Tuesday, July 15, 2014


* Joe Kristan’s Friday TAX ROUND-UP led me to “State Economic Prosperity and Taxation”, which summarized “new research by economist Pavel Yakovlev for the Mercatus Center at George Mason University” that “examines the effects of taxation on states’ economic performance, businesses growth, and net migration rates”.  

The not surprising bottom line of the research -

Higher state taxes generally reduce state economic growth, GSP, and even population. It is clear that people produce or consume less, or even move to a different state, in response to higher taxes.”

* A tweet from @DianeGilabert asked, “Need a comprehensive article on the real estate professional rules?”  I clicked on the link and was taken to “Real Estate Professionals: Avoiding the Passive Activity Loss Rules” by John H. Skarbnik, J.D., CPA, LL.M. at THE TAX ADVISOR.

* Over at STACIE’S MORE TAX TIPS, Stacie Clifford Kitts, in a rare original post, asks the question “Are Your Tax Records ‘Company Clean?’ 

Well, are they?    

* As Russ Fox points out in “Deadlines for Us, But Not for Them: GAO Gives IRS an F on Correspondence Audits” at TAXABLE TALK the GAO study’s conclusions weren’t a surprise to me or other tax professionals.

Russ quotes the study (the highlights are his) -

The notices the Internal Revenue Service (IRS) sends during correspondence audits have misled taxpayers by providing unrealistic time frames on when IRS would respond to their correspondence. For example, notices stated that IRS would respond within 30 to 45 days when it has consistently taken several months to do so. Further, as of early 2014, IRS data show that it had not responded timely to more than 50 percent of the correspondence taxpayers sent.”

Without exception every letter I send to the IRS in response to a “correspondence audit”, or any other notice, receives a reply from the Service weeks later stating that the IRS needs 45 more days to research and properly respond to my letter.  45 or so days later a second letter arrives stating that the IRS needs 45 more days to research and properly respond to my letter. 

The issue is usually resolved in 4+ months after the receipt of my original letter.  Sometimes the collection process continues, and I have to write to tell the IRS that they have received my response and should suspend collection, and sometimes it does not.

* It has been a while since I came across news of a state tax amnesty program.  These programs have raised tons of revenue for states in the past.  BOSTON.COM reports “Mass. Approves 2-Month Tax Amnesty Program

The program, signed into law by Gov. Deval Patrick, is available to taxpayers who failed to file a timely tax return or underreported their income.

Taxpayers who failed to pay any outstanding tax liability or failed to pay the proper amount on a required estimated tax payment are also eligible.

Those who pay their taxes and interest within the designated two-month amnesty period will not be assessed penalties. The waiver won’t apply to any individual who is the subject of a tax-related criminal investigation.”  


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