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IRS overwhelmed by tax return identity theft scams - Examiner.com

Google IRS Federal Income Tax - Mon, 2014-03-24 15:04

Examiner.com

IRS overwhelmed by tax return identity theft scams
Examiner.com
Astronomical as it sounds, these statistics do not include the almost 480,000 fraudulent refund claims filed using the Social Security numbers of Puerto Rican citizens, who generally do not file federal tax returns unless earning stateside income, or ...
This Could Be in Your Wallet — Tax Refunds from 2010Patch.com
Nearly 24000 Arizona residents could be owed old tax refundsArizona Republic
Arizonans owed millions in IRS refundsArizona Daily Star
The Star-Ledger -Oswego Daily News
all 66 news articles »
Categories: Tax news

How People Respond to Investment Taxes and What This Means for Economic Growth

Tax Foundation - Mon, 2014-03-24 14:15

Capital gains realizations and dividend payouts increased significantly between 2011 and 2012, ahead of a tax increase in 2013.

According to the IRS, capital gains realizations increased 60.4 percent, increasing from $310.9 billion in 2011 to 498.7 billion in 2012. Qualified dividends saw a similar increase, up 50.9 percent after increasing from $125.2 billion in 2011 to $188.9 billion in 2012.

This increase corresponded with an increase in both the capital gains and dividends tax rates. On January 1, 2013, the capital gains and dividends tax rate rose from 15 percent to 23.8 percent (which includes the 3.8 percent surcharge from the Affordable Care Act).

This result – large timing changes corresponding with investment tax changes – isn’t unusual with capital gains because taxpayers are able to choose when they sell their stocks and collect their gains. The data shows this to be true.

Th chart below compares the capital gains tax rate and federal revenue. Before the capital gains rate went up in 1986, we see a similar case to 2012, as people sold their stocks ahead of the tax increase. Likewise, when the rates are cut, you can see the revenues spike as well.

This helps illustrate an important point: capital is highly responsive to taxes. This is important because investment is crucial to growing the economy.

Unfortunately, current U.S. tax policy creates heavy biases against saving and investment through double, triple, and even quadruple taxation. We have the highest corporate rate in the OECD and have high taxes on dividends, capital gains, and business investment. And currently, the United States ranks second to last in investment as a percentage of GDP among developed countries and has been on the decline.

This is bad for everyone.

In the long-run, lower investment means a smaller capital stock. This means that workers will have fewer factories and machines and less equipment to work with. This means fewer computers, backhoes, front loaders, lawn mowers, pumpjacks, office buildings, etc. When workers don’t have tools to work with, they become less productive; wages drop, economic growth slows, and lower living standards.

On the other hand, if we remove biases against saving and investment, we would see the opposite. Productivity and wages would increase, the economy would growth, and living standards would increase.

For more on the effect of taxes on investment and what tax changes can improve the economy, see here and here.

Categories: Tax news

'Inevitable glitches' ahead for U.S. anti-tax evasion law: IRS

Yahoo Tax - Mon, 2014-03-24 13:58

A new U.S. anti-tax evasion law, set to take effect on July 1, will encounter "inevitable glitches," said the head of the U.S. Internal Revenue Service on Monday, adding that the IRS will be sympathetic to banks doing their best to comply. The Foreign Account Tax Compliance Act (FATCA) will require foreign banks, insurers and investment funds to send the IRS information about Americans' offshore accounts worth more than $50,000. Acknowledging banks' concerns about costs and complexity, he said, "We will be understanding of those problems as long as those (financial) intermediaries are making reasonable, good faith efforts to comply." Signed into law by President Barack Obama in 2010, the law was originally supposed to take effect on January 1, 2013.


Categories: Tax news

Wisconsin Governor Walker signs $504 million tax cut

Yahoo Tax - Mon, 2014-03-24 13:20

Wisconsin Governor Scott Walker, a Republican, on Monday signed into law a measure that uses the state's projected surplus to give a tax break of more than $500 million to workers and property owners. The law puts into place $504 million in tax cuts, consisting of $406 million in property tax relief and a $98 million state income tax break for those in the lowest tax bracket. "This is a great day for the hardworking taxpayers of Wisconsin," Walker said in a statement. Walker, who is running for re-election this year, has vowed to funnel most of Wisconsin's projected surplus to residents through tax breaks.


Categories: Tax news

State Sales Tax Jurisdictions Approach 10,000

Tax Foundation - Mon, 2014-03-24 11:15

A number of states are calling on Congress to authorize them to collect sales taxes on interstate Internet transactions, including at a congressional hearing early this month. The states claim that they have simplified their sales tax systems so that compliance is no longer burdensome.

