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July 2013

Everyone wanted to hear Internal Revenue Service chief Danny Werfel (yes, since I've seen him in person, I now feel comfortable using the more familiar version of his first name) speak. And there were no empty seats in the ballroom for the lone presentation of 2013 tax law changes. But of the 13 regular IRS Nationwide Tax Forum seminars I've attended over the last two days at the Gaylord Texan in Grapevine, the most well-attended have been on business expense substantiation and Schedule C challenges. Is all this interest an indication of the growth of entrepreneurialism in today's economy? Whatever... Read more →


Internal Revenue Service Principal Deputy Commissioner Daniel Werfel spoke to hundreds of tax preparers meeting in Texas Tuesday, but his message was clearly directed at Capitol Hill. Werfel was a last-minute addition to the July 30 opening day itinerary at the IRS Nationwide Tax Forum in Grapevine, Texas, in the Dallas-Fort Worth metroplex. He received applause from the tax professionals that filled the ballroom. That was probably the most welcome public appearance he's made since taking over as the temporary IRS chief specifically to help it deal with a variety of missteps and public and Congressional outrage. Despite the agency's... Read more →


All three of the sessions I've attended on this first day of the Dallas/Fort Worth area IRS Nationwide Tax Forum have one thing in common: cover your tracks. Form 8867 got a lot of attention during the Earned Income Tax Credit (EITC) due diligence session. This is the checklist to help ensure that the person claiming the EITC and any children considered in connection with the credit do indeed meet tax code qualifications. Tax preparers must submit this form with the taxpayer's return and EITC claim. Tax pros also were reminded to keep in their own records copies of any... Read more →


You know you are a beyond-all-hope tax geek when you see a headline like the one below and immediately think "Why did Buffy hire a ringer to do her taxes and what exactly is a tax ringer?" instead of realizing that the story is using one of the other possible, non-IRS meanings for "taxing." Tax Forum focus: In my defense, it's been a long day. Who can tell me why every road in North Texas is under construction? But, despite road crews' and detours' best efforts, I'm finally settling into my hotel room just outside of lovely Grapevine, Texas, where... Read more →


In seeking specifics from their Senate colleagues on ways to reform the tax code, Senate Finance Committee Chairman Max Baucus (D-Mont.) and the committee's Ranking minority party member Orrin Hatch (R-Utah) promised confidentiality. But some senators aren't afraid of angering lobbyists, losing their big-money political action committee (PAC) contributions or upsetting constituents. They're sharing their tax reform recommendations with all who are interested. Tax provisions that benefit lower-income individuals are a priority of Sen. Jay Rockefeller, the second-ranking Democrat on the Finance Committee. "Our current tax code provides us a solid foundation for increasing opportunity and upward mobility for people... Read more →


Congress is about to go on its annual August recess without coming to an agreement on a farm bill. The fate of the legislation, which would extend the current farm bill that expires on Sept. 30, has been in limbo since the House-passed version stripped the food stamp program, which is known as the nutrition title. But it's not just Representatives and Senators who have issues with the bill. The U.S. Public Interest Research Group (U.S. PIRG) says that the final farm bill should take a more comprehensive view of federal tax support for all of America's nutritional needs. Inequities... Read more →


College costs are getting a lot of attention right now. The fall semester is nearly here and Congress is still fighting over federally subsidized student loan rates. But instead of borrowing, a new study by educational loan provider Sallie Mae finds that today's students are relying more on money they don't have to pay back. "How America Pays for College 2013" reports that scholarships and grants are the biggest source of college funding, paying for 30 percent of costs, up from 25 percent four years ago. The average amount of such free money grew to $6,355, up from $4,859 in... Read more →


By the end of today, we should know what tax laws U.S. senators think should remain (or be added to) the Internal Revenue Code. We just won't know which senator suggested what. Specific attribution of the various tax code rewrite recommendations will be kept secret for the next 50 years. That's right. Lawmakers apparently are so afraid of being tied to actual tax laws, they've been guaranteed that they won't be linked to their suggestions, at least not while they are likely to still be serving in the Senate. Talk about no courage of their convictions. Blank, anonymous slate: This... Read more →


Edith Windsor, the woman whose estate tax lawsuit led the U.S. Supreme Court to invalidate the Defense of Marriage Act (DOMA), is getting even more tax money back. In addition to the $363,000 plus interest that Windsor will get from Uncle Sam for federal estate taxes she paid after the death of her wife Thea Spyer, Windsor also will be getting a New York state estate tax refund. And she's not alone. New York Gov. Andrew Cuomo has ordered the state's tax department to issue refund checks to the surviving spouses of gay marriages who had to pay estate taxes... Read more →


It's that time of year again. Parents are down to their last nerve as summer vacation seems to drag on forever. But hold on moms and dads. The resumption of classes gets closer every day. And so do the annual back-to-school state sales tax holidays. In fact, the first of 17 summer tax holidays kicks off this weekend in Mississippi. The events, ranging from two days to a full week, have over the years expanded beyond the traditional new school clothes and classroom supplies. The announcement of the 2013 sales tax holidays, listed in the table below, as well as... Read more →


