Tax Break

Tax clips from the Web: Oklahoma mulls cutting income tax, how to spend your refund and more

February 6, 2012

Miss Oklahoma, Betty Thompson (R), first runner up in the Miss America contest

Oklahoma wants to abolish its state income tax. The plan, according to Governor Mary Fallin, is to achieve one of the lowest income tax rates in the country by eliminating some tax credits and closing loopholes in the tax code. Other taxes would not be increased, according to The Oklahoman.

“Our goal is to transform Oklahoma into the best place to do business, the best place to live, find a quality job, raise a family and retire in all of the United States. Not just better than average, but the very best,” state Representative Leslie Osborn said. (Cue Rodgers and Hammerstein music)

Across the United States, the average state sales tax rate has dropped, according to William Barrett at Forbes.

Some of us may even get refunds this April. How would you spend it?

“Last year I spent part of my tax return on tickets to two conferences, thinking that they’d be good for my “professional development,” writes Sarah Gilbert for GetRichSlowly.org. Gilbert urges us to think carefully about our priorities before paying a bill or going out and spending a chunk on new hurricane lamps for the non-working fireplace and pillar soy candles for inside. Get the candles, but not before taking care of priorities like credit card debt, mortgage payments, utility bills and savings accounts — put at least a third of the refund there, she says.

Someone always has to tell us that, don’t they?

IRS crack downs (re: Swiss Banks)

The IRS has been on a hunt for tax evader havens for the last few years, but now they are starting to kick up dust. The Federal Crimes Tax Blog said on Feb. 1 that the United States set a deadline for several Swiss banks to turn in a host of data that may hold American account information. “The Swiss apparently turned over data purportedly in response to the demand, but the Swiss encrypted the data so that the U.S. is unable to use the data without the encryption key.  The Swiss posture that the encryption key will not be disclosed until the IRS gives something on the unmitigated demands (probably some assurance that Swiss banks and all except the worst individual enablers won’t be indicted).”

A Reuters story on Feb. 3 highlighted the first bank actually to be indicted by the United States for helping Americans to hide taxable assets. How many more are down the road?

Finally, it seems as if frequent flier miles have turned the corner and become actual income. Well, maybe. Taxes In The Back writes that Citi is sending  its customers 1099-MISC forms for rewards miles that they received as part of a “ThankYou Rewards” banking program. The last word the IRS has had on the matter, however, was that it was not considering frequent flyer miles a tax issue.

Citi sure is making a lot of fuss over nothing then, right? Or will the IRS change its policy? We need more answers.

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