Tax Break

Tax clips from the Web: Kanye’s charity blunders, D.C. lobbyists and identity fraud

A Federal Trade Commission report listed identity theft as the top complaint from consumers in 2011 – for the 12th year in a row. Of those 280,000 complaints, about 24% were tax or wage-related. This is something of a stark wake-up call to the perils of our electronic lives, which can be hacked without our knowledge, right up until we hit the send buttons on our electronic tax returns, says Jonnelle Marte for Smart Money’s tax blog: “For some victims, the fraud isn’t discovered until they hit the send button on their electronic tax returns — and get a rejection note from the IRS. Other times it takes a little longer to know something is wrong, such as not receiving a refund check.”

If you have been unlucky enough to be hacked, correcting the error could take the IRS from 6-12 months, according to Marte.

Home on the range

Here is a quote from the author of the Tax Foundation’s annual rating of the states with the best tax climates -“The lesson is simple,” wrote study author Mark Robyn, “A state that raises sufficient revenue without one of the major taxes, all things being equal, has an advantage over those states that levy every tax in the state tax collector’s arsenal.”

Millionaire Corner notes that at the top of the list this year is again Wyoming, with no corporate or individual income taxes. New York spends another year at the bottom of the list, with New Jersey right behind as the nation’s worst state for taxes.

News flash

Accounting firm Ernst & Young has a lobby arm, Reuters reported on March 9. This came as news to many, perhaps especially to those who view the roles of independent accounting firms as essential to the validity of corporate activities.

Tax clips from the Web: Mitt’s millions, cost basis and more

Mitt Romney taxesTax season looms! Indeed, for many, it already has begun. Here are some of the best stories on taxes that you might have missed elsewhere on the Web.

Mitt’s millions raise a fundamental tax question

Call it the dawn of the debate over carried interest and why it may be taxed differently in the future. The primary question that has emerged from the ruckus over Mitt Romney’s finances, which Kay Bell asks in her tax blog don’tmesswithtaxes, is whether capital gains should be taxed at a lower rate than normal income. There are arguments on either side. One is that  investments help build the U.S. economy, so tax breaks may be justified. On the other side is an argument that Warren Buffett was famous for making in the Op/Ed pages of the New York Times last August in which he asked why capital gains tax breaks should result in a billionaire paying an effectively lower tax rate than his middle-income staff.

Cost basis exploration

Forbes’ blogger Kelly Philips Erb weighs in with “Got Stock? Cost Basis Rules May Impact Taxes,” a good read if you have income from investing in stocks. This year investors need to know about changes to “cost basis” rules from the IRS. The department made changes partly to ensure that investors pay enough tax on gains from their stocks last year. Now stock brokers are required for the first time to provide the cost basis amounts to their clients in time for filing, and send a new form to the IRS. Investors still have responsibility for reporting all transactions that resulted in stock gains, of course, so whether the process will become more complicated remains to be seen.