Three of New York’s trendiest fitness clubs may be putting a spiritual spin on their services as a way of avoiding sales taxes, but state Attorney General Eric Schneiderman isn’t having it, Crains reports.

Schneiderman last week issued subpoenas for unpaid sales taxes to popular spinning clubs SoulCycle and Flywheel Sports, and to Bar Method, which bills itself as a combination ballet and Pilates-style workout. The subpoenas are investigative and the companies have not been accused of any wrongdoing.

Fitness companies in New York City, uniquely within the state, are subject to sales taxes unless their services are limited to yoga and meditation, which allows them to qualify for a religious exemption. Bar Method, SoulCycle and Flywheel Sports do not offer yoga, but their branding and testimonials often tout a spiritual element to the workouts.

The tax distinction between yoga studios and other fitness clubs was only made by the state last July, and a consultant for the health and fitness industry told Crains that the problem had arisen before.

“There’s been a real confusion for years as to what the criteria are for payment,” said Richard Caro, president of Management Vision. “This is not something that’s a new topic.”

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The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.

The deal also resolves, for now, the question of whether Washington can overcome deep ideological differences to avoid harming an economy that is only now beginning to pick up steam after the deepest recession in 80 years.

Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.

Asian stocks hit a five-month high and the dollar fell as markets welcomed the news. China’s state news agency Xinhua took a more severe view, warning the United States must get to grips with a budget deficit that threatened not a “fiscal cliff” but a “fiscal abyss”. Most of China’s $3.3 trillion foreign exchange reserves are held in dollars.

The vote averted immediate pain like tax hikes for almost all U.S. households, but did nothing to resolve other political showdowns on the budget that loom in coming months. Spending cuts of $109 billion in military and domestic programs were only delayed for two months.

Obama urged “a little less drama” when the Congress and White House next address thorny fiscal issues like the government’s rapidly mounting $16 trillion debt load.

There was plenty of drama on the first day of 2013 as lawmakers scrambled to avert the “fiscal cliff” of across-the-board tax hikes and spending cuts that would have punched a $600 billion hole in the economy this year.

As the rest of the country celebrated New Year’s Day with parties and college football games, the Senate stayed up past 2 a.m. on Tuesday and passed the bill by an overwhelming margin of 89 to 8.

When they arrived at the Capitol at noon, House Republicans were forced to decide whether to accept a $620 billion tax hike over 10 years on the wealthiest or shoulder the blame for letting the country slip into budget chaos.

The Republicans mounted an effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate.

RELUCTANT REPUBLICANS

For a few hours, it looked like Washington would send the country over the fiscal cliff after all, until Republican leaders determined that they did not have the votes for spending cuts.

In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law.

“We are ensuring that taxes aren’t increased on 99 percent of our fellow Americans,” said Republican Representative David Dreier of California.

The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.

The speaker had sought to negotiate a “grand bargain” with Obama to overhaul the U.S. tax code and rein in health and retirement programs that are due to balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama’s tax measures.

Income tax rates will now rise on families earning more than $450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.

Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.

However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.

The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.

But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

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A man who told the National Enquirer that he had a “steamy affair” with John Travolta while working as his pilot from 1981 to 1987 is now suing the actor, insisting he never signed a confidentiality agreement that would bar him from talking to the media about his time with the actor, according to TMZ. The man, Doug Gotterba, claims Travolta’s lawyer, Marty Singer, threatened a lawsuit after the story was published. Singer  maintains that Gotterba’s termination agreement included a confidentiality clause and that the former employee is just out for attention. “Mr. Gotterba obviously filed this lawsuit to get his 15 minutes of fame,” Singer says. “We plan to get this meritless case promptly dismissed.”

Might her upcoming “Maleficent” mark the end of Angelina Jolie‘s acting career? It’s not out of the question, the actress says. “I have enjoyed being an actress I am so grateful to the job and I have had great experiences and I have even been able to tell stories and be a part of stories that mattered and I have done things for fun, but…” Jolie tells Britain’s Channel 4 News coyly, once again prompting rumors of a planned early retirement. “If it went away tomorrow I would be very happy to be home with the children,” she says. “I wake up in the morning as a mom and I turn on the news like everybody else and I see what’s happening and I want to be part of the world in a positive way.”

