Joseph I. David, CPA

Republicans unveil tax reform framework

Republican lawmakers released a framework for tax reform on Wednesday, announcing that their goals are to cut tax rates, simplify the Internal Revenue Code, and provide a more competitive environment for business. The framework generally reiterates proposals made by President Donald Trump in April.
Under the framework, the top individual tax rate would be 35% and the corporate tax rate would be 20% (Trump had been calling for a 15% corporate tax rate).
While the framework provides tax reform targets, it does not provide legislative language, which would still need to be developed in the congressional tax-writing committees. Republicans have announced that their goal is to have tax reform legislation enacted by the end of the year.
Individuals
For individual taxpayers, the framework calls for:
• Three tax brackets: 12%, 25%, and 35% (currently there are seven brackets, with the lowest one being 10% and the top one being 39.6%). However, the framework allows congressional tax-writing committees to add a fourth, higher bracket for high-income individuals. The income levels at which the three brackets would apply were not specified.
• Repeal of the alternative minimum tax.
• Repeal of the estate tax and the generation-skipping transfer tax.
• Taxing passthrough income at a maximum rate of 25%. (The tax-writing committees would be given the task of developing rules to ensure that high-income taxpayers do not use this provision to avoid the 35% bracket.)
• Consolidating the standard deduction and personal exemptions into a larger standard deduction of $12,000 for individuals and $24,000 for married couples filing jointly.
• Increasing the child tax credit and providing a $500 credit for care of nonchild dependents.
• Eliminating most itemized deductions, including the deduction for state and local taxes, while preserving the deductibility of mortgage interest and charitable contributions. The framework directs Congress to maintain tax incentives for higher education, retirement savings, and employment.
Businesses
For businesses, the framework calls for:
• An end to taxation of U.S. companies’ worldwide income and a move to a territorial system. The tax-writing committees would have discretion to write anti-base-erosion measures.
• A one-time tax on accumulated offshore earnings, which would be taxed at two unspecified rates: One rate for cash and cash equivalents and a lower rate for other assets.
• Limiting the deductibility of interest.
• Eliminating deductions, at the tax-writing committees’ discretion, but the framework calls for the research and low-income housing credits to be retained.
For five years (or more), allowing 100% ex

Attorney General’s Office Reports of
Interactive Email Scam Targeting Illinois Charities


June 9, 2016

Attorney General Lisa Madigan warns Illinois charities of elaborate donation scam. This sophisticated email scam is offering Illinois charitable organizations large and unsolicited donations from a man who claims to be carrying out the final wishes of his deceased mother.

Madigan’s office has been notified by several Illinois charities that were suspicious of a potential scam after engaging in lengthy and believable email conversations with a supposed donor. Luckily, the charities did not fall victim to the scam, but passed along information in an effort to warn others.

Madigan’s office understands the scam to be centered on a donor who identifies himself as “Rob Whitlock” of Great Britain. He promises to donate a large sum of money in memory of his
mother who passed away earlier in the year. The emails detail his mother’s wishes and her support of a specific charity’s mission, using emotional pleas to increase the authenticity of the proposal.

Upon conducting basic internet research, the charities find that “Rob Whitlock” appears to exist and a business website includes a photo and telephone number. But in reality, the website is fake.
Whitlock’s scam involves sending a check that includes a larger amount than promised, which is designed to be received as a welcome gift. However, emails follow claiming Whitlock’s
accountant made a mistake and the additional funds need to be wired back to him immediately because he has promised to help a local family with medical support for their ailing daughter.

It appears that some charitable organizations have caught on to the scam and contacted their banks about the unsolicited donation to learn the check is being returned by the bank because it is altered or fictitious. Other charities appear to have, unfortunately, fallen for the scam and “returned” the overage to Whitlock, losing a large amount of money.

Madigan urges Illinois charities to be on the lookout for this elaborate and persuasive type of donation scam.

“Unfortunately like many scams we see, this situation is too good to be true,” Madigan said. “We are certain these emails are the handiwork of at least one scammer looking to take advantage of
Illinois charities that could use unsolicited gifts to support their missions.”

Madigan’s office offers the following tips for charities considering accepting a donation:

If it seems too good to be true, it probably is.
• Take time to research donors thoroughly. Do not rely solely on the internet. Take time to speak with industry peers and others to gather their insights and feedback on potential
donors.

• Real donors can be trusted to share important details and will offer to meet in person.

• Their communication typically does not include spelling or grammar mistakes.

• Do not refund any money until you have checked with your bank to confirm the fund shave cleared.

Madigan encourages Illinois charities to report suspicious solicitations by contacting her Charitable Trust Bureau
at (312) 814-2595.

Source: Illinois Attorney General's Office 6.9.16

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