Posts Tagged ‘Matt Gardner’

Tax Roundup, 2/1/2016: Caucus day, and other plagues.

Monday, February 1st, 2016 by Joe Kristan

20160131-1Is there such a thing as snow locusts? Today is the last day Iowa will be plagued by presidential candidates and their relentless ads and emails. Tonight, blizzard and winter storm warnings across the state.

Lots of things go into choosing a candidate. We kid ourselves if we think it is all rational. Many voters put as much thought into their political preferences as they do into choosing a favorite sports team. Most voters are much more informed about their sports teams than their votes.

But Tax Update readers are different!  You especially want to know about candidate tax policies. Fortunately, the Tax Foundation has an excellent Comparison of Presidential Tax Plans and Their Economic Effects. I like this chart they provide:

taxplanchart

You’ll notice that only one plan is projected to have positive economic effects while reducing the budget deficit over 10 years. I like that one.

 

Other Caucus-related links:

Tax Policy Center Major candidate tax proposals, a center-left analysis.

TaxProf, Clinton (47%), Sanders (54%) Propose Highest Capital Gain Tax Rates (Now 24%) In History

Tyler Cowen, My favorite things Iowa (Marginal Revolution). “The bottom line: Who would have thought ‘jazz musician’ would be the strongest category here?” Speak for yourself, buddy!

 

20160201

 

Russ Fox, The Liberty to Commit Tax Fraud:

This story does show two things. First, requiring every tax professional to obtain a license won’t stop tax fraud. The alleged fraud here was started by an individual with a PTIN, someone who assuredly could obtain the former RTRP designation or the current AFSP “seal of approval.” Second, the Department of Justice news release notes, “In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.” This is absolutely true, and the DOJ should be commended for their work. It also shows that licensing every tax professional isn’t needed to get rid of unscrupulous ones.

Amen.

William Perez, When Does an 83(b) Election Make Sense? 

Paul Neiffer, Pre-1977 Purchases May Get 100% Step-up or Not! Involving old joint interests in property.

Kay Bell, W-2, 1099 forms delivery deadline is here

Jack Townsend, 60 Minutes Exposé on Money Laundering Into the U.S.

Jason Dinesen, Not All Donations to Charity Are Deductible. Time, for example.

Kristine Tidgren, Des Moines Water Works Lawsuit Gets More Complicated (AgDocket)

Peter Reilly, NorCal Tea Party Patriots V IRS – Grassroots Or Astroturf?

Leslie Book, Migraine Caused by Improper IRS Collection Action During Bankruptcy Stay Triggers Damages for Emotional Distress

Robert Wood, Worst Lottery To Win Is IRS Audit Lottery, So Decrease Your Odds

TaxGrrrl, Understanding Your Tax Forms 2016: 1098-T, Tuition Statement

Tony Nitti, IRS Rules On Whether Trade-In Of Private Jet Qualifies For A Tax-Free Like-Kind Exchange

Happy Blogiversary! to Hank Stern for 10 years of Insureblog.

 

20160131-2

 

Matt Gardner, International Speedway Reaps Benefits of Revived “NASCAR Tax Break” (Tax Justice Blog). In which the Tax Justice people sctually make a lot of sense: “In the context of our growing budget deficits, the annual cost of the NASCAR giveaway is a drop in the bucket at less than $20 million, making it a small part of the $680 billion extenders package. But because its benefits are narrowly focused on a few privileged companies, the damaging effects of this tax break go way beyond its fiscal cost.”

Donald Marron, What Should We Do with the Money from Taxing “Bads”? (TaxVox)

TaxProf, The IRS Scandal, Day 996Day 997, Day 998. Day 997 links to  IRS’s New Ethics Chief Once Ordered Records Be Illegally Destroyed. These are the people who think they need to regulate tax preparers to keep us in line.

 

Scott Drenkard, David Bowie: Tax Planning Hero (Tax Policy Blog). “Taxes really matter, especially for an artist like Bowie who had a lot of options for where to reside and earn income.”

Robert D. Flach, THE TWELVE DAYS OF TAX SEASON

 

Finally, in honor of the Iowa Caucuses I quote the great Arnold Kling, who captures my feelings about these proceedings perfectly:

To me, political campaigns are not sacred events, to be eagerly anticipated and avidly followed. They are brutal assaults on reason. I look forward to election season about as much as a gulf coast resident looks forward to hurricane season.

Only the beginning of a wise and profound post. Read it all.

Share

Tax Roundup, 1/25/16: Four steps to a quicker, cheaper 1040. And: ID theft – prevention vs. punishment.

Monday, January 25th, 2016 by Joe Kristan

1040 corner 2015How to make your tax return cheaper. If you don’t have all of your 1099s, brokerage statements and so on, there’s a good chance you’ll have them by the end of the week (but if you’re waiting on K-1s, forget it). Then you will want to send it all to your tax pro and get it back right away. If you want to get it back quickly, and keep your fee down, the best way is to provide everything your tax pro needs the first time.

Every time we have to ask you a question or track down a document, it slows things down, and the fees start to creep up. Here are a few things taxpayers commonly forget to do or include.

Go through the tax organizer and at least answer the questions. Many taxpayers just return a blank organizer with their 1099s. That’s unwise. The question part is there for a reason. For example, it identifies life events that don’t show up on 1099s or W-2s. Once a client mentioned his wife in a phone conversation. I had improperly prepared returns for him as single for two years. Of course, the “change in marital status” question on the questionnaire had been returned unanswered on his blank organizer both years.

Double-check your estimated tax payments. The standard answer tax pros get from taxpayers who return blank organizers is “I sent in all the payments you said on the dates you said.” And sometimes that’s actually true, but quite often it isn’t. That leads to IRS notices, tax penalties and extra tax pro fees. Go through your check register and bank statements and write down the actual dates and amounts on the organizer — or send copies of the cancelled checks from your statements.

Spend a few minutes culling your information. You don’t want to pay your tax pro to dig through your utility bills, cable provider statements, and junk mail to find your charitable contributions and information returns. Clear out the junk before you bring it in.

Make sure your contact information is current. If we do have to ask you questions, it’s a lot easier if we have your current email address and the right cell phone number.

This is the first of our 2016 filing season tips. Look for these occasionally until April, when they will come thick and fast. 

Related: Robert D. Flach, DON’T BE IN SUCH A HURRY – BUT DON’T WAIT UNTIL THE LAST MINUTE. “I have a strict long-standing rule that all returns that are not literally in my hands, with all the necessary information, by March 19th will be automatically extended!”

