IRS opens investigation into Google tax practices

By Matt Weinberger | October 17, 2011, 2:47pm

PDTSummary:

Google may have dodged $3.1 billion in federal income taxes over 3 years by funneling profits through subsidiaries in Ireland, the Netherlands and Bermuda.The United States Internal Revenue Service IRS has opened an investigation into Google’s practice of saving about $1 billion a year in federal income tax by funneling profits from its US and European business units into countries with lower tax rates, Bloomberg is reporting.The techniques Google used, referred to as the “Double Irish” and the “Dutch Sandwich,” involved moving profts through Ireland, the Netherlands and Bermuda in order to get the most favorable tax rates possible. In fact, in the second quarter of 2011, Google paid an effective tax rate of 18.8 percent, about half of the average combined US and state statutory rate of 39.2 percent.A large part of the issue, according to Bloomberg’s unnamed source, is Google’s valuation of software and intellectual property that was licensed abroad. In other words, Google may be attributing acquisitions like the $1.65 billion YouTube purchase to its foreign subsidiaries and paying less in taxes for having done so. It’s estimated that Google may have saved $3.1 billion over three years by following this method.We’re short on official details: the IRS hasn’t made the audit official and doesn’t comment on individual taxpayers regardless, and the French tax authorities have launched their own investigation but are following that same rule of silence.The Guardian, which has put together its own timeline of Google’s international money trail, got the following statement from a company spokesperson:“We have an obligation to our shareholders to set up a tax-efficient structure, and our present structure is compliant with the tax rules in all the countries where we operate. We make a very substantial contribution to local and national taxation and provide employment for over a thousand people in the UK. We also generate significant revenues for other companies, and last year gave more than $6bn to our AdSense publisher partners, including newspapers and broadcasters across the world.”Or in simpler terms, Google is saying that you can argue all you want about the ethics of this kind of tax strategy, what it’s doing is perfectly legal and ultimately beneficial. And if the brass at the IRS doesn’t like it, it’s up to them to prove Google wrong. But what’s one more legal battlefront to Google?

via IRS opens investigation into Google tax practices | ZDNet.

10 Tips to Avoid Nanny Tax Problems

2011 DECEMBER 7

by Ken

Unless you’re a CPA, chances are you don’t relish the prospect of additional work at tax time. So you’ll want to take some steps to avoid nanny tax problems before they arise. We’ve put together a list of ten tips you can use to avoid problems with you nanny’s taxes.

Stay Above the Table – For starters, forget about any benefits you may think you would both gain from cash payments, and skirting the tax issue entirely. The risk is hardly worth the savings, and the penalties are far greater.

Taxpayer  Benefits – If your nanny prefers a particular take-home pay, or net salary, you will want to determine which taxes that amount will exclude. In other words, decide up front if the net salary you agree to will be before or after you pay her Social Security and Medicare, etc.

Know the Laws – You don’t need to be a lawyer, but it’s wise to understand the tax laws with regard to your obligations as an employer. In most cases if you hire a nanny, you are going to be responsible for collecting her Social Security and Medicare taxes. That is, deducting them from her paycheck each pay period, and issuing her a W-2 form for filing her income taxes.

Discuss Taxes With Nanny – Make sure that both you and your nanny are on the same page regarding what taxes need to be deducted and why, and estimate the amounts in order to avoid surprises later.

Know Her Legal Status – You should already have determined whether she is legally authorized to work during the hiring process. Only citizens, permanent residents or non-immigrants who possess a work visa may be legally hired for work. In any case, you will still be liable for her taxes. The difference is that she would have to file a form W-7, request for an Individual Taxpayer Identification Number (ITIN).

Know What Forms to File – Aside from the aforementioned W-2, you must also file an SS-4 application for an Employee Identification Number (EIN); and, if you pay her cash in excess of $1,600, a Schedule H form.

Know Your Deductions – Be certain about which expenses you incur by having a live-in nanny are tax-deductible. For instance, food and lodging that are provided to a live-in nanny at the convenience of the employer, are eligible for tax-exemption.

Working Agreement – For many reasons it’s strongly advised that you write up a working agreement between you and your nanny at the time of hire. One of the benefits of doing so is that it will include the details of her salary, overtime and other factors that will affect her income, as well as what taxes each party will be responsible for paying.

Disclosure – Remember that you are required to disclose on your own personal income tax return the amount of wages you paid your nanny.

Keep Accurate Records – maintain a log of your nanny’s work schedule. Document the hours she works, including overtime, overnight work and any duties outside her normal responsibilities as well as whatever compensation you paid her for it.

via 10 Tips to Avoid Nanny Tax Problems | NannyPro.com.

State Income Tax Avoided By 68 Large Profitable U.S. Companies In Recent Years: Study

The Huffington Post   Bonnie Kavoussi

First Posted: 12/ 7/11 12:16 PM ET Updated: 12/ 7/11 12:16 PM ET

Large U.S. corporations are not only figuring out ways to avoid federal income taxes, but taxes at the state level too.

Of the country’s most consistently profitable large companies, a full fourth of them — 68 companies in total — paid no state income tax at least once over the past three years, according to a study released on Wednesday by the left-leaning Citizens for Tax Justice. Moreover, twenty large consistently profitable U.S. companies paid an average state income tax of zero or less between 2008 and 2010, according to the study.

News of the tax-dodging comes at a time when states are imposing layoffs and slashing services to combat widening budget deficits. Overall, state-level revenue from corporate taxes has been plummeting for the past 20 years as tax-avoidance schemes have become more sophisticated, according to an interview with Gardner by Bloomberg News. Today, only six states do not levy income taxes, according to Bloomberg News.

“They’re so busy avoiding taxes, it’s no wonder they’re not creating any new jobs,” Matthew Gardner, executive director of the Institute on Taxation and Economic Policy and a co-author of the study, said in a statement. He added that large corporations “devote their money and legal firepower to coming up with tax avoidance schemes.”

Companies that avoided paying state income taxes at least once in the past three years include Boeing, Goldman Sachs, Wells Fargo, General Electric, Yahoo, J.C. Penney, Hewlett-Packard, American Express, Merck, and Verizon, according to the study. And on average, the 265 companies surveyed paid taxes at roughly half of the official rate, costing states $42.7 billion in revenue over the past three years, the study found.

Many large U.S. corporations also have shifted their profits overseas in order to avoid federal taxes.

A study by Citizens for Tax Justice released in June found that 12 large U.S. corporations — including General Electric and DuPont — paid far less in federal corporate taxes than the official rate. A separate report by the Citizens for Tax Justice found thirty large U.S.-based multinational companies paid negative federal income taxes over the past three years, with Wells Fargo taking home the most in tax subsidies.

via State Income Tax Avoided By 68 Large Profitable U.S. Companies In Recent Years: Study.

The Examination (Audit) Process

FS-2006-10, January 2006

The IRS examines (audits) tax returns to verify that the tax reported is correct.

Selecting a return for examination does not always suggest that the taxpayer has either made an error or been dishonest. In fact, some examinations result in a refund to the taxpayer or acceptance of the return without change.

The overwhelming majority of taxpayers files returns and make payments timely and accurately. Taxpayers have a right to expect fair and efficient tax administration from the IRS, including verification that taxes are correctly reported and paid with enforcement actions against those who fail to comply voluntarily.

Taxpayer Rights

The IRS trains its employees to explain and protect taxpayers’ rights throughout their contacts with taxpayers. These rights include:

A right to professional and courteous treatment by IRS employees.

A right to privacy and confidentiality about tax matters.

A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.

A right to representation, by oneself or an authorized representative.

A right to appeal disagreements, both within the IRS and before the courts.

How Returns Are Selected for Examination

The IRS selects returns using a variety of methods, including:

Potential participants in abusive tax avoidance transactions — Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions. Examples include information received from “John Doe” summonses issued to credit card companies and businesses and participant lists from promoters ordered by the courts to be turned over to the IRS.

Computer Scoring — Some returns are selected for examination on the basis of computer scoring.  Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.

Large Corporations — The IRS examines many large corporate returns annually.

Information Matching — Some returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return.

Related Examinations — Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for examination.

Other — Area offices may identify returns for examination in connection with local compliance projects. These projects require higher level management approval and deal with areas such as local compliance initiatives, return preparers or specific market segments.

Examination Methods

An examination may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). Taxpayers may make audio recordings of interviews, provided they give the IRS advance notice. If the time, place, or method that the IRS schedules is not convenient, the taxpayer may request a change, including a change to another IRS office if the taxpayer has moved or business records are there.

The audit notification letter tells which records will be needed. Taxpayers may act on their own behalf or have someone represent or accompany them. If the taxpayer is not present, the representative must have proper written authorization. The auditor will explain the reason for any proposed changes. Most taxpayers agree to the changes and the audits end at that level.

Appeal Rights

Appeal Rights are explained by the examiner at the beginning of each audit. Taxpayers who do not agree with the proposed changes may appeal by having a supervisory conference with the examiner’s manager or appeal their case administratively within the IRS, to the U.S. Tax Court, U.S. Claims Court or the local U.S. District Court. If there is no agreement at the closing conference with the examiner or the examiner’s manager, the taxpayer has 30 days to consider the proposed adjustments and their next course of action. If the taxpayer does not respond within 30 days, the IRS issues a statutory notice of deficiency, which gives the taxpayer 90 days to file a petition to the Tax Court. The Claims Court and District Court generally do not hear tax cases until after the tax is paid and administrative refund claims have been denied by the IRS. The tax does not have to be paid to appeal within the IRS or to the Tax Court. A case may be further appealed to the U.S. Court of Appeals or to the Supreme Court, if those courts accept the case.

via The Examination (Audit) Process.

IRS Seeks to Return $153 Million in Undelivered Checks to Taxpayers; Recommends e-file, Direct Deposit to Avoid Future Delivery Problems

IR-2011-113, Nov. 30, 2011

WASHINGTON — In an annual reminder to taxpayers, the Internal Revenue Service announced today that it is looking to return $153.3 million in undelivered tax refund checks. In all, 99,123 taxpayers are due refund checks this year that could not be delivered because of mailing address errors.

Undelivered refund checks average $1,547 this year.

Taxpayers who believe their refund check may have been returned to the IRS as undelivered should use the “ Where’s My Refund?” tool on IRS.gov. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Last year, more than 78.4 million taxpayers chose to receive their refund through direct deposit. Taxpayers can receive refunds directly into their bank account, split a tax refund into two or three financial accounts or even buy a savings bond.

The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. Nearly 8 out of 10 taxpayers chose e-file last year. E-file combined with direct deposit is the best option for taxpayers to avoid refund problems; it’s easy, fast and safe.

The public should be aware that the IRS does not contact taxpayers by e-mail to alert them of pending refunds and does not ask for personal or financial information through email.  Such messages are common phishing scams.  The agency urges taxpayers receiving such messages not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that can infect their computers.  The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “Where’s My Refund?” tool.

via IRS Seeks to Return $153 Million in Undelivered Checks to Taxpayers; Recommends e-file, Direct Deposit to Avoid Future Delivery Problems.

Interest Rates Remain the Same for the First Quarter of 2012 IR-2011-112,

Nov. 28, 2011WASHINGTON ― The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2012. The rates will be: three 3 percent for overpayments [two 2 percent in the case of a corporation];three 3 percent for underpayments;five 5 percent for large corporate underpayments; andone-half 0.5 percent for the portion of a corporate overpayment exceeding $10,000.The 3 percent rate also applies to estimated tax underpayments for the first calendar quarter in 2012 and for the first 15 days in April 2012.Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half 0.5 of a percentage point. Further, the federal short-term rate that applies during the third month following the taxable year also applies during the first 15 days of the fourth month following the taxable year.The interest rates announced today are computed from the federal short-term rate during October 2011 to take effect Nov. 1, 2011, based on daily compounding.Revenue Ruling 2011-32, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin No. 2011-52, dated Dec. 27, 2011.

via Interest Rates Remain the Same for the First Quarter of 2012.

For Immediate Release

Date: 11/09/2011

Contact: Joel Davison, Public Relations Manager, (804) 786-3507

Tax Department’s New Website Gives Taxpayers What They’ve Asked For

RICHMOND – The Virginia Department of Taxation introduced a brand new website this week designed to give taxpayers a quicker, more intuitive path to the information they need.

Along with a fresh, uncluttered home page and a new look and feel, the new website features a menu-based design that guides users to what they need with a minimum of mouse clicks. The forms have been organized in a more navigable layout with additional information about each one. The search function is much improved, and important announcements and other information are now featured in a large slideshow in the center of the home page.

The major website overhaul was largely in response to comments and suggestions received from taxpayers in surveys on the old site, along with feedback from focus groups and Department employees. The new site better aligns with the needs and expectations of the agency’s stakeholders, who include individuals, businesses, tax professionals and localities.

“Our customers were a little frustrated and I didn’t blame them,” said Tax Commissioner Craig M. Burns. “The site needed upgrading anyway and the taxpayers who took the time to respond to surveys helped us define what the new site should look like. We now have a full-time webmaster to keep the new site current and up to the standards our customers demand.”

More taxpayers than ever, both individuals and businesses, are doing their tax-related transactions online through the Department’s website. Last year the site logged over 9 million electronic transactions, including returns filed, payments made and businesses registered. This was an increase of nearly 10 percent over the previous year.

All of the content on the new site has been reviewed and, in many cases, rewritten to make it easier to understand. The new site is also compatible with most browsers and electronic devices, such as mobile phones and tablets. The address of the new site is the same as the old site: www.tax.virginia.gov.

The Department will continue to update and add new content and features to the site with an eye toward constantly improving the experience for its customers. It will also continue paying close attention to their feedback.

via Commonwealth of Virginia Department of Taxation.

Long-Term Care Insurance Credit

Credit for Purchase of Long-Term Care Insurance

Individuals may claim a credit equal to 15% of the amount paid by the individual during the taxable year in long-term care insurance premiums for long-term care insurance coverage for himself, but the total credits for any policy may not exceed 15% of the amount of premiums paid for the first 12 months of coverage. Any unused credit may be carried forward for the next five taxable years. In order to determine the amount that may be used as a basis for this credit, the individual must subtract any amount actually included as a deduction on Schedule A of the individual’s federal income tax return. In addition, the individual may not claim this credit to the extent the premiums have been used to claim the Virginia deduction for long-term health care premiums. It may be possible, however, for an individual to claim this credit and the Virginia deduction in the same year.

Example

This credit is based on the amount paid during the taxable year, even if the months covered by the policy extend into the following taxable year. For example, if an individual purchased a policy on July 1 and paid for 12 months, he would base his credit on the entire payment, even though only six months of the coverage period would fall in the taxable year in which he claimed the credit. If however, the individual made payments on a monthly basis, he would claim a credit in the current taxable year for 6 months of premiums and a credit in the second year for the next six months of premiums in order to reach the allowed total of 12 months. In that case, the individual could also claim a deduction in the second year for the 6 months of premiums that were not used as a basis for the credit.

via Tax Credits — Commonwealth of Virginia Department of Taxation.

Hiring Household Employees:

You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.Household work is work done in or around your home by the following people.

Babysitters

Caretakers

Cleaning people

Domestic workers

Drivers

Health aides

Housekeepers

MaidsNannies

Private nurses

Yard workers

Workers who are not your employees

If only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business.A worker who performs child care services for you in his or her home generally is not your employee.If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.

Example

You made an agreement with John Peters to care for your lawn. John runs a lawn care business and offers his services to the general public. He provides his own tools and supplies, and he hires and pays any helpers he needs. Neither John nor his helpers are your household employees.

via Hiring Household Employees.

IRS Begins PTIN Renewals for 2012 Filing Season IR-2011-105, Oct. 20, 2011WASHINGTON:

The Internal Revenue Service today announced that the nation’s 738,000 tax return preparers who have Preparer Tax Identification Numbers PTINs can now renew their PTINs for the 2012 filing season.Preparers are required to renew their PTINs on an annual basis and need to do so before the next year begins. For example, a preparer’s PTIN for 2012 must be renewed by Dec. 31, 2011.Anyone who for compensation prepares, or helps prepare, all or substantially all of tax returns or claims for refunds must have a PTIN. Paid return preparers must have valid, current PTINs to prepare tax returns in 2012.The PTIN renewal fee for 2012 is $63. The initial application fee for a PTIN remains at $64.25. Return preparers who obtained their PTINs by creating an online account should renew their PTINs at www.irs.gov/ptin.Preparers who used paper applications to receive their 2011 PTINs will receive an activation code in the mail from the IRS which they can use to create an online account and convert to an electronic renewal for 2012. Individuals can also renew using a paper Form W-12, IRS Paid Preparer Tax Identification Number Application, but renewing electronically avoids a four to six week wait for processing the renewal request.Return preparers who are applying for a PTIN for the first time must go through a strict authentication procedure and should follow directions carefully. Return preparers who prepared, or helped prepare, returns for compensation in 2011 without PTINs must obtain 2011 PTINs and then renew their PTINs for 2012, paying fees for each year if they intend to practice next year. Penalties may apply for paid tax return preparers who prepared, or helped prepare returns in 2011 without valid PTINs.Some changes to the PTIN application and renewal process include:Return preparers must self-identify if they are supervised preparers or non-1040 preparers.Supervised preparers will need to provide a supervisor’s PTIN when applying for or renewing their PTINs.Credentialed preparers Certified Public Accountants, attorneys and Enrolled Agents must provide the expiration date for their licenses when they apply for or renew their PTINs.Supervised preparers are individuals who don’t sign the returns they prepare or help prepare; work at a firm at least 80 percent owned by a Certified Public Accountant, an attorney or an Enrolled Agent; and prepare returns that are signed by a supervisor who is a CPA, attorney or Enrolled Agent.Non-1040 preparers are people who do not prepare any individual income tax returns for compensation. For this purpose, preparers of Form 1040-PR and Form 1040-SS are considered non-1040 preparers.Supervised preparers and non-1040 preparers must identify themselves when they apply for or renew their PTINs to be exempted from testing and continuing education requirements; Certified Public Accountants, attorneys and Enrolled Agents are also exempt from testing and continuing education requirements.Taxpayers who use a paid return preparer are urged to choose a return preparer with a valid PTIN. Return preparers should also sign the returns they prepare for taxpayers and enter their PTINs on the returns.  For more information on choosing a return preparer, go to Tips for Choosing a Tax Preparer.For more information on the PTIN requirements or on becoming a Registered Tax Return Preparer, go to www.irs.gov/taxpros.

