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January 7, 2009
National Taxpayer Advocate Releases Annual Report to Congress
National Taxpayer Advocate Nina E. Olson today released her 2008 Annual Report to Congress, which lists the twenty most serious problems encountered by taxpayers (as required by § 7803(c)(2)(B)(ii)(III)). The report urges Congress to greatly simplify the tax code and recommends measures to reduce the burden on taxpayers: "It is imperative for the IRS to consider the circumstances of taxpayers facing economic hardship before initiating enforcement actions."
- Volume One:
Press coverage:
January 7, 2009 in IRS News | Permalink
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Comments
The NTA report gave an example of the impact of AGI based phase-outs on the effective tax rate. A $500 bonus and the income related phase-outs of the Social Security benefit exclusion, the Hope Credit were selected for the llustration.
Considering the Tax Benefit Rule, a more interesting illustration would have used the income/refund related to a $500 state income tax overpayment rather than a $500 bonus. The income would have been taxed once and both the income and the refund could have been used in the phase-out calculations. Did the effective tax rate on the $500 of real income when fully accounted just exceed 100 percent for a taxpayer in the 15 percent bracket?
And consider this, a number of states include state income tax refunds in the calculation of taxable Social Security benefits while excluding the refunds from direct taxation. The last time I looked, Montana was the only state that excluded state income tax refunds from the calculation of taxable Social Security benefits.
Posted by: WD Kebschull | Jan 10, 2009 6:35:45 PM
