Reference no: EM13588564

A small mill town in Georgia has a clothing factory that employs about 35% of the working population. Many years ago a creative accountant came up with an idea. Instead of paying Christmas bonuses to the workers, the executives would donate to a charity and the "charity " would distribute the funds tax free.. The stated purpose of the charity was to help poor people enjoy Christmas. Every year after Thanksgiving there were notices posted around town inviting anyone who needed a little extra to make Christmas merry should send a letter to a specific mail box and they would be responded to by "Santa's Elves". The company gave the executives special year end achievement bonuses which they donated to Santa's Elves. A few days before Christmas the wives of the executives would open all the letters, read them and send out checks. There were many letters from poor people who needed a warm winter coat, extra blankets, vitamins not covered by medical insurance and new eyeglasses because theirs were broken and held together with tape or string. There were also letter from every employee at the mill explaining why their children needed the newest electronic gadget, or the latest fashion sneakers or designer clothes. Analysis of the checks showed that people working at the mill more 10 years got $250, 5-10 years, $100, 3-5, $50 and less than 3 got nothing. About 3% of the funds were sent in responses to letters for coats, blankets, vitamins and glasses.

You are an IRS agent assigned to review the charitable performance of Santa's Elves. Write you conclusion.

Assignment #3
A small town has been battling its unions for many years over the proper payment of extra money ( shift differential) to people who work nights and weekends. About six years ago the city started paying the differential but those who worked before that sued and case dragged in court with hearings and reviews. On September 30, 2013 the court issued its final ruling. The city would be obligated to pay $1,000 for every man, woman and child to pay the court award.

You are an advisor to a candidate for mayor and he needs to give a response to union workers , the general public and the press as to his plans for getting an extra $1,000 out of the budget for every person in the city. Note this is not I,000 taxpayers, there are children and senior citizens who pay no tax because their social security is not large enough to generate any tax.

Any suggestion is fair game but your candidate wants to win the election and not alienate the public. Tell me you best choice and at least two "non workable " suggestions.Both problems and the tax computation.