via IRS Begins PTIN Renewals for 2012 Filing Season.

Finalizing Tax Preparation Services on Amended Tax Returns

November 17, 2011 by ButterflyFiled under: Taxes

Most tax practitioners require a little extra tax preparation education to learn the details about preparing an amended return. When Form 1040X is properly completed, it summarizes the new tax return and explains the contrast with the original filing.

Assembly of the entire package is a key element of tax preparer training. An amended tax return is only mailed to the IRS and never electronically filed. The mailing is sent to the same IRS Service Center that processed the original tax return. The amendment forms should easily lead the IRS agent to the tax reporting changes.

Form 1040X is the top page of an amendment filing. This form provides the essential details contained on the newly prepared Form 1040. A most important part of paid tax preparer study is that Form 1040X must have a clear reason for filing an amended return. This explanation points out what forms have changed.

The IRS Service Center manually processes the amended return. After assuring that the explanation for the change is sufficient, the attached documentation is examined. Consequently, the pages that follow Form 1040X are the new Form 1040 along with any new schedules. All of these attachments are prepared by following the same tax preparation guide that would have been deployed if the original tax return was accurately prepared.

An IRS agent reviews all the new information described on Form 1040X. If additional documentation is required, a letter is sent that requests specific details before the amendment is processed.

In addition, there is a double check of all the withholding and other tax payments listed on the amended tax return. Payment of any additional tax owed as a result of the amendment is sent with the Form 1040X. Refunds require approximately 8 to 12 weeks of processing for taxpayers to receive.

The IRS does verify information on amended tax returns more thoroughly than original tax returns. Therefore, efficient processing of an amendment demands providing a clear reason for amending and proper documentation. A little more detail is thus sent with an amended tax return. For example, efficiency of IRS processing improves by sending copies of the original tax return pages that have changed.

In addition, attaching a photocopy of the supporting document for the amendment is recommended. With original tax filings, copies of documents are not attached – other than a W-2 or other form showing withholding. Only an amended tax return should have a copy of any document that supports a new deduction.

More than any of the other tax preparation services, amended tax returns entail a focus on clear explanation and organized documentation. Nothing related to amendments is accepted without some proof.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for tax preparation education and tax professionals. Access to free questions for the tax preparer training is available on their website.

Article Source:

http://EzineArticles.com/?expert=Sawyer_Adams

via Finalizing Tax Preparation Services on Amended Tax Returns | Finance Review.

November 16, 2011

IRS Corners Prisoner Tax Cheats0In their ongoing efforts on catching tax cheats, the IRS has prevented $4.4 billion in bogus tax refunds from being given out this year. This represents an increase of 171% from the previous year, according to the report released by the Treasury Inspector General for Tax Administration TIGTA. The TIGTA reported in 2010 that a total of almost 50,000 prisoners claimed more than $130 million in tax refunds, which largely went unscrutinized.The TIGTA report also states that, “As of April 30, 2011, the IRS reported that it had selected 199,854 tax returns filed by prisoners for screening. This represents a 256 percent increase in the number of prisoner tax returns identified and sent to screening when compared with the same period last processing year.”The increasing incidences of tax cheating by prisoners still serving their sentences has been a thorn in the IRS’ side of late, which explains the IRS tightening their monitoring of such crimes. In fiscal 2010, investigations into tax fraud increased by 14% and the corresponding recommendations for prosecution rose by 18%, figures that exceeded the IRS’ own targets. Audits of millionaires spiked by a hefty 73% last year as the IRS strived to close the tax gap the difference between the amount of tax collected and the amount actually owed, all in the midst of Congressional budget cuts.Another major crackdown by the IRS is the investigations into offshore banks suspected of assisting wealthy American taxpayers hide their taxable income in overseas accounts. Thus far, 11 banks have been put under investigation including Credit Suisse, HSBC Holdings and various other regional banks.Over and above all these, the IRS also has to administer various social policy programs through the tax code. This has lent weight to the often heard argument that the tax code is extremely complex.One other complaint about the IRS is the difficulty in communicating with them. Nina Olson, the National Taxpayer Advocate, commented that, “IRS is still failing to answer one out of every four calls it receives from taxpayers who need assistance. Equally concerning, among calls that do get answered, the average wait time in FY 2010 was nearly 11 minutes, up from about four and one-half minutes in FY 2007.”Besides that, the rate the IRS responds to correspondences also leaves much to be desired. The “correspondence inventory” shot up by 31% between Fiscal Year 2007 and Fiscal Year 2010. According to Olson’s estimates, the IRS spends only 5% of its budget on taxpayer services.Last tax season the IRS gave refunds amounting to $142.2 million to 140,596 taxpayers due to processing errors. Some of the programs that resulted in significant refund errors were the First-Time Homebuyer Credit, the Adoption Credit, the Nonbusiness Energy Property Credit and the Plug-in Electric and Alternative Motor Vehicle Credit.Bookmark & Share

via IRS Tax Problem Solver Blog – IRS Help.

