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October 2011

Happy Halloween! My suburban community tonight will resemble many across America tonight: costumed kids, some a little older than they really should be (you know who you are neighbors!), taking to the streets to collect candy. It's already been a good Halloween. I bought candy on Saturday and still haven't eaten one mini bar! It's a good thing I haven't reduced the stash, since our across the street neighbor didn't put up his usual, out of control light display. In the past, kids gravitated to his house, bypassing all of us in his immediate vicinity. Without that distraction, the hubby... Read more →

What do home foreclosures and credit card transactions have in common? In the wonderful world of Congress and the Internal Revenue Service, a lot. When a housing bill was enacted in 2008 to provide relief to folks facing foreclosure, it included a provision calling for the IRS to keep closer tabs on credit and merchant card, collectively known as payment card, transactions. This reporting requirement also covers third parties contracted by payers. The IRS calls them electronic payment facilitators. You and I know the most popular one as PayPal. The new payment tracking system was devised as a way to... Read more →

Some folks are calling for a new tax on financial transactions. But if Congress has its way, the Internal Revenue Service might not have enough money to enforce existing tax laws. Both these topics got closer looks last week at my other tax blog. Occupy Wall Street protesters have been calling for a Robin Hood tax, a levy on financial transactions that supporters say would primarily affect higher-income investors. A transaction tax is not a new idea, but there's not a lot of support right now for it. Even the head honcho at Treasury has dismissed a transaction tax and... Read more →

UDPATED Sunday, Aug. 16, 2020 You just got the biggest scare of your life and it has nothing to do with Halloween. The Internal Revenue Service sent you a notice. Photo by me of a neighbor's yard skeleton Halloween decoration. These letters can indeed be frightening. But don't panic. There are lots of reasons why the IRS is writing. Yes, some notices do request more tax money, but others are less alarming. The IRS also sends out notices to notify you of changes to your return or to request additional information. In many cases, you can deal with an IRS... Read more →

Somebody better head over to the House GOP leadership offices, Republican National Committee and Fox News with handfuls of Prozac, Xanax and Cymbalta. Those folks are going to need calming down in the wake of a survey that found most millionaires said their taxes need to be hiked. That's right, Warren Buffett's peers agree with his call for higher taxes on higher earners. And that revelation earns it this week's Follow-up Friday spotlight. More than 67 percent of the millionaire investors polled this month by Spectrem Group's Millionaire Corner say that the U.S. economy can be improved by implementing tax... Read more →

After four years without a U.S. Formula 1 race, there soon will be two. Maybe. In May 2010, the FIA announced that starting with its 2012 season the Formula 1 United States Grand Prix will be run in Austin. The deal calls for F1 races in the Lone Star State through 2021. Now comes word that in 2013 there will be a second U.S. F1 race. The Grand Prix of America at Port Imperial will be held in New Jersey. That event also has a 10-year contract. And this second U.S. race has given new hope to Texas taxpayers who... Read more →

Actor Alec Baldwin and Dean Skelos, majority leader of the New York Senate, went at it yesterday over proposals to tax the state's richer residents. There were no physical blows. The heated exchange was via Twitter. The online fight erupted after the avidly liberal Baldwin, Emmy-winning star of NBC's 30 Rock sitcom where he plays a conservative network executive, slammed Skelos, cited by some locals as the state's most powerful Republican lawmaker, after Skelos blasted the actor for supporting higher taxes on the wealthy. The main point of contention was a plan to retain New York's surcharge on top earners,... Read more →

2012 income tax brackets

With all the attention on Occupy Wall Street tax protests, which Americans make up the richest 1 percent and growing income disparity, the timing of the Internal Revenue Service's annual inflation adjustments couldn't be better. Each year about this time, the IRS looks at official inflation data and then calculates how increases, if any, in the cost of living will apply to a wide variety of tax provisions that affect almost every taxpayer. The changes include standard deduction and personal exemption amounts, how much money we can sock away in retirement accounts, the value of popular tax credits and, of... Read more →

You can't blame the folks in charge of producing Jack Daniel's for having a few stiff shots of their signature sour mash. Moore County, Tenn., council members want the distillery, located in the tiny town (population 361, according to the whiskey's label) of Lynchburg, to pay substantially more in property taxes. What's substantial? From a current $1.5 million annual bill to as much as $5 million a year. As I said, another round, please. In order to collect the new revenue, the county council voted to ask the Tennessee legislature to authorize a local referendum on whether the distillery should... Read more →

Here in the United States we keep hearing about how our corporate tax system makes it hard for businesses to compete globally. The U.S. corporate income tax rates, say executives and politicians, are just too darn high. Guess what? Businesses are singing a similar tune across the pond. Diageo, a leading maker of adult beverages, is threatening to relocate overseas if the United Kingdom keeps its 50 percent income tax rate. This time, though, the company is concerned about individual, not business, taxes. "I believe the 50 percent tax rate will lead to the long-term damage to this nation's competitive... Read more →

Who's in the top 1 percent of earners?

