Posts Tagged ‘Kerry Kerstetter’

Tax Roundup, 1/24/2013: Tax increases for everyone, anyone? And more bad news for tax season!

Thursday, January 24th, 2013 by Joe Kristan

 

Tax Foundation graphic.

TaxProf,  NY Times: it Is Time to Raise Taxes on Everybody — Including the Middle ClassPaul Caron links to a New York Times Op-ed:

To make ends meet, both parties agree, spending must be drastically cut. Under the White House budget proposal, discretionary spending on everything except the military is projected to shrink to its smallest share of the economy since the Eisenhower administration by the beginning of the next decade. Though he has resisted Republican demands to slash entitlements, President Obama remains willing to look for further savings from Medicare.

This is not, however, the only option we have. There is an alternative: raising more money from all taxpayers, including the middle class.

Nobody wants to talk about this. … Yet Americans would benefit from a discussion of this possibility.

It’s not true that “both parties agree” that spending must be drastically cut.  It’s not clear that either party, as a whole, admits it, and at least one party remains in firm denial.  The President’s campaign was all about spending money and sending the bill to the rich guy.  Still, it’s nice that finally somebody at the New York Times admits that the rich guy isn’t buying.  He can’t.

 

Janet Novack,  As IRS Tax Filing Season Begins, Bad News For Honest Taxpayers.  She20130121-2 speaks with Taxpayer Advocate Nina Olson.  The article has some depressing truth:

Customer service at the Internal Revenue Service is dismal and deteriorating. (Only 68% of telephone callers who wanted to talk to a human at the IRS last tax filing season eached one, and then only after an average 17 minute wait.)  The epidemic of identity theft refund fraud hasn’t yet been contained.  Hope for a major reform that might simplify the tax code is waning.

The article also has some serious nonsense about last week’s ruling shutting down the IRS preparer regulation power grab:

“If the injunction stands, the taxpayers of the United States will be grievously harmed,” IRS National Taxpayer Advocate Nina E. Olson told Forbes. “The practical effect of not having some kind of consumer protection for taxpayers going to return preparers is enormous. And I say that seeing all the return preparer fraud, and the return preparer negligence, and the return preparer inadvertent mistakes that happen.”

Enormous?  More like what we did forever until two years ago.  If anybody has evidence that last year’s tax preparers were significantly more accomplished and accurate than they were before the regulations, they haven’t shared it.  And the idea that the RTRP literacy competency test and minimal CPE requirement would have changed that is silly.

Ms. Olson believes that depriving consumers of choices in preparers is in their interest because the diminished choices would be better.  That flies in the face of all we know about regulation.  The net result would be higher prices, driving more taxpayers to do their returns and driving some on the margins out of the system altogether, while sending more business to the big franchise tax prep outfits.

 

Robert D. Flach, TAX RETURN PREPARER REGULATION, LICENSURE, AND/OR CERTIFICATION.  Robert’s magnum opus on how tax preparers should be regulated.

While I agree that having the Internal Revenue Service regulate tax preparers is not the best option – it is without a doubt a far superior option to having Congress legislate regulation.  My opinion of the intelligence, competence, and ability, or rather lack of intelligence, competence, and ability, of the current members of Congress is well known.
The optimal source of tax preparer regulation/licensure/certification, whether mandatory or voluntary, would be an independent industry-based organization, not unlike the AICPA or ABA, such as the National Institute of Registered Tax Return Preparers that I have proposed.

Robert also calls me out:

As I have asked in response to Joe’s assertion, would you want a “casual” electrician wiring your kitchen, or a “casual” dentist filling a cavity, or a “casual” architect designing your home?

If I do, what business is it of anybody else?  If I want to pay a talented handyman neighbor or cousin to install a ceiling fan for me, why is it anybody’s business?  Why should he be not allowed to take my money just because he doesn’t have an electrician card from the Bureau of Electrical and Mortuary Science?  As TaxGrrrl noted yesterday, occupational licensing is taking over the economy, and that’s not a good thing.

 

TaxGrrrl, With A Week To Go, IRS Talks Opening Day and Refunds

 

Cara Griffith, Have State Income Taxes Run Their Course? (Tax.com)

The corporate income tax is inefficient and a not sufficiently stable source of revenue for states. It should be eliminated. The individual income tax is likewise not a particularly stable source of revenue for states, and while counterintuitive, progressive tax systems do not work well at the state-level. Income redistribution, to the extent that it should be a goal at all, should not be undertaken at the state-level. So  in a perfect world, yes, the state individual income tax should be eliminated as well.

Christopher Bergin agrees.

 

Good. Another bid to ban traffic enforcement cameras in Iowa. (O. Kay Henderson, via The Beanwalker).  Traffic cameras are your local government’s most sincere way of showing their contempt for you.

 

Trish McIntire,  Form 8332 and Fairness.  How the IRS enables bitter ex-spouses.