Tips for Choosing a Tax Preparer

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

Here are a few points to keep in mind when someone else prepares your return:

Check the person’s qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations effective in 2011 require all paid tax return preparers including attorneys, CPAs and enrolled agents to have a Preparer Tax Identification Number.

Check the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.

Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.

Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.

Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.

Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.

Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.

Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.

The IRS can help many taxpayers prepare their own returns without the assistance of a paid preparer. Before seeking a paid preparer, taxpayers might consider how much information is available directly from the IRS through the IRS Web site. Check out these helpful links:

e-file for Individual Taxpayers

Free File

Free Tax Return Preparation For You by Volunteers

You can report abusive tax preparers and suspected tax fraud to the IRS on Form 3949-A, Information Referral or by sending a letter to:

Internal Revenue Service

Fresno, CA 93888

Download Form 3949-A and fill it out or order by mail at 800-TAX FORM (800-829-3676).

Related Links:

PTIN Requirements for Return Preparers

The Office of Professional Responsibility

Where Do You Report Suspected Fraud Activity?

via Tips for Choosing a Tax Preparer.

IRS to Delay Fingerprinting Requirement for Certain PTIN Applicants, Shulman Says (IR-2011-108)

Posted on 11/09/2011 by CCH

IRS Commissioner Douglas H. Shulman told tax professionals on November 8 that the Service has delayed its plan to fingerprint certain preparers who apply for preparer tax identification numbers (PTIN). Shulman also reported that the IRS continues to learn how to use the information in new Schedule UTP, Uncertain Tax Position Statement, while respecting taxpayers’ internal analysis and deliberations. Shulman spoke at the national tax conference of the American Institute of Certified Public Accountants (AICPA) in Washington, D.C.

Return Preparer Initiative

Effective January 1, 2011, all return preparers who prepare returns for compensation, subject to certain exceptions, must obtain or renew a PTIN. The IRS launched an online PTIN registration system in 2010. “Sixty percent of the preparers who have registered for a PTIN are not CPAs, enrolled agents or attorneys,” Shulman reported. The Service has also posted PTIN troubling-shooting tips on its website.

The IRS indicated that certain preparers would be required to submit their fingerprints when applying for a PTIN. At an October 7 hearing, the AICPA and other professional organizations asked the IRS to revisit the fingerprinting proposal (TAXDAY, 2011/10/10, I.5).

Shulman announced that the Service has delayed the fingerprinting proposal. “We have decided to hold off on fingerprinting as we consider the issues that have been raised, and have further discussions with interested parties,” Shulman said.

“The AICPA welcomes the development,” Edward Karl, CPA, vice president, taxation, AICPA, told CCH. “The IRS heard a chorus of concern about the proposal on October 7,” Karl added.

Individuals who are not CPAs, EAs [enrolled agents], attorneys and certain other preparers are exempt at this time from the registered tax return preparer examination. “From the beginning, we planned to exempt CPAs, EAs and attorneys from the testing requirements,” Shulman said. He noted that the CPA community has extensive testing and continuing education requirements in place. On its website, the IRS reported that the registered tax return preparer examination is expected to be available in late November.

Preparer Oversight

“Beginning soon, the IRS will send letters to tax return preparers who have been identified as high risk,” Shulman said. “The letters are not sent randomly. They are based on real data where we see compliance issues.” The IRS also will increase in-person visits to preparers. Additionally, the Service will beef-up the resources available to the IRS Office of Professional Responsibility (OPR).

Schedule UTP

Shulman reported that the IRS has received about 1,500 Schedules UTP containing 3,500 disclosures. “About half of all Schedule UTP returns filed contained only one uncertain tax position. Not surprisingly, the top three code sections were Section 41, research tax credits, Section 482, allocation of income including transfer pricing, and Section 162, trade and business expenses.”

“The goal of Schedule UTP is to get the information we need while respecting the taxpayer’s analysis,” Shulman said, adding that “this is clearly a learning year for taxpayers and a learning year for the IRS.” The IRS is committed to working through any glitches, he noted.

Offshore Disclosures

“The [offshore] settlement program exceeded our wildest expectations,” Shulman said (TAXDAY, 2011/08/29, I.2). Taxpayers who did not participate in the now-closed offshore initiative should go forward under the Service’s permanent settlement program, Shulman noted.

IRS Budget

The Budget Control Act of 2011 (P.L. 112-25) dictated a certain reduction in federal spending and the IRS is not exempt, Shulman explained (TAXDAY, 2011/10/21, I.7). At this time, the subcommittees in the House and Senate responsible for the IRS have approved budget cuts for the Service, he reported. “We are still engaging with Capitol Hill so lawmakers understand the consequences of budget cuts to the Service.”

CPA Community

Shulman applauded the AICPA for the services it provides to not only taxpayers but also to CPAs in continuing education and other programs. “Whatever changes come our way, the productive working relationship that the IRS and CPA community enjoy remains a critical element of our tax system.”

By George L. Yaksick, Jr., CCH News Staff

IR-2011-108

IRS Online Troubleshooting Tips

via IRS to Delay Fingerprinting Requirement for Certain PTIN Applicants, Shulman Says (IR-2011-108) | CCHGroup.com   News & Information.

November 9, 2011 | Wall Street Journal

news » hoover daily report

Do Americans Favor a Flat Tax?

by David Brady (Deputy Director; Davies Family Senior Fellow; and cochair, Virtues of a Free Society Task Force) and Tammy Frisby (Research Fellow)

Last week, YouGov/Polimetrix asked a sample of 1,000 adults about a flat rate income tax. We commissioned the poll to survey Americans on their opinion of changing from our current income tax system to a flat tax system under which all but low-income Americans would pay 19% of their income in taxes, regardless of how much money they make.

