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July 2013

Later today, IRS Principal Deputy Commissioner Daniel Werfel will go before the House Small Business Committee to discuss the agency's audit procedures. Committee Chairman Rep. Sam Graves (R-Mo.) called the hearing to jump on the whack-the-IRS bandwagon ensure that the IRS isn't cherry-picking small business tax returns for added examination based on their political leanings. This is the latest in tangential Congressional inquiry into the IRS following the Treasury Inspector General for Tax Administration report that groups, progressive as well as conservative, had their applications for 501(c)(4) tax-exempt status pulled for extra scrutiny based on be on the lookout, or... Read more →

The Internal Revenue Service will be open for business on July 22. Next Monday was to be the fourth agency-wide furlough day. But this afternoon, IRS workers got an email from tax chief Daniel Werfel telling them, "The IRS will be open for taxpayers that day as scheduled, and all employees will be paid for that day." There was no mention of the possible loss of bonus pay, an option floated last week by Werfel as a way to meet sequester costs instead of making employees take unpaid leave days. Rather, said Werfel, the decision to conduct IRS business as... Read more →

Sen. Charles Grassley (R-Iowa), former chairman of the Senate Finance Committee, wants to know why the country's top prosecutor decided against prosecuting an instance of "willful unauthorized access" to taxpayer information. That case was one of eight since 2006 of unauthorized access or disclosure of tax records belonging to political donors or candidates. Keep that date in mind. I'll come back to it. IRS tax-exempt review origins: Grassley's inquiry is the latest offshoot of the Internal Revenue Service's questionable method of reviewing applications for tax-exempt status. On May 14, the Treasury Inspector General for Tax Administration (TIGTA) released its findings... Read more →

The Internal Revenue Service is back on the hot seat this week, as two House committees will again look into how it handled tax-exempt status requests and how it deals with small businesses. Representatives have been trading charges over the IRS' use of be on the look out, or BOLO, lists. While agency employees did use such lists to review 501(c)(4) applications from Tea Party and other conservative groups, BOLOs also were used in assessing the applications from progressive and more liberal groups. On Thursday, July 18, the House Oversight and Government Reform Committee will hear from IRS employees who... Read more →

The good news from CCH's latest look at the U.S. tax code is that the number of pages in the tax software and publisher's Standard Federal Tax Reporter is still less than 74,000 ... barely. Each year CCH provides a visual representation of the size of its publication, which includes federal tax law, legislation, Internal Revenue Service regulations and explanations by the company's experts to help interpret and comply with the laws. When the Internal Revenue Code as we know it originated in 1913, it took 400 pages. But now, 100 years later, the CCH publication needs 73,954 pages to... Read more →

The best way to protect yourself against identity theft is to protect your personal information, such as your Social Security card. Don't carry your card with you in case your wallet or purse is stolen. And don't give your Social Security number out unless it's absolutely necessary. Those are a couple of tips in the Internal Revenue Service's various YouTube videos about identity theft. Click image (or link) to view IRS' "Protecting Yourself From Identity Theft" video. Too bad the IRS didn't follow its own advice. Taxpayer SSNs exposed: Last week, the tax agency inadvertently leaked taxpayer Social Security numbers.... Read more →

A quick reminder for Boston area taxpayers and others affected by the April 15 Boston Marathon explosions: Your 2012 tax returns and payment of any tax are due Monday, July 15. Following the terrorist bombs set off on tax day, the Internal Revenue Service gave affected taxpayers three additional months to take care of tax tasks. Much of downtown Boston was still closed to the public on April 21 when Liz West took this photo, available via Flickr, of the area around where the two bombs exploded as the April 15 Boston Marathon was wrapping up. The extended deadline applies... Read more →

Sergei Magnitsky, a lawyer who was jailed for his part in revealing alleged collusion between Russian mobsters and government officials in a $230 million tax rebate scheme, was himself convicted this week of tax evasion. There is, however, one key thing to note about the Russian court's decision. Magnitsky died in 2009 at age 37 of pancreatitis while he was held in the Butyrka prison in Moscow. Magnitsky's death prompted widespread global criticism from human rights activists who said he that he had been beaten and deliberately denied medical treatment. Magnitsky was a lawyer for U.S.-born British investor William Browder... Read more →

Many states enacted new laws on July 1 when their new fiscal years began. Several of the changes included sales tax hikes. But a Washington, D.C., think tank says that too many states still have antiquated sales tax laws that are preventing their economies from growing. The Center on Budget and Policy Priorities (CBPP) notes that sales taxes account for nearly a third of the tax revenue that states collect. States use this money to help pay for education systems, transportation networks and a range of other public initiatives. But simply increasing sales taxes won't work. Although the median state... Read more →

If the acting Internal Revenue Service chief has his way, all tax agency employees will be working -- and getting paid -- on the previously announced furlough days of July 22 and Aug. 30. American Federation of Government Employees members in San Antonio, Texas, were among those who participated in 100 rallies across the country as a part of AFGE's National Day of Action on March 20 to protest sequestration and furloughs. Photo courtesy AFGE via Flickr Creative Commons. But in exchange for putting all of the IRS' almost 98,000 employees back to work as usual, some of those workers... Read more →

