Friday, December 30, 2011
2011 – THE TAX YEAR IN REVIEW
Let me end 2011 with my annual tax year in review post.
2011 marked my 40th tax season in “the business”. I have been preparing 1040s professionally since February of 1972.
And this summer I celebrated the 10th Anniversary of THE WANDERING TAX PRO blog. My first blog posting was published on Sunday, July 22, 2001.
The year began with a surprise recognition – I was named as the National Association of Tax Professionals January 2011 “Member of the Month”.
Later in the year I was named the New Jersey chapter of NATP’s “2011 Chapter Member of the Year” - “in recognition of your years of dedication to the New Jersey Chapter of NATP and to your fellow tax practitioners”!
As I stated in my annual April THAT WAS THE TAX SEASON THAT WAS post –
“There was nothing special or significant about this tax season.
No new tax ‘gimmicks’ – just a repeat of last season’s refundable Making Work Pay credit; it continued to FU withholding, especially for those receiving pensions.”
And clients continued to receive one or more “corrected” Consolidated Year-End Tax Reporting Statements” from brokerage houses late in the season, which continued to cause delays.
This was the first year of the federal “e-file” mandate for tax professionals, but since IRS regulations equated “file” with “mail” I did not have to e-file the returns I prepared. To cover my arse I had my clients sign a brief statement that I do not “file” their returns for them, I give them the finished return and they “file” the return themselves, and attached this to my file copy of the return. The IRS did not contact or penalize me for not e-filing.
I also avoided having to comply with a new New York State tax preparer e-file mandate because I do not use flawed and expensive tax return preparation software to prepare any of my returns, although I did have to make my annual $100 extortion payment to Albany, which I passed along to clients with NY returns.
And 2011 was the first year that only those individuals who registered with the IRS and received (or “refreshed”) a PTIN, as I did last fall, were permitted to prepare federal income tax returns for a fee under the new tax return preparer regulation regime – although I did not notice the IRS publicizing or emphasizing this fact very much.
The IRS pushed the beginning of the required annual 15 CPE in federal taxation for paid preparers to 2012, and also put off any decision on the need for registered preparers to be fingerprinted. I did, however, take 32 hours of continuing professional education in federal taxation and 8 hours in NJ state taxation in 2011, sitting through at least 4 hours of ethics preaching.
The “beta testing” of the required (except for EAs, CPAs, attorneys, and “supervised” employees thereof) initial competency test began in the late fall – but no preparers have yet to be awarded the RTRP designation (I do not think the IRS knows yet who has actually passed the test). Many EAs, exempt from the test, have decided to sit for it anyway to be able to receive the RTRP designation. I am waiting until the summer of 2013 to sit for the test, as I have until December 31, 2013 to pass.
As CCH wrote in its year in review special report – “2011 had been predicted to be a quiet year in federal tax news – as it landed between major tax legislation in 2010 and expected tax reform in 2012”.
There were no major Tax Acts passed in 2011. On April 14th the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011” (now that’s a mouthful) was (finally) signed into law. The Act thankfully repealed excessive expanded Form 1099 reporting requirements that were included in earlier Acts. This was further proof that the idiots in Congress do not read in full the bills they vote for.
On the next day the “Department of Defense and Full-Year Continuing Appropriations Act of 2011” became law, which repealed a provision of the so-called health-care reform bill that was to become effective in 2014.
And, as has become a habit, the idiots in Congress once again waited until literally the last minute to pass an extension of a temporary tax break. The 2% reduction in the employee’s share of Social Security tax withholding was extended for only two months (thru February of 2012).
But the fools did not address the multitude of other tax breaks that expired on December 31st – including the usual list of “extenders (i.e. the deductions for educator expenses, tuition and fees, state and local sales tax, and the AMT patch). I expect that is what they will be extending, along with the “Bush” tax cuts, at the last minute next December.
Speaking of the idiots in Congress – what I considered the biggest tax story of 2010 (“the total irresponsibility of the idiots in Congress”) continued and exacerbated in 2011. The current Congress has been called the most “vituperative and contentious” in recent history. As Leonard Burman, a former Treasury Department official who teaches public affairs at Syracuse University in New York and frequently posts for the TAX VOX blog of the Tax Policy Center, observed about the idiots -
“I’ve never seen such a high level of dysfunction in the 25 years or so that I’ve been paying attention to government.”
The American public has finally become fed up with their foolishness. 2011 polls by CBS and CBS/NY Times reported that only 9% of Americans approved of the actions of the current Congress, giving it a 83-84% disapproval rating. A Rasmussen Reports national telephone survey found that just 9% of “Likely U.S. Voters” rate the job Congress is doing as good or excellent, while 63% view Congress’ job performance as poor.
The IRS, lawyers, Paris Hilton, the BP oil spill, and the idea of America turning Communist were all more popular than Congress, which was only slightly more popular than Fidel Castro.
I spent a lot of time in 2011 posting about these idiots, and I am sick of writing about them. They have certainly proven beyond any doubt that they are lazy, irresponsible, self-absorbed idiots that deserve nothing but contempt.
There is not much more that can be said about their constant failures that have not already been voiced by me, my fellow tax bloggers, and other commentators and journalists. I resolve to stop complaining about the idiots in 2012, other than to report on specific actions or legislation.
Like the weather, everyone was talking about tax reform in 2011, but nobody did anything about it.
As Kay Bell of DON’T MESS WITH TAXES said in her year-in-review post -
“Everyone agrees that our tax code has gotten out of control.
And everyone agrees that big changes need to be made.
But no one can agree on just how to do that.”
Much of the talk was a result of the Presidential election campaign, with the multitude of Republican wannabes presenting their tax proposals.
It began with Herman Cain’s “9-9-9” plan – a 9% personal income tax, a 9% national sales tax, and a 9% corporate tax. It was said that this plan was based on the fact that the cost of a Godfather’s pizza was $9.99.
Several candidates proposed a simple flat tax system, although a couple suggested the ridiculous idea that taxpayers be given a choice between the current mucking fess and the flat tax. The simpler systems started by doing away with all “tax expenditures”, adding back only deductions for contributions, mortgage interest, and taxes. Other candidates merely proposed making the “Bush” tax cuts permanent. Many wanted to eliminate the dreaded AMT, the so-called “death tax”, and the tax on capital gains and dividends.
As I said in my recent review of the Republican candidates’ tax proposals –
“So no candidate gets a perfect score from me. No candidate’s tax reform proposal is acceptable in full as offered.”
BO called for a “millionaires' tax”, which would create a new tax bracket for high-earners. A group called the Patriotic Millionaires also lobbied for an increase in the tax rates for high-income Americans. This call was based on Warren Buffett’s oft-quoted, but misleading, statement that he paid less income tax than his secretary.
My response to this was - “if certain millionaires, probably guilty about the source of their wealth, want to pay more to the federal, or state, government they can always make a contribution”.
So that was the year 2011 in taxes. Did I miss anything?
As 2012 is an election year it is expected that nothing of any consequence will be accomplished in the tax arena (or any other arena). Next February the idiots in Congress will probably extend the payroll tax cut for the rest of the year, and, as I suggested above, next December they will pass the usual year-end extenders bill and also continue the “Bush” tax cuts for another year or two.