20160125-1a

 

Jim Maule, Will Providing a Driver’s License Number Reduce Tax Return Identity Theft?:

The problem is two-fold. On one side, better systems of identification are necessary, and need to be based on information that is not as easily stolen. Databases need to be secured more carefully than at present. On the other side, identity thieves and those thinking of engaging in that behavior need to be presented with changes in their risk analysis. Not only are better methods required to track them down, they also need to face more severe consequences for their behavior.

I think the penalties in place are already severe enough. The problem is that it is too easy to steal tax refunds. The grifters that go in for identity theft aren’t known for impulse control or careful weighing of benefits and costs. They just know that with the right personal information and a copy of Turbotax, they can make prepaid debit cards rain on their mailboxes. And, of course, the overseas crime syndicates don’t care about the penalties, because they are unlikely to ever face them.

It’s much more important to improve IRS procedures to thwart I.D. theft in the first place. The IRS is finally taking needed steps here, but lots of horses are already out of the barn.

TaxGrrrl, 11 Tips To Protect You From Identity Theft & Related Tax Fraud

 

Russ Fox, An Entity a Day Will Keep the IRS Away, Right? “Here’s a scheme that’s sure to work to avoid remitting payroll taxes to the IRS. Every day (or week or month), I’ll form a new business entity that’s collecting the tax. Once the amount due to the IRS gets large, I’ll just use a new entity. The IRS will never catch on, right?” As Russ explains, wrong.

Kay Bell, Taxpayers want up-front pricing from paid tax preparers.

William Perez, Taxes When Hiring Household Help

Matt McKinney, Anonymous ownership in an Iowa LLC (IowaBiz.com).

Jack Townsend, More on Transparency for Entities Acquiring Valuable Real Estate in Some U.S. Markets

Robert Wood, Trump Is Unapologetically Aggressive On Taxes, Like Buffett And Bono. All the sort of folks who are happy to increase taxes, on other people.

20160125-2b

 

Kadri Kallas-Zelek, Incorrect Claims for Earned Income Tax Credits Are Likely to Become More Costly (Tax Policy Blog). “The IRS estimates that for the fiscal year 2013, improper payments from EITC amounted to $13.3 to $15.6 billion, or 22 to 26 percent of total EITC payments.”

TaxProf, The IRS Scandal, Day 989Day 990Day 991. Hard drives as doggie treats.

Renu Zaretsky, Snow, Settlements, and Sales Taxes. Today’s TaxVox headline roundup covers Snowzilla, online sales tax cheats, and Oregon liquor taxes, among other things.

Matt GardnerAdobe Shifts Hundreds of Millions Offshore, Revealing, Like PDF Documents, Its Profits Are Portable Too (Tax Justice Blog). For some reason, this only inspires the Tax Justice folks to do what’s failing more and harder.

 

Career Corner. Let’s Review: Deloitte Demotivation, Denim, Bad Managers (Caleb Newquist, Going Concern).

 

Share

Tax Roundup, 1/22/16: Tax scams for tax pros. And: How Des Moines got so cool once I moved here.

Friday, January 22nd, 2016 by Joe Kristan

Accounting Today Visitors:  Click here for the post on Popular wisdom and tax rates.

 

Gone Phishing. It’s not just taxpayers that get scam emails. Scammers also aim at tax pros. For example:

Phishing message 20160122

Of course the message is a fake. It was sent by the sketchy-sounding email address “info@tablerockbelize.com” and the link goes to something called “otadealsbox.com/irs.” Nothing good would happen from following that link. Be careful out there.

 

Nicole Kaeding, Map: State-Local Tax Burden Rankings for FY 2012 (Tax Policy Blog):

20160122-1

While Iowa’s tax burden isn’t that out of line — it’s actually a little better than average — our business tax climate is one of the worst. It’s a result of how poorly designed Iowa’s tax system is. The good news is that there’s a lot of room to improve our tax system without increasing the overall tax burden.

 

Start your weekend right with fresh Buzz! from Robert D. Flach. Today’s links cover lots of ground on early filing, and a good explanation of why the talk of how “IRS now has six years to audit your taxes” isn’t right.

Jason Dinesen, Do I Need Form 1095-C to File My Tax Return? The next question: how many taxpayers even know to expect one?

20150121-1

William Perez reminds readers to Communicate Effectively with Your Tax Preparer

Annette Nellen, Filing 2015 tax returns – help for practitioners

Kay Bell has 4 filing tips to ensure you get your tax refund ASAP

Robert Wood, What To Do If Form 1099 Reports More To IRS Than You Received

Paul Neiffer, Mr. Market Wants Its Excess Profits Back. “We know what happened after the 1970s and now Mr. Market is now trying to grab those excess profits back from farmers from the ‘ethanol’ boom.”  Of course, aging corn state politicians are fighting back by yelling at clouds.

Jim Maule, Deductions Arising from Constructive Payments. “The Tax Court explained that payment by an S corporation of a shareholder’s personal expense is a constructive distribution. It pointed out that this principle had previously been articulated by the court. Thus, explained the court, ‘It also follows that for purposes of claiming the deduction, the shareholder is treated as constructively paying the obligation.'”

Peter Reilly, Tax Planning In Bernie Sanders Land Would Feel Familiar To Elderly CPAs. Older than me, even.

E. Martin Davidoff, New Format of Notice of Intent to Levy Fails to Provide Sufficient Notice (Procedurally Taxing)

Russ Fox, Fail, Caesar! An Update. Implications for poker pros.

20160122-3

TaxProf, The IRS Scandal, Day 988. “Tax Agency Erased Hard Drive Despite Litigation Hold.” Don’t try that with your tax records.

Jeremy Scott, Furor Over Extenders and Rising Deficits Disingenuous (Tax Analysts Blog), my emphasis:

So the new CBO report is something of a bitter pill for Obama. But the president isn’t to blame, according to some observers. In fact, the CBO itself points out that about half the cost of rising deficits is from tax legislation enacted since August 2015. The biggest chunk, of course, comes from the extenders compromise, which made some expiring (or expired) tax provisions permanent. That hurts the budget outlook, which always assumed expiring tax provisions would stay expired.

But extenders have never been allowed to stay expired. They are always renewed — sometimes late and sometimes retroactively, but without significant exception. And that makes the CBO’s observations about extenders deceptive. It also highlights why previous CBO projections about the deficit were always too rosy. By assuming that extenders would go away once they expired, budget forecasters were always showing too much revenue. If the CBO had used a model that assumed Congress would continually renew popular provisions like the research credit, the deduction for state and local sales taxes, and bonus depreciation, the numbers would look almost identical to what the January 19 report is showing now.

Exactly. The extenders were an ongoing accounting scam, pretending provisions that were permanent in reality would go away. “By making some extenders permanent, Congress has finally allowed the CBO to paint a more realistic portrait of the federal deficit and the long-term budget outlook.”