A nice dinner out at the Beverly Hills Polo Lounge with John Mayer turned awkward for Katy Perry when her ex-husband, Russell Brand, showed up. Just how awkward are we talking about? Perry reportedly crouched under her table and hid just to avoid Brand, according to Us Weekly. “The hostess almost seated Russell next to Katy,” a source says. “Katy’s face was like, ‘Oh s—!’” And while the seating disaster was averted and Brand was set up elsewhere in the restaurant, he apparently needed to satisfy his curiosity upon learning of Perry’s presence.  “On his way to the bathroom, he looked at [John and Katy] through a window,” the source adds.

Now that the world has learned that Kate Middleton is pregnant, the next question is exactly what kind of mother will she be? “Kate will be a firm but fair mother,” a pal of the Duchess of Cambridge predicts, according to Us Weekly. “Kate will let her children have fun and freedom, but she will also make sure they do what is best for them.”

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Mattera, editor at large at Human Events, approached said “Bono” and asked him direct questions about U2′s taxes, particularly about moving money to Holland for a lower tax base.

“How do you not have control over that? It’s your company. Are you not in charge of your own company?” Mattera asked.

“It’s not my company,” the impersonator responded.

“You have no say in what U2 does?” Mattera pushed.

“Not particularly,” said the “Bono.”

The reason he didn’t have much of a say about his company? Because it wasn’t actually his company at all. The impersonator declined to let Mattera in on the little joke, and the reporter went on believing he had captured a real “gotcha” moment.

According to Media Matters, the video was posted on Breitbart.com and Glenn Beck’s The Blaze this week, but was pulled and marked “private” on YouTube last night. Lucky for us, and anyone else in need of a good laugh, it has resurfaced.  (Watch it below!)

Mattera admits he was duped, but said it was bound to happen.

“I got punked. I thought I got Bono. I didn’t. I got his impersonator apparently. Hats off to him. He got me — and how!” Mattera said in an e-mail to Washington Post blogger Erik Wemple. “After scores of interviews with big-time politicians and celebrities, I finally got had. It was bound to happen sooner or later. On the bright side, if I’m gonna get had as good as I did, it might as well be in pursuit of one of the greatest rockers ever.”

As for the impersonator, it was Pavel “Bonodouble” Sfera who said he was only giving answers he knew how to give. In the end, Sfera decided not to reveal his true identity to Mattera.

“I let him go. I didn’t think he was being legitimate and fair,” Sfera said.

As Mattera learned first-hand, “gotcha” journalism isn’t always fair.

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Few high-profile decision makers have publicly supported their pleas so far, and most in their target audiences decline to even discuss it, lest they get dragged into the debate.

That isn’t the case outside the corporate elite.

More than 40,000 Twitter users shared billionaire investor Buffett’s op-ed column in Monday’s New York Times calling for the wealthy to shoulder a bigger tax burden.

CNBC’s largely corporate audience backed Starbucks Chief Executive Schultz’s call to fellow CEOs to stop sending political donations until Congress and the president come up with a long-term plan for a “fair, bipartisan” deal to curb U.S. debt, with 89 percent in favor in a poll.

But public outrage will not make their suggestions reality. That would require other tycoons and top executives to jump on board to tell the Republicans and the Democrats that they had also had enough of the rancor that brought the United States close to a debt default earlier this month and contributed to the loss of the nation’s triple-A debt rating.

“Getting Washington to do something about this, getting the GOP [Republican Party] to move off their ‘no new tax’ position, no funding of our deficit problem through raising tax revenue, I don’t see how that’s going to happen,” said Dal LaMagna, an entrepreneur and investor who has unsuccessfully run for national office.

LaMagna has a history of outspokenness, but few are joining him in debating this question.

Even if Buffett and Schultz fail to get more than a handful on board with their proposals, the very fact they made them may tend to help Democrats on the campaign trail for the presidential and congressional elections in November 2012.

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“My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice,” The 80-year-old “Oracle of Omaha” wrote in an opinion article in The New York Times.

Buffett, one of the world’s richest men and chairman of conglomerate Berkshire Hathaway Inc., said his federal tax bill last year was $6,938,744.

“That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent,” he said.

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Submitting online from the comfort of home or at the U.S. Post Office, taxpayers turned over the complicated forms that tally up either the joyful news that a refund is coming or painful reality that even more money is due.

Watchdog groups, meanwhile, found the richest Americans are paying a smaller share of the pot than in years past. According to 2008 IRS data analyzed by the Tax Foundation, the top 1 percent of earners paid 38 percent of all federal individual income taxes, a decline from 2007 when the same group paid more than 40 percent.

Citizens for Tax Justice, which looks at all taxes paid including federal, state and local taxes, said that in 2010 the top 1 percent of earners will pay 21.5 percent of taxes. The group said that top 1 percent earned just over 20 percent of total income.

“It doesn’t make things any easier for a working stiff like me,” said David Desmarais, 37, of Stanford, Connecticut, a hotel desk clerk who mailed his tax return at the enormous main post office in New York City. “I work really hard to earn what I do, so tax day is never fun.”

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Internal Revenue Service Commissioner Douglas Shulman last week told a congressional hearing he was in talks with the White House budget agency about contingency plans in the event of a government shutdown.

Taxes are due this year on April 18.

Lawmakers and the Obama administration continued talks yesterday to avert a shutdown, racing against expiration of a temporary government funding measure that ends this Friday.

When the IRS Commissioner was asked about the potential for a shutdown last week, talks seemed productive.

“Everybody is hopeful that there won’t be a shutdown,” Shulman said, noting negotiations between congressional leaders and the White House were ongoing.

An IRS spokeswoman could not speculate on how the agency would handle a shutdown this time.

Shutdown could hurt economy

President Barack Obama warned yesterday that a federal government shutdown would seriously disrupt the U.S. economy, after Republican and Democratic leaders failed to make headway on a budget deal.

With the clock ticking toward a government shutdown on Friday, Obama said he would call negotiators from both parties back to the White House if necessary to break an impasse.

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The president’s fiscal 2012 budget released today sets funding for the tax-collection agency at $13.3 billion, an increase of $1.1 billion from 2010, the last time a full appropriation was made for the IRS.

Almost half of the increase, or $460 million, would support the agency’s tax-enforcement programs. Under the plan, the IRS would focus on fighting tax evasion through the use of offshore accounts and cheating by corporate and high-wealth taxpayers.

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“It gives people a chance to come in before we find them,” Internal Revenue Service Commissioner Doug Shulman said.

Under the new program, participants face a 25 percent penalty for the year with the highest balance, compared with the usual penalty of 50 percent.

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The lawsuit comes on the eve of the main U.S. tax filing season, a crucial period for the largest U.S. tax preparation companies because the February-to-April quarter accounts for roughly three-fifths of annual revenue and much of their profit. H&R Block did not immediately return requests for comment.

The lawsuit relates to so-called “refund anticipation loans,” which for a fee allow taxpayers quick access to expected refunds, rather than having to wait for the IRS to send checks.

According to the complaint, H&R Block falsely claimed that its “Second Look Review” program, which reviews past tax returns prepared by rivals, found that two-thirds of prior returns prepared by Jackson Hewitt contained mistakes.

“H&R Block’s 2 out of 3 claim necessarily implies the false claim that two out of three Jackson Hewitt customers who are entitled to refunds have been short-changed due to Jackson Hewitt errors or incompetence,” the complaint said.

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In addition, many lower- and middle-income New Yorkers are eligible for the Earned Income Tax Credit. Families making less than $48,362 and single parents making less than $43,352 can get cash back from the IRS if they file a tax return.

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“This is a great move, because homeowners are very confused reading their tax bills,” said Ella Stevens, president of the 800-member Wantagh/Seaford Homeowners Association. She said residents have complained that previous grievances seldom ever resulted in lower property taxes.

Mangano said the previous system of yearly assessments was “dysfunctional in every way” and “pushed Nassau County into fiscal instability.” He added that Nassau County pays the second-highest property taxes nationwide: “This reform alone stops the assessment sham of making the same error each year.”

Residents have until March 1 to contest their current assessment. Gregory Hild, chairman of the Department of Assessment’s Transition Team, said the new system would stop “the cycle of
erroneous refunds that waste over $250 million of taxpayers’ hard-earned money annually.”

Stevens said the improved assessment system will encourage residents to make upgrades on their homes. Previously, they worried about high assessments for any changes.

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