The growing number of sales tax jurisdictions, as reported by the tax software company Vertex, suggests the states have more simplification work to do. There are now 9,998 different sales tax jurisdictions in the United States, up more than 300 when Vertex last reported the figure in 2011.

The number of jurisdictions vary widely by state. New Jersey, despite a plethora of local governments, has just two jurisdictions – statewide and areas bordering Delaware. Texas by contrast, despite endorsing congressional action while itself declined to adopt uniform tax definitions or other sales tax reforms, has over 1,500 different sales tax jurisdictions.

Certainly, number of jurisdictions isn't everything. We have put together a chart of essential simplifications in a federal online sales tax bill, including unified audits, uniform bases and definitions, notice of rate and base changes, liability waivers, and federal court jurisdiction. No matter how it’s measured, states haven’t yet fulfilled their promises to simplify their sales taxes.

State

Total Sales Tax Jurisdictions, 2014

Alabama

791

Alaska

103

Arizona

131

Arkansas

370

California

231

Colorado

307

Connecticut

1

District of Columbia

1

Florida

56

Georgia

162

Guam

1

Hawaii

2

Idaho

9

Illinois

443

Indiana

1

Iowa

994

Kansas

428

Kentucky

1

Louisiana

341

Maine

1

Maryland

1

Massachusetts

1

Michigan

1

Minnesota

35

Mississippi

3

Missouri

1242

Nebraska

209

Nevada

18

New Jersey

2

New Mexico

142

New York

84

North Carolina

105

North Dakota

137

Ohio

96

Oklahoma

587

Pennsylvania

3

Puerto Rico

79

Rhode Island

1

South Carolina

41

South Dakota

251

Tennessee

125

Texas

1515

Utah

310

Vermont

12

Virginia

174

Washington

346

West Virginia

11

Wisconsin

70

Wyoming

23

TOTALS

9998

Source: Vertex, Inc.

Categories: Tax news

Who pays most income taxes? - CNNMoney

Google IRS Federal Income Tax - Mon, 2014-03-24 10:52

CNNMoney

Who pays most income taxes?
CNNMoney
And they are paying the lion's share of federal income tax revenue -- 74% in 2011. That's up from 61% in 1997, according to an analysis of IRS data by the Tax Foundation. The biggest jump during that time period was among 55- to 65-year-olds. Their ...
Who pays most income taxes? People 45 and upWCVB Boston

all 9 news articles »
Categories: Tax news

Will The IRS Ever Accept Your Tax Returns With A Tweet? - Forbes

Google IRS Federal Income Tax - Mon, 2014-03-24 06:42

Forbes

Will The IRS Ever Accept Your Tax Returns With A Tweet?
Forbes
The federal government and the IRS? Much less so. Tax returns even for a simple taxpayer can be byzantine. If the only thing you had to list on your return was your name, Social Security Number and total income, that should fit within 140 characters ...

and more »
Categories: Tax news

Former Inmate Gets 5 ½ Years in Federal Prison for Leading IRS Tax Fraud from ... - Shoals Insider

Google IRS Federal Income Tax - Sun, 2014-03-23 23:53

Shoals Insider

Former Inmate Gets 5 ½ Years in Federal Prison for Leading IRS Tax Fraud from ...
Shoals Insider
BIRMINGHAM – A federal judge recently sentenced the ringleader of a federal tax fraud that was run from inside an Alabama state prison to serve more than five years in federal prison, announced U.S. Attorney Joyce White Vance, Internal Revenue Service ...

Categories: Tax news

Reasons for Filing an Extension of your Federal Income Tax - Tax Law Home (blog)

Google IRS Federal Income Tax - Sun, 2014-03-23 00:15

Reasons for Filing an Extension of your Federal Income Tax
Tax Law Home (blog)
April 15, the date when state and federal income tax returns are due, is only a few weeks away. While many ... If a taxpayer owes taxes as of April 15, that money is still due to the IRS on April 15 even if the taxpayer files an extension. Filing an ...

Categories: Tax news

9 retirement savings tax tips - Pensacola News Journal

Google IRS Federal Income Tax - Sat, 2014-03-22 23:00

9 retirement savings tax tips
Pensacola News Journal
"Stretching the retirement savings available for an additional 20 years of life expectancy requires correctly managing the complex retirement taxation rules established by Congress and the IRS," says Byrnes, who is also associate dean at the Thomas ...

and more »
Categories: Tax news

Rhode Island House speaker resigns amid probe

Yahoo Tax - Sat, 2014-03-22 20:12

The Democratic speaker of the Rhode Island House of Representatives resigned his leadership position on Saturday, a day after law enforcement officials searched his office and home in an investigation. Gordon Fox said in a statement that he is giving up the speakership he has held since 2010 and that he would serve out his term as a representative in the House but would not run for re-election this fall. "The process of governing must continue and the transition of leadership must be conducted in an orderly manner." The U.S. Attorney's Office for Rhode Island confirmed on Friday that two search warrants were executed in a joint investigation with the FBI, the Internal Revenue Service and state police.