Matt Gardner, After Years of Shrinking, Nation’s Deficit Set to Grow in 2016; Recent Tax Cuts a Contributor (Tax Justice Blog)

 

Howard Gleckman, What Are the Consequences of a Financial Transactions Tax? (TaxVox). Aside from moving exchanges offshore, damaging markets, erasing wealth, and making it harder for the little guy to close transactions, it’s a great idea.

 

Joseph Thorndike, Do Progressives Hate Tax Reform? (Tax Analysts Blog):

The Tax Reform Act of 1986 was far from perfect, but it made good on the lower rates/broader base mantra. Almost immediately, however, both parts of the bargain began to fray; rates began creeping up within a few years, and preferences (never vanquished entirely in the first place) also began to grow. By the mid-1990s, tax reform was starting to look like a disappointment, to both liberals and conservatives.

Today, classic tax reform has little real support outside the wonk community. So it’s fair to say, as Holtz-Eakin does repeatedly, that liberals don’t care about tax reform.

But neither do conservatives.

I think that’s always true, in a way. That doesn’t mean it’s not worth doing.

20160122-4

News from the Profession. Report: CPAs Exaggerate Their Success at the Bar, Pretty Much Everywhere (Caleb Newquist, Going Concern).

Fun link: How America’s Dullest City Got Cool. I think they overstate how much of the revival of Des Moines was planned by anyone, but they are right to point out home much this town has improved since I moved here in 1985 (proving that correlation is definitely not causation). Thanks to @lymanstoneky for the link on Twitter.

 

Share

Tax Roundup, 11/3/15: Work in Illinois, live in Iowa, pay quarterly. And: fun with FATCA!

Tuesday, November 3rd, 2015 by Joe Kristan

Illinois sealReciprocity = no state wage withholding. A newly-released policy letter from the Iowa Department of Revenue explains how the Iowa-Illinois tax reciprocity agreement works for an Iowan working in Illinois for a non-Iowa company. The letter is addressed to the employer:

Your employee is an Iowa resident, earning income in Illinois, and therefore is exempt from paying Illinois income tax on income earned from salaries, wages, and other compensation. For your employee to pay Iowa income taxes, the employee should make estimated payments by completing Form 1040ES – Estimated Income Tax for Individuals. The employee may also need to file an Illinois form showing that they are an Iowa resident not subject to Illinois withholding under the agreement.

While in theory it should make no economic difference whether you pay taxes through quarterly estimates or withholding, many taxpayers prefer withholding. It just seems less painful to have the money taken out before you see it, and you don’t have to remember to write those estimates. I wonder if the employee really feels better off.

The letter adds:

It is also possible for your business to register for an Iowa Withholding Tax Permit on the Department’s website (https://www.idr.iowa.gov/CBA/start.asp). In that case your Iowa resident employees could have those employees fill out an IA W-4 (available at https://tax.iowa.gov/form-types/withholding-tax) and you as the employer could withhold Iowa tax from their paychecks.

Illinois is the only state with which Iowa has a reciprocity agreement. Other states withhold (if they have an income tax) on Iowa employees, and the Iowans claim a credit for taxes paid in other states on their Iowa 1040s.  That sort of works out like Iowa wage withholding in a way for Iowans working in Wisconsin, Missouri, Nebraska and Minnesota — except with the hassle of completing two full state tax returns. For those crossing the border to South Dakota, which has no income tax, the compliance problem is the same as for the Illinois taxpayer in this policy letter.

20150928-1

 

Wall Street Journal, American Tax Refugees: Why So Many Yanks Are Renouncing Their U.S. Citizenship  (may be subscriber only link):

Fatca requires that foreign banks, brokers, insurers and other financial institutions give the U.S. Internal Revenue Service detailed asset and transaction records for any accounts held by Americans, including corporate accounts controlled by American employees. If a firm fails to comply, the IRS can slap it with a 30% withholding tax on transactions originating in the U.S. Facing such risks and compliance costs, many foreign firms have decided it’s easier to dump their American clients.

So Americans overseas are becoming increasingly unbankable. Not the wealthiest ones, of course, those “fat cat” potential tax evaders whom Democrats rail against. Much more vulnerable are sales reps, English teachers, lawyers, retirees—the overwhelming majority of American expatriates—whose modest finances make them unappealing clients amid Fatca’s compliance costs.

To get a few press releases, politicians have to break a few citizens eggs.

 

Robert Wood, U.S. Ranks As Top Tax Haven, Refusing To Share Tax Data Despite FATCA. As long as the U.S. intrudes on other countries’ banks, the other countries will want to reciprocate.

Jack Townsend, National Taxpayer Advocate Nina Olsen Comments on FATCA and OVDP. Quoting the Taxpayer Advocate: “The problem with FATCA is that it imposes burdens on taxpayers at all sorts of levels, and it’s not clear what benefits we’re really going to get from it or what we’ll be able to do.” It’s not about “we,” unless we are a politician looking for a cheap headline.

 

20150918-3

 

Robert D. Flach comes through with more Tuesday Buzz, with links to posts on minimum IRA distributions and small business money mistakes, among other things.

Kristine Tidgren, Tax Court Says 1972 Settlement Transfer Was Not a Gift (The Ag Docket). “One takeaway of this case for those outside of the Redstone family is recognition of the cold, hard fact that no statute of limitations applied to prevent the IRS from collecting taxes on this alleged 1972 gift.”

TaxGrrrl, Court Switches Gears, Says AICPA Can Sue IRS Over Tax Preparer Credentials. The IRS “voluntary” preparer regulation scheme hits a bump.

 

Russ Fox, I’m Sure Their Vacation in Arizona Will Impress the Sentencing Judge. “Mr. Joling wanted to be on “biblical safe ground” (he was a pastor) so he didn’t pay taxes.” Biblically safe, perhaps, but not legally, for sure.

Peter Reilly, Democratic Presidential Candidate Drops Out Without Releasing Tax Plan. And almost without anyone noticing.

Leslie Book, Halloween Special: Third Circuit Case Affirms Preparer’s Conviction For Aiding in Preparing False Tax Returns (Procedurally Taxing). “Despite the promise of oversight and its enhancing greater visibility, prosecuting bad apple preparers is an important after the fact way of ensuring that those who abuse the system know that their actions have consequences beyond bringing in fees for raiding the fisc.”

Jason Dinesen, Glossary: Gross Income/Gross Profit

William Perez discusses the new 401(k) Contribution Limits.