Paul Neiffer,  Why Imputed Interest Matters For 2013 (And Beyond)

Kaye A. Thomas,  Another Demutualization Case

Robert W. Wood, Golfer Phil Mickelson Is Not Alone In Fleeing Taxes (Via Kerry Kerstetter)

Peter Reilly, Why Phil Mickelson’s Remark Was Really Dumb

Brian Mahany, Is FATCA In Trouble? Unfortunately, NO

Joseph Henchman,  CBPP’s Misleading Chart on Debt Stabilization (Tax Policy Blog).  A study in cherry-picking.

Jen Carrigan, Should Capital Gains Be Taxed Differently? (Guest post at The Missouri Taxguy blog).

Patrick Temple-West,  Firms keep stockpiles of ‘foreign’ cash in U.S., and more

Tax Trials,  District Court Decision Prevents IRS from Regulating Certain Tax Return Preparers

Kay Bell,  Fiscal cliff tax provision could help stem fraudulent refund claims by prisoners

 

News you can use:  Passing the CPA Exam While Billing Over 2500 Hours in a Year Is Way Harder Than Having a Baby(Going Concern).  Also less useful and not as smart.

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Tax Roundup, 1/17/2013: Iowa alternative maximum tax introduced. Also: cash for clunkers, firearms edition!

Thursday, January 17th, 2013 by Joe Kristan

20130117-1Alternative Maximum Tax introduced in Iowa House.  The Republican leadership of the Iowa House of Representatives has introduced a new way to compute Iowa personal income tax.  HF 3 would create an optional “alternative base income tax”at a 4.5% flat rate.   The bill would allow taxpayers to elect to be taxed on their federal Adjusted Gross Income before net operating losses, less a $6,200 standard deduction ($12,400 for joint filers and heads of households).  The only credits allowed would be for estimated taxes and withholding.  Taxpayers could instead continue to follow the existing tax law.

There is an obvious flaw in the statute as drafted: federal AGI includes interest on federal debt, which states aren’t allowed to tax.  Maybe that’s just assumed, but the existing Iowa income tax law specifically excludes U.S. interest.  This tax is different from that proposed by Iowans for Discounted Taxes, which would exempt all investment income from the tax base.

The bill would be a huge step forward for Iowa tax policy if it were enacted as a replacement for Iowa’s current tax, rather than an option.  Eliminating all of the tax credits and special state deductions would greatly simplify everyone’s tax life, and lowering the rate would make Iowa much more attractive to businesses and newcomers.  In this form, though, it’s just another computation, an alternative maximum tax.  It’s like the alternative minimum tax, except you pay the lower tax computed, rather than the higher one.   It was probably drafted this way to avoid a fight over eliminating the current deduction for federal income taxes on Iowa returns.

I will run some numbers to see how the HF 3 tax would compare with taxes computed the current way.  The bill is co-sponsored by 54 representatives, including House Speaker Paulsen, so it’s a given that it will pass the House in some form.  It will be interesting to see whether the Senate, controlled by Democrats, will bring this to a vote.  The Governor has made clear income tax reform isn’t his priority this year.

 

This plan might be half-cocked.  From William McBride at the Tax Policy Blog:

This week Rep. Rosa DeLauro (D-CT) proposed an assault weapon buy-back program that would operate through the tax code:

“The SAFER Streets Act creates a $2,000 refundable tax credit ($1,000 for two consecutive years) for an assault weapon owner who turns in their firearm to the state police.”

This assumes the gun manufacturers cannot produce additional guns as
fast as the old ones are destroyed, and that they cannot be produced, at
this rate of production, cheaper than the buy-back price. 

Cash for Clunkers, firearms edition.

Kay Bell,  Guns, ammo, violence and taxes

 

TaxProf, TIGTA: IRS Has 60% Error Rate in Policing Noncash Charitable Contribution Deduction.  I’m sure they’ll do lots better implementing the Affordable Care Act.

Patrick Temple-West,  New Yorkers face higher real estate taxes, and more

Peter Reilly,  Are Tax Protesters Actually Winning ?:

Ms. Curtis lost as badly as it is possible to lose in Tax Court.  There is the 75% fraud penalty and the maximum sanction, $25,000, for frivolous arguments. She still might appeal, though.  Presumably the Circuit will make relatively quick work of that and maybe pile on some more sanctions.  Fine.  Now the IRS has to start trying to collect from her. 

Tax protester arguments can slow down the tax collector, but the tax man wins in the end.

 

Robert D. Flach, THE RETURN OF A HOME OFFICE STANDARD DEDUCTION

Kerry Kerstetter,  New option for Home Office deduction

Jason Dinesen,  How the Fiscal Cliff Deal Affects Teachers

Trish McIntire,  Red Forms

Cara Griffith, Should States Just Enforce Use Tax Collection? (Tax.com)

Russ Fox,  California Supreme Court Takes Gillette Case

Joseph Henchman,  The Al Bundy Tax Rule: New Hampshire Governor Pledges to Veto Beer Tax (Tax.com)

If it’s your identity, pretty bad.  IDENTITY THEFT AND TAX FRAUD – HOW BAD IS IT? (TaxTV.com)

Brian Mahany,  Steelers’ Plaxico Burress Pays Off $98,000 IRS Tax Lien

Christopher Bergin, Everybody’s Gone Surfing (Tax.com)

News you can use: Going Concern’s Guide to a Healthy Busy Season: Because No One Should Die at Work

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