Wednesday, January 6, 2010


Welcome to the first BUZZ of 2010.

* I love Prof Jim Maule’s bottom-line comment on the NJ State legislature in his post “Tax Ignorance: Legislators and Lobbyists” at MAULED AGAIN. In it he asks a question that could apply to any legislature – local, state or federal.

It boils down, once again, to a legislature being quick to dish out tax breaks, quick to spend money, but slow to take on responsibility for its actions, slow to keep track of what it does, yet quick to ask others to do its work. Ought not legislators be held to the same standard of expertise that applies to people working in other occupations and jobs? Do not the taxpayers deserve better?

* And speaking of Jim Maule, he started the year off with another excellent quote about our representatives in Washington in his post “A Zero Tax, A Zero Congress” about the expiration of the federal Estate Tax –

What I can offer is my condemnation of the Congress for putting America into yet another economic mess. Several commentators have noted, cynically perhaps, that members of Congress benefit from having the estate tax issue held open because it encourages lobbyists for the various positions to rustle up more cash for the campaign coffers of members of Congress. Far be it for me to criticize a cynical observation. Truth be told, I think these commentators are making a valid point. It's not unlike members of Congress to put personal objectives, including raising re-election funds and grabbing power, ahead of what needs to be done for the national economic good. One look at the bribery involved in crafting a health care bill tells us quite a bit about the value system in play on Capitol Hill.”

* Check out Russ Fox’s “2009 Tax Offender of the Year” to find out who wins the prize.

To be considered for the Tax Offender of the Year award, you must do more than cheat on your taxes. It has to be special; it really needs to be a Bozo-like action or actions.”

I love the #2 choice – “the 1st session of the 111th United States Congress”.

This Congress, dominated by Democrats, managed to take the art of spending to new heights of lowness. Budget sanity? Who needs that! Our children, grandchildren, and great-grandchildren will be paying for Congress’ largess.”

If you ask me, Congress is the biggest tax offender of just about any year!

* TAXGIRL Kelly Phillips Erb’s list of “Most Popular Posts of 2009” (based on page views) included an excellent “Ask the taxgirl” post on “Payments Made Under the Table”.

She makes several good points –

It’s important to remember that your employer is not your friend. An employer who suggests that you might be paid ‘under the table’ is definitely not your friend, for about a million reasons.”

And – “just because you weren’t having taxes withheld does not mean that they were paying you under the table. If you were, in fact, properly classified as an independent contractor (and not an employee), the employer would not have been required to withhold taxes.”

Read the entire post. It concerns a person who collected unemployment while being paid, presumably, “under the table” who got upset when the company that paid her wanted a Social Security Number to report the income on a Form 1099.

As Kelly points out, much more tactfully then I would, the questioner (1) committed unemployment fraud and (2) must provide her Social Security number to the “employer”.

* And one more from Kelly – she answers the question “The Cost of Kids Getting Better: Is It Deductible?”, drawing on her own recent experience.

Kelly, we hope Amy is doing ok. And, as a resident of the Garden State, I agree with your “shudder” when stating “And if I lived in NJ. . .”. With my father’s passing on New Year’s Day I now need to rethink my residence situation.

* Kay Bell tells us what she considers to be the “top five federal tax developments over the last 10 years” in her post “A Look Back at the Decade in Taxes” (my 4th decade in taxes) at DON’T MESS WITH TAXES.

I am certainly on board with her first three picks. She hit the nail on the head in her summation of “Rebates, Rebates, Rebates” –

In all these cases, the rebates were relatively minimal, especially when compared to the large amount of confusion, frustration and anger they generated.
Here's hoping this rebate mania will soon fade and be replaced with legitimate tax reform

And as for the cafones in Congress –

Perpetual Congressional lateness in approving these extenders, the technically temporary tax breaks that are renewed for one or two years at a time, is a real pain. Over the years, the delays have led to filing and planning problems, not only for us taxpayers {and tax preparers – rdf} but also for the IRS."

* Oops! Sorry, Kay. I missed the Tax Carnival again! I have got to pay better attention. Anyway – check out “Tax Carnival #62: Happy New Tax Year!” at DON’T MESS WITH TAXES.

* Mary O’Keeffe shows us why timing is important in her post “Last Baby of the Old Year or First Baby of the New Year?” at BED BUFFALOES IN YOUR TAX CODE.

* Stacie Clifford Kitts writes about a sorry taxpayer in “Joe Schmo Didn’t Think He Needed Any Tax Planning” at STACIE’S MORE TAX TIPS (in it’s new location with a great new look).

The story of JS is, sadly, a familiar one to us tax preparers.

* Trish reports on a little surprise that taxpayers who have used a “credit counseling agency” to “settle” or reduce credit card debt will be receiving in “Tax Surprise - 1099C”.

Cancelled credit debt is taxable income – unless the taxpayer was insolvent.

* Bill Perez adds his voice to those of us who warn taxpayers “not to file a tax return using the information from your last paystub of the year” in his post “How Soon Can You File a Tax Return?” at WILLIAN’S TAX PLANNING BLOG.

Bill tells us that –“the IRS is on the look out for people who file only using their paystub”.

* Joe Kristan reports on a report that is just “A Polite Way of Saying 'It Was Just a Big Waste of Money'” (the First Time Homebuyer’s Credit that is) at the ROTH AND COMPANY TAX UPDATE BLOG.

The Congressional Research Service says lower prices, not the homebuyer tax credit, have gotten houses selling again.”

* Let me end on Joe Kristan’s bottom line comment on the just released IRS report on tax preparer regulation

The only sure way to improve tax compliance is to simplify the tax law and eliminate the most egregious opportunities to cheat, like refundable credits. Since that isn't going to happen, the IRS will saddle the innocent with paperwork that won't solve the problems.”