Calendar-year corporation returns are due today! They are easy to extend on Form 7004 if you can’t finish them today. If you don’t extend an S corporation return and you file late, the penalty starts at $195 for each late K-1, and $195 each for every additional month the return is late.
Joseph Henchman, Iowa House Passes Alternative Maximum Tax: Income Tax Option Clear of Carveouts (Tax Policy Blog). Joseph has some good things to say about the Iowa alternative tax that passed the house this week (HF 478):
I’ve never filled out an Iowa income tax form but it looks like one of the harder state tax returns. Iowa allows you to deduct what you pay in federal income tax, which is nice but is that much more calculation work (and probably drives up tax rates). There are lines for the lump-sum tax, the minimum tax, the K-12 textbook credit, the school district surtax, the motor fuel tax credit, and the earned income tax credit. I’m sure each one of these has their explanations of necessity but together it sounds like a lot of paperwork, record-keeping, and Tax Filing Day frustration.
Hence, I’m impressed by a bill passed yesterday (House File 478) by the Iowa House which would offer an alternative to all Iowa taxpayers: a 4.5 percent tax on all income above about $15,000, which no further deductions or exemptions. It’s not perfect: our friend Joe Kristan pointed out that a credit for taxes paid to another state and a deduction for federal interest are probably constitutionally required, and offsetting deductions to certain kinds of income (allowing gambling losses if you tax gambling winnings) is good policy. But as Joe said, the bill “is a welcome step towards improving Iowa’s income tax.”
I’m hoping it’s a step towards the Tax Update Quick and Dirty Iowa Tax Reform Plan.
It’s a myth, so they’re cracking down on it!
Bloomberg News, States Crack Down on Top Earners Who Flee as Levies Rise: Taxes
If they feel have to “crack down” on something, maybe there’s something to that myth.
Janet Novack, Blame Congress, As Well As H&R Block And IRS, For College Tax Credit Mess. Oh, I do! From the article:
Far be it from me to let either the Internal Revenue Service or tax prep giant H&R Block off the hook for the current mess which has delayed refunds for more than 600,000 taxpayers claiming college tax credits by up to eight weeks. In addition to their operational missteps, both did a poor job (at least initially) of communicating with taxpayers who desperately need those refunds to pay tuition or other bills.
But let’s put some of the blame where it rightly belongs: on the Washington politicians. For more than two decades, Congress has been expanding “tax expenditures” with little regard for how complicated such provisions might be for taxpayers to use and for the IRS to administer, let alone for whether they do enough good to justify their cost and the economic distortions they create. A new 1065-page Congressional Research Service compendium lists 250 different tax expenditures. Happy reading.
Every little break like this diverts IRS resources from actually collecting income taxes and makes the income tax a little less effective and useful. Yet Congress still sees the tax law as the Swiss Army Knife of public policy.
Jim Maule, Tax Depreciation: Do the Math:
No matter how well a student in the basic tax course masters the depreciation deduction to the extent it is studied, that student knows that the total depreciation with respect to a property cannot exceed its cost. All of the students would find themselves bewildered by the proposition that depreciation deductions on a property that cost $34,799 would total $56,000.
So was the Tax Court.
Tony Nitti, Golfer Sergio Garcia Comes Up Short In Tax Court, But Is The Decision A Victory For Other Athletes? He won on his endorsement royalty income, so while he may not have had an undisputed win, he did OK, like a PGA golfer who gets second-place prize money.
Going Concern, IRS Won’t Be Sorry If You Never Get Around to Claiming Your Refund. Over $900 million in 2009 refunds will be out of reach of their rightful recipients after April 15, when the 3-year window for claiming them expires.
Trish McIntire, Don’t Lose Your 2009 Refund
Paul Neiffer, Will Large Farmers Be Able to Use Cash Method in the Future?! Farmers should get the same tax rules and breaks everyone else does, no less and no more.
Kay Bell, Will a relationship neutral tax code save traditional marriage?. Not every problem is a tax problem.
Howard Gleckman, The Ideological Chasm Between the House and Senate Budgets
William McBride, Dave Camp Floats a Rewrite of Small Business Tax Rules (Tax Policy Blog)
Jack Townsend, U.S. Taxpayer Pleads to FBAR and Tax Perjury Violation
Brian Strahle, State Tax Revenues: Corporate Income Tax Not That Important?
Oh, Goody. Applying for Obamacare Subsidies Will Be as Complicated as Doing Your Taxes (Megan McArdle)
Argo pay your taxes. It turns out Iowa isn’t the only government whose film tax credits attract scammers. From London comes this via Boston.com:
In some ways ‘‘A Landscape of Lies’’ was a typical indie film, with a tiny budget, a B-list cast and an award from an American film festival.
What made it special is that it was created solely to cover up a huge tax fraud.
In fact, officials say, the project was a sham, set up to claim almost 1.5 million pounds in goods and services tax for work that had not been done, as well as 1.3 million pounds under a government program that allows filmmakers to claim back up to 25 percent of their expenditure as tax relief.
No word on whether Leo Bloom prepared the fraudulent returns.
News you can use: Polish Up Your Guccis. (Christopher Bergin, Tax.com).
Will there be tax reform? I think there has to be. But I don’t think it will look like theTax Reform Act of 1986 because, in short, it’s not 1986, and we don’t have the same problems or even the same tax system. That doesn’t mean there aren’t a lot of lessons to be learned from the ’86 experience. But I don’t think tax reform will happen soon. And a few of the reasons I think that come right out of “Gucci Gulch.”
I have a copy of Showdown at Gucci Gulch, the book about how the 1986 tax reforms were enacted. I haven’t brought myself to open it; it seems too much like reading about my job.
He should have hidden the cash across the pond. Opening statements underway in Beavers tax evasion trial (WGNtv.com)
Tags: iowa tax policy, maule, megan mcardle, Kay Bell, Janet Novack, William Perez, Christopher Bergin, TaxGrrrl, Paul Neiffer, Going Concern, Trish McIntire, Joseph Henchman, Howard Gleckman, film tax credits, Jack Townsend, Quick and Dirty Iowa Tax Reform Plan, Brian Strahle, William McBride, Anthony Nitti, Beavers, Brian Mahany