Flat tax proponents face an uphill battle. Americans in general opposed the flat tax proposal 39% to 28%. Democrats opposed the flat tax by a wide margin, 52% to 19%. More Republicans supported the flat tax proposal than opposed it, but even then, a majority did not favor it (45% in favor to 33% opposed). The level of support is only slightly higher among registered voters who say they will vote in a Republican primary or caucus next year. These Republicans favored the flat tax 48% to 30%.

But fully one-third of all respondents in our survey were unsure about their opinion of the proposed flat tax. This high degree of uncertainty is consistent with a recent Rasmussen poll of likely voters that asked about a 17% flat tax on income over $17,000. In the Rasmussen poll, 42% opposed the flat tax, 31% favored it, and 27% remained undecided.

Surveys conducted in the late 1970s and early 1980s found similar high rates of uncertainty in public opinion about the flat tax. During this earlier period, one-fifth to one-quarter of Americans reported that they were not sure about their position on flat tax proposals.

In the late 1990s, there was a sustained national debate over the flat tax, spearheaded by Republican presidential candidate Steve Forbes and House Majority Leader Dick Armey. What did Americans think about the flat tax then? Using the Roper iPoll database—a curated repository of public opinion surveys conducted by reputable polling organizations, including the NBC/Wall Street Journal poll—we identified 10 surveys from 1995-1996 and two from 1999 that asked respondents to choose between a graduated rate income tax system and a flat, single rate income tax.

Support for the switch to a flat rate system ranged from a low of 38% in late 1995 to highs of 48% and 49% throughout 1996. In 1999, two surveys that asked Americans to make the choice between a tax system under which higher earners pay higher rates and a single rate for all taxpayers reported that 48% and 50%, respectively, supported a single rate.

Today our survey data suggest that the decisive group of Americans who would be needed to create majority support for a flat rate could be those who continue to suffer in our struggling economy.

In addition to the partisan divisions on the flat tax, one of the largest divides in opinion in our survey fell between Americans who have fared better and worse in our difficult economy. We asked respondents about the change in their personal finances over the past year. Among the roughly half (or 48%) who reported that they were better off or about the same financially now as one year ago, 46% opposed the proposed flat tax, 29% favored the flat tax and 25% were unsure.

Contrast that group to the 45% of respondents who said their personal finances were worse off. These Americans were about as likely to support the flat tax (31%), but much less likely to oppose it (35% opposed) and much more likely to be unsure about their position (34%). That’s a big percentage of undecideds up for grabs.

Persistent high unemployment, slow economic growth, and calls to “tax the rich” might sway these Americans to stick with the current graduated rate system and possibly support increases in the marginal rates paid by the highest earners. So the challenge for proponents of a flat or flatter tax system is to persuade these Americans that a radically reformed tax code would spur the so-far-elusive investment, robust economic growth, and job creation that would make them better off a year from now than they are today.

Mr. Brady is deputy director of the Hoover Institution and a professor of business at Stanford University. Ms. Frisby is a research fellow at the Hoover Institution.

via Do Americans Favor a Flat Tax? | Hoover Institution.

Wednesday, November 09, 2011The broader political reach of the man behind the no-taxes pledgeIn noting how a small group of Republicans dared defy the man behind the no-taxes pledge, I quipped “what are they afraid of? That Grover Norquist will egg their houses?”Obviously I was being a smart-ass trying to be funny had pranks on my mind since we had just passed Halloween.I know Norquist wields a lot of power. And his personal support, along with that of his Americans for Tax Reform ATR, carries a lot of weight on Capitol Hill.JONATHAN ERNST/Reuters/Fotoglif  — Americans for Tax Reform President Grover Norquist speaks during the Reuters Washington Summit in the Reuters newsroom in Washington, Nov. 7, 2011.Ive seen it first-hand. When I worked in the Washington, D.C., government relations OK, lobbying offices of two major companies, I watched as they shelled out big bucks each year to ATR. I must also note that we followed expected government relations OK again, lobbying protocol and gave money to more liberal groups, too.And in the years that Ive been gone from the nations capital, ATR has grown. A lot.Politico looks at How Grover Norquist Corners Congress:”Americas No. 1 anti-tax activist has turned his single-minded nonprofit organization and its no new taxes pledge into a sprawling lobbying empire that leverages his iconic status to influence politicians on a broad array of issues that sometimes have little or nothing to do with preventing tax hikes.”The upshot is that while there might be some occassional defections, Norquists organziation is going to be around, and powerful, for a while. Youve been warned.

via Dont Mess With Taxes.

November 4, 2011

Tax Cheats Fraudulent Tax Refund Claims:

A man from Mableton, Georgia has been using stolen identities of homeless people to claim false tax refunds. In an ongoing court case, prosecutors said Rahman Hill, 43 was a co-conspirator in a scheme that has cheated the IRS of about $1.6 million in fraudulent claims. He will spend 8 years in prison. Thus far, three other individuals have been charged in the same case.US Attorney Sally Quillian Yates said Hill would obtain records of these people from homeless shelters, prisons and other sources. Then he would claim tax refunds using their names and direct the checks to bank accounts owned by him and co-conspirator Kelcey Pierre Miller, 36, of Atlanta. They would access the funds with their ATM cards, debit cards and wire transfers.Other conspirators include Keith Lamone Richard, 40, of Decatur, Peter Raymond Williams, 42, of Newark, New Jersey and Jabbar Ivan Pender, 40, of Newark who filed 123 returns between December 2005 and March 2007 and received $1,660,152 in refunds.Miller received a jail term of six years and three months while Richard was sentenced to three years’ probation and Williams’ prison term is set at five years and three months. Pender from Newark is already in federal prison on drug trafficking charges.Rodney E. Clark, a special agent attached to the IRS Criminal Investigation department said in a joint statement with the US Attorney’s office, “The defendant sentenced today stole the identities of some of the most vulnerable citizens of our society. This is not only a financial loss to the US Treasury, but it also causes great harm and hardship to the victims of the identity theft.”Watch Out for New Phishing ScamThere is a new phishing scam circulating in New York and other parts of the country that appears to be an email sent by the IRS with the subject line, “IRS Notification”. It contains an attachment that, when opened, will cause major harm to your computer. The content of the email claims to give you details of taxes owed in the 2010 – 2011 tax year.In typical phishing scams, clicking an attachment could release software designed to access all your passwords, bank and personal details from your computer.Diane Besunder, IRS spokeswoman for New York said, “The IRS does not send out unsolicited e-mails about a taxpayers account or ask for detailed personal and financial information. The IRS also never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.”Do not open any email or click any attachment in emails purportedly coming from the IRS. Report it at once to phishing@irs.gov. Once you have forwarded the email, delete it immediately

via IRS Tax Problem Solver Blog – IRS Help.

“South Park” and Millionaires: The Top 0.17%

Posted on November 3, 2011 by David S. Logan

Comedy Central’s controversial series “South Park” aired an episode last night appropriately titled “1%.”  As one expected from the press release, it was about class warfare and the various 99%/Occupy [insert place name here] movements around the world.

Via a circuitous (yet not unrealistic) route, the episode illustrates how the 99% movement could theoretically fail and embeds-knowingly or unknowingly-an absolute gem of a tax statistic on the way.

All of South Park Elementary (less Eric Cartman, who is the 1%) forms a 99% movement to change policy.  But eventually the fifth graders decide to break from the 99% and form their own 83% movement.  This leaves the fourth graders (the main class of “South Park”) as the 17%.  But one character points out that since this 17% must still be mad at its top 1%, it now must focus its outrage on the top 0.17%.

According to the IRS, this is the exact percentage of 2009 taxpayers who made over $1 million.

Only the writers know whether mentioning the percentage of millionaires was pure coincidence, but it’s worth noting that the father of Matt Stone-one of the show’s creators-is an economist.

WARNING: The episode described above contains adult language and extremely politically incorrect content.  It is intended for mature audiences only.

via The Tax Foundation – Tax Foundation’s “Tax Policy Blog”.

Never, Ever Trust What the IRS Says

Posted on November 4, 2011

That’s our friend Paul Krugman talking about us, presumably, and the sources we use to show there is actually a great deal of income mobility, both up and down the economic ladder.  For instance, the table below, from this report based on IRS data, shows that about 60 percent of households that were in the lowest income quintile in 1999 were in a higher quintile in 2007.  About 40 percent of households in the top quintile moved to a lower quintile over this 9 year period.

Yes, the biggest chunk moved to the next quintile over, but about 1/3rd of those in the lowest quintile moved to the middle quintile or higher.  About 6 percent moved all the way from the lowest to the highest quintile!

The St. Louis Fed found similar results.

Based on the same data, the first graph below shows that millionaires don’t stick around too long – about half for just one year.  It seems Steve Martin was on to something, although income fluctuations appear to be driven more by capital gains than crazy inventions.

Lastly, based on another set of IRS data, the second graph below shows that it is even less likely that one can remain among the top 400 income earners.  Over the period 1992 to 2008, about 73 percent make the list for just one year.  Only 4 remain among the top 400 for all 17 years.

Note:  Computations by author from the 1999-2007 IRS SOI Individual Tax Panel.

via The Tax Foundation – Tax Foundation’s “Tax Policy Blog”.

By Arden Dale

Lots of small companies are skipping their federal payroll taxes in this wobbly economy, and tax lawyers say the Internal Revenue Service has gotten more aggressive about penalizing executives, accountants or other individuals for the lapses.

Among the IRS’s tough tactics: freezing a company’s accounts receivable, seizing assets and garnishing wages of responsible employees. It can assess substantial penalties and apply tax liens.

Payroll tax debt can “bring a company to its knees,” says Caroline D. Ciraolo, a partner at Rosenberg Martin Greenberg LLP in Baltimore, Md. She sees cases more frequently now, citing the example of a tool company that suffered a fire and, struggling in the rocky economy, used money it should have spent on payroll tax as an emergency slush fund.

Other clients with payroll tax problems included a medical services company and a group of charter schools for at-risk children. Closely-held businesses like these may have revenue of several millions of dollars and may be owned by four or five people.

A government watchdog in July estimated that some $54 billion in employment taxes go underreported every year. The report by Treasury Inspector General for Tax Administration described a study the IRS has under way, in which it plans to audit payroll-tax compliance by some 6,600 randomly picked employers for recent years.

Chicago tax lawyer Robert E. McKenzie, a partner at Arnstein & Lehr LLP, describes the IRS’s tactics as “harsh.” In singling out people to penalize, it seems “more likely to shoot at the person on the sidelines” instead of those genuinely responsible for the arrears.

The tax code gives leeway to hold the company itself liable for employment tax errors, or to lay responsibility with a range of individuals or entities, from officers, owners, bookkeepers and treasurers to lenders that prevent companies from paying employment tax by seizing control of company accounts and dictating what debts can be paid.

Once the IRS adds its penalties, the debt can snowball. Companies can be fined for outright failure to pay or to report on the tax, and also for paying late — that is, if it misses by more than two-and-a-half days the deadline for depositing the funds with a bank or other authorized institution, which then forwards them to the IRS. Fines for late payment can go as high as 25% of the tax due. Sometimes employers hesitate to file a tax report when they have fallen behind on payments, and that just compounds their problems and triggers more penalties.

Typically, tax attorneys like Ciraolo and McKenzie get involved after a business has run into trouble. Often their help is sought by an individual whom the IRS has held personally liable.

