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July 2009

After numerous fits and starts, the issue of health care overhaul took off this week, with House leaders introducing their preferred approach and the Senate panel created to looks at the issue also coming up with a plan. Now, however, the person in charge of determining the costs of legislation says the revamp efforts being discussed now could make things worse. Congressional Budget Office Director Douglas Elmendorf testified before a Senate committee today that the bills now being considered on Capitol Hill do not propose the fundamental changes needed to significantly reduce current federal health spending trends. In fact, the... Read more →

OK, it's really just the 1040 puzzle. And iI'm talking about an actual jigsaw puzzle, not the way to finally put together all our various tax pieces. The TaxProf Blog reports that two of his fellow tax professors from Indiana University Maurer School of Law in Bloomington have completed a puzzle that depicts the granddaddy of individual tax returns. As TaxProf notes, and shown in the image excerpt at left (and the full puzzle photo on his site), even when dealing with taxes for fun and games, there are still "loopholes." Unfortunately, I couldn't locate anyone selling Form 1040 jigsaw... Read more →

State + federal health tax = 50%-plus rate

This post has been updated with new information. If you read it earlier today, give it another look now. Thanks Healthcare reform begins in earnest now that House Democratic leaders have officially introduced a $583 billion bill to pay for the overhaul. Money, as usual, has been the biggest hurdle so far. Lawmakers have been struggling to come up with ways to pay for expanding medical coverage to the nearly 46 million uninsured Americans. Details of H.R. 3200, America's Affordable Health Choices Act of 2009, were revealed on Tuesday. It would raise the necessary revenue in large part via a... Read more →

While I've been concentrating on ways to improve the IRS at my Taxpayer Advocacy Panel meetings this week, the real world has been continuing on its merry way outside our conference room. One event of note is the Senate questioning of Supreme Court nominee Sonia Sotomayor. I haven't been able to watch any of the hearing, but The Caucus has been live blogging the proceedings. In connection with her nomination to the country's highest court, I also wanted to remind you of my June 29 post on the judge's dearth of tax rulings, Supreme Court reverses Sotomayor case. Yeah, I... Read more →

I'm at a Taxpayer Advocacy Panel (TAP) meeting in Nashville, and my colleagues and I just got some great news. The IRS has announced a series of public forums at which it will solicit comments about development of tax preparer performance standards. As soon as IRS Commissioner Doug Shulman put out the word in early June that his agency is looking at creating formal standards for tax preparers, the tax pro community has been abuzz. The goal, says Shulman, is to help ensure tax preparers are qualified, ethical and provide a high level of service. Everyone can agree on that.... Read more →

Possible deduction for Chinese drywall

Owning a home is the American pain. I mean dream. Wait, no. I mean pain. Don't get me wrong. The hubby and I have been homeowners most of our married life. We bought a small condo in suburban Maryland soon after we were married and over the year bought and sold four other homes. We loved each of our houses; still love the one we're in. But we also hated the upkeep and repairs that come with every home, including the one we're in. Then there are the catastrophic cases where we've had to call on our property insurer for... Read more →

April 15 is a distant memory for most taxpayers, but as the IRS works through the millions of tax year 2008 filings it has received, some folks are learning their rebate claims are causing problems. You remember the rebates. They were the $300 to $600 checks that were approved in February 2008, sent out that spring and were supposed to jump start the economy. The amount of those checks was based on 2007 income, but they actually were "prebates" that were accounted for on 2008 returns as the Recovery Rebate Credit. And that's where the trouble started. Folks who didn't... Read more →

While catching up on my tax reading this weekend, I came across a couple of reports from the Treasury office that keeps an eye on IRS activities. Admit it. You wish you had my life. In defense of my free-time reading choices, the studies by the Treasury Inspector General for Tax Administration (TIGTA) were on a topic that morbidly fascinates every taxpayer: audits. The first report, released on June 17, has some not so welcome news about those incredibly invasive information examinations, often referred to as audits from Hell. That nickname originated when these random audits first appeared in the... Read more →

California's budget crisis has all the elements of a major disaster movie. There's the big-name star politician star, Gov. Arnold Schwarzenegger. There are the continuing battles, no special effects needed, between Democrats and Republicans in Sacramento. There's the supporting cast of millions, an electorate that propels the main money story line by voting for projects but against ways to pay for them. And there's the unbelievable plot twist, a state paying its bills with IOUs. Now all we need is a studio to green light the project. That shouldn't be too hard to find since, despite all it's money troubles,... Read more →

While there's still plenty of political sparring going on in Washington, lawmakers on both sides of Capitol Hill apparently can agree on one thing: The IRS needs more money to help it bring in more money. The appropriations committees in both the Senate and House this week signed off on a fiscal 2010 budget of $12.15 billion for the IRS. The House and Senate revenue panels also agreed that the IRS should get $5.5 billion this coming fiscal year to help it enforce our tax laws. That's a $387 million increase from last fiscal year's amount. House Appropriations Committee Chairman... Read more →

