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September 2013

With each passing minute, we get closer to the first government shutdown in 17 years. That raises the question of what's next in the tax world if that happens. The Internal Revenue Services has a plan. Its 61-page shutdown contingency document details the agency's preparation for and implementation of a shutdown of its services and offices, as well as reactivation of tax functions. The key thing for the millions who got an extension until Oct. 15 to file their 2012 tax returns to note is that the IRS expects you to meet that deadline. Even if most of the federal... Read more →


The incredible television series Breaking Bad ends tonight. My Sunday evenings will be without nearly as much turmoil, except on those nights when the Cowboys play, but I will definitely miss this show. In winding down the series this past week, I popped in and out of AMC's Breaking Bad marathon. I'm sure it comes as no surprise that the repeat viewings reminded me of the show's tax-related story lines. And as quickly as fulminated mercury crystals can blow out a crazed drug dealer's office windows, I got to thinking about other tax lessons we can learn from high school... Read more →


Here's something that might help Congress as it struggles with how to reform our out-of-control tax code: a comic book. Not only does "Blood From a Stone: A Cartoon Guide to Tax Reform" offer lots of entertaining drawings, it's a solid primer on the history of our tax system and what needs to be changed. Click image to also see the comic book's Table of Contents. And now the 1977 comic book is available online. Citizens for Tax Justice, the nonprofit tax advocacy group that broke the news of the comic's new electronic format, notes: "While the comic is now... Read more →


With Obamacare getting renewed attention because of the approaching Oct. 1 opening of health insurance exchanges and the possible closure of the federal government on that date, it's a good time to share some information about health care reform. The Kaiser Family Foundation (KFF) has created the calculator shown below to help those who will be purchasing health insurance on their own under Obamacare, officially known as the Affordable Care Act. Remember, if you already have health insurance through your employer or are getting coverage through a government program like Medicare -- that's an estimated 240 million of us --... Read more →


IRS can't account for $67 million to implement Obamacare

Perhaps Sen. Ted Cruz should have read Treasury Inspector General for Tax Administration (TIGTA) report #2013-13-115 during his recent faux filibuster. It doesn't have quite the lilt of Dr. Seuss' "Green Eggs and Ham," which by the way was an interesting choice since the children's book is about a guy who hated something until he actually tried it. But TIGTA's audit is at least germane to the ostensible reason why the Texas Republican talked for 21 hours. The report is about the Internal Revenue Service's accounting for -- or not -- of costs in implementing Obamacare. The official title of... Read more →


A federal appeals panel did not appear impressed by the "dead horse" argument the Internal Revenue Service rode into court with in defense of the agency's effort to regulate paid tax preparers. During oral arguments Sept. 24 before the U.S. Court of Appeals for the D.C. Circuit, the judges repeatedly questioned the IRS' attorney, Gilbert Rothenberg, about whether Congress had empowered the agency to issue regulations imposing mandatory testing and continuing education requirements on return preparers. Three independent tax professionals don't think the IRS has the oversight authority. With the assistance of the libertarian Institute for Justice, they filed suit... Read more →


"Stay (Faraway, So Close)" isn't just the title of a U2 song. It's a good description of the popular Irish rock band's tax situation. The band, fronted by Bono and The Edge, has sold more than 150 million records and is estimated to be worth around €805 million ($1.1 billion U.S.). And like lots of businesses and their wealthy owners, U2 found a way to reduce its taxes. U2 moved part of its operation from its native Ireland just across the North Sea to Holland in 2006 to take advantage of that country's lower tax rate. The reason? Ireland capped... Read more →


Sleepy Hollow already was my favorite new show of the fall television season. It's got an incredibly easy-on-the-eyes Ichabod Crane (Tom Mison) with a wonderful British accent. Then there's Abbie Mills (Nicole Beharie), the perceptive deputy sheriff who is starting to believe Crane's tales of time travel and witches and a Hessian soldier he turned into the Headless Horseman. Add in Abbie and Ichabod's chemistry, word that John Noble (aka Fringe's Walter Bishop) is joining the cast as a recurring character and creepy special effects and Fox has done it again. I'm seeing the next Mulder and Scully. And if... Read more →


The Internal Revenue Service is having its day in court, telling a federal judge today why the tax agency should be able to test and otherwise regulate paid tax return preparers. It's the next phase in the feds' fight against three independent tax preparers who earlier this year won a key ruling that invalidated IRS plans to impose mandatory testing and continuing education requirements on Registered Tax Return Preparers, or RTRPs. A decision by the U.S. Court of Appeals for the D.C. Circuit, which today is hearing oral arguments for and against the IRS plan, isn't expected for months. The... Read more →


Haute couture designers Dolce & Gabbana have learned a lesson from their run-in with Italian tax authorities, but definitely not in the style of those of us who shop off the rack. While we might have hunkered down and tried to keep a low profile as we battled the tax collector, D&G decided to flaunt riches this weekend on a Milan runway. Click image to see video of the Milan show. High fashion tax evasion charges: In case you don't read Women's Wear Daily or international tax journals, Domenico Dolce and Stefano Gabbana were convicted in June of failing to... Read more →