Tom Nichols, a tax attorney in Milwaukee, Wis., advises new businesses on how to avoid trouble in the first place. The best plan: Meet the deadlines, he says. Short of that, pay taxes the IRS could make a personal liability for the person it targets.

The Federal Insurance Contribution Act (FICA) tax is equal to 15.3% of an employee’s gross wages up to the FICA wage base of about $110,000, and consists of Social Security (12.4%) and Medicare taxes (2.9%). Half of the FICA tax is paid through an employee contribution (7.65%) and the other half is paid by the employer (7.65%); the latter can’t trigger personal liability.

In hard times, businesses tend to look at payroll tax as their own money, and hang onto it or use it to pay “the squeakiest wheels first,” Nichols says. Often, this is a supplier or someone else key to keeping the business running.

In the end, the IRS, not employees, stands to lose. Even employers who do not pay payroll tax report it on Forms W2 issued to employees, which keeps workers right with the IRS.

via More IRS Troubles for Cash-Strapped Small Businesses – The Tax Blog – SmartMoney.

Tax Tips for Freelance Bloggers

Paying Taxes as a Freelance Blogger with Fewer Surprises

By Susan Gunelius, About.com Guide

See More About:taxesbusiness taxblogging jobs

If you’re a freelance blogger and get paid as an independent contractor, then it’s highly likely that taxes are not being taken out of your pay. The IRS wants its share of your pay, regardless of your status as a full-time employee or a freelancer. Depending on how much money you make as a freelancer during the year, you could be hit with a surprisingly painful tax bill when you file your annual tax return unless you plan ahead. First, you need to understand how freelance blogger taxes work, and then use the tips below to prepare yourself for tax season.

Take All Possible Deductions

Consult with a tax professional to make sure you’re taking all the deductions you legally can. To get started, check out this list of tax deductions for bloggers.

Keep Accurate Records

Save all of your business-related expense receipts, paychecks, electronic paystubs, and so on. Not only will you need them when you or your tax preparer completes your tax return, but you may need to present them in case your return is audited.

Classify Your Freelance Blogging Business

Depending on your personal situation, you might want your freelance blogging business to be classified on your tax return as a sole proprietorship, an s-corp (small corporation) or a limited liability corporation (llc). Read more about classifying your blogging business, and then consult with a tax professional for additional guidance.

Pay Taxes out of Other Income Each Month

If you make a sizeable income from your freelance blogging business, you could find yourself with a large tax liability when tax season rolls around. To be sure you aren’t underpaying taxes throughout the year, increase your withholdings from any taxed income that you receive each month such as your paycheck from your full-time job if you have one or your spouse’s paycheck.

Save a Percentage of Your Freelance Blogging Income Each Month for Taxes

Another way to reduce the tax bill on your freelance blogging income when you file your tax return is to put aside a percentage of your income each month specifically for the purpose of paying your annual tax liability. This way, you’ll have the money you need when you or your tax preparer calculates the tax due on your tax return. Many freelancers find that setting 20% of their monthly income aside is usually enough to cover their tax bills each year. Consult with a tax professional to determine what’s the best amount for you to earmark for taxes each month.

via Tax Tips – Tax Tips for Freelance Bloggers.

Focus

US corporate tax

Nov 4th 2011, 16:06 by The Economist Online

The statutory federal income tax rate for big American companies is 35%. But a study by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy, two Washington, DC-based think-tanks, has assessed the tax records of 280 companies from the Fortune 500 list with reliable pre-tax profit reports. Among these companies the average effective tax rate between 2008-10 was only 18.5%. While 71 companies paid over 30% of their profits in federal income tax, 30 enjoyed negative tax rates over the whole three year period. Pepco, an electricity company, had the lowest effective tax rate of -57.6%. Wells Fargo, a bank, received the biggest tax subsidy over the three years of almost $18 billion, and was one of 25 companies which took more than half of the total $223 billion subsidy claimed. In at least one of the three years, 78 firms paid no or negative tax rates, and legally-by writing off capital investments before they actually wear out (known as “accelerated depreciation”), making use of tax deductible stock options and industry-specific tax breaks, and offshore tax havens.

via Focus: US corporate tax | The Economist.

Replacing the Income Tax

September 23, 2010  ·  Filed under: Criticisms

Stephen Eldridge has taken a detailed look at the FairTax and written a critical paper of the tax plan.  While I do not share Mr. Eldridge’s conclusions or agree with many of his arguments, he has put together a well documented paper worth reading and discussing.

Stephen writes:

After much study and analysis, I believe that the H.R. 25 sales pitch is full of superficial arguments and hidden truths aimed at a public which does not have the interest, time or training to dig under the surface to understand how H.R. 25 really works and how it affects our economy and lives. Upon further research, additional negatives emerged.

and quips

It is a deadly prescription for curing our existing Internal Revenue Code malady. If it is ever enacted, H.R. 25 will surely kill the patient. We must look for a cure that makes us healthy.

While covering a great range of topic points including reviewing other tax plans and suggesting a solution, he focuses on several main points with H.R. 25.

Wealth Redistribution, Progressivism, Class Warfare is expanded

The Sales Tax Base is far broader than any tax system in the world

The Sales Tax Rate may be very high – the “sticker shock” will destroy our economy

The States are affected negatively

The “IRS” grows worse than ever

America’s Home Buyers and Builders will suffer greatly – Banks will not lend on the sales tax

I think by far, Stephen’s best argument is on wealth redistribution, progressivism, and class warfare.  I’m not sure if his final solution presented in the paper would ever be viable for the American people, but I respect his effort and applaud his goals.

Here it is for your pleasure and discussion (also added to the research section of the blog). “Replacing the Income Tax“

via Replacing the Income Tax :: The Fair Tax Blog.

WordPress Test

This page is set up to allow for discussions of various tax questions.  If you have any tax related questions please post them here.