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Greg Mankiw, The President’s Latest Bad Idea:
Apparently, President Obama’s budget is going to include some kind of penalty for people who have accumulated more than $3 million in retirement accounts. The details are not yet known, but I think we know enough to say that this is a terrible idea.
A sizable body of work in public finance suggests that consumption taxes are preferable to income taxes. Completely replacing our tax system with a better one is, however, hard. Retirement accounts, such as IRAs and 401k plans, are one way our tax code has gradually evolved from an income tax toward a consumption tax. The use of these accounts should be encouraged, not discouraged.
Unlike some of his other bad ideas, this one isn’t going anywhere.
William McBride, President Obama’s New Tax Increases (Tax Policy Blog)
TaxProf, NY Times: Former Baucus Staffers Cash in as Finance Committee Tees Up Tax Reform. Ah, the sacrifices of public service. I bet they aren’t proposing the Instapundit revolving door tax. Related: Max Baucus and Dave Camp, Tax Reform Is Very Much Alive and Doable. (Wall Street Journal).
Paul Neiffer. 3%-6%-12%:
One of our last posts indicated that the IRS had issued a notice indicating they might not assess the late payment penalty for returns that are extended and paid after April 15, 2013 if the return included certain forms that were delayed by the new tax law.
However, when you read the fine print, it appears that you still need to accurately estimate your tax and pay in at least 90% of this extra tax to escape the penalty.
The IRS language is:
For each taxpayer who requests or has requested an extension to file a 2012 income tax return that includes one of the forms listed in Exhibit 1 of this Notice, the IRS will deem the taxpayer to have demonstrated reasonable cause and lack of willful neglect, provided a good faith effort was made to properly estimate the tax liability on the extension application, the estimated amount is paid by the original due date of the return, and any tax owed on the return is fully paid no later than the extended due date of the return.
I suspect that the IRS will not be very strict in making taxpayers demonstrate reasonable cause, but if you have the cash, you should pay up.
William Perez, Filing Protective Claims for 2009 Tax Returns for Same-Sex Married Couples
Kay Bell, 6 ways to prepare and e-file your federal taxes for free
TaxGrrrl, Ask The Taxgirl: Home Offices And Capital Improvements
Roberton Williams, How Much Will 2013’s Payroll Tax Hikes Cut Your Take-Home Pay?
Peter Reilly, Wesley Snipes Almost Out – Kent Hovind Remains In Prison
Russ Fox, Bozo Tax Tip #5: Don’t Seal the Envelope!
One of her clients mailed his tax return to the IRS but forgot to seal the envelope. The return did make it to the IRS, but without page two of Schedule C. The first that the client found out there was a problem was when the IRS sent him a letter noting the omission. The second time he knew that there was a problem was when she found she was a victim of identity theft.
E-filed returns never fall out of the envelope.
Jack Townsend, Good Overview Article on Financial Issues for Americans Living Abroad
Phil Hodgen, Form 1040NR Filing, Tax Payment Deadlines
The criminal masterminds that the IRS can’t stop. Tampa exotic dancer sentenced for tax fraud (tbo.com)
The Critical Question. News Analysis: Why Are Fee Waivers Like Deep-Fried Twinkies? (Lee Sheppard, Tax Analysts; gated).
Stay tuned for my first 2013 filing season tip going up later this morning!