More midyear tax moves

With the arrival of July last week, I posted half a dozen tax moves for you to consider. This week I look at 10 more midyear tax moves over at Bankrate. Yes, summertime is tax time, that's why this and my earlier list earn this week's Weekly Tax Tip honors. Here are today's top 10 tax moves to make now: File your 2012 return. Adjust withholding.* Evaluate estimated taxes. Hold on to camp receipts. Get organized. Give to charity.* Contribute to your retirement plan(s).* Plan for the 3.8 percent investment tax. Make home energy improvements.* Hire a tax pro. Yes,... Read more →

Tropical Storm Chantal, the third named system of the 2013 Atlantic hurricane system, is churning toward the United States. Homeowners, especially those with coastal properties, are keeping an eye on the system. But tax collectors also keep close watch on tropical storms because especially destructive ones cost onto only the homeowners, but local governments' treasury balances. The most recent example is in New Jersey. Tax assessments on more than 40,000 properties in the Garden State are down by $4.3 billion because of damage caused by Superstorm Sandy. Ortley Beach, N.J., June 4, 2013 -- Workers wrap up the day by... Read more →

2013 is half over, but some folks are holding onto the hope that tax reform can be accomplished this year. I am not among them. The closer we get to the 2014 election year, the harder it will be to make substantive tax changes that will tick off both lobbyists who fund campaign efforts and the voters who will have the final say as to who goes or returns to Washington, D.C. But the Representatives and Senators who head the Congressional tax-writing committees are committed to putting on tax reform show. In one case, it's a literal road show. Talking... Read more →

One of the most contentious portions of the Affordable Care Act, also known by its acronym ACA or Obamacare, is the penalty that's to be assessed large employers who don't provide health-insurance coverage to workers. The penalty, which could be a fine of up to $3,000 per employee if a company with 50 or more workers doesn't offer affordable insurance to workers, was to go into effect in 2014. But in a surprise announcement last week, the Obama Administration said it would postpone the penalty provision until 2015. That one-year delay is this week's By the Numbers figure. Heeding business... Read more →

James Gandolfini's unexpected death last month in Italy is back in the news, this time because a large portion of the actor's $70 million estate reportedly will be subject to the federal estate tax. The will left by Gandolfini, best known as the complex mob boss Tony Soprano in the HBO television series "The Sopranos," is "a disaster," says a New York estate tax attorney. William Zabel, who was asked by the Daily News to review Gandolfini's will, says the document is "a nightmare from a tax standpoint." The 51-year-old actor made a "big mistake" by leaving 80 percent of... Read more →

We just celebrated America's 237th birthday, but the land of the free is far from that when it comes to bad habits. More, and higher, sin taxes are regularly showing up in state tax codes. The most recent sin tax hike showed up on July 1 -- the start of most states' fiscal year and the usual effective date for new laws -- in Minnesota. It now is much more expensive to be a smoker in the Land of 10,000 Lakes. Minnesota's tax on cancer sticks more than doubled this month, going from $1.23 to $2.83 a pack. New York... Read more →

If your kids are too old for day camp, then maybe they a job to fill their class-free summer hours is a good idea. Not only will it teach your teen responsibility and help develop a healthy work ethic, it will provide them with some pocket money. And it also could provide some valuable tax lessons. The traditional teen summer job tax connection is this week's Weekly Tax Tip. Generally, the Internal Revenue Service wants its share of all earners income, regardless of age. That generally leads to the young worker's the first hard tax realization: Just who the heck... Read more →

America's battle for independence from Great Britain was propelled in large part by our battle against unfair taxation. Since that's part of our national DNA, it's no surprise that the fight continues in 2013. So today, the 237th birthday of our nation, here are some tax facts, courtesy the Tax Foundation, to consider. The top marginal income tax rate in 1913, the first year the modern income tax was levied, was 7 percent. The annual income that fell into the top tax bracket 100 years ago was, in inflation adjusted 2012 dollars, more than $11 million; to be precise: $11,595,657.... Read more →

How many of you are still working this afternoon, the day before the July 4th holiday? And how many of you will be back in the office on Friday, July 5? All of the Internal Revenue Service's employees will be taking Friday off, but not because they want to. Friday, July 5, is the tax agency's third furlough day of the year, meaning IRS personnel won't be paid for the sequester-forced time off. As was the case on May 24 and June 14, the first two furlough days, all IRS operations again will be closed. What is and isn't available:... Read more →

I'm a big science fiction fan so I've always hoped that time travel would one day be possible. Then I look at the calendar and think it's already happening. I mean, really, the year is halfway over. Just how did it get to be July without somehow magically skipping forward?! With time ticking away so quickly, we need to act now to take advantage of tax moves that could help reduce our upcoming 2013 tax bill. Here are six easy tax tasks to take care of this month. 1. Adjust your withholding Long-time readers know that I preach and preach... Read more →