 

20140929-1

 

Joseph Henchman, Voters in Five States Consider Tax-Related Initiatives (Tax Policy Blog). Colorado ponders its marijuana tax windfall, Ohio considers approving one for itself.

Jonathan Ackerman, Rosanne Altshuler, Jeffrey Kupfer Bipartisan tax reform is possible: Lessons learned from President Bush’s reform panel (TaxVox). “Our antiquated business tax system has failed to keep up with an economy that has changed dramatically as a result of globalism, technology, and new capital flows.”
Scott Greenberg, The Bush Tax Reform Panel, Ten Years Later (Tax Policy Blog). “The Bush Panel was an important moment in recent tax policy history, because it provided one possible roadmap for a bipartisan tax reform agreement in the future.”

Matt Gardner, Apple Shifts a Record $50 Billion Overseas, Admits It Has Paid Miniscule to No Tax on Offshore Cash (Tax Justice Blog). Showing once again that Apple management isn’t stupid.

 

Career Corner. Accounting Firms Need To Have More Transparent Conversations With Employees About Compensation (Caleb Newquist, Going Concern)

 

Share

Tax Roundup, 9/30/15: Taking from rich doesn’t give to the poor; state incentives favor the big.

Wednesday, September 30th, 2015 by Joe Kristan

Today we have two instances where policy tanks that I usually disagree with make important tax policy points.

TPC logoFirst, The center-left Tax Policy Center, a project of the Brookings Institution (which I castigate below), makes an important observation about the overrated problem of income inequality in their paper, Would a significant increase in the top income tax rate substantially alter income inequality? The summary (my emphasis):

The high level of income inequality in the United States is at the forefront of policy attention. This paper focuses on one potential policy response: an increase in the top personal income tax rate. We conduct a simulation analysis using the Tax Policy Center (TPC) microsimulation model to determine how much of a reduction in income inequality would be achieved from increasing the top individual tax rate to as much as 50 percent. We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.

I have zero hope that politicians will heed this. Just because you take from the rich doesn’t mean it goes to the poor. It goes to the well-connected, as in the next item.

Second, the not-so-center-left Good Jobs First takes the side of the angels in the battle against state tax incentives, with a survey of small businesses called In Search of a Level Playing Field:

A national survey of leaders of small business organizations reveals that they overwhelmingly believe that state economic development incentives favor big businesses, that states are overspending on large individual deals, and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. 

I think they have this exactly right. It’s not start-ups that get the big deals from the legislature and the Economic Development bureaucrats. It’s the well-connected and wealthy companies that know how to work the system. The rest of us get to pay for it.

20090604-1

Related: LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION

 

Jason Dinesen, The Iowa School Tuition Organization Tax Credit. “Iowa offers dozens of obscure tax credits. The one I get asked about most is the tax credit available for donations to a ‘school tuition organization’ or STO.”

Kay Bell, Maryland issuing court-ordered county tax credit refunds. If you don’t want to repay illegal taxes, don’t collect illegal taxes.

Russ Fox, How to Wynne Your Money Back in Maryland

Paul Neiffer, IRS Provides List of Counties Eligible For Additional Extension on Livestock Replacement

Jim Maule, Taxation of Prizes, Question Two. He quotes a post from a sweepstakes message board:

 I won concert VIP tickets, there is no value on the tickets, so I can’t sell them. If no value is on them, why am I paying taxes on them? 

Mr. Maule explains that there is a value. If there isn’t, then why didn’t the winner give them away?

Robert D. Flach, WON’T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER: MY BEST TAX ADVICE FROM OVER 40 YEARS’ EXPERIENCE PREPARING 1040s.

 

20150930-1

 

InsureBlog, Yes, The New York Obamacare Co-op [squandered*] $340 Million. *The actual headline uses a more colorful term.

Robert Wood, Hillary Backs Cadillac Tax Repeal

 

TaxProf, The IRS Scandal, Day 874. Today’s edition features IRS agents abusing their power on everyday taxpayers. But we can trust them to regulate their tax preparer adversaries, right?

Arnold Kling, Hypocrisy and Cowardice at Brookings. Arnold addresses the firing by the Brookings Institution of Robert Litan, a scholar accused by Senator Elizabeth Warren of “writing a research paper to benefit his corporate patrons.” He is appalled:

1. Robert Litan is one of the most decent individuals in the whole economics profession.

2. Giving Litan’s scalp (sorry for the pun) to Elizabeth Warren does nothing to bolster the integrity of Brookings. It amounts to speaking cowardice to power.

There’s more. The episode is appalling, and it shows the totalitarian tendencies that are barely beneath the surface of Senator Warren’s populism.

 

20150930-2

 

Alan Cole, Donald Trump’s Tax Plan Will Not Be Revenue-Neutral Under Any Circumstances (Tax Policy Blog)

Jeremy Scott, Trump’s Tax Plan Is Pretty Much GOP Orthodoxy (Tax Analysts Blog)

Matt Gardner, How Donald Trump’s Carried Interest Tax Hike Masks a Massive Tax Cut for Wealthy Money Managers (Tax Justice Blog)

Peter Reilly, Trump Tax Plan Would Increase Deficit By Over $10 Trillion

Tony Nitti, Love Trump, Hate Romney, But Their Tax Plans Are One And The Same

Renu Zaretsky, Thirty days, goodbye September, shutdown talks—maybe in December. Today’s TaxVox headline roundup covers shutdown politics, plans to use reconciliation procedures to pass bills repealing pieces of Obamacare, and tax Trumpalism.

 

See you at Hoyt Sherman Place tonight!

 

Share

Tax Roundup, 9/23/15: Certified mail > Stamps.com. And more!

Wednesday, September 23rd, 2015 by Joe Kristan

 

certifiedTiming is everything. While electronic filing solves proof of filing questions for many returns, not everything is e-filed. While the IRS “mailbox rule” holds that things mailed by the due date are considered filed on time, it’s up to the taxpayer to prove timely mailing. I recommend Certified Mail with a post office postmark and return receipt requested, though a shipping slip from a “qualified private delivery service” also works.

But not a Stamps.com postmark. A taxpayer sent a petition to the Tax Court, which does provide for electronic filing of petitions. The taxpayer used certified mail, and the date on the Stamps.com mark was on time, but the petition arrived late. That went badly (my emphasis):

In the instant case, the “sender’s receipt for certified mail” was not postmarked by a USPS employee but rather was handwritten by an employee of petitioner’s counsel. Therefore, sending the petition by certified mail afforded petitioner no guarantee of a timely postmark, and he assumed the risk that the postmark would bear a date on or before the last day of the 90-day period prescribed for filing the petition. Unfortunately for petitioner, the Stamps.com “postmark” upon which he relies is superseded by USPS Tracking data, which tracking data serves as a postmark, see Boultbee v. Commissioner, T.C. Memo. 2011-11, and is therefore conclusive in determining whether the petition was timely mailed, see sec. 301.7502-1(c)(1)(iii)(B)(3), Proced. & Admin. Regs. In the instant case, USPS Tracking data demonstrates that the petition was not timely mailed.

