Tax treats from Washington, D.C.
Wednesday, October 31, 2007
It's not quite as sweet as the candy you'll be handing out to young ghouls tonight, but lawmakers on Capitol Hill do have a few treats for taxpayer goody bags.
A measure that will keep states from taxing your Internet connection for the next seven years is now awaiting Dubya's signature.
A bill that will keep millions of taxpayers out of the AMT's clutches for the 2007 tax year has been officially introduced.
And many of the tax breaks you and I have enjoyed over the last few years are on track to be around for a bit longer.
No 'Net taxes for a while: Representatives and Senators all agreed that taxing consumers' online connections was a bad idea. The hold-up was just how long to extend the tax moratorium that officially expires tomorrow.
As noted in previous blogs here and here, there's widespread support for a permanent Internet tax ban, but concerns over possible long-term impact on state and local governments forced a compromise.
The House agreed to a four-year extension; the Senate wanted seven years. On Tuesday, the House agreed to the Senate version.
In addition to the extended tax moratorium, the bill contains a provision that will prevent state and local governments from assessing taxes beyond Internet access. Sen. Ron Wyden, D-Ore., got language included that specifically prohibits taxation of e-mail, instant messaging, video clips and personal electronic storage services "that are provided independently or not packaged with Internet access."
But voice, audio or video programming or other products and services that use Internet protocol and for which there is a charge, regardless of whether the charge is bundled with other Internet access services or separate, can still be taxed.
And the bill won't help those of us who live in states that enacted Internet service taxes before the original moratorium in 1998. The unlucky online users are me and my fellow Texans, as well as residents of Hawaii, New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Washington and Wisconsin.
AMT relief temporary, too: As promised (and blogged about here), Ways & Means Chairman Charles B. Rangel, D-N.Y., has introduced the Temporary Tax Relief Bill of 2007 (H.R. 3996) to keep 23 million taxpayers from facing the alternative minimum tax (AMT) for another year.
The bill is scheduled for committee markup on Nov. 2 and is likely to move quickly to a full House vote. The big battle will not be to grant AMT relief for 2007 tax filings, but how to pay for it. Committee estimates put the cost of AMT relief at nearly $51 billion over 10 years.
Rangel isn't saying how he plans to pay for his bill until Friday's committee markup session.
What he is saying, though, is that the bill would provide AMT relief for nonrefundable personal credits, as well as increase the AMT exemption amount to $66,250 for joint filers and $44,350 for individuals.
For folks still worried about AMT effects, in today's Wall Street Journal Tax Report column, Tom Herman looks at some of the counterintuitive tax strategies individuals employ to avoid the AMT.
Extender goodies: Finally, on this scariest of days -- OK, second scariest; April 15 is still tops on the horror list for most adults -- we are happy to report that many tax breaks set to expire on Dec. 31 also have new life. Sort of like this skeleton rising from the ground.
The AMT bill, H.R. 3996, will continue many of the most-popular expiring business and individual tax breaks, such as deductions for state and local sales taxes, teachers' expenses and tuition and fees, as well as the private mortgage insurance write-off.
A full list of tax breaks that get one more year on the books, aka extenders, can be found in this summary document.
Happy Halloween! I took these photos in my Halloween crazy neighborhood. It should be a fun night if the kids' costumes come close to matching their parents' yard decorations!
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