QuoteAs taxes come due, let's give the IRS some credit
By E.J. Dionne Jr.
Thursday, April 15, 2010; A21
You might imagine that if a terrorist attack killed an American public servant and threatened the lives of 200 people, it would have been big news for weeks and an enduring symbol of the risks taken by those who serve their country.
Yet when an American named Joseph Stack flew a plane into an office building in Austin in February, killing Vernon Hunter, a 68-year-old Vietnam veteran, the news reports were remarkably muted, and the story quickly disappeared.
Hunter worked for the Internal Revenue Service, which was housed in the Austin building, and according to Stack's suicide note, the IRS was his target.
On or about April 15, the Web and the commentary pages overflow with assaults on the IRS that cast its employees as jackbooted thugs, to use an old phrase, and our tax system as a form of oppression comparable to the exertions of the worst Russian czars and the most fiendish modern totalitarian dictators.
We should call this propaganda what it is: a sweeping falsehood that libels the work of committed federal employees such as Hunter.
Who are the men and women of the IRS? They are the people who collect the revenue that allows the government to finance our troops who are in harm's way, help our wounded warriors, pay Grandma's Medicare bills, cover the costs of keeping our food and drugs safe, and do so many of the other things the vast majority of us want our government to accomplish.
Yes, if you support our troops, you have to support the work of the Internal Revenue Service.
Champions of government's core functions have been far too timid in taking on the slanders directed against the IRS. When right-wingers tell IRS horror stories, progressive politicians are typically defensive: Well, sure, let's correct those abuses, but . . . mumble, mumble, mumble.
It's time to tell the truth: that our tax system allows enormous leeway for innocent mistakes, that IRS agents often help hard-pressed taxpayers work out reasonable ways of meeting their obligations and that our system provides, as it should, many avenues through which taxpayers can exercise their due-process rights.
And rarely is it pointed out that if we stop IRS employees from trying to collect the money owed by those who cheat on their taxes, we are only increasing the burden on honest taxpayers.
One attack on the recently passed health-care bill is that its mandate requiring individuals to buy insurance will be enforced by the IRS. In fact, the penalties for not buying insurance are low. Moreover, IRS Commissioner Douglas Shulman told Congress that the IRS would not audit taxpayers to see if they had purchased coverage.
But really, is there another agency that would deal with the mandate with greater efficiency or fairness than the IRS? Of course every bureaucracy has its flaws, but we Americans have one of the most responsive and transparent tax-collection systems in the world. We should be proud of it.
In a speech this month at the National Press Club, Shulman told the story of Vernon Hunter. "He was a manager of revenue officers," Shulman said, "the people who go out in person to collect debts owed to the government. And while these are the very people who could be parodied as the prototypical IRS agent, they actually try to help people resolve their debts."
Shulman added this: "Vernon Hunter's son, Ken, said something profound, which captures the spirit of how people at the IRS view their job. Rather than show anger toward the man who killed his father, he simply said: 'If he would have talked to my dad, my dad would have helped him.' "
We rightly denounce those who offer rationalizations for terrorism. But shortly after Hunter died, here is what Rep. Steve King (R-Iowa) said of Joseph Stack at the Conservative Political Action Conference: "I think if we had abolished the IRS back when I first advocated it, he wouldn't have had a target for his airplane. . . . It's sad that the incident happened down in Texas, but by the same token, the IRS is an agency that's unnecessary."
Shame on King and shame on those who demagogue the work of the IRS. Vernon Hunter was a patriot who died serving his country. We should be grateful to him and to those who carry on his work.
I love how all the poors bitch about having to fill out a simple form in order to get a refund. :)
Math= TEH HARD. :(
No.
