Sunday, April 27, 2008

Don't Mess with the IRS

Younger folks out there might not remember the complete story about Al Capone but one thing everyone should keep in mind is that when no other government agency could make any criminal charges stick to good old Al, the IRS came to the rescue. Yep, Big Al killed lots and lots of people but he went to jail for tax evasion.

How you ask! Well, he didn't pay taxes, claiming not to have any income - yet, had villas and other assets that told a different story.

The IRS has always had the ability to track money to a certain extent and today the agency does this better than ever with the help of computers and other modern technological advances. What is not well known is the fact that the IRS has the ability and the authority to do what are called life-style audits. This is basically what they used to get Big Al.

The main premise of a life-style audit is that your life style should reflect the income claimed on your tax return. In other words, if you are living high on the hog and claim small amounts of income or no income on your tax return, then the IRS can use this as a basis for conducting an audit and collecting taxes.

There's a big difference between supporting a dependent - whether that person is a relative or not - and giving someone large sums of money or expensive gifts with whom you do not have a legitamate tax relationship. If you exceed the gift tax threshold then the gift giver must file a gift tax return. In 2008 that threshold is $12,000 and this is now being indexed for inflation. For decades the threshold was $10,000. So, the Big Als of today can't have anybody give them large sums of money - at least not legally - without taxes being paid. For more information go to www.irs.gov and either search on gift tax or refer to Publication 950.

Now remember I said legal. If politicians pass tax laws that favor the rich, then the rich can then legally pay less taxes. But they'd better keep it legal or they too are subject to the long arm of the IRS auditors.

For a modern-day example just look at the situation that the actor Wesley Snipes now finds himself in. He will be serving 3 years in jail for his misguided attempt to pay less taxes. His co-defendents have also been charged and sentenced. For more information on this story go to:

http://www.usatoday.com/life/people/2008-04-24-snipes_N.htm

So, at a time of looming deficits, politicians not wanting to raise taxes but bring in more money, you can bet your next pay check that the IRS is and will contintue to be more aggressive in collecting unpaid taxes and that Congress is making sure the agency does so.

Every writer should make sure they show due deligence in paying the taxes they are legally requried to pay and none of us is exempt from an audit. In fact, as writers we are more vulnerable to an audit because of the nature of our income and how we have to deduct our expenses. Unlike an employee whose employer provides a form of verification for the IRS, writers are essentially small businesses (or hobbies) and their income/expense records are primarily verified through IRS audits.

There's also the issue of the Tax Gap that has everyone in Congress excited about collecting more taxes without raising taxes. For a discussion of what the Tax Gap is please see my article at the following link:

http://www.helium.com/items/956548-theres-phrase-congress-legislators

Sunday, April 6, 2008

Kindle credited with recent boost in e-book market

Last week USA Today published an article with the following title:

Kindle boosts tiny e-book market

Here's the link:

http://www.usatoday.com/tech/products/2008-04-04-kindle-ebook-market_N.htm?loc=interstitialskip&POE=click-refer

It's a must read.

An then there's the article at Publishers Weekly that is very, very interesting. Longtime Hyperion president Bob Miller is leaving to form a studio at Harper Collins. Check out the reference to a new kind of publishing program.

Here's the link:

http://www.publishersweekly.com/article/CA6547542.html

Both of these articles are definitely food for thought.

Wednesday, April 2, 2008

Print on Demand is moving forward

As a serious writer if you don't follow the articles in Publishers Weekly - well you should! You can sign up for their daily email newsletter at www.publishersweekly.com by selecting newsletters and then subscribe. You may have to register at the site as well.

So why do you want to do this? Well, there are some interesting news tidbits that come out of this electronic newsletter. The most recent is about Print on Demand or POD. Once a dirty word in the publishing industry it's now a hot new fad.

There was a time when the quality wasn't quite there but with technology that has changed. In fact, rumor has it that short runs are the same printing process as POD. Rumor further has it that most of the printing process for all publishers is actually shifting to the same type of printing technology, regardless of print run size.

What's the advanatage of POD? Well decades ago when printing costs per unit were based on large numbers of prints - essentially decreasing as the publishers printed more copies - it was actually cheaper to print 10-50,000 copies of a book and put it in a warehouse until it was sold. In fact, in order to justify the "make-ready" or setup costs of printing, a large minimum number had to be printed and then it was up to the sales force to get the books sold. This was primarily in the typesetting days of old.

With all the advances in technology and printing efficiencies the cost disparity between printing one book, short runs and larger runs is diminishing. There is still cost disparity between the size of smaller and much larger print runs but publishers now have more control over the number of books that get printed, don't sell, then are returned. The nubmers of returns on books that were expected to sell well and didn't is legendary and it's a horribly inefficient business model.

In my opinion a main reason for this eagerness to embrace POD is the increase demand for content at a faster, more I-want-it-now rate, and while the newer generations are hungry for online content there's still a desire for the printed format and always will be. Part of this is owed to the baby boomers and their aging eye sight but part is also because sometimes paper is just best. The good news is we have more choices now. The bad news is we have more choices now and it's sometimes hard to make up our minds about what we want so often we choose both.

More than ever you will be able to sort through content online and then decide which format you want it in and receive it, perhaps even putting your own book together from various pieces of content. It's both exciting and scary.

This latest article at Publisheres Weekly online (and in print) is just another indication that POD is here to stay.

Here's the link:

http://www.publishersweekly.com/article/CA6547006.html?nid=2286&source=title&rid=#reg_visitor_id#