The Moral: you want to protect yourself using certified mail, you should make a trip to the post office. Marking the certified mail slip in the office mailroom doesn’t do the job; neither does a postage meter or Stamps.com

Cite: Tilden, T.C. Memo. 2015-188.

 

20150923-1

 

Quotable: 

I’ve read so many blog posts taking victory laps on Obamacare, but surely something is wrong when our most scientific study of the question rather effortlessly coughs up phrases such as “but most uninsured will lose” and also “Average welfare for the uninsured population would be estimated to decline after the ACA if all members of that population obtained coverage.”  The simple point is that people still have to pay some part of the cost for this health insurance and a) they were getting some health care to begin with, and b) the value of the policy to them is often worth less than its subsidized price.

-Tyler Cowen (Marginal Revolution), The incidence of the ACA mandates

Alan Cole, The Cadillac Tax is Still Probably Raising Deductibles (Tax Policy Blog).  “The news website Vox today covered the issue of rising deductibles in the U.S. health care market. As with their past coverage of the issue, there is a curious omission from the piece: the Cadillac tax.”

 

Jason Dinesen, The Difference Between Not-for-Profit and Tax-Exempt. “Not-for-profit is a legal term,” but “Tax-exempt is a federal tax term.”

Robert Wood, Who Pays Tax On Business Sale? Ask Warren Buffett. Warren likes taxes paid by other people.

TaxGrrrl, 2015 Tax Season ‘Miserable’ For Many Taxpayers: Will It Get Better In 2016?

Russ Fox, Kiplinger’s Tax-Friendly and Least Tax-Friendly States: Bring Me (Mostly) the Usual Suspects. Iowa’s somewhere in the middle. Delaware is rated best, California worst.

 

Kay Bell, Senators seek Treasury Secretary’s help in hiking IRS budget. I’m sure they’ll get it.

Peter Reilly, Tax Rules Forbid Churches From Endorsing Candidates, Will IRS Take Action? “If Pope Francis starts “feeling the Bern” will the taxman show up at St. Patrick’s Cathedral?”

Robert D Flach, IT’S NOT ALL OR NOTHING AT ALL. “Once again the idiots in Congress have put off dealing with the now infamous ‘tax extenders’. And once again these idiots will probably extend the entire lot for at least one more year at year-end.”

 

np2102904

 

TaxProf, The IRS Scandal, Day 867

David Brunori, Don’t Be Fooled — Services Should Be Subject to Sales Tax (Tax Analysts Blog) “Most services aren’t subject to sales tax in most states. From a tax policy perspective, that’s no good. The sales tax should fall on all final consumption — preferably at a very low rate. So everything we buy should be subject to tax.”

Howard Gleckman, Senate Democrats Would Take Some Small Steps To Clean Up Energy Tax Breaks (TaxVox) “The government is still picking winners and losers—it is subsidizing clean energy—but at least it would no longer hyper-manage the process by creating one set of subsidies for hydrogen and another for solar panels.”

Matt Gardner, It’s Not the Real Thing: Coca-Cola Hit with $3.3 Billion Tax Bill for Fake “Foreign Income” (Tax Justice Blog).

 

Cause: The Most (Montana) And Least (Washington) Fair State & Local Tax Systems (TaxProf)

Effect: Crackdown On Luxury Car Owners Dodging Taxes With Montana Registration (CBS Minnesota)

 

The Dangers of Video Games. PAC man says 1MDB left US$975m loan off the books, suggests fraud (Malaymail Online)

 

Speak for yourself, buddy. Your Firm’s Website Sucks; How to Help Improve It and Boost Your Career at the Same Time (Brian Swanson, Going Concern).

 

 

 

Share

Tax Roundup, 8/17/15: New directions in Iowa tax policy. And lots more!

Monday, August 17th, 2015 by Joe Kristan
If Iowa's income tax were a car, it would look like this.

If Iowa’s income tax were a car, it would look like this.

This week may see the start a discussion of the future of Iowa tax policy. The Iowa Association of Business and Industry Tax Committee meets Thursday to discuss proposals for the future of the Iowa income tax.

There’s a lot to talk about. The Tax Foundation puts Iowa among the bottom-ten states in its 2015 Business Tax Climate Index. Iowa has the second worst corporate tax ranking and the highest corporation tax rate of any state. We also have a subpar individual tax ranking. Along with the high rates — and made possible by them — the Iowa income tax is full of special favors for influential and sympathetic interests. This makes the taxes expensive and difficult to comply with and not so good at collecting revenue.

The state legislature has not seriously addressed income tax reform in recent years. There has been no movement against the awful corporation tax that I am aware of. The Republican caucus has pushed an individual “alternative maximum tax,” one with lower rates and a broader base — that would co-exist with the current system. That has an obvious flaw — everyone would compute their tax both ways and pay the lower tax. That makes the system more complex. But all tax reform has been bottled up by the Democrat-controlled Iowa Senate.

What are the ingredients for Iowa tax reform? A good tax reform discussion should consider:

Repeal of the Iowa corporation income tax. The Iowa corporation tax provided $438 million of the the state’s 2014 revenue, out of $7.545 billion. Corporation income taxes discourage in-state growth and are expensive to enforce. The state would be better off without it.

Repeal of all incentive tax credits. The state has many tax credits, some of which are refundable, including the R&D tax credit. Simply eliminating the tax credits would recoup some of the lost revenue from a corporation income tax repeal.

Move the individual income tax to an AGI-based system. Eliminate state itemized deductions and special state deductions and use the savings to lower the rates. Such as system would only retain a few itemized deductions to prevent abuse of taxpayers, principally the deduction for gambling losses.

Don’t be Kansas. That state enacted a poorly conceived tax reform effort a few years ago, and it has been a mess. Ambitions for tax reform have to be reconciled to revenue needs. While I think the state should spend less than it does, we can’t assume it will do so. Tax reformers need to present a plan that is revenue-neutral, or close to it.

Related:

Is Iowa’s business tax climate really that bad?

Baby steps towards fixing Iowa’s business tax climate

What an Iowa income tax might look like with a fresh start.

The Tax Update’s Quick and Dirty Iowa Tax Reform Plan

 

Jared Walczak, How High Are Property Taxes in Your State? (Tax Policy Blog). With this map:

 

20150817-1

 

Iowa still has relatively high property taxes, even after the recent property tax reforms. But we have high income and sales taxes too.