Categories: Tax news

IRS is overwhelmed by tax return identity theft - ksl.com

Google IRS Federal Income Tax - Sat, 2014-03-22 10:53

ksl.com

IRS is overwhelmed by tax return identity theft
ksl.com
SALT LAKE CITY — With just under a month until the federal tax deadline, hundreds of thousands of Americans have reportedly been victimized by the No. 1 crime in the United States: identity theft. Or in the case of the illegally filed income tax ...

Categories: Tax news

9 retirement savings tax tips - USA TODAY

Google IRS Federal Income Tax - Sat, 2014-03-22 04:34

9 retirement savings tax tips
USA TODAY
"Stretching the retirement savings available for an additional 20 years of life expectancy requires correctly managing the complex retirement taxation rules established by Congress and the IRS," says Byrnes, who is also associate dean at the Thomas ...

and more »
Categories: Tax news

Rhode Island House speaker's home, office searched in federal probe

Yahoo Tax - Fri, 2014-03-21 19:09

By Fausto Giovanny Pinto PROVIDENCE, Rhode Island (Reuters) - U.S. federal law-enforcement officials searched the office and home of the speaker of the Rhode Island House of Representatives, Gordon Fox, on Friday, according to his spokesman. But there was no immediate word on the subject and nature of the investigation, including whether the Democratic speaker was a target. The Rhode Island U.S. attorney's office confirmed only that two search warrants were executed as part of a joint investigation with the FBI, the Internal Revenue Service and state police, but declined to state the location and target of the warrants. Larry Berman, Fox's spokesman, told reporters at the State House that investigators asked staff to leave the office while a warrant was executed, according to video of the remarks posted on the website of local news channel WPRI.


Categories: Tax news

IRS: Hawaii has $5.4M in 2010 unclaimed tax refunds - khon2.com

Google IRS Federal Income Tax - Fri, 2014-03-21 15:29

IRS: Hawaii has $5.4M in 2010 unclaimed tax refunds
khon2.com
The Internal Revenue Service says more than $5.4 million in tax refunds have gone unclaimed in Hawaii. The IRS says the money is potentially due to 6,200 Hawaii residents who did not file a federal income tax return for 2010. In order to collect those ...

Categories: Tax news

U.S. IRS audited fewer wealthy Americans in 2013

Yahoo Tax - Fri, 2014-03-21 14:38

The U.S. Internal Revenue Service said on Friday that it audited fewer high-income Americans in 2013 than it did in 2012 or 2011, while it conducted more audits of people with no income. Total audits fell by 5 percent from 2012 to reach the lowest level since 2008 as the IRS said it coped with budget cuts. For the fiscal year that ended September 30, 2013, the IRS said it audited 24.2 percent of individual tax returns with adjusted gross income of $10 million or more. There were also fewer individual tax returns audited in the $5 million to $10 million gross income band, the IRS said.


Categories: Tax news

Whittier man accused of quarter-billion dollar in tax fraud scheme - Los Angeles Daily News

Google IRS Federal Income Tax - Fri, 2014-03-21 13:09

Whittier man accused of quarter-billion dollar in tax fraud scheme
Los Angeles Daily News
"As a result of those alleged false federal income tax returns that Old Quest and DLFRA filed with the IRS, the IRS erroneously issued millions of dollars in tax refunds to Old Quest and DLFRA customers, including one refund for $816,594 who was ...

Categories: Tax news

Still time to get a refund on a 2010 federal income tax return - Sacramento Bee

Google IRS Federal Income Tax - Fri, 2014-03-21 11:38

WKBW-TV

Still time to get a refund on a 2010 federal income tax return
Sacramento Bee
Nationally, refunds totaling almost $760 million may be waiting for an estimated 918,600 taxpayers who did not file a federal income tax return for 2010, the IRS said. The estimated California refunds trailed only Texas, with about 81,000 taxpayers in ...
IRS Looks to Distribute $760 Million in Unclaimed Tax RefundsAccounting Today
IRS Has $760 Million for People Who Have Not Filed a 2010 Income Tax ReturnWKBW-TV
IRS: 2010 tax refunds availableNeighborNewspapers.com
Quad City Times
all 313 news articles »
Categories: Tax news

Kevin Spacey at Annapolis Bar Tonight to Lobby Legislators for Subsidies

Tax Foundation - Fri, 2014-03-21 10:45

Kevin Spacey is my favorite actor—I spent my entire recent vacation flight watching his movies—so it’s hard for me to say bad things about him. But he’s also a celebrity with an alleged net worth of $80 million lobbying for tax subsidies from Maryland taxpayers:

Gerard E. Evans, an Annapolis-based lobbyist for the show, has invited the entire Maryland General Assembly to a local wine bar to meet the two-time Academy Award winner who plays the scheming Vice President Frank Underwood in the series. An invitation describes the event as “an evening of Annapolis, D.C. and Hollywood.”