Quote from: Caliga on April 15, 2010, 07:25:54 AM
I love how all the poors bitch about having to fill out a simple form in order to get a refund. :)
They do? :huh:
Doesn't everyone bitch and moan about tax day? :unsure:
The Inland Revenue sent me a letter saying I'm going to have to go back to Self-Assessment this year. Three jobs, a month of self-employment and two weeks on the dole will make for a fun-filled form-filling :bleeding:
Not to mention the heart-stopping £600 National Indurance bill HMRC sent me in error :mad:
Quote from: Brazen on April 15, 2010, 07:43:24 AM
The Inland Revenue sent me a letter saying I'm going to have to go back to Self-Assessment this year. Three jobs, a month of self-employment and two weeks on the dole will make for a fun-filled form-filling :bleeding:
Not to mention the heart-stopping £600 National Indurance bill HMRC sent me in error :mad:
Are you a consultant? :huh:
And the Insurance error is appalling. The UK used to be an example of efficiency. Truly, the country has gone to the dogs.
Yes, I've hugged a couple.
Quote from: Martim Silva on April 15, 2010, 07:55:17 AM
Are you a consultant? :huh:
And the Insurance error is appalling. The UK used to be an example of efficiency. Truly, the country has gone to the dogs.
Nah, it's just this tax year spanned me being made redundant, taking a new job I hated for six months, leaving, signing on, almost immediately landing a contract for a month and getting another job.
Quote from: Caliga on April 15, 2010, 07:39:50 AM
Doesn't everyone bitch and moan about tax day? :unsure:
No. Why should the average person do so - the average person has already filed. :mellow:
Quote from: grumbler on April 15, 2010, 08:42:59 AM
No. Why should the average person do so - the average person has already filed. :mellow:
I attended a talk about the development of the UK online self-assessment filing system. Apparently 90 per cent of people file on the last day, and 70 per cent of them in the very last hour :D
Quote from: grumbler on April 15, 2010, 08:42:59 AM
No. Why should the average person do so - the average person has already filed. :mellow:
-_-
EJ Dionne likes taxes. What a surprise. :lol:
I have to digitally sign my return today. Wait until the last minute--that's the way to go. The longer the money stays in my bank account the better.
Quote from: MadImmortalMan on April 15, 2010, 10:56:48 AM
I have to digitally sign my return today. Wait until the last minute--that's the way to go. The longer the money stays in my bank account the better.
I filed my taxes long ago, and authorized the IRS to take out the small amount of money I still owe today. Best of all worlds.
I filed my return in mid-march. Still waiting for my cheques.
Quote from: Admiral Yi on April 15, 2010, 07:30:46 AM
They do? :huh:
Some of them are certainly confused by it, and don't seem to be ashamed in saying they don't understand the 1040EZ form :lol:
One of my friends is a tax inspector, and he invited some of his workmates to his wedding. There was one very HOTT tax chick I wouldn't mind hugging. :licklips:
Quote from: MadImmortalMan on April 15, 2010, 10:56:48 AM
I have to digitally sign my return today. Wait until the last minute--that's the way to go. The longer the money stays in my bank account the better.
How much do you think the extra few days at 0.5% interest got you? :P
Quote from: Caliga on April 15, 2010, 07:25:54 AM
I love how all the poors bitch about having to fill out a simple form in order to get a refund. :)
Math= TEH HARD. :(
It's a pretty shitty system.
Fed government: So we both know that we owe you some money that we borrowed interest free. We couldn't be bothered to keep track, so can you figure out how much we owe you? Oh and if you don't have a computer, can you make sure to pay for postage. Thanks! :hug:
Quote from: garbon on April 15, 2010, 03:22:58 PM
Quote from: Caliga on April 15, 2010, 07:25:54 AM
I love how all the poors bitch about having to fill out a simple form in order to get a refund. :)
Math= TEH HARD. :(
It's a pretty shitty system.
Fed government: So we both know that we owe you some money that we borrowed interest free. We couldn't be bothered to keep track, so can you figure out how much we owe you? Oh and if you don't have a computer, can you make sure to pay for postage. Thanks! :hug:
Except they don't know they owe you money, and they can't keep track because they don't always get the information they need to compute taxes (that is why you need to complete a return). And if they borrowed money from you, that is your fault--in some cases people can borrow money from the government interest free.
You can get a stamp for about $0.44.
Quote from: alfred russel on April 15, 2010, 03:20:32 PM
Quote from: MadImmortalMan on April 15, 2010, 10:56:48 AM
I have to digitally sign my return today. Wait until the last minute--that's the way to go. The longer the money stays in my bank account the better.
How much do you think the extra few days at 0.5% interest got you? :P
Heh. Not much. It's just the basic accounting principle. :lol:
Won't be hugging any this year for sure.
My uncle the tax collector (he's the one who turned bad in the family :P ) told me I'd make 70k$ a year right now as "sector specialist" if I was to apply for a job there (Ministère du Revenu du Québec).
Maybe in the future I'll hug some tax collectors, but it's doubtful :P
I've prosecuted a few tax files. My experience in dealing with Canada Revenue Agency is that they have been extremely helpful, and just want people to get their tax returns up to date. They routinely tell us to ask for the minimum fine ($1000), and even to 'roll-up' the minimum fine to cover multiple years, instead of $1000 per missed return.
Filed a few weeks ago, am currently waiting on a big refund. Now, when the refund comes, that's the day I'll hug a tax man. :contract:
Quote from: alfred russel on April 15, 2010, 03:35:00 PM
Except they don't know they owe you money, and they can't keep track because they don't always get the information they need to compute taxes (that is why you need to complete a return). And if they borrowed money from you, that is your fault--in some cases people can borrow money from the government interest free.
You can get a stamp for about $0.44.
That's even better!
Oh we took some money from you but we don't know if it is the right amount or not. Oh well figure it out, please.
Besides, presumably a person pays both federal and state taxes. That's 88 cents which can almost buy you some "food" at McDonald's!
Let's see, for grabon's system of no-file taxes to work we would need:
A method of automatically reporting dependents.
A method of automatically reporting income earned from self-employment.
A method of automatically reporting tip income.
A method of automatically reporting of mortgage interest and other deductible payments.
Am I missing anything?
Quote from: Admiral Yi on April 15, 2010, 07:41:39 PM
Let's see, for grabon's system of no-file taxes to work we would need:
A method of automatically reporting dependents.
A method of automatically reporting income earned from self-employment.
A method of automatically reporting tip income.
A method of automatically reporting of mortgage interest and other deductible payments.
Am I missing anything?
Dependents = hospitals and courts (adoption, divorce) reporting.
Tips = restaurants reporting.
Mortgage interest = mortgage companies (large, regulated banks, already sending in the IRS-approved forms) reporting.
Self employment or other deductible payments, sure.
Quote from: ulmont on April 15, 2010, 07:45:42 PM
Dependents = hospitals and courts (adoption, divorce) reporting.
Tips = restaurants reporting.
Mortgage interest = mortgage companies (large, regulated banks, already sending in the IRS-approved forms) reporting.
Self employment or other deductible payments, sure.
How does a restaurant know how much their wait staff gets tipped?
Mortgage interest would be easy but all that home business stuff would not.
I don't see an easy way to do self employment income.
Quote from: Admiral Yi on April 15, 2010, 07:49:06 PM
How does a restaurant know how much their wait staff gets tipped?
A lot of places split tips, and the IRS requires staff to report tip income to their employer.
Quote from: ulmont on April 15, 2010, 08:03:40 PM
the IRS requires staff to report tip income to their employer.
You sure about that? It has been decades since I worked for tips, but I never had to. Has there been some change?
Quote from: Admiral Yi on April 15, 2010, 08:05:55 PM
Quote from: ulmont on April 15, 2010, 08:03:40 PM
the IRS requires staff to report tip income to their employer.
You sure about that? It has been decades since I worked for tips, but I never had to. Has there been some change?
Quote from: IRSIf you receive cash, check, or credit card tips of $20 or more in any one calendar month while working for one employer, you must report the total amount of your tips to your employer by the 10th day of the next month. If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report on the next day that is not a Saturday, Sunday, or a legal holiday.
To report your tips, you can use Form 4070, Employee's Report of Tips to Employer.
The link here is to "Taxable Income for Students," but the tip part is generic.
http://www.irs.gov/individuals/students/article/0,,id=96674,00.html
US tax day is always a nice gentle reminder that I have less than two weeks of procrastinating before I do mine at the last minute, and await my tiny return.
Quote from: garbon on April 15, 2010, 06:37:00 PM
Quote from: alfred russel on April 15, 2010, 03:35:00 PM
Except they don't know they owe you money, and they can't keep track because they don't always get the information they need to compute taxes (that is why you need to complete a return). And if they borrowed money from you, that is your fault--in some cases people can borrow money from the government interest free.
You can get a stamp for about $0.44.
That's even better!
Oh we took some money from you but we don't know if it is the right amount or not. Oh well figure it out, please.
Besides, presumably a person pays both federal and state taxes. That's 88 cents which can almost buy you some "food" at McDonald's!
You realize you can adjust the amount of your withholding? If the amount is too high for you, just have it reduced.
I have no answer for the $0.88 injustice.
Quote from: Admiral Yi on April 15, 2010, 07:41:39 PM
Let's see, for grabon's system of no-file taxes to work we would need:
A method of automatically reporting dependents.National ID system
A method of automatically reporting income earned from self-employment.National ID system
A method of automatically reporting tip income.National ID system
A method of automatically reporting of mortgage interest and other deductible payments.Theoretically possible because of SSNs, but for simplicity's sake, let's say national ID system
Am I missing anything?
Does anybody else see why that wouldn't fly?
Quote from: ulmont on April 15, 2010, 08:13:17 PM
Quote from: Admiral Yi on April 15, 2010, 08:05:55 PM
Quote from: ulmont on April 15, 2010, 08:03:40 PM
the IRS requires staff to report tip income to their employer.
You sure about that? It has been decades since I worked for tips, but I never had to. Has there been some change?
Quote from: IRSIf you receive cash, check, or credit card tips of $20 or more in any one calendar month while working for one employer, you must report the total amount of your tips to your employer by the 10th day of the next month. If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report on the next day that is not a Saturday, Sunday, or a legal holiday.
To report your tips, you can use Form 4070, Employee's Report of Tips to Employer.
The link here is to "Taxable Income for Students," but the tip part is generic.
http://www.irs.gov/individuals/students/article/0,,id=96674,00.html
What do you think the compliance rate is with that?
Also, none of that will work. There are plenty of employers of US workers that don't give W-2s (underground economy, employers of expatriates), and I don't think there is a requirement mortgage debt be from a bank for the interest to be deductible.
God Bless the IRS. It's the only agency in the government that actually pays for itself.
Quote from: alfred russel on April 15, 2010, 08:38:13 PM
What do you think the compliance rate is with that?
I'm guessing the compliance rate with people reporting tips to their employer is about the same as people reporting tips to the IRS.
Quote from: alfred russel on April 15, 2010, 08:38:13 PM
Also, none of that will work. There are plenty of employers of US workers that don't give W-2s (underground economy, employers of expatriates), and I don't think there is a requirement mortgage debt be from a bank for the interest to be deductible.
If you aren't getting a W-2 or another form, you aren't bothering to file taxes, or at least to report that income, so no worries.
As to mortgage debt, what are these non-bank entities that are giving out mortgages, calculating the interest paid so that the mortgagee can claim it with the IRS, and still not sending the IRS forms already?
Quote from: ulmont on April 15, 2010, 08:44:35 PM
If you aren't getting a W-2 or another form, you aren't bothering to file taxes, or at least to report that income, so no worries.
