Saturday, December 26, 2009


Today is my father’s 90th birthday – so it is back to the rehab facility at the Jersey Shore to celebrate.

* TAX PROF Paul Caron reports on some good news in “Senate Pledges to Retroactively Restore Expiring Tax Breaks in 2010”.

Senate Finance Committee Chair Max Baucus (D., Mont.) and Ranking Member Chuck Grassley (R., Iowa) today pledged to pass the tax extenders legislation early in 2010, retroactive to Jan. 1, 2010. Interestingly, Sens. Baucus and Grassley did not mention the retroactivity of any estate tax bill.”

While I have learned to take anything a politician says with several grains of salt, I have no reason to believe this “pledge” is not a true one.

* Dan Meyer adds too more women to the tax bloggers to his “Twelve Blogs of Christmas” honor roll – TAX CPA Marilyn Lawver and TAX MAMA Eva Rosenberg. Click here to view a recap of the entire 12.

I am very glad that the “new girls on the block” – Marilyn, Stacie and Mary – have been chosen for the honor. They are truly excellent additions to the tax blogosphere!

* Some good news from the IRS! As reported in the NATP weekly email newsletter -

No Penalty for Under Withholding Due to MWPC

The IRS released the 2009 version of Form 2210, Underpayment of Estimated Tax By Individuals, Estates, and Trusts. In the instructions, the IRS states it will waive the penalty for an underpayment caused by the adjustments made to income tax withholding tables in Spring 2009. The adjustments were made to the withholding tables in anticipation of the Making Work Pay Credit (MWPC) on 2009 income tax returns

* I normally advise clients to get married early in the year and have babies late in the year. As the marriage tax penalty is still alive and well, as long as you are going to “pay the price” of being married for the entire year you might as well “enjoy the benefits(?)” for as much of the year as possible.

Joe Kristan provides some examples when just the opposite might be true and a couple may want to tie the know before year end in “The Newlywed Game, Year-End Tax Planning Edition!” at the ROTH AND COMPANY TAX UPDATE BLOG.

* The year-end best/worst lists have begun. As bloggers love lists I am sure there will be a multitude published during the next week.

The TAXVOX blog of the Tax Policy Center starts the ball rolling with “Tax Vox’s Lump of Coal Award: The Worst Tax Ideas of 2009”. This is the third annual Lump of Coal Award. As the post explains – “So many choices. So little time.”

Number 9 is The “Bo-Tax” and the “Tanning Bed Tariff”. “This is what happens when you need money and won't talk seriously about revenues”. I have already posted my opinion of this kind of tax.

Numbers 8 and 7 sought of go hand-in-hand –

8. Obama’s Middle-Class. This is a rerun from last year, but it is too good to leave out. The President thinks we will somehow reduce the deficit and fix the tax code without raising taxes by a dime for those poor souls making a quarter million dollars-a-year or less. Unfortunately, that's 95 percent of us. Can’t wait to see how he does it.

7. Taxing the Rich. Why not let a handful of wealthy taxpayers finance all your new ideas. So let’s drive the top rate north of 45 percent, even though no one will really pay it. On the other hand, except for Barbra Streisand and those other Hollywood types, they are mostly Republicans anyway

I certainly do not think that taxing the rich “because they can afford it” is the answer. What about turning some of the 40+% of Americans who are “non-taxpayers” – pay absolutely no federal income tax (and often actually make a profit by filing a tax return) - back into actual tax-payers?

Number 3 is the fraud magnet known as the First Time Homebuyers’ Credit – “Congress started the year by giving away $8,000 in subsidies to "first-time" homebuyers, as many as 74,000 of whom, it turned out, never quite got around to buying a house. Then, it extended the boondoggle to current owners who buy up. Bottom line: People who were already going to buy will get billions of dollars in government subsides. But you gotta make those real estate agents happy.”

I will have to give this some thought and perhaps present some additions to the list in a future post.

* Don’t miss Kay Bell’s “T3” (aka “Tax Twitter Tuesday 12.22.2009”) at DON’T MESS WITH TAXES.

* And speaking of Kay – the yellow rose of taxes finishes off her 12 Tax Tips of Christmas series with perhaps the best tip of all - "#12 Hire a Pro”.

Kay tells us, “every taxpayer's situation is unique and, to paraphrase Animal Farm, some are uniquer than others. You may have some wrinkles that need ironing out by someone who is formally trained to do so.”

Wrinkles? Boy, could I show you wrinkles!

When looking for a tax pro do remember that I am not for hire.
Click here for a complete list of Kay's 12 Tax Tips of Christmas.
* The Treasury Inspector General for Tax Administration (TIGTA) has been busy lately, and has issued two reports with disturbing findings.

For one, as WEBCPA reports, “Millions of IRS Tax ID Numbers Could be Fraudulent”.

A new report by the Treasury Department’s Inspector General for Tax Administration found that millions of people may have improperly received Individual Taxpayer Identification Numbers from the IRS that could be used to fraudulently claim tax refunds.

TIGTA reviewed a sample of ITIN applications and found that almost 70 percent contained significant errors or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008

WEBCPA also reports that “IRS Can’t Verify Eligibility for Stimulus Tax Breaks”.

In this report TIGTA “found that the IRS cannot verify taxpayer eligibility for 13 of the 20 benefits and credits for individual taxpayers and 26 of the 36 tax provisions benefiting businesses {from the American Recovery and Reinvestment Act of 2009 – rdf} at the time a tax return is processed.”

You may remember that an earlier TIGTA report “identified $636 million in fraudulent or erroneous First-Time Homebuyer Tax Credits, many of which were tied to difficulties in verifying the credits”.

As is often the case, Joe Kristan’s comments hit the nail on the head in “Let's Give the IRS More To Do! Oh, Wait...” at the ROTH AND COMPANY TAX UPDATE BLOG.

It's hard enough for the IRS just to determine the correct taxable income and collect the tax of millions of individuals and businesses. When you ask the IRS to also to run economic stimulus, coordinate national energy policy, function as the national directory of industrial research, act as national low-income welfare administration, and now act as national health care administration, it's not going to work out well.”