Mark your calendars, Philadelphia-area taxpayers. The chairmen of the House and Senate tax-writing committees want to hear your thoughts on tax reform on Monday, July 29. House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) will visit two small businesses, one in and the other just outside the City of Brotherly Love. Next Monday's second stop in the Dave and Max National Tax Reform Tour will start at 10:30 a.m. Eastern time at Mrs. G's TV & Appliances in Lawrenceville, N.J. The third-generation retail operation has been in business for more than... Read more →


Prince Charles is no doubt enjoying his new status as a grandfather. But the king in waiting (and waiting and waiting) has more than just the still-unnamed baby prince on his mind. Prince Charles' tax situation is under scrutiny. Parliament's public accounts committee wants to know why the Duchy of Cornwall, Charles' hereditary estate, pays no corporate tax or capital gains tax. The estate's financial statement for the year ending March 31 reported a value of £19 million, almost $29 million U.S. That was an increase of just more than 4 percent over the previous year. Charles himself does pay... Read more →


Congratulations to the new royal parents on the arrival of the future king of England. Kate Middleton, officially known as Catherine, Duchess of Cambridge, delivered an 8 pound, 6 ounce son at 4:24 p.m. today local time, 11:24 a.m. Eastern time here across the pond. The proud father, Prince William, the Duke of Cambridge, was in the delivery room. As for the royal heir's name, Buckingham Palace issued a statement that it would be announced "in due course." Even though we Americans vehemently rejected the monarchy 237 years ago, we remain fascinated by the modern royal family. And I suspect... Read more →


How attractive is the Unites States tax system? Not very, according to a recent analysis by two German economists. In their paper, Measuring Tax Attractiveness Across Countries, Sara Keller of the WHU-Otto Beisheim School of Management and Deborah Schanz of Ludwig-Maximilians-University Munich, created the Tax Attractiveness Index. It purports to quantify countries' tax environment attractiveness. And the U.S. system is pretty darn ugly. Of the 100 national tax systems analyzed by the duo, the United States ranked 94th. And that sad number of 94 is this week's By the Numbers figure. The table below (a larger, clearer version can be... Read more →


The Internal Revenue Service isn't getting as much front page coverage as it did when the 501(c)(4) application debacle broke back in May. But not to worry, tax geeks, things are still happening in and around the federal tax collection office. And recent Congressional hearings on IRS operations and the agency's bottom line were topics last week at my other tax blog. Intriguing email: Let's start with the applications for tax-exempt status and the use of be on the lookout, or BOLO, lists to deal with the requests from conservative and progressive groups. In looking into how what the Treasury... Read more →


It's always a pain to get a place ready to sell. But tax officials are facing some special problems in the upcoming auction of a rural New Hampshire property. The 103 acres previously owned by a pair of militant septuagenarian tax protesters could be loaded with booby traps. The potentially deadly home of convicted (and jailed) tax protesters Ed and Elaine Brown will soon be on the auction block. Photo courtesy InfoWars.com. "It's going to be a very interesting sale," Chief U.S. Deputy Marshal Brenda Mikelson told the Associated Press. Mikelson is in charge of the auction of the Plainfield,... Read more →


The Motor City is getting a lot of attention today. Unfortunately, it's because Detroit has filed for bankruptcy. Detroit, Mich., viewed from Windsor, Ontario, Canada, across the Detroit River; photo by Andrea_44 via Flickr The process is different for a municipality that files bankruptcy than when a company or an individual goes broke. But the bottom line is that all entities have determined that this last-ditch effort is the only way to get their finances back in any kind of workable shape. Taxes obviously are a part of the equation. In Detroit's case, the falling individual and corporate population has... Read more →


The chairmen of the House and Senate tax-writing committees agree that overhaul of the huge and complicated U.S. tax code has a good chance of passage. Rep. Dave Camp (R-Mich.), head of the Houses Ways and Means Committee, and Sen. Max Baucus (D-Mont.), leader of the Senate Finance Committee, each put the possibility of tax reform passage at greater than 50 percent. The gung-ho comments were made during an appearance today at the Economic Club of Washington. If you've got around 51 minutes to kill, click on the C-SPAN image above (Audio alert: the video will start as soon as... Read more →


Everyone makes tax mistakes, even the Internal Revenue Service. That was again made clear earlier this month when the IRS sent some taxpayers and tax professionals notices that included an interest calculation error. The math mistakes were on CP 2000 notices mailed out the first two weeks of July and which dealt with proposed taxes due on unreported income. The IRS says the interest amount calculated on that new unpaid income amount was too low. Sorry recent CP 2000 recipients. I wish I could tell you, to borrow a Monopoly board game phrase, that the IRS error was in your... Read more →


IRS Principal Deputy Commissioner Daniel Werfel spent most of this afternoon (July 17) answering questions from the House Small Business Committee. Click on image to view the Ustream recording of the hearing (starts around 1:01:17 p.m. mark). The hearing was called to look into whether the questionable procedures used by the IRS in reviewing applications for 510(c)(4) tax-exempt status were also used in other agency divisions. Specifically, Committee Chairman Rep. Sam Graves (R-Mo.) wanted to make sure the IRS doesn't audit small business tax returns based on an owner's political persuasion. Since the House and therefore its committees are under... Read more →