The House of Representatives might finally get around to taking up the Marketplace Fairness Act now that the committee chairman in charge of moving the measure has established groundwork for the bill's consideration. The Marketplace Fairness Act would give each state the power to demand that online retailers collect sales and use taxes even if they have no physical presence, known as nexus, in the state. The Senate passed the bill by a wide margin on May 6. Since then we all thought -- OK, maybe it was just me -- that the House was just screwing around. However, it... Read more →


"You now have a Swiss bank account if anybody asks. Crédit Nationale Du Génève code name 'PADDY.' Lavish awkward gesture; all of 15 Swiss Francs in it. But if you ever want to impress anybody, they can find out you have a Swiss account. But Swiss law prohibits the bank from revealing the balance. Thus are all men made equal." Jimmy Dell, a character in the 1997 movie "The Spanish Prisoner," offered that description of the secrecy afforded an owner of a Swiss bank account. Jimmy's words are no longer true. Opening up accounts: Thanks to the Foreign Account Tax... Read more →


In 11 days lots of federal employees could be living on less. Political posturing on Capitol Hill could lead to a shutdown of government offices when the new fiscal year begins on Oct. 1. Some Internal Revenue Service employees, however, already are adjusting their budgets. A mediator has decided that acting IRS head Daniel Werfel's decision to cancel $70 million in scheduled bonus payouts is OK. It's a good thing for Werfel that the third-party mediator agreed with the temporary tax agency chief since the bonus money already has been spent. It was used to offset the cancellation of furlough... Read more →


If you can pull yourself away from that DVR of Pirates of the Caribbean: The Curse of the Black Pearl -- Hey, don't be embarrassed; I watch it as often as I can myself. -- it's time on this International Talk Like a Pirate Day to discuss some swashbuckling taxes. Yes, taxes and pirates have many connections. Pirates as tax collection catalyst: Let's start with some early U.S. tax history. Before we broke away from Great Britain, we had relied on that country's vaunted naval force to help protect colonial ships from Barbary Coast pirates. During the Revolution, Benjamin Franklin... Read more →


Inflation hasn't been much of a problem this year (despite what my mom says every time we head to the grocery store!). But prices have gone up enough for one tax services company to project changes in the 2014 federal income tax brackets that should save most of us at least a little money. CCH, a Wolters Kluwer tax and accounting business, each year analyzes Consumer Price Index data for September of the prior year through the current August and projects how the inflation rate is expected to affect the many U.S. tax code provisions. The CCH projections are a... Read more →


That adage that the more things change the more they stay the same certainly applies to taxes. It seems that every time lawmakers at any level try to make taxpayer lives easier, some unexpected, unintended consequences pop up. This week gay and lesbian married couples are finding that out, although to be fair, most are not that surprised. Key day for same-sex filers: Monday, Sept. 16, marked the day that same-sex married couples began filing their federal tax returns the same way as heterosexual married couples. Many had received filing extensions this tax season in anticipation of the change, which... Read more →


If you are a Coloradan who didn't make your estimated tax payment that was due on Monday, Sept. 16, because of severe storms, flooding and landslides in your area, you might have more time. The Internal Revenue Service has announced that certain taxpayers in Adams, Boulder, Larimer and Weld counties, which have been designated as major disaster areas by the Federal Emergency Management Agency, now have until Dec. 2 to send in that third 1040-ES voucher for the 2013 tax year. That deadline extension is in addition to the special tax option these taxpayers have to claim their disaster losses... Read more →


Deadly flooding devastates Colorado

This is not how anyone wants to start a Monday or any day. My heart goes out to those who have lost friends and family members in the massive flooding in Colorado. It is going to take a long time for these folks to recover. Those who've lost property also face challenges. The president has issued a major disaster declaration for the affected areas of the state. That move will now make available federal assistance and special tax relief for some flash flood victims. Helping disaster victims: Charitable groups also have mobilized to lend whatever help they can. The Denver... Read more →


While Capitol Hill lawmakers are screwing around considering ways to deal with the country's impending financial deadlines, Congress' independent budget analysts announced some good fiscal news. The U.S. Treasury picked up $284 billion in August. That added revenue, according to the Congressional Budget Office (CBO), means Uncle Sam's budget deficit at the end of last month was $411 billion smaller than at the comparable period last year. That sizable reduction, making the budget deficit around $753 billion for the first 11 months of the 2013 fiscal year, is noteworthy. At this point in 2012, the budget deficit was $1.164 trillion.... Read more →


Looking for something to do this weekend? If you pay estimated taxes on earnings that aren't subject to withholding, then you can work on your third 1040-ES filing for the 2013 tax year. Click image to access the PDF version of Form 1040-ES, including all vouchers and instructions. In case you haven't yet encountered estimated taxes, these four extra payments are for such taxable income as investment and self-employment earnings, as well as unexpected income like prizes, gambling winnings or a lottery jackpot. Estimated taxes are the way to meet the tax code's pay-as-you-earn system that's covered for most wage... Read more →