So Nevada Sen. John Ensign's parents helped pay off his girlfriend and her husband. Can this story get any ickier? Forget I asked that. Having watched for years politicians do incredibly stupid things, the answer is yes, it could get more sordid. In today's Capitol Hill soap opera installment, we learned that Ensign's folks gave his mistress and her family a total of $96,000. But before we go any further, here's a quick recap: The married Ensign had an affair with Cindy Hampton. She was a campaign staffer at the time. Oh yeah, Cindy also was married when she had... Read more →

An interesting question was raised the other day on Moolanomy Answers: Can you have both a 401(k) and a traditional IRA? The short answer is yes, but check out the full discussion for additional retirement saving whys and wherefores. As you've probably already guessed, I was one of the folks offering my thoughts. Retirement considerations are always timely. Everyone -- the sane among us at least! -- wants to be able to one day spend time doing what we want, rather than what an employer demands. Given today's economic and workplace realities, the best, and sometimes the only, way to... Read more →

IRS suspends some tax shelter penalties

The IRS has taken a Congressional request (yeah, let's call lit a request) to heart and is suspending tax shelter penalty collection efforts on certain small businesses. Last month, a bipartisan group of Congressmen wrote to IRS Commissioner Douglas Shulman and asked him to temporarily stop imposing the penalties on small businesses. These smaller firms, argue the lawmakers, are facing unintentional and excessive penalties for their utilization of some illegal tax shelters. It's not that the Representatives and Senators want to give the offending companies a free pass. It's just that they believe the automatic penalties, created as part of... Read more →

Have you ever wanted to pay a bill with an IOU? Some Californians may soon be able to do just that. Golden State officials began sending out IOUs last week to buy some time for lawmakers to figure out a way to close the state's $26.3 billion budget gap. Now a bill that would require the state to accept its own IOUs -- $230 million worth have been issued since July 2 -- is moving through California's legislature. State Assemblyman Joel Anderson, a Republican from La Mesa, is primary sponsor of a measure that would allow state vendors, contractors and... Read more →

I sneaked out of my office for a couple of hours today to catch Public Enemies. I enjoyed it, but then I'm a big fan of Johnny Depp, Michael Mann and old-time gangster tales. Today's financial climate couldn't be more perfect for the movie. John Dillinger and his gang were robbing banks in the early '30s, a time when financial institutions were failing, taking people's life savings down with them. To many, Dillinger was a folk hero. That's alluded to in a scene where Depp's Dillinger tells a bank employee to take his few dollars back; the robber only wants... Read more →

Congress has been pretty busy of late, what with energy legislation and the debate on health care. But National Taxpayer Advocate Nina E. Olson has added a few more things to Congress' to-do list. As the Taxpayer Advocate Service enters its 10th year, Olson writes in her midyear report that both her office and the IRS "face a difficult environment for achieving what is, in essence, the same mission -- ensuring that the IRS treats taxpayers fairly and identifying ways to increase voluntary compliance while addressing noncompliance." In addition, she notes that tax collection at a time when "increasing numbers... Read more →

Our home is on a hill in suburban Austin. That's one of the main reasons we bought it. While it's a bit of pain for the hubby to mow, our lot offers us some great views, the most notable being undeveloped canyon land on two sides. We moved into the place in late June 2005 and were thrilled when July 4 rolled around to discover that the wide open views also provide us with multiple fireworks displays from neighboring communities. So each Independence Day has become an unofficial block party. Last night, as the hubby and I stood out in... Read more →

In addition to all of today's more important and meaningful celebrations, July 4th also has a special place in the hearts of racing fans. It's the weekend when NASCAR runs the Firecracker 400, as it was originally dubbed before we had sporting event naming rights, at Daytona International Speedway. The old-time moniker still fits, especially since the cars now run at night, when any on-track pyrotechnics are even brighter. And you know there will be some. The July event is one of four restrictor plate races. More often than not, the two plate races at Daytona and the two at... Read more →

On July 4 1776, 56 citizens representing the 13 British colonies officially gave birth to the United States of America. By affixing their names to a statement that the King of England was abusing the colonies and violating basic principles of human decency, they declared themselves free from the rule of Great Britain. On this July 4th holiday, take a few minutes to read the eloquent and brave words of our founding fathers. Yes, one key component of the U.S. fight for freedom was the right to have some say in how we are taxed. That continues to be a... Read more →

Other states also delaying tax refunds

Not to be a nag, but an Associated Press report underscores the importance of not overpaying your state taxes. California is obviously getting the most attention right now because of its issuance of IOUs to taxpayers awaiting refunds. But the flip side of the tax equation, plummeting tax collections, has prompted other states to delay processing income tax returns, and postponing delivery of refunds, for months so they can make state ends meet, according to the AP. Such refund-related budget machinations, however, could cost the cash-strapped states more in the long run. "Some of the tardy states are fast approaching... Read more →