 

Russ Fox, Two Sets of Returns Aren’t Better than One:

Today I look at the idea of preparing one set of tax returns for clients but using a second set of returns when submitting the returns to the IRS. Of course, those second returns had higher refund amounts with the difference being pocketed by the preparers. After all, what’s a little tax fraud?

This is what Russ might call a Bozo tax offense. It’s not like this sort of thing will go very long without someone noticing.

 

Jason Dinesen, Glossary: Estimated Tax Payments

Annette Nellen, Innovation box tax reform proposal, A good explanation of a bad idea.

Kay Bell, IRS says free identity theft protection services are tax-free. “That’s very good news for me, since I was part of the huge OPM hack”

TaxGrrrl, IRS Offers Tax Guidance On Free Identity Theft Protection Services

Paul Neiffer is on the road on The ProFarmer Midwest Crop Tour.

Jim Maule, Rebutting Arguments Against Mileage-Based Road Fees. I think an expansion of tolling is more likely, but I don’t think that is very likely either.

Jack Townsend, Ninth Circuit Requires a Filing for Tax Perjury Charge. “Under the facts, Boitana had merely presented the false return to the agent, but that presentation was not a filing.”

Peter Reilly, Let Irwin Schiff Die With His Family Not In Prison:

You don’t have to agree with Irwin Schiff’s views on the federal income tax, to feel sympathy for Peter Schiff’s request that his father be released from prison. Irwin, now 87, has been diagnosed with lung cancer and it seems likely that he will not live to see his July 26, 2017 release date.

I think the government has made its point.

 

Patrick J. Smith, D.C. Circuit Majority Opinion in Florida Bankers Not Consistent with Supreme Court’s Direct Marketing Decision (Part 1) (Procedurally Taxing):

The weakness of the majority opinion in Florida Bankers, together with the strength of a dissenting opinion filed in the case, as well as the inconsistency of the majority opinion not only with the Supreme Court’s Direct Marketing decision but also with other D.C. Circuit opinions, all make the Florida Bankers case a strong candidate for en banc review. 

The suit challenges the FATCA rules on foreign reporting.

20150817-2

TaxProf, The IRS Scandal, Day 828Day 829Day 830

Matt Gardner, Latest Inversion Attempt Illustrates U.S. Can’t Compete with a 0 % Corporate Tax Rate (Tax Justice Blog). It could with a zer-percent rate of its own.

Renu Zaretsky, Tax plans and presidential candidates: The future [may or may not be] now. The TaxVox headline roundup talks about presidential candidate tax plans and the bleak outlook for the IRS budget under the current Commissioner.

Quotable:

If you think of government programs as technology, they are hopelessly behind. We regulate communications using the FCC, which is 1930s regulatory technology. We address health care for the elderly with Medicare, which is 50-year-old technology.

In the private sector, when an enterprise becomes technologically obsolete, it falls by the wayside. In government, it gets larger.

Arnold Kling

 

News from the Profession. Yep, Almost All Accounting Firm Partners Are Still White Guys (Caleb Newquist, Going Concern). Well, I still am, anyway, and I don’t see that changing.

 

Share

Tax Roundup, 8/4/15: Cash-basis farmers score Tax Court win. Plus Buzz, and more!

Tuesday, August 4th, 2015 by Joe Kristan

binStrawberries. An old joke holds that the tax law has a provision that makes it illegal for farmers to pay taxes. Jokes usually express an underlying truth. The ability of most farm enterprises to deduct expenses on a cash basis is a big part of the joke. A fiscally-alert cash-basis farmer can ease the tax pain of a profitable year by buying up to a year’s worth of feed, seed and supplies on December 31, deducting the whole purchase.

The Tax Court last week upheld a broad use of cash-basis deductions by farmers in a case involving a California strawberry grower, Agro-Jal. This cash-basis deduction challenged case differs from what you might see in a typical Iowa crop or livestock operation. The taxpayer packs the strawberries it grows, and it purchased and deducted the packing materials on a cash basis. The IRS said that such supplies are not the sort of feed, seed and materials allowed to farmers as a cash basis deduction.

Judge Holmes looked at the rules and said the IRS got it wrong. The decision largely hinged on a Section that wasn’t directly in play here, Section 464. This section was enacted to fight an early tax shelter based on allowing cash basis farm deductions to off-the-farm investors by preventing “farm syndicates” from using the cash method. Judge Holmes considered the IRS arguments, and then noted (my emphasis, footnotes omitted):

But section 464 does bolster Agro-Jal’s argument indirectly, because the history of section 464 shows that before its enactment anyone in the farming business could immediately deduct prepaid expenses. Seen against this backdrop, section 464 looks like it was aimed at both especially abusive taxpayers — “farming syndicates” — and to certain especially abused expenses — “feed, seed, fertilizer, or other similar farm supplies.”

I understand this to mean that absent some other provision, farmers can, or could, deduct all prepaid expenses. Judge Holmes went on to consider the tax regulation on deductions of materials and supplies, and concluded that the IRS reading was not supported.

There is another wrinkle. The IRS has re-issued the “materials and supplies” regulation as part of its “repair regs” project, and it has changed the language relied on by the taxpayer. Tax Analysts discusses that change ($link):

Sharon Kay of Grant Thornton LLP said that the reference to the old version of the regs may not help other cash method farm taxpayers understand how to apply the new final tangible property regulations on materials and supplies. “That’s the big question,” she said. “What does this case mean, not just looking back, but actually looking forward under the new tangible property regulations?”

Kay noted that throughout the revisions to the tangible property regs, the IRS had made statements, primarily in the various preambles, that it did not intend for the revisions to substantially change the “determination of the treatment of materials and supplies as either non-incidental or incidental.” She said that the holding in Agro-Jal reflects farm taxpayers’ understanding of the law and general practices.

This may mean the IRS could continue to challenge deductions under the new regulations, hoping for a different result. But for Iowa livestock and crop farmers, whose big prepaid deductions are mostly for advance purchases of feed, seed and fertilizer, cash accounting does not seem to be under immediate threat. And it probably wouldn’t have been even if the IRS had won this case.

Paul Neiffer has more: Cash Basis Farmers Allowed to Deduct All Costs!

Cite: Agro-Jal Farming Enterprises, Inc., 145 T.C. No. 5.

 

buzz20150804

 

It’s summer. The bees are buzzing, and so is Robert D. Flach with a fresh Buzz roundup, including coverage of the new due-date rules.

Robert Wood, Charging $476K For Strippers On Company Card? No Tax Deduction, Jail Instead. That’s a lot of $1 bills.

