Monday, July 18, 2016

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

"The United States is the only country where it takes more brains to figure your taxes than to earn the money to pay it." –
former Florida Senator Edward J Gurney

* Tax pros – the July 15th issue of TAXPRO BUZZ is here!  Click here to download.

* In “Tax Expenditures and Oversight” at 21st CENTURY TAXATION  Professor Annette Nellen discusses the recent Government Accountability Office (GAO) report on “Tax Expenditures: Opportunities Exist to Use Budgeting and Agency Performance Processes to Increase Oversight” (GAO-16-622).  Click here for the highlights and here for the full report.

Annette says (highlight is mine) –

It looks at the estimated $1.23 trillion annual cost of special tax deductions, exclusions, credits and preferential rates AND how there is basically no oversight of these costs relative to discretionary budget items.”

According to the report highlights the $1.23 trillion in tax expenditures distributed via the 1040 is “an amount comparable to discretionary spending”.

This lack of oversight is one of the reasons that government welfare and other social program benefits, like the Earned Income Credit, the refundable Child Tax Credit, the various educational benefits, the residential energy credits, etc, should not be distributed via the Tax Code.


* Speaking of federal social welfare programs that don’t belong in the Tax Code - in “Illustrating the Earned Income Tax Credit’s Complexity” the TAX FOUNDATION talks about another GAO report from earlier this year (highlight is mine) –

The Government Accountability Office (GAO) published a report in May of this year. It found that the program suffers from a high improper payment rate. For the fiscal year 2015, they found that $15.6 billion of the EITC’s $68.1 billion in total payments were considered improper, meaning the filer over claimed or wasn’t eligible. That’s almost a fourth of the entire program’s payments.

The GAO says that the program’s high payment error is a result of the program’s complex eligibility requirements.”

Once again the solution – take the EITC and other federal social benefit programs out of the Tax Code!

* A trifecta - NO! NO! A million times NO!  The million and two NOs is my response to Senator Seeks to Revive First-Time Homebuyer Tax Credit” from Michael Cohn at ACCOUNTING TODAY.

This credit, being refundable, was, as refundable tax credits are, a fraud magnet when it was in effect in the past. 

As Michael explains (highlights are mine):

The original credit was fraught with erroneous claims, and Congress had to add antifraud protections to the final extension of the tax break. A report in 2012 by the Treasury Inspector General for Tax Administration found the Internal Revenue Service disallowed nearly $1.6 billion in erroneous claims but said there was likely much more fraud that could have been caught if the IRS had been given expanded math error authority from Congress.”

If the idiots in Congress want to encourage homeownership via subsidies let the subsidy be provided as a direct government payment at the closing of the qualifying home purchase.

Read my lips – NO REFUNDABLE CREDITS!  NO DISTRIBUTION OF FEDERAL SOCIAL BENEFIT PROGRAMS VIA THE 1040!

* Kay Bell tells us that “NJ looking at ending Pennsylvania tax reciprocity” at DON’T MESS WITH TAXES.

As Kay explains –

With reciprocity, the taxpayer files a return and pays the tax only in the state where they live.” 

So NJ resident taxpayers who work in PA do not pay any PA non-resident state income tax on their PA-source wages – and do not have to file a non-resident PA state tax return.  The PA employer withholds (or is at least supposed to) and remits NJ Gross Income Tax from the PA source wages.  And, of course, vice versa with PA residents working in NJ. 

While this creates some extra work for the employer, and at times some extra work for the taxpayer or tax preparer when the PA employer erroneously withholds PA state income tax instead of NJGIT, I have always liked this arrangement and hope it continues.

* At her BANKRATE.COM tax blog Kay suggests “10 midyear tax moves to make now”.

#10 is “Hire a Tax Professional”.  Begin your search To find a tax professional click here.

* Jason Dinesen continues his tour of the 1099 forms with “A Little About 1099s:Types of 1099s (1099-LTC thru 1099-SA)”.

* It seems that the infamous “47%” is not 44%.  The Tax Policy center’s TAX VOX blog gives us “A Closer Look At Those Who Pay No Income Or Payroll Taxes”.   

* Forbes.com’s TAXGIRL Kelly Phillips Erb reports that “Back To School State Sales Tax Holidays Start Soon”.  Kelly provides “a quick list of states offering taxpayers a break this year”.

* Jim Blankenship deals with the issue of taking an “RMD from an Inherited IRA” at GETTING YOUR FINANCIAL DUCKS IN A ROW -

If you have inherited an IRA you are required to begin taking distributions from the account according to a set schedule.”

* Michael Cohn from ACCOUNTING TODAY reports that a new “Group Plans to Audit the IRS” –

The Tax Revolution Institute— a Washington, D.C.-based nonprofit that says it promote ‘justice and integrity in the tax system’—has created a new website, AuditIRS.com, where it hopes to collect personal experiences from taxpayers about their encounters with the IRS.”


Democrats have suggested that Trump is trying to hide something by refusing to release his returns. Some Republicans, including 2012 Republican presidential nominee Mitt Romney, have also said that Trump should release his returns.

Trump has said that he will release his returns once the IRS is finished auditing him, but the agency has said that an audit does not prevent taxpayers from releasing their own information.”

Of course he has something to hide – he does not make as much as he says he does, and he gives next to nothing (proportionate to his income) to charity. 

* And, returning to Kay Bell’s BANKRATE.COM tax blog, we also hear that someone has offered a “$5M ‘reward’ for Trump tax return” –

An anonymous individual has offered to donate that amount to a veterans' charity if the presumptive Republican presidential nominee will release his tax returns.

The inquisitive donor, who wants to keep his identity private, reportedly will even let The Donald choose the charity.”

THE FINAL WORD

Does this sound like anyone we know?

The late Theodore Millon, one of the co-developers of the Diagnostic and Statistical Manual of Mental Disorders, devised the subtypes of personality disorders and described the attributes of the “unprincipled narcissist” disorder as: deficient conscience; unscrupulous, amoral, disloyal, fraudulent, deceptive, arrogant, exploitive; a con artist and charlatan; dominating, contemptuous, vindictive. These personality attributes shape behavior patterns which, in the unprincipled narcissist, tend toward self-absorbed egotism. Symptoms include an excessive need for admiration, disregard for others’ feelings, an inability to handle criticism, and a sense of entitlement.”

We are just a few short weeks from when Chief Birther Donald Trump, an unscrupulous, amoral, vindictive, con man, sweeps into Cleveland and becomes the scariest and most profoundly unqualified person to ever be nominated by a political party in the history of the United States.”


TTFN
 
 
 
 
 
 
 
 

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