Saturday, January 31, 2009


FYI – this will be the last WHAT’S THE BUZZ post until I return from my “tax season hiatus”.

* Trish McIntire of OUR TAXING TIMES knows that brevity is the soul of wit. She comes right to the point in her post “The IRS Doesn't Email”. To repeat the entire post - “If you get an e-mail from the IRS, do not respond. It is a fraud.”

* Fellow twit, and fellow tax blogger, Chad Bordeaux brought to my attention at Twitter an early January post from TAX PROF Paul Caron titled “Dick Morris: Tyranny of the Tax Exempt”, in which Paul quotes an op-ed from the New York Post by Dick Morris.

Morris tells us that (the highlights are mine) –

Under Obama's plan, the majority of American voters would pay no federal income taxes, but would get money from the government instead. That is, these "refundable tax credits" are basically welfare checks - and Obama's plan would leave the most of us collecting, not paying. ...

Today, the bottom 50% of US taxpayers pays a total of $30.6 billion in federal income taxes on a combined income of about $1 trillion. So about 3% of all federal income-tax payments come from the poorest half of the country. (The top 1% pays 40%; the top 25% pay 85% of the federal income tax.)

Obama's plan -- he'd give all couples a $1,000 refundable tax credit and all single people $500 -- would funnel more than $50 billion to the lowest half of the country, thereby completely wiping out their total federal tax liability. In most cases, it would trigger a "refund" welfare check.

In one stroke, this would transform the majority of voters from taxpayers into tax eaters -- and leave an increasingly small minority to pay the bill. Whether or not this is good economics, it is very dangerous politics

Not good at all!

* Bill Perez of WILLIAM’S TAX PLANNING BLOG at asks “How Accurate is Tax Software Required to Be?” deals with the following questions concerning commercial tax preparation software – “Does the IRS require tax preparation software to be accurate? Does it test software to ensure the numbers are calculated appropriately? Or to phrase it bluntly, is your tax software reliable?

What does he find? It appears that “tax software does not undergo the sort of rigorous testing from the IRS that one might imagine”.

Another item of concern – “I found a 2007 audit of the Free File software alliance, the Treasury Inspector General for Tax Administration (the watchdog agency in charge of auditing the IRS) discovered that the IRS does not verify the accuracy Free File or other tax software programs.”

Bill’s bottom line, other than the implied be wary of the accuracy of tax preparation software, is that the "current tax code is a complicated mess that needs to be simplified so people know they are definitely paying the right amount of tax."

Right you are, Bill, on both your implied and stated bottom line! FYI, the above highlights are mine.

* While on the subject of the IRS “Free File” program, Jeff Schnepper has a great article on this program titled “Free Tax Filing Could Cost You” at MSN Money.

Jeff starts off the article with “The Internal Revenue Service's Free File program brings back words of wisdom I once received from my father: ‘Whenever you get something for free, be careful. You're probably not getting your money's worth’."

He ends with – “Personally, I'd like the IRS to develop its own free tax-preparation portal on its Web site. Remember, the agency's last name is ‘Service’." Me too!

* I think I have found the greatest thing since sliced bread – check out a seemingly great software package that promises to “quickly compute the tax basis for AT&T, the Baby Bells and the other companies that the Baby Bells merged into” in my post “Eureka” at the NJ TAX PRACTICE BLOG.

* In the process of answering a question on RALs in her post “Ask the taxgirl: Refund Anticipation Loan (RAL) Denials and Delays” TAX GIRL Kelly Phillips Erb reports that “According to Americans for Fairness in Lending, the average RAL lender fee is $100. The interest rates for a RAL ranges from 40% to 700% depending on the size of the refund.”

That sounds like usury to me!

* Kelly also provides a good overview of the alimony issue in “Ask the taxgirl: Is it Alimony?”. She makes an excellent point when she tells you, “hire a tax professional to review your settlement or divorce agreement and make sure it makes good tax sense (no matter which side you’re on)”.

* While at least BO did not nominate NJ Governor Jon “Mr Disappointment” Corzine for Secretary of Treasury, his actual nominees to posts in the Treasury Department are apparently not much better. Professor Linda Beale discusses them, including the appointment of former CEO of Henry and Richard as Deputy Commissioner of the IRS, in her post “The New Administration” at ataxingmatter.

BO, WTF were you thinking?!? The last person we would ever want in a position of authority at the IRS is anyone from H+R Block – especially a former CEO!!!

You know, now that I actually think about it, in my 37 years in “the business” I don’t think I have ever heard or read a story where a taxpayer actually had a good experience with Henry and Richard! Has anyone out there ever gotten truly competent service for a fair and reasonable fee without being pressured to purchase a usurious RAL or other unnecessary and expensive H+R product from Henry and Richard?

* Twit-follower Jim discusses in detail the non-tax provisions of BO’s economic stimulus package in “American Recovery & Reinvestment Plan Details” at the recently renamed BARGAINEERING (the blog formerly known as BLUEPRINT FOR FINANCIAL PROSPERITY).

* Right on, Sheryl of BUSINESS START-UP SUCCESS CLUB! Your post “
Should You Take a Home Office Deduction?” falls under the heading of “you took the words right out of my mouth”. I certainly agree with Sheryl when she says, “I wholeheartedly believe that you should take all the tax deductions that you qualify for”.

TTTA (Ta Ta Till April)

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