As to mortgage debt, what are these non-bank entities that are giving out mortgages, calculating the interest paid so that the mortgagee can claim it with the IRS, and still not sending the IRS forms already?
Disagree--I may not get a W-2 because I'm working in Hong Kong for a foreign company whose HR department doesn't know what a W-2 is.
I don't know how the deduction process works for seller financed homes, but I would expect I could deduct the interest whether or not the seller ever calculates the interest paid.
Quote from: alfred russel on April 15, 2010, 08:16:42 PM
You realize you can adjust the amount of your withholding? If the amount is too high for you, just have it reduced.
OMG, really? I wasn't aware that I was one of the poor people Cal and deracist were talking about.
Btw, I had to pay more tax this time. ;)
As usual, I get beau coup bucks back with my return. Anti-tax sentiment is teh fial.
Although, I have a feeling this'll be the last year for that, since now I make enough money to vote Republican. MUST FIND MOR LOOPHOLZ
Quote from: alfred russel on April 15, 2010, 09:07:25 PM
I don't know how the deduction process works for seller financed homes, but I would expect I could deduct the interest whether or not the seller ever calculates the interest paid.
The seller/mortgage holder must fill out a couple of forms and send one to the mortgage payer before the mortgage payer can claim that interest as deductible. So, no, you cannot claim the interest if the seller does not ever calculate the interest paid.
Quote from: grumbler on April 16, 2010, 06:38:33 AM
Quote from: alfred russel on April 15, 2010, 09:07:25 PM
I don't know how the deduction process works for seller financed homes, but I would expect I could deduct the interest whether or not the seller ever calculates the interest paid.
The seller/mortgage holder must fill out a couple of forms and send one to the mortgage payer before the mortgage payer can claim that interest as deductible. So, no, you cannot claim the interest if the seller does not ever calculate the interest paid.
I asked my brother, a CPA, and he says that is incorrect. You are required to give the mortgage holder the information to report your interest, and he/she is required to report it, but if the mortgage holder fails in his/her responsibilities, you don't lose your deduction. But when you report, you need to provide the IRS the name, taxpayer ID, and address of the mortgage holder. You also will need to be able to support the amount of interest in the case of an audit.
Quote from: garbon on April 16, 2010, 12:47:28 AM
Quote from: alfred russel on April 15, 2010, 08:16:42 PM
You realize you can adjust the amount of your withholding? If the amount is too high for you, just have it reduced.
OMG, really? I wasn't aware that I was one of the poor people Cal and deracist were talking about.
Btw, I had to pay more tax this time. ;)
Then what are you whining about? You figure out your own taxes and you pay them what you owe. If you prepay too much, that is your fault. Seems fair to me.
Quote from: CountDeMoney on April 16, 2010, 05:50:05 AM
As usual, I get beau coup bucks back with my return. Anti-tax sentiment is teh fial.
No, that's because you're teh fial. :)
Although maybe not anymore, as you suggested. :cool:
Quote from: Admiral Yi on April 15, 2010, 08:05:55 PM
You sure about that? It has been decades since I worked for tips, but I never had to. Has there been some change?
Big deal. The American Way would be to simply drastically under-report your tip earnings. :)
"Yes, Mr. Auditor, I do work weekend evenings at Olive Garden, but nobody ever shows up to dine there!"
Quote from: alfred russel on April 16, 2010, 07:28:19 AM
I asked my brother, a CPA, and he says that is incorrect. You are required to give the mortgage holder the information to report your interest, and he/she is required to report it, but if the mortgage holder fails in his/her responsibilities, you don't lose your deduction. But when you report, you need to provide the IRS the name, taxpayer ID, and address of the mortgage holder. You also will need to be able to support the amount of interest in the case of an audit.
Either your brother is incorrect, or you didn't explain the situation to him correctly.
The mortgage holder and mortgagee must have a signed contract, with interest terms spelled out, if you as the mortgagee wish to claim the interest. If the mortgage holder doesn't even calculate the interest paid (necessary to create the contract), you won't have anything to show the IRS that demonstrates that you owed or paid any interest at all. Copies of checks won't suffice.
