EPA and other federal agencies in the Nation’s Capital, including the Defense Department, have refused to pay new property taxes assessed to help fund a major stormwater cleanup effort.

The tax fight was started after EPA forced the District of Columbia to adopt tough stormwater control measures to clean up the Anacostia River, which is inundated with trash and other runoff pollutants.

To pay for this EPA-mandated stormwater program, the D.C. Water and Sewer Authority revised its fee structure to charge landowners stormwater fees based on the square footage of property, instead of assessing fees based on the number of people using a property.

As reported in the Washington Examiner, this sparked the federal agency’s anti-tax fervor, because the change turned the per-person fee structure into a property tax, and federal agencies are exempt from paying property taxes.

The Pentagon has refused to pay the tax, charging that it’s an “impermissible tax on the federal government.”

If you’re a small business owner, or even someone who handles your own taxes, here are five areas you’ll want to monitor very closely on your return:

1. Increased expenses: Most companies have tightened the belt on excess expenses, and so has the U.S. government. Be sure not to add or inflate any expenses you don’t have receipts for. It’s an instant
   red flag, especially in cases where the overall amount is significantly higher than it has been in years past.
2. Overestimating donations: Philanthropy may be the gateway to power, but it’s also something the IRS watches very closely. If the donation amounts claimed are extremely high, or — even worse — if they exceed amounts reported by a nonprofit, it could cause the IRS to question everything else on your return.
3. Miscalculations: It may sound simple, especially in the age of Turbo Tax, but be sure to double-check (or perhaps even triple-check) your math. When something doesn’t add up, it forces the IRS to dig deeper and find out where (and why) the error occurred in the first place. Besides, double-checking may reveal a miscalculation that bodes in your favor.
4. Home office deductions: More and more people are telecommuting these days, either full- or part-time. While that makes you eligible for standard deductions for costs like electricity, online access, supplies, etc., it’s also an area the IRS watches very closely, so people don’t bilk the government out of cash. Be careful not to overshoot on simple costs like stationery, phone, etc., unless you’re sure you can back them up.
5. Failing to sign the return: One of the upsides of tax services like Turbo Tax is that they ensure you go back and handle every minor detail, including approving an electronic signature, before filing your return. If you’re filing on your own (or through a third party), be absolutely sure to sign your return before filing it. It’s such a minor detail, but again … once the IRS has to follow up on an incomplete return, it only increases the chances you could be one of the unlucky taxpayers who gets audited.

The good news: Traditionally, the IRS only audits 1% of U.S. taxpayers. So the best advice is always to file promptly and honestly to avoid any type of complications.

Do you have any actionable advice for people who are trying to avoid being audited? Any other red flags we missed? Your own audit nightmare story?

Feel free to share your thoughts in the comments section below.

Source: ”Avoid an Audit:  Red Flags You Should Know,” by Glen Curtis, Investopedia, 2/10/10

1. Gas: We all remember the dog days of $4 a gallon. It wasn’t a pleasant time. But it forced people (and companies) to consider other options like carpooling, public transportation and telecommuting. For that reason an increased gas tax could become a very real possibility, with the government claiming it’s a tax consumers can avoid if they minimize their gas usage.
2. Online: With so many consumers doing their shopping online these days, the notion of adding an “online sales tax” has been proposed several times. It’s a dicey proposition, as there’s so much to regulate, and it could end up having a negative overall impact for online retailers, but it’s another “avoidable” tax a lot of taxpayers wouldn’t be subject to. The catch: As online shopping continues to gain popularity, the return from this type of tax would increase substantially.
3. Energy: Energy taxes are being sold to the public under the guise that “we’re all in this together.” In other words, we can all help make things better by contributing just a little bit more. Meanwhile, individual taxpayers and businesses can minimize the blow by taking measures to cut down on electricity and other energy sources.
4. Alcohol and tobacco: “Sin taxes” are the easiest for politicians to sell because they’re levied against people who choose to spend money on vices. Proponents of such taxes actually help make the argument by telling those affected by them, “If you don’t like it, quit.”
5. Corporate: The unemployment rate is brimming, and that means a ton of unemployment insurance claims, the majority of which are funded by business taxes. In order to keep replenishing that pot, the government could end up imposing additional “unemployment” taxes on businesses. It’s a bait-and-switch tactic that ultimately penalizes consumers, who wind up paying for the increases via lower wages and other cuts.

So what do you think? Would you consider any of these cuts a worthwhile alternative to increasing taxes on everyone? Are there any areas we missed here? We’d love to read what you think in the comments section below.

Source: “8 Sneaky Ways to Raise Taxes,” by Rick Newman, U.S. News and World Report, 2/2/10

Total: $30,379,000  (and counting)

To donate (or to find out more), click here.

Source: “Companies give $30 mil for Haiti,” by Ari Weinberg, 1/15/10

IRS is now claiming the right to seize deposits for seat licenses a company may hold at stadiums and similar venues in order to recover outstanding tax liabilities. That’s the latest according to a legal memorandum. IRS says it has the right to grab those funds through a levy.

In the same ruling, IRS floats the idea that it may also have the ability to seize a company’s renewal rights for sporting events. But the legal ground here is shakier, and even IRS admits it would only be possible in case where the team allows its ticket holders to transfer rights and renewals.

If your organization is still hoping to take advantage of the slew of
small-business tax breaks that went into effect in February, you’ll need to get moving.

We’re more than halfway through the year, and Obama’s stimulus package benefits expire when 2009 does.

Even IRS recently reminded taxpayers of all they stand to gain, courtesy of The American Recovery and Reinvestment Act.

Here’s a recap of all the breaks available.

You may have to work fast to capitalize on some of these, but it could be well worth it:

Special Depreciation Allowance
Any room left in the ’09 budget for new property or equipment? Your company can take the 50% bonus depreciation as long as you put that equipment into service by year-end.

Section 179 Deduction
You can still deduct up to $250,000 of the cost of that machinery, equipment, furniture, etc. (The deduction was supposed to drop to $133,000.)

Expanded Net Operating Loss Carryback
If your business is in the unenviable position of having its expenses exceeding its income last year, here’s some consolation.

As long as you have an average of no more than $15 million in gross receipts in a three-year period and have been profitable in the past, you can claim a special refund.  But act fast: You have until Sept. 15 to file a claim.

Note: There are also some small biz breaks for individuals involving estimated taxes and the sale of stock.

Go here for tons of guidance on Recovery Act-related tax breaks and other possible financial advantages.