* CCH reports that “IRS Commissioner Studying Controversial Private Collection Initiative”. I have said it many times before, and I will continue to say it – having outside collection agencies doing the job of the IRS is a very bad idea for lots of reasons (only one of which is that the IRS could do it cheaper) and the practice should be terminated.
* Kay Bell discusses the 10th Anniversary of the “IRS Restructuring and Reform Act of 1998” in her post “10 Years Of a 'Kinder, Gentler' IRS. Now What?” at DON’T MESS WITH TAXES.
* Michael of BEYOND PAYCHECK TO PAYCHECK discusses his economic “stimulus” experience in “Stimulus Payments - A Braggy Uncoordinated Mess?”.
* The Wall Street Journal reports in the article “Their Fair Share” that IRS data for income tax returns filed for 2006 indicates “the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history”.
According to the article – “the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he's going to cut taxes for those at the bottom, but that's also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half.”
It goes on to say, “Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts.”
Also on this topic, Tax Foundation Fiscal Fact No. 135, "Summary of Latest Federal Individual Income Tax Data," explains that upper-income taxpayers pay federal income taxes at a rate disproportionate to their share of the nation's income. The Fiscal Fact includes detailed charts of the latest IRS data.
* The National Association of Tax Professionals believes that “the next Congress will probably be dominated or, at least, very favorably populated by Democrats. Our discussions on the Hill lead us to believe that healthcare reform will overshadow tax reform in the coming Congress. The Joint Committee on Taxation has stated that ‘Healthcare reform is the biggest fiscal challenge facing the country and likely will push tax reform to the back burner.’”
* An article at Accountingweb.com reports that “Tax Documentary, ‘An Inconvenient Tax’, In The Works”. It will be “an unbiased, educational and entertaining look into the potential reforms that are inevitable come 2010 when the Bush administration tax cuts cease”. The film is scheduled to be released in November. TAX PROF Paul Caron also discusses the movie in his post “An Inconvenient Tax”. I don’t think I will wait until the DVD for this one.
* And for those of you who are interested, Paul also provides links to recent postings and commentary on the Presidential candidates’ tax plans in his post “More on the McCain and Obama Tax Plans”.
* On the same topic, the Tax Foundation’s TAX POLICY BLOG sets us straight on “More Bogus E-mails About Obama and Taxes” that are apparently floating around out there.
* Kelly Phillips Erb’s post “Economic Stimulus Didn’t Help Us, Most Small Business Owners Say” at TAX GIRL quotes a survey conducted by Suffolk University that says - “Almost 80% of small business owners report that the economic stimulus checks made no difference to their own business”.
* Email tax scams are not limited to the United States. UK tax professional David reports on an email allegedly from HM Revenue and Customs regarding a tax refund that is very similar to one regarding an IRS refund that has made the rounds in the US in the post “Beware: Tax Refund Scam” at his TAX REBATE BLOG (this refers to a UK rebate and not the George W “stimulus” rebate). Be warned – you must scroll down the “page” a bit before the post appears.
* Trish McIntire’s post “Chutes and Ladders” over at OUR TAXING TIMES brings up an excellent point that needs to be stressed. Various marketing campaigns and salespersons with no tax knowledge are constantly telling us casualty losses, or hybrid cars, or mortgage interest, or medical expenses or employee business expenses, etc, etc, etc are “deductible” or qualify for a “tax benefit” or “special tax treatment”. But, while technically correct, it ain’t necessarily so.
Trish’s post tells us about casualty losses. Many other items, such as mortgage interest and points, are only deductible if you are able to itemize on Schedule A and the total amount of itemized deductions before the item in question is added exceeds the Standard Deduction amount for your filing status. Even if you can itemize medical and employee business expenses are only deductible to the extent that they exceed 7½% or 2% of your AGI. If you are a victim of the dreaded Alternative Minimum Tax (AMT) you do not get any energy credit for purchasing a hybrid car.
Do not make any purchasing decisions based on a salesman’s or advertising campaign’s claims of a tax benefit. As your tax professional first!