One week until all is right with the entire world, tax preparers. Oh sure, maybe since partnership returns are now due on September 15th, the October deadline doesn’t have the same urgency as in years past but at the very least, it marks the official end to another tax season.
There are still plenty of you that are still slogging through 1040s though, so hang in there. If you’ve got any last minute meltdowns or clients that are giving you serious heartburn, let us know or discuss in the comments.
The rest of you, commence schadenfreude. Unless you like the week leading up to a deadline. Sickos.
Related Posts
The IRS Will Pay You for Snitching but You Better Have a Big Fish and Don’t Mind Waiting
Recently we discussed snitching on tax cheats in the UK and we speculated that tax rats Stateside would be less common because of the increasing trend of hating (or just plain killing) on the Federal Government.
Well, we were dead wrong. Since Congress passed the Tax Relief and Health Care Act of 2006, the payouts to whistleblowers increased from a maximum of 15% of the recovered proceeds to a maximum of 30%. So far the temptation is working as tips to the IRS have increased to 476 for the latest fiscal year (9/30) compared to just 116 in the previous year.
Continued, after the jump
The catch is that the IRS doesn’t want to hear about your elderly neighbor that’s running numbers out of their basement for extra cash. No, they want the serious scofflaws, according to the Tax Girl, “the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed $2 million for any taxable year (that’s the sother restrictions also apply).”
So if you crunch the numbers, you can see there’s plenty of motivation to flip on someone if you know they are a tax dodger. Problem so far is that because of the boring arcane nature of tax law and the swiftness of the American court system, not one payout has occurred to date.
Plus, the law isn’t exactly encouraging the most honest of folks to come forward when you consider that Joe Francis’s accountant ratted him out only to be accused of shenanigans himself. And as Joe Kristan points out, “…there is always something creepy about the IRS being able to horn in on confidential client-professional relationships…”
The IRS probably isn’t worried too much about who gives them the information, just as long as they get it, so they’ll probably make a run at this with an imperfect system and with sources of questionable motivation for the time being.
If You Pay Them, They Will Come [Tax Girl]
Informant Program Spurs IRS Whistleblower Tips [Web CPA]
30 Pieces of Silver or 30 Percent of the Gross [Roth & Company, Tax Update Blog]
Pennsylvania’s Tax Amnesty Ad Will Work on the Most Paranoid of Citizens
Pennsylvania’s tax amnesty program started on April 26th and to help taxpayers get off their non-complying asses, this ad has been introduced to motivate Keystone Staters that owe back taxes.
If this doesn’t get Quaker stoners into compliance, nothing will:
Personally, we would liked to have seen the PA Dept of Rev go the route of PICPA and incorporate Snuggies or breathlessly judgmental friends. Although we understand that scare tactics may be effective, a state must be pretty desperate to run this to get taxpayers motivated.
Btw, Philadelphia’s tax amnesty program started today and, so far, is considerably less Orwellian.
Earlier:
Tax Amnesty Programs: A Gold Mine for States or Bad Policy?
How Big of a Burden Will the New 1099 Reporting Requirements Be for Small Businesses?
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
Slipped into the health care reform bill passed in March was a new tax reporting regulation likely to create a huge burden for businesses, something we wrote about recently. Now a government watchdog, the National Taxpayer Advocate, is questioning the rule’s potential unintended consequences for small companies.
Plus, it looks like the regulation won’t raise a heck of a lot of money anyway.
The rule would require anyone with business income to issue 1099 tax forms to all vendors from whom they bought more than $600 worth of goods and services that year.
In her report, Nina Olson, the Taxpayer Advocate, warned that the rule could prove to be an unacceptable added burden for small businesses, which would face a virtual cyclone of new paperwork to comply with the regulation. “The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance,” she wrote. And the rule could also give an unfair advantage to large suppliers that have the resources to help customers track purchases.
What’s really going on here? The regulation, which would take effect in 2012, seems to be yet another attempt by federal and state government agencies to shore up revenues by cracking down on unpaid tax liabilities–and taking steps that intentionally or unintentionally impact small businesses in particular. For example, a bevy of agencies, plus Congress, are on a regulatory jihad against corporate misclassification of independent contractors. And there are reports that the IRS is especially eyeing small businesses in that crackdown.
Thing is, like that effort, the new 1099 tax reporting regulation isn’t likely to reap a whole lot of money. For example, the nonpartisan Joint Committee on Taxation recently estimated the rule would raise an underwhelming $2 billion annually in added revenue, according to CNNMoney.com.
Will the Taxpayer Advocate’s remarks have any effect? Even before Olson’s report, there were signs that the IRS had started to backtrack. For example, the IRS announced in May that the rule won’t include transactions made through credit and debit cards. As the tax agency addresses all the compliance complexities of the rule, it’s likely to make other changes, as well.
But with government agencies in desperate need of money, the reporting rule isn’t going to disappear completely.