Yes, "how much do you make?" is a rude question. See, mom, I did pay some attention when you tried to instill some manners in me! But with the Occupy Wall Street protesters focusing on income disparity, it's a question many of us are asking. More specifically, we want to know what we have to do to make it into the elite 1 percent category. It depends upon whose data you use. My story today on examines various calculations to arrive at America's top earnings level. But it you want to go by the Internal Revenue Service's figures, and... Read more →

California's statewide tax amnesty for owners of offshore accounts closes Oct. 31. That Halloween date also is the deadline for Cook County, Ill., which includes most of the city of Chicago and many of its nearby suburbs. But taxpayers who owe in Denver and Los Angeles have a bit more time to pay up and avoid many of the usual associated penalties. California's offshore voluntary compliance initiative: Encouraged by the Internal Revenue Service's success in collecting taxes from hidden offshore accounts, California tax collectors decided to get in on the act. Through Oct. 31, the Golden State is now allowing... Read more →

In June, Internal Revenue Service Commissioner Douglas Shulman went before a Senate committee and told lawmakers that their plans to cut his agency's budget would be counterproductive. Apparently, they didn't believe him. Since Shulman's Congressional testimony, the House Appropriations Committee has approved an $11.5 billion fiscal 2012 IRS budget. The Senate Appropriations Committee has OK'ed a $111.7 billion version. Both funding measures are hundreds of millions less than the agency received last year. But before lawmakers finalize any figures for fiscal year 2012, which began Oct. 1, the IRS commissioner has touched based with Capitol Hill once again to express... Read more →

Politicians at all levels of government are working, or at least making campaign promises, to give taxpayers what they think they want. On the state and more local level there's a proposal to do away with property taxes. And at the federal level, Republican presidential hopefuls are talking up flat taxes. Both these topics got closer looks last week at my other tax blog. In North Dakota, voters could decide next summer whether they want to abolish property taxes. If voters say so, North Dakota would be the only state in the nation to abolish real estate taxes. Meanwhile, most... Read more →

Happy 25th anniversary historic Tax Reform Act of 1986. I was working on Capitol Hill in 1986, for a Congressman who served on the Ways and Means Committee. This past weekend, I was at an event where I chatted with another former Representative who also was on the tax-writing committee and we reminisced about those days. Yes, tax reform consumed our lives back then, but in a very good way. President Ronald Reagan, surrounded by Members of Congress from both parties, signs the Tax Reform Act of 1986 on Oct. 22, 1986. The '86 tax reform law reduced the number... Read more →

This coming holiday shopping season could be the last one in which online shoppers avoid their states' sales taxes. Tax software maker and publisher CCH reports that of the 45 states that have a sales tax, 16 have enacted or have legislation pending that would require online retailers to collect sales and use tax or, at the very least, to more strongly urge in-state customers to pay use tax. And Washington, D.C., is getting more involved in the issue, too. This week's Follow-up Friday focuses on another piece of federal legislation that would require states to collect sales tax from... Read more →

EITC, corporate estimated tax and inmate information included in new trade laws

When Obama this morning signed the recently passed trade bills with South Korea, Colombia and Panama, not only did laws affecting commerce between the United States and those countries go on the books, but also some new tax laws. Costlier EITC errors for preparers: As part of the U.S.-Korea Free Trade Agreement Implementation Act, the due diligence penalty that can be assessed tax return preparers in connection with erroneous Earned Income Tax Credit (EITC) claims goes from $100 to $500. This fine applies to each instance where a tax professional doesn't adequately check whether a client is indeed eligible for... Read more →

Although they're around 2,500 miles and vastly different mindsets apart, New York and California have a lot in common. Both states are trendsetters. Both are entertainment hubs. Both are home to lots of celebrities. But when it comes to taxing their richer residents, New York and California are going in opposite directions. N.Y. governor says no to wealthy surtax: New York Gov. Andrew Cuomo says he will not sign any bill that continues the Empire State's surcharge on higher earners. Currently, the state assesses a top state income tax rate of 7.85 percent on single taxpayers earning between $200,000 and... Read more →

For most of us, our home is our biggest investment. It also provides a lot of tax breaks. For now. As presidential candidates and the Joint Select Committee on Deficit Reduction, aka the Super Congress or super committee, debate possible changes to our tax system, you can bet that discussion on housing tax breaks will be part of the heated discussion. So while we still have them around, this week's Weekly Tax Tip (sorry for being a day late; it was a crazy Wednesday that looks to be extending its madness into today!) looks at home sweet homeownership tax benefits.... Read more →

I love it when a blog reader's question coincides with a story I'm working on so that research for one benefits the other. That's the case with a question from Pam about yesterday's post asking where do your earnings rank? Pam, I share your surprise, dismay, wonder, pick an adjective about my own income and just where it came in on the earnings scale. As for your question about whether the calculation is the same for joint filing households, the answer is yes. The calculator uses Internal Revenue Service data to compute where earners land on the income spectrum. And... Read more →