Friday, March 8, 2013
Following up on Tuesday's post, House Holds Hearing Today on The Tax-Related Provisions in the President’s Health Care Law: Tax Foundation, Obamacare Tax Increases Will Impact Us All:
The Joint Committee on Taxation recently released a 96 page report on the tax provisions associated with Affordable Care Act. The report describes the 21 tax increases included in Obamacare, totaling $1.058 trillion – a steep increase from initial assessment. The summer 2012 estimate is nearly twice the $569 billion estimate produced at the time of the passage of the law in March 2010. ...
2010 Estimate, 2010-2019, $billion
2012 Estimate, 2013-2022, $billion
0.9% payroll tax on wages and self-employment income and 3.8% t tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles) / $250,000 (married)
“Cadillac tax” on high-cost plans *
Employer mandate *
Annual tax on health insurance providers *
Individual mandate *
Annual tax on drug manufacturers/importers *
2.3% excise tax on medical device manufacturers/importers*
Limit FSAs in cafeteria plans *
Raise 7.5% AGI floor on medical expense deduction to 10% *
Deny eligibility of “black liquor” for cellulosic biofuel producer credit
Codify economic substance doctrine
Increase penalty for nonqualified HSA distributions *
Impose limitations on the use of HSAs, FSAs, HRAs, and Archer MSAs to purchase over-the-counter medicines *
Impose fee on insured and self-insured health plans; patient-centered outcomes research trust fund *
Eliminate deduction for expenses allocable to Medicare Part D subsidy
Impose 10% tax on tanning services *
Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers
Modify section 833 treatment of certain health organizations
Other Revenue Effects
Additional requirements for section 501(c)(3) hospitals
Employer W-2 reporting of value of health benefits
Total Gross Tax Increase:
* Provision targets households earning less than $250,000.
** Includes CBO’s $216.0 billion estimate for “Associated Effects of Coverage Provisions on Tax Revenues” and $6.0 billion within CBO’s “Other Revenue Provisions” category that is not otherwise accounted for in the CBO or JCT estimates.
Source: Joint Committee on Taxation Estimates, prepared by Ways and Means Committee Staff
Monday, February 25, 2013
The Treasury Inspector General for Tax Administration has agreed to investigate whether an IRS employee improperly steered more than $500 million in government contracts to Signet Computers, after receiving this letter from House Committee on Oversight and Government Reform Chair Darrell Issa.
“At best, this is a conflict of interest that runs afoul of ... Federal Acquisition Regulation,” