactions are not comparable. In light of the statute’s plain text and the legislative history, the IRS also reasonably concluded that Congress intended to hone the definition of the arm’s length standard so that it could work to achieve an arm’s length standard so that it could work to achieve an arm’s length result, instead of forcing application of a particular comparability method. In addition, the court found the IRS understanding of its power to use methodologies other than a pure transactional comparability analysis was reasonable and, therefore, deferred to its interpretation under Chevron.

References: For qualified cost-sharing arrangements, see FTC 2d/FIN ¶D-1155United States Tax Reporter ¶4824.05.

Intellectual Assets

 

  • Trade secrets
  • Trademarks
  • Copyrights
  • Patents
  • Web sites
  • Customer database
  • Social media accounts

Among the devices most overlooked by privately owned businesses for tax planning, estate planning & asset protection is the use of Intellectual Property.

This Act that made it all possible.

“Today, President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”) into law, bringing trade secrets alongside trademarks, copyrights and patents as intellectual property rights protected under federal law.” May 23, 2016.

Intellectual property is a term for intangible creations of human intellect. In businesses that often takes the form of patents, copyrights, web sites, trade name, business name, URLs, copyrights, trade secrets, customer lists, etc. Privately owned businesses seldom recognize & value them. Every business has unrecognized intellectual property. Failing to recognize your intellectual assets puts it at risk, makes you more susceptible to audit and increases your income tax. Most businesses never recognize or value intellectual assets. As a rule of thumb, we often recognize & value intellectual assets for tax planning, estate tax planning and asset protection. Generally we move the specific assets, now documented, out of the operating company and place then in another company which is less at risk of lawsuit & seizure by a hostile actor. Your personal name and your operating company are both bad choices to hold intellectual assets.Done right, it is possible to suffer a debilitating lawsuit and open up the next day with little more than a hiccup.

  • We will use intellectual property for tax savings
  • We will use intellectual property to protect vital business assets
  • We will use intellectual property for greater maneuverability.
  • We will identify your intellectual property
  • We will formally recognize your intellectual property
  • We will move intellectual property from risky operating entities to safer property holding entities’
  • We will document intellectual property.
  • We will value intellectual property.
  • We will establish royalty rates.

The goal is, even if you lose a tremendous lawsuit, you will be able to open up the next day with all your vital assets in place without missing a beat. This is also a great estate planning tool & a great tax planning tool.

Wise Words From A Wise Man

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.”

“Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

(Judge Learned Hand.)

From <https://elliscpa.us/

Business Structures

Few private businesses are structured effectively.

There are something like 33 different entities from which you can operate a business. The most commonly used are personal individual schedule C business, partnership, LLC or corporation. Each of these are taxed differently and can take deductions the others can’t. We use all of these except the schedule C business frequently. Plus we use the other 28 when circumstances dictate.

Private businesses are poorly structured. That makes them vulnerable to unnecessary tax, dangerous lawsuits & getting caught by competitive forces without the ability to maneuver. All of which can be disastrous. As businesses get larger, the more sophisticated they become and the more they will turn their attention to structures. At one time Caterpillar had 350 separate subsidiary companies in the Luxembourg alone. But private businesses generally go through their entire existence as a single structure.

We are expert at business structures. We will restructure your business to its best structure to achieve goals in tax, asset protection & maneuverability.

  • A great structure achieves myriad valuable goals easily and effortlessly.
  • A bad structure constantly interferes with business goals & exposes your vital assets to lawsuits & litigation.
  • A bad structure is a trap because it’s inflexible, cumbersome & poorly conceived. Plus it adds to tour tax burden & puts all assets at risk needlessly.
  • A bad structure is a lead weight around your shoulders.
  • A bad structure makes it more difficult to survive & thrive in a competitive environment

Hillary Payback or Tax Reform?

It looks like everyone got what they voted for in tax reform.

It’s pretty clear who the big winners and losers are. Each individual will probably have to do some calculating to be absolutely certain, but the broad groups of winners & losers are pretty clear right now.

Tax Reform isn’t Valhalla. We did not just die and go to heaven. For every tax cut, there is a tax increase somewhere to make up for the lost revenue. That’s how the process works. If you are a large global corporation with more than 100 shareholders and no individual owner to answer to, you won the lottery. You are the big winner. That much is certain. That is where the bulk of the tax savings go. OK. That’s what they said they were trying to do, and they did it. For everyone else, broad groups will win and broad groups will lose. And those are pretty clear right now.

But here’s a pattern that has escaped notice.

Losers:
High income earners with expensive homes and dependent children living in high tax states will be losers under tax reform. As will professionals such as equity bankers & physicians at all income levels wherever they live. Both groups will pay more tax under tax reform. But here’s where the pattern begins to show up. According to the demographics, those are the Hillary voters. When they voted for Hillary; they voted for tax increases; and they got tax increases.

Winners:
The winners on tax reform will be low income families in low tax states. In fact, I believe, low income people even in high tax states will be winners. Hmmm. Does that describe Trump voters? I think it does. Those people voted for tax cuts when they voted for Trump. And they got tax cuts. That formula works even for people who live right next door to each other; one voted for tax hikes and one voted for tax cuts; they both got what they voted for.

The big losers on tax reform are Hillary voters who are really winners because they voted for tax increases and got what they voted for. Everyone got what they voted for. Probably coincidence.

But balancing the budget in the same week?

Now here’s the real kicker. In the same week tax reform was passed, Trump manipulated our friends in the UN into voting in favor of ending their own US foreign aid, which will go a long way toward balancing the Federal budget. Thank you UN.

Trump gave people what they voted for and balanced the budget in a single week. Is that even possible? No other President from Washington to Lincoln to FDR ever had a week like that.

There is one hurdle left.

Who has the gonads to cut off 90% of foreign aid? Probably not Trump. The press would rake him over the coals. But Nikki Haley definitely does. Did you see her glaring at UN voters as they voted on the Jerusalem issue?  In addition, she followed up the vote by inviting all the nay voters to a party. She is looking for a fight and she is getting in their faces. Nikki Haley will cut them off in a minute, and she won’t give a diddle what the press thinks.

These people are serious. I’m going to keep my head down and stay the hell out of both their ways. But I am enjoying the show. As the Chinese proverb says, ‘May you live in interesting times.’

 

PS. I will be a loser. But after applying my own off-the-shelf tax strategy, I will be a winner. There is a solution to every problem.  Want to solve your tax problems? Give us a call.

 

 

 

 

 

 

How can I save on taxes?

One of my favorite questions is, “How can I save on taxes?” To which I always reply, “Send me a big check.” Which is the essence of this post.

This post is in reply to a similar comment we got today. In some cases, there’s some things we can do. In this case there wasn’t. But we covered some things that I generally cover verbally so I reworked my reply and am posting it on this blog.

We generally look down on year-end tax planning as an exercise in meaningless timing differences that end up resulting in higher taxes as often as any other outcome. They very seldom actually cut anyone’s taxes in the long run. Including IRA’s, but that’s another story.

The edited reply is below.

By the way, that’s why we do tax estimates in the first place, to make sure no one is surprised three days before the return is due. That isn’t fun for the taxpayer and throws us into cardiac arrest. Most firms don’t do them. Last year we grew so rapidly we didn’t have the staff to do them as promptly as we would have wished, but we try to do them quarterly.

Here goes.

“Unfortunately there is not much you could do to save on taxes except waste money. The income is already in and it’s solid. The only possibility now is buying deductions, which is where the waste comes in. I’ll explain below.

We did your tax estimate despite not having all your numbers, just because we wanted you to be aware of the bullet you need to bite. We still don’t have your business income/loss and any real estate transactions you were involved in. So the final numbers could go either way. Don’t expect much on the downside because in your case it would take $100,000 loss to save $23,000 in taxes.

Let me put this in perspective for you.

Deductions have to be bought.
With the exception of statutory depletion (which you got by the way) in the good ol’ USofA you get no deductions that don’t cost you hard cold cash.
Just because you spend money doesn’t mean it’s deductible.
In your case, it costs you 100% to save 25%.
So spending money to save on taxes is not a great idea.

The goal is not to cut your taxes, the goal is to make the maximum stick to the walls. You could easily cut your taxes by sending me a $100,000 check. You would save $25,000 in taxes, but you would lose $100,000 in net worth. The happiest day of your life will be the day you pay a million dollars in income tax. Because that will mean there’s more millions sitting in your bank account.

There are ways to delay the tax bite, but your set up won’t work for that, so that’s no option. The only other way you can avoid paying taxes in the USA is an international tax haven. That’s possible, but it won’t fit your income streams. And the setup is expensive. In certain cases it’s legal, but not advisable in your case.

The essence of tax planning is to convert personal non-deductible expenditures into fully deductible legitimate business expenses, and when possible, to change the character of your income from a highly taxed to a lesser taxed income. Both of these have been accomplished with your S corp business. There’s nothing much more we can do. You do your own bookkeeping so we have no opportunity to see what possible expenditures you may be overlooking, but we don’t think there will be enough to cut your taxes meaningfully.

The plunging price of crude oil and gasoline may be the solution to your problem because your royalty checks will be going down along with the cost of crude. That is something you may want to keep in mind. If you put off paying your taxes until next year, you may end up right in the middle of a steadily decreasing income flow.

Although there would be penalties, you don’t have to pay 2014 taxes until October 15, 2015.

So …

Don’t do anything rash to cut your taxes because that’s how people go bankrupt.