It is true that you can still try to get an interest deduction without the Form 1098 (or whatever the form is), but if you don't have the contract (and thus the calculation of interest paid), you won't succeed.
Quote from: Caliga on April 16, 2010, 07:33:11 AM
Big deal. The American Way would be to simply drastically under-report your tip earnings. :)
"Yes, Mr. Auditor, I do work weekend evenings at Olive Garden, but nobody ever shows up to dine there!"
The minimum you must pay taxes on is 15% of sales, IIRC.
Quote from: grumbler on April 16, 2010, 07:56:38 AM
Quote from: alfred russel on April 16, 2010, 07:28:19 AM
I asked my brother, a CPA, and he says that is incorrect. You are required to give the mortgage holder the information to report your interest, and he/she is required to report it, but if the mortgage holder fails in his/her responsibilities, you don't lose your deduction. But when you report, you need to provide the IRS the name, taxpayer ID, and address of the mortgage holder. You also will need to be able to support the amount of interest in the case of an audit.
Either your brother is incorrect, or you didn't explain the situation to him correctly.
The mortgage holder and mortgagee must have a signed contract, with interest terms spelled out, if you as the mortgagee wish to claim the interest. If the mortgage holder doesn't even calculate the interest paid (necessary to create the contract), you won't have anything to show the IRS that demonstrates that you owed or paid any interest at all. Copies of checks won't suffice.
It is true that you can still try to get an interest deduction without the Form 1098 (or whatever the form is), but if you don't have the contract (and thus the calculation of interest paid), you won't succeed.
I didn't explain that situation to him, because that isn't what we were discussing. You said in your previous post, "The seller/mortgage holder must fill out a couple of forms and send one to the mortgage payer before the mortgage payer can claim that interest as deductible." That is, according to my brother, incorrect.
I'm also not aware of any requirement that interest terms be spelled out (much less be calculated). Maybe there is an exception for mortgage interest, but the tax code allows for imputed interest to be calculated.
Quote from: alfred russel on April 16, 2010, 08:13:51 AM
I'm also not aware of any requirement that interest terms be spelled out (much less be calculated). Maybe there is an exception for mortgage interest, but the tax code allows for imputed interest to be calculated.
When the previous owner of my house and I looked at having him hold the mortgage (as he had had the owner before him do), we looked at the legal requirements. Among them is the written contract. Some things are optional, but specific interest payments are not. There are professional services which calculate all of this and they are apparently recommended by the IRS to avoid the serious problems one can encounter if they are not calculated properly.
Imputed interest is taxable as income for the lender, but not deductible by the borrower.
Quote from: grumbler on April 16, 2010, 08:35:39 AM
Quote from: alfred russel on April 16, 2010, 08:13:51 AM
I'm also not aware of any requirement that interest terms be spelled out (much less be calculated). Maybe there is an exception for mortgage interest, but the tax code allows for imputed interest to be calculated.
When the previous owner of my house and I looked at having him hold the mortgage (as he had had the owner before him do), we looked at the legal requirements. Among them is the written contract. Some things are optional, but specific interest payments are not. There are professional services which calculate all of this and they are apparently recommended by the IRS to avoid the serious problems one can encounter if they are not calculated properly.
Imputed interest is taxable as income for the lender, but not deductible by the borrower.
Per a discussion with my brother, he disagrees.
Imputed interest is deductible by the borrowed so long as the interest would otherwise be deductible, and this is not uncommon. The IRS has guidelines for determining imputed interest, but most CPA firms with a tax practice should have no problem with the calculation have be experienced performing it.
Any requirements for signed contracts are probably in state law rather than the IRS code. The IRS should be satisfied with any "persausive evidence of the arrangement." While all 50 states may require signed contracts, some foreign jurisdictions may not.