“He’s coming to promote ‘House of Cards’ and the tax credit,” Evans said of Spacey. “He loves Maryland. He’s got a house here.”

The visit is scheduled just a few days after the Senate voted to increase the amount the state can spend next year, to $18.5 million, on a tax credit that rewards movie and television production companies that choose to film in Maryland. “House of Cards” has been the biggest beneficiary in recent years.

Media Rights Capital, which produces House of Cards, which has already received $26 million in subsidies from Maryland taxpayers, had threatened to relocate production (presumably to DC) if more wasn’t coming. This puts to rest the myth that these subsidies just need to lure companies and other factors will keep them and build a permanent industry: the reality is that as soon as the subsidies end, they leave.

I know it's tough doing business in Maryland, what with those high taxes they have on everything. I wish they could focus on cutting taxes for all businesses in Maryland, not just one wealthy out-of-state business that happens to have an awesome wealthy spokesperson.

As we previously said:

Film production only creates temporary jobs, and companies can leave at the drop of a hat. The Maryland Film Office estimated that House of Cards Season 1 “resulted in local hiring of 2,193 Maryland crew, cast, and extras” but it’s pretty clear based on the letter above that companies can bolt the second they get a better deal. And those jobs aren’t available once filming wraps up. Programs do not “pay for themselves” as is often touted. Proponents will argue that increased economic activity will create enough new tax revenue to make up for the initial loss of revenue from the credit. That’s not true. In fact, film tax incentives are a net loss to states, and there are plenty of studies demonstrating this. Estimates of economic impact should be taken with a grain of salt. As we noted a few years ago: “[a]dvocates rightly point out that one dollar of film spending trickles through the economy and creates more economic activity. For instance, if a film production spends one dollar on wages for a worker, that worker will take that income and spend it in the economy, creating income for others, and so on…But the fact that film productions impact the broader economy is not unique to this industry.” If those dollars from the State of Maryland weren’t spent on film production, they’d be spent on something else and still cycle through the economy. Those 2,193 employees the Maryland Film Office is touting likely would have happened anyway.

More on film tax credits here.

Categories: Tax news

Illinois Speaker Madigan Proposes 3 Percent High-Earner Tax

Tax Foundation - Fri, 2014-03-21 10:15

On Thursday, Illinois House Speaker Michael Madigan proposed a 3 percent “additional income tax” constitutional amendment for earners with incomes over $1 million. Currently, Illinois’ income tax rate is 5 percent for all income levels, and, according to current law, it is scheduled to fall to 3.75 percent on January 1, 2015.

Illinois has been debating progressive income tax proposals for some time now, with previous proposals including top rates ranging from 9 percent to 11 percent. Illinois’ current flat tax is protected by the state’s constitution, and thus a move to a progressive tax would require a supermajority of the legislature and a referendum in November. The tax increase would be retroactive to January 1, 2014.

Madigan’s plan differs from others in that it ties a rate proposal to the progressive tax constitutional amendment and dedicates the revenues to public services. Other tax increase proposals in Illinois have not tied the constitutional amendment’s passage to a specific rate structure: they’ve proposed amendments giving broad powers to Illinois policymakers to make a progressive income tax at their discretion, and left rate structures vague. Madigan’s proposal specifically sets a 3 percent additional rate above the normal income tax rate and ties revenue raised from the tax to school districts to be distributed on a per pupil basis.

With numerous tax plans floated for Illinois, it’s not clear what the final plans put before voters may be. Governor Quinn will deliver his budget address on March 26th, where presumably his tax plan will be laid out. But whatever the case, a “millionaires’ tax” is poor policy: it is a narrow, high-rate tax on a highly mobile group of people who earn less in bad economic times. The spending such a tax increase supports leads to the cost of government being hidden from most people and shouldered by a few, making revenues even more volatile and narrowly-based.

It’s true that high-earner taxes will can raise revenue in the short term, but eventually, the taxes can negatively impact location decisions. Illinois is already struggling to keep many of its prominent companies and experiencing slower than average job growth. With a higher tax on individuals and many businesses, people expanding old businesses or creating new ones will incorporate the higher cost of doing business into their decision-making, and could choose to steer clear of the state.

Read more on Illinois here.                                                                 

Read more on high-earner taxes here.

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