The Seinfeld show debuted 25 years ago, but its comedy endures. Tax attorney Rob Wood suggests that it also teaches ten tax lessons. In this report, he discusses his Forbes article “Seinfeld's 10 Enduring Lessons---About The IRS.”
Wood notes that he views Seinfeld from the perspective of a tax lawyer. One of the lesson, aired in 1991, is that the IRS has power. Jerry is audited and has to produce a $50 receipt for the contribution. The byplay on the show compares the IRS to the mafia, a comparison the agency may not appreciate but which contains a grain of truth. The IRS is a powerful agency.
The incident also highlights the issue of fake charities, the kinds of things that pop up in the wake of any major disaster. But what about donations to such a bogus charity? Wood says that the taxpayer needs to verify that the charity is a legitimate one to begin with; the taxpayer also needs to retain good evidence of the donation in order to withstand an audit.
Wood also mentions independent contractors. One Seinfeld involves a maid, whose boss avoids paying payroll taxes by claiming that she is an independent contractor. The use of independent contractors as a way of avoiding the expenses of having employees is fairly common in the U.S. But employers should be aware that the IRS has rules about what makes someone an independent contractor. Wood points out that employers can face "taxes, interest and penalties, plus liabilities to their workers for violating the 'right to control' test."
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.