Tax Legislation

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A Rate of Your Own

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On January 1, Congress passed a bill to keep the government from leaping off the so-called "fiscal cliff" — a set of tax hikes so devastating that Washington insiders warned they would ricochet through the economy, plunge us back into recession, and possibly even send the earth spinning into the sun. That bill included raising the top marginal rate on taxable income over $400,000 ($450,000 for joint filers) from 35%, where it had stood for the last 12 years, to 39.6%.

39.6% may sound like a lot today. But it's still really quite low, as far as top rates are concerned. Back in 1935, the nation was mired in the depths of the Great Depression. Inflation was 3.71% and unemployment stood at a whopping 21.7%. As for taxes, the top rate reached 79% on income over $5 million (roughly $85,672,000 in today's dollars). But — and this is a pretty big but — according to tax historian Joseph Thorndike, just one person actually paid that rate: billionaire John D. Rockefeller, Jr.

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Sequestration & the IRS

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Not even the mighty IRS can avoid the latest political hot potato, sequestration (mandatory across-the-board spending cuts for nearly all federal agencies).

Yesterday the Senate rejected two bills that would have avoided the sequestration.  This means it is almost guaranteed that the automatic spending cuts required by the Budget Control Act of 2011, P.L. 112-25 will kick-in.

The Internal Revenue Service (IRS) told employees on Thursday that agency furloughs from sequestration would not begin until after tax-filing season, according to a union that represents agency workers.

With mandatory government spending cuts looming, Acting IRS Commissioner Steven Miller sent a memo to all IRS employees on Thursday, outlining the agency’s plans in the event sequestration occurs as planned on Friday. He outlined spending cuts the IRS plans to make, including employee furloughs,

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Biggest. Crybabies. Ever.

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Here in America, we're used to people running to court every time life throws a curveball. Spill hot coffee in your lap? Sue McDonald's! Get drunk, drive your car into a bay, and drown because you can't open your seat belt underwater? Mom and Dad can still sue Honda and win $65 million! Electrocute yourself trying to rob a bar? There's a lawyer for that!

Earlier this month, though, we saw some satisfying comeuppance in one of those cases that makes us roll our eyes in amazement.

First, a little history. UBS is Switzerland's biggest bank — and, like most Swiss banks, it used strict Swiss secrecy laws to attract depositors. They solicited Americans to open accounts, knowing full well that many of them were using those accounts to cheat the IRS — and in some cases, even advising them how to do it. In 2007, a disgruntled employee blew the whistle (and earned a record $104 million reward in the process). Two years later, UBS paid $780 million

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Healthcare Reform To Cause Real Life Headaches

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As all of use hurtle down the road toward the implementation of the 2010 health care legislation it sure does appear that the health care legislation will certainly create its own health problems... especially for your tax adviser! There is a lot to know about the 2010 health care legislation in order to take advantage of favorable provisions and to avoid or minimize penalties. 

The health care legislation enacted in March 2010—the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, as amended by the Health Care and Education Reconciliation Act, P.L.111-152—is almost 1,000 pages long. It involves numerous rules on employer-provided health care, insurance exchanges, insured rights, and the health care delivery system. There are numerous tax provisions. Guidance from the IRS and other government agencies has been emerging since 2010, and much of it is quite lengthy.

The Affordable Care Act includes a variety of measures specifically for small businesses that help lower premium cost growth and increase access to quality, affordable health insurance. Depending on whether

The IRS wants us to invent the 48 hour day

"Tax season" as we all know it is an American tradition. For a few months at the beginning of each year everyone is scrambling to find receipts, W-2 forms, mortgage interest, business profits, etc. so that they can get to their tax accountant and find out the good or not-so-good news about their tax bill.  

Most years there is a practical window of about 10 weeks to get all this accomplished, from the first week of February through April 15 (remember, most of us don't even receive all our paperwork from third parties until the end of January).  For me as a CPA, this is my claimed reason for my current hair style, or to be more candid, lack of hair much at all. I've chosen to let my genetics off the hook for this one.

In early January, the IRS announced a delayed, Jan. 30, start to the 2013 tax filing season, and it did not start accepting business tax returns until Feb. 4. The IRS also announced that, because of the need for extensive form and processing systems changes, many taxpayers would not be able to file returns until March -- and when in March we still do not know.

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Online sales taxes back on the Senate's plate

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Time for everyone to 'fess up. Who has ordered goods via the Internet and not paid your state sales tax? As suspected, most everyone is raising their hand. 

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. While most states do require individuals to report their online purchases when they file their annual tax returns not everyone does.

Shopping online and avoiding sales taxes has indeed saved consumers a lot of money. But it has also created an uneven playing field for brick and mortar retailers versus Internet-based retailers.