Peter Reilly, Review Of Julian Block’s Home Seller’s Tax Guide. “The book packs a lot of important information into less than 100 pages.  I think that if I had a real estate office, I would be negotiating with Julian to buy copies in bulk to hand to potential clients as a marketing tool.”

Jim Maule, Another Problem with Targeted Tax Credits. “Once tax credits are handed out, everyone wants in on the gravy train.”

Kay Bell, Cool tax moves to make during August’s hot Dog Days

Jack Townsend, New Legislation Affecting FBAR and Tax Matters (8/1/15).

Mike Feehan, Urban Legends, Insurance File No. XXIV (Insureblog). “My opinion?  Most claims submitted are valid claims.  And systematic denial of valid claims is an urban legend.”

 

Cara Griffith, New York Attempts to Tax Income From Nonresident Lawyer Based on Bar License (Tax Analysts Blog):

“Thankfully, an administrative law judge for the DTA set the division straight. The ALJ concluded that the division’s argument is meritless, inconsistent with the state tax regulations, and inconsistent with New York judiciary laws. “The Division cannot,” the ALJ said, “assert tax merely based on a New York license.”

This is a case where my “sauce for the gander” proposal would allow taxpayers to collect penalties from the state for making a frivolous argument.

Richard Auxier, Recovery cannot save state budgets from politics (TaxVox). “Since then the economy has improved, state tax revenue are growing, and legislatures have more room to maneuver during budget season. Yet havoc still reigns in many statehouses. In fact, it might be getting worse.”

 

20150804-1

 

TaxProf, The IRS Scandal, Day 817

Matt Gardner, Innovation Boxes and Patent Boxes: Congress Is Focusing on Corporate Tax Giveaways, Not Corporate Tax Reform. (Tax Justice Blog). The “patent box” would give preferential rates for intellectual property income, which would create a new industry of consultants devoted to making all income I.P. income. Far better to broaden the base and lower rates for everyone.

Kyle Pomerleau, Ways and Means Committee Introduces “Innovation Box” Discussion Draft (Tax Policy Blog). “Simply put, a patent box provides a lower tax rate on income related to intellectual property.”

 

Quotable: 

Most economists, on the other hand, believe that targeted tax incentives may work, but only in the sense that companies get extra cash and say the right things at press conferences. However, the tax breaks often don’t work in the sense of actually boosting state and local economies in any appreciable way. One large high-tech warehouse on the edge of town with 40 workers won’t transform anything. Neither will a dozen.

Billy Hamilton, Tax Analysts ($link)

 

News from the Profession. Accountant Posts Big Game Hunting Photos, Internet Flips Out (Caleb Newquist, Going Concern). I hope my big game trophy shots never make the internet. Oh, wait…

 

Share

Tax Roundup, 3/20/15: Tax Foundation looks at Iowa Alt Max Tax proposal.

Friday, March 20th, 2015 by Joe Kristan

IMG_1284More on the Iowa Alternative Maximum Tax Proposal. The Tax Foundation’s Jared Walczak discusses HSB 215 in Iowa Considers Alternative Maximum Tax:

The basic idea is that each year, taxpayers get to choose between (1) paying under the current graduated income tax structure, claiming any credits, deductions, or exemptions for which they are eligible; or (2) paying a flat 5 percent rate on all taxable income while foregoing most income subtractions.

Those making the election for a flat rate would still be able to subtract the standard deduction ($6,235 for an individual), plus interest and dividends from federal securities, and federal pension income, but would forego other subtractions. In exchange, they could pay a flat 5 percent rate.

Jared comes to conclusions much like I did when I looked at the 2013 version of this proposal:

Iowa is one of a small number of states that allow a deduction for federal income taxes paid, which can certainly be significant. However, I crunched the numbers on a variety of scenarios, and conservatively estimate that taxpayers with more than $40,000 in taxable income would almost always be better off paying the alternative tax—unless, again, they fall into tax-advantaged categories as farmers, low-income families with children, and the like.

It is not, however, a sure thing. Some high income taxpayers might fare better under the traditional rate structure if they combine that federal deductibility with, say, sizable deductions for charitable contributions. And some low middle-income families might qualify for enough assistance through the tax code to make the standard approach worth their while. This adds complexity to the system, as taxpayers would want to calculate their tax burden both ways.

Jared notes that the proposal would be a revenue loser to the state, adding to its political problems. He also provides an example of another state that has tried a similar setup:

Alternative maximum taxes are rare but not unknown. Rhode Island adopted an alternative flat income tax structure from 2006 – 2011 which culminated in lower overall rates and the elimination of the state’s top brackets. That bill included phased-in reductions in the flat rate, whereas the legislation pending in Iowa sets the rate at 5.0 percent in perpetuity, but like the Rhode Island bill, this Iowa proposal draws upon elements of good tax policy. Ideally, though, Iowa would look at ways to reduce its high income tax burden without making taxpayers calculate their tax burden twice.

While I have not heard anyone in the legislature say so, I believe this is an attempt to provide badly-needed individual tax reform to Iowa withoutIf Iowa's income tax were a car, it would look like this. offending Iowans for Tax Relief.  The self-proclaimed “Taxpayers’ Watchdog” is known as a powerful force in the Iowa GOP, and has been known to set up primary challenges to those falling into its disfavor (though one observer says its influence has waned). ITR is an uncompromising backer of the deduction for federal taxes on Iowa returns. It is very difficult to achieve significant rate reductions while leaving the deduction in place. By leaving the deduction on the books while making it mostly meaningless, the Alt Max Tax backers sneak reform past the watchdog.

Related Tax Update Coverage:

Iowa Alternative Maximum Tax advances to its doom.

The Iowa flat tax proposal: a good deal for middle class and up, but not for lower incomes.

 

Roger McEowen, How Do I Handle Unharvested Crops At Death? (ISU-CALT). “When an individual dies during the growing season, the tax treatment of the crop is tied to the status of the decedent at the time of death.”

William Perez, Did You Pay Interest on Student Loans? It May be Tax Deductible

TaxGrrrl, Understanding Your Forms: 1098-E, Student Loan Interest Statement

Robert Wood, Which Legal Fees Can You Deduct On Your Taxes?

Kay Bell, IRS welcomes tax tip-off time, aka March Madness betting

Jason Dinesen, Glossary: Earned Income Credit

Peter Reilly, Tax Court Rules That Being Accommodation Party In Tax Shelter Is Hard Work. Apparently signing papers can be taxing. I appreciate this:

The Harvard degrees and successful architecture practice were negatives when it came to getting out of the accuracy penalty. Also Mr. Chai had not provided all the correspondence to his tax adviser.  Of late I’ve been thinking that the IRS is too quick to propose the accuracy penalty, a sentiment Joe Kristan shares,  I’ll bet Joe wouldn’t object to this one.  It is actually pretty mild.

Not every wrong tax penalty is negligent or willful, but some certainly are.

 

IMG_1216

 

Keith Fogg, From Lindbergh to Nixon to Stegman – Fixing Information Flow in Identity Theft Cases (Procedually Taxing):

Recently, the United States District Court for the District of Kansas in the case of Kathleen Stegman ruled that the IRS could keep from the taxpayer the return filed by someone using her identifying information.  The sad part here is that the administrative decision to withhold the returns from her and the Court’s decision sustaining the IRS refusal to turn over the information seems to correctly reflect the law as it stands.  The law should change and taxpayers should have the ability to access documents using their identifying information.

It seems that the IRS is very good at hiding behind taxpayer confidentiality to cover its own mistakes.

 

TaxProf, The IRS Scandal, Day 680

Annette Nellen covers the AICPA tax reform suggestions for individuals:

The suggestions address:
1. Simplified Income Tax Rate Structure;
2. Education Incentives;
3. Identity Theft and Tax Fraud;
4. Relief for Missed Elections (9100 Relief); and
5. “Kiddie Tax” Rules.

The AICPA proposal is here.

 

youn-se-thumb

 

Howard Gleckman, Trying to Square the House’s Tax Cuts and Its No-Tax-Cut Budget. “House tax writers seem to be ignoring their own party’s fiscal plan.”

Matt Gardner, House Budget Proposal Silent on Fate of Budget-Busting Tax Extenders (Tax Justice Blog).

Career Corner. The Aftermath of the Ex-PwC Employee Who Got Fired After a Dispute with Comcast Is About What You’d Expect (Caleb Newquist, Going Concern).

 

Today’s Spambox Bargain: “Canadian Nightcrawlers Shipped Direct To You. Live Guarantee.”

Canadian!

Share

Tax Roundup, 3/19/15: Iowa Alternative Maximum Tax advances to its doom. And: The Tax Foundation doesn’t want your 1040!

Thursday, March 19th, 2015 by Joe Kristan
If Iowa's income tax were a car, it would look like this.

If Iowa’s income tax were a car, it would look like this.

Iowa House Ways and Means advances Alternative Maximum Tax. The committee voted to send HSB 215 to the House Floor yesterday.  The bill would let taxpayers choose between the current Iowa income tax and a simpler version with a broader base, lower rates, and no deduction for federal taxes.

The ideas in the alternative bill are all good policy. But just adding this to the current awful income tax is like spray painting a car that’s half rusted-through. It’s extra work that does no good.

In the real world, taxpayers would compute both taxes and pay the lower one. This is the opposite of the current alternative minimum tax, where you pay the higher of the regular or alternative tax base. That’s why I call it an Alternative Maximum Tax.

If you want to simplify taxes, simplify the tax system; don’t just tack a simplification module on the existing code.

Really, though, this proposal is just for show, as they know Senator Gronstal will never let it move in the Iowa Senate. If it reinforces the idea that you can lower rates with a broader base and by taking out the deduction for federal taxes, it could even do some good. It might even get them thinking about the  Tax Update Quick and Dirty Iowa Tax Reform Plan.

 

Filing season tip: Please Don’t Mail Your Tax Returns to the Tax Foundation (Joseph Henchman, Tax Policy Blog):

Someone mailed us their tax returns and documents today. We quickly sent it back to that individual, as we neither process tax returns nor assist individuals with tax planning or preparation. Tax documents contain a lot of private information and everyone should be very careful about to whom they send this information.

We are here for taxpayers but we are unable to assist individuals with tax planning or preparation. Our staff includes scholars who study tax policy and data, not tax preparation professionals.  

Another inadvertent argument for e-filing: those returns are pretty sure to end up in the right place.

 

TPC logoRoberton Williams, Who’s Afraid of Income Taxes? New Interactive TPC Tools To Help You Understand the 1040. A cool new feature at TaxVox:

In bite-sized pieces, Who’s Afraid of the Form 1040? discusses the main tax form, explaining the different filing statuses, who counts as a dependent, and what income is taxed (and what income isn’t). How do deductions and credits cut your tax bill and how does the AMT boost it? And how does the income tax help you pay for college, health care, and retirement?

With tax trivia (we used to file our returns on the Ides of March) and facts (just 2.9 percent of taxpayers will owe AMT for 2014 but they’ll pay an average of $6,500), the new feature explains many aspects of the income tax. It won’t make it easier to file your taxes but it might make the process a bit more interesting.

We have also updated our Interactive 1040. Inaugurated last year, this web tool allows users to examine each individual line of the 1040 and Schedule A (itemized deductions). Pop-up boxes contain brief explanations and links to distributional tables and other TPC resources on each topic.

It might be a good way to help you understand why that refund you thought you had coming didn’t.

 

IMG_1322TaxGrrrl, It’s Not A Scam: IRS Is Really Sending Out Identity Verification Letters. Letters, people, not phone calls, not emails. They don’t call without sending a letter first.

Kay Bell, What should be on the IRS’ taxpayer service to-do list? I would start with not sending billions of dollars to ID-fraud scammers.

Me, IRS issues Applicable Federal Rates (AFR) for April 2015.

TaxProf, The IRS Scandal, Day 679.

 

David Brunori, A Very Good Tax Reform Idea in Louisiana (Tax Analysts Blog).

Louisiana Gov. Bobby Jindal (R) has a tax plan that should be creating buzz all around the country. He wants to convert some of the state’s individual and business tax credits from refundable to nonrefundable. Let’s be clear: Refundable tax credits are government transfers. They are welfare. They merely use the tax code as a vehicle to take money from some people and give it to others. And apart from the earned income tax credit, no refundable credits represent sound policy.

Given that over 25% of the EITC ends up in the wrong hands, I’m not sold on that one either. David is absolutely correct on the unwisdom of refundable credits, and transferable credits are just as bad.

 

20150319-1

 

Tony Nitti, AICPA Sends 34 Tax Proposals To Congress

Annette Nellen posts on Need for greater tax literacy and regulation of preparers. Tax literacy, sure. Preparer regulation? Not so much. Massive simplification? Definitely.

Joseph Thorndike, Mike Lee’s Tax Plan Was Promising. Until It Wasn’t. (Tax Analysts Blog). “Are the reformicons done for?”

Matt Gardner, GOP Budget Proposal Once Again Punts Tough Questions (Tax Justice Blog)

Career Corner. Busy Season Zen: The Swish Montage (Caleb Newquist, Going Concern). Ommmm.

 

Share