Tax Break

Map of identity theft cases in January 2012

Criminal Investigation Activity January 2012A major IRS and Justice Department crackdown on identity theft shows how widespread and common it has become. Tuesday the tax collector announced that a national sweep had led to 69 indictments, targeting 105 people in 23 states,  including cases where people are alleged to have impersonated the dead, the mentally disabled and citizens of Puerto Rico in order to get their hands on millions in fraudulent tax refunds.

The government asserts that it stopped $1.4 billion in bad refunds last year, up from $262 million in 2010.

You can get a full version of the graphic by clicking on the map here or by going to the IRS site at http://www.irs.gov/pub/irs-utl/ci-idt-casemap.pdf.

The IRS also has information on how to detect when you may have been the victim of identity theft, or could become one. For example, if you have received an email claiming to be from the IRS, it probably isn’t.

Taxes not just certain, they’re right thing to do-survey

Internal Revenue Service office near Times Square in New York.

Most Americans believe strongly that it’s a civic duty to pay their “fair share” in taxes, that cheating on taxes is wrong and that cheaters should be held accountable, said a survey from the U.S. Internal Revenue Service’s Oversight Board released on Monday.

Created by Congress in 1998 to keep an eye on the IRS, the oversight board does its survey annually. This year’s is consistent with past results showing strong support for the tax obligations of citizenship and low tolerance for those who shirk it.

Despite chatter on the political fringes about taxes being a form of theft, 96 percent of those surveyed said they completely or mostly agreed that  ”it is every American’s civic duty to pay their fair share of taxes.”

The alternative minimum tax and one man’s 74 percent tax rate

In his Saturday column in the New York Times, Pulitzer-prize winning reporter James B. Stewart tallied up his tax rate and found it to be a shocking 74 percent of taxable income. Is he possibly the most taxed man in America, he wonders?

Tax rates have been much discussed of late, with Mitt Romney’s tax returns disclosing his 13.9 percent tax rate, and the appearance of Debbie Bosanek, Warren Buffett’s secretary, at the State of the Union address last week to boost President Obama’s push for more tax equity.  Bosanek is reported to pay a 35.8 percent tax rate, while her famous boss says his rate is 17.4 percent of his taxable income.

How could Stewart’s rate be so stratospheric? After some research, he determined that his personal situation is “a near-perfect storm of punitive tax policies.” He lives in one of the highest tax districts in the country (New York City), earns his income (rather than getting it from capital gains or carried interest, a la Romney), doesn’t have a significant mortgage deduction and pays an unincorporated business tax on some of his income, like book royalties.

Tax and accounting this week

Some events in the week ahead:

Tuesday, January 31

1. Senate Finance Committee Chairman Max Baucus to convene a hearing to discuss the 50-plus tax provisions that expire annually or biannually, termed “tax extenders.” The Joint Committee on Taxation has estimated that a one-year extension of all would cost $37 billion over the next decade. Witnesses will be:

    Dr. Rosanne Altshuler, Professor and Chair of the Economics Department, Rutgers University Dr. Jason J. Fichtner, Senior Research Fellow, Mercatus Center, George Mason University Calvin H. Johnson, Andrews & Kurth Centennial Professor of Law, The University of Texas School of Law Caroline L. Harris, Chief Tax Counsel and Director of Tax Policy, U.S Chamber of Commerce

2. The Financial Accounting Standards Board to hold an open meeting with its investors’ technical advisory committee in Norwalk, Connecticut.

3. The Congressional Budget Office to release its annual budget and economic outlook, with director Douglas Elmendorf to testify on it before the House Budget Committee on Feb. 1 and before the Senate Budget Committee on Feb. 2.

Tax clips from the Web: Best states for business tax, slow IRS returns and a very wealthy candidate

Politics!

Republican presidential hopeful Mitt Romney released his 2010 tax returns to the public, shedding some light on what puts him among America’s top income earners. This chart on CNNMoney has been making the rounds all week, showing tax breakdowns for Mitt Romney, Newt Gingrich and President Obama.

Anyone who was expecting Romney’s 2010 tax filing to expose the candidate for unscrupulous manipulations of the tax law was delivered a goose egg. The returns did show a tax rate of 13.9 percent for the multimillionaire, but due to the laws on taxation of investment income, this was exactly the amount that Mr. and Mrs. Romney were required to pay, Forbes’s Tax Girl blog writes.

Is something of a seismic shift happening in American rhetoric over taxes? Politico polled members of Congress this week and found that Democrats largely agree with the sentiment that tax increases are now needed to address an expanding gap between wealth levels in the U.S. This suggests the tax issue may have the potential to remake the campaigns for many Democrats, including the president.

Obama in bind over corporate tax reform-ex-Aide

Former White House Adviser Jared Bernstein

President Barack Obama spent a lot of time during his State of the Union speech last week talking about taxes – from Warren Buffett secretary’s high tax rate to a call to give tax breaks for manufacturers and promote ‘in-sourcing’ of U.S. jobs.

The president also said he’d be putting out more meat on several policy ideas he floated – including a minimum tax on foreign income and a pitch to give tax credits to companies that bring jobs back to the United States.

But whatever happened to a corporate tax overhaul plan Obama’s Treasury Secretary Timothy Geithner called imminent this time last year?

What Mitt missed on his tax forms, and why?

Romney tax return 

Mitt Romney’s presidential campaign acknowledged to Reuters and others that his campaign is revising his federal ethics forms. They will now report more than a half-dozen offshore holdings, including income from a multimillion-dollar Swiss bank account, that was not disclosed last year.

The Romney campaign has described the issue as a minor discrepancy, and noted that all taxes owed on the overseas accounts were paid. But given the political football that overseas assets and tax disclosure have become –with the Internal Revenue Service cracking down on those who have assets abroad — that acknowledgment raises important questions.

First, why did the Romneys choose to hold assets overseas, particularly in places that have been targeted in the IRS’s ongoing crackdown? In addition to Switzerland, the Romneys held assets in the Cayman Islands, the Bermudas and Ireland, all countries that have lower tax rates than the U.S. Things can be perfectly legal, yet look terrible for someone with political ambitions, especially a presidential candidate.

Mitt Romney’s tax returns explained: David Cay Johnston on CNN

 

Reuters Tax Columnist David Cay Johnston appeared on CNN earlier this week to discuss some of the interesting details in Mitt Romney’s tax returns.

For a direct link, click here.

Canary in the tax code: Will Kansas give up tax breaks for lower rates?

Kansas governor Sam Brownback

U.S. tax experts agree Congress won’t see a tax reform plan ahead of the 2012 election, but Kansas lawmakers already have.

The tax reform blueprint, lowering rates but broadening the base of income that’s taxed by eliminating current tax breaks, is playing out in the state capital Topeka. The legislature convened on Monday and will debate Republican Governor Sam Brownback’s new tax overhaul plan.

Brownback’s plan would condense the state’s five tax brackets to just two –  4.9 percent and 3 percent – eliminating three additional rates currently in place, including the current top rates of 6.45 percent and 6.25 percent.

Treasury aims to make FATCA more user-friendly

Proposed regulations to implement a new law to fight offshore tax evasion may not be as burdensome as many have feared.

That’s the word from a U.S. Treasury Department official on soon-to-be released regulations affecting thousands of banks and brokers worldwide subject to the Foreign Account Tax Compliance Act (FATCA), signed into law in 2010.

FATCA has drawn sharp complaints from foreign banks because of its reach and costs of compliance. The Treasury Department is now “keenly aware” of the challenges of compliance, and the proposed regulations will answer many concerns, said Emily McMahon, acting assistant secretary for tax policy.