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.
TTFN
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