Paying Your Taxes on Time

195Property Tax Sale

Any time property taxes are not paid to a taxing authority by the tax due date. The taxes become delinquent. Then that can create a lien superior over any other lien including the mortgage. A tax judgement/Lien can be placed on the property, and will remain until the delinquent taxes, interest, penalties, fees and costs are paid.

The lien allows the taxing agency to sell the property to pay the delinquent taxes that are owed. It the property is sold for delinquent taxes and the redemption period has expired, the property owner and other parties with an interest in the property will lose all rights to the property, and the title is transferred to the new purchaser free and clear of any liens.

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Stamrecht BV Set-Up for a Severance Payment to Save Income Tax

195Setting up a stamrecht bv when you receive a severance payment in The Netherlands is meant to postpone and ultimately save income tax. Setting up a stamrecht bv can be complicated when you do not have the necessary knowledge of the pertinent tax and company law.

A stamrecht bv (“annuity company”) is a limited company (“besloten vennootschap” or “bv”) constituted according to Dutch law which has an annuity agreement with the former employee / owner. The company receives the severance payment and promises to make periodical payments in the future. Due to the progressive tax brackets, postponing income tax on a redundancy payment can lead to lower income tax when the severance payment is paid out at times when your income is lower. Since the cost of setting up a stamrecht-bv is fixed, it depends to a large extent on the amount of your severance payment if it is worthwhile to do so.

For setting up a stamrecht bv as a minimum you need the service of a public notary. The assistance of a specialised tax lawyer is recommended. Furthermore there is a large army of more and lesser competent advisors who offer an all-in service to set up a stamrecht bv. Apart from the set-up costs you will have annual expenses for the company register, bank expenses and expenses of an accountant if you cannot or do not want to do the administration of the company.

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No Guarantees: Lower Taxes in Retirement?

194Many people assume that they will drop down at least a tax bracket once they retire. That assumption, similar to many assumptions about retirement, may not hold true when the actual event arrives. This article explores why it is not safe to assume that retirement tax rates will be lower than your current one.

First, several deductions that you have now will likely not be available once you retire. Consider your children. Will they be adults who have graduated from college when you stop working? If so, strike off education credits and dependent deductions you could normally take. Also, since you will no longer work, strike off your contributions to your retirement plan. Will your mortgage be fully paid when you retire? Strike off the deduction for that.

Here’s an additional consideration: retirees who primarily rely on Social Security for their income may be eligible to receive up to 50 percent of that income tax-free while those who have saved well for retirement will be taxed once they begin to take distributions. Our government may also decide that a tax increase is necessary as some future point. So, tax rates could actually increase.

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Principles of Taxation in Ancient India

197As defined in Wykepedia Dictionary taxes are ‘compulsory charges levied by a government for the purpose of financing services performed for the common benefit’. In the words of Mill, taxation is “the condition of the existence of governments”(Principles of Political Economy). There is no denying the fact that no government can function without incurring a considerable expense on governance and welfare of its people. And for this people’s contributions in the form of taxes are the foremost components of financial resources to the government. This position is not confined to modern days’ governments alone but existed through out the ages, ancient and medieval; rather its existence may be traced back to the evolution of mankind into political organization. The ancient India was no exception to this. There is no dearth of evidence in the form of references and inferences in the documents of this period. The Vedic texts, epics, smritis, puranas, Arthashatra, literary texts and epigraphs of the time, all equivocally dwell at great length about the paramount importance of taxes to governments. Starting with the Vedic period, there existed a regular system of taxation. The technical fiscal terms like ‘bali’, ‘shulka’,’bhaga’,‘udaja’, and ‘niraja’ are frequently mentioned in the literature of this period1 which reasonably and legitimately lend support to the view that taxation had evolved from voluntary to compulsory and regular in nature. The Rigvedic king was the ‘sole taker’ of taxes and even did not hesitate in using force to realize the state’s dues fallen in arrears2. The Atharvaveda refers to the state’s share ‘in village, in horses and in kine (cows)3′. However, it is not known what share the state had in the wealth of its people. It appears that in course of time during the Vedic period itself, taxation started affecting life of the people so much so that a tendency to escape from taxes started gaining ground among influential people of the society. The Brahmanas were the first to claim immunity from taxes possibly on the basis of being engaged in unproductive vocations4. However, the simple nature of Vedic taxation did not last long as it was no longer adequate to meet the growing needs of government arising out from sweeping economic, social and political developments that had taken place during the post Vedic period of Indian history. This gave birth to a number of general rules or canons of taxation.

Modern scholars on ancient Indian polity hold the principles of Hindu Taxation in high esteem. “That the constitutional law of taxation was a living law, regulating life”. Whatever the form of government there was, taxation was not an object of ruler’s caprice5. Some of the scholars go to the extent of asserting that the modern maxim of ‘ability to pay taxes’ and ‘the least sacrifice theory’ were the guiding principles in ancient India6. The historical accounts, however, do not subscribe to the eloquent estimates of these scholars as it would be evident from the critical examination of data available in the various texts of the period under review.

The first principle of modern taxation is that it is compulsory in nature. In ancient Indian texts, there are abundant evidences to show that taxes as compulsory payments were well

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Do You Pay Taxes on a Structured Settlement?

193Sell Structured Settlements

Sometimes if a claimant is a case for a large sum of money, the defendant, the lawyer for the plaintiff, or consult a financial planner in cooperation with the settlement, the payment of the settlement in installments over time rather than an amount. Where arrangements are paid in this way is a structured settlement. Often purchasing one or more annuities will create the structured settlement, which is to guarantee the future payments.

A structured solution may provide for the payment in almost all the plans of the parties to choose. So the system can be paid in annual installments for several years, or it can be paid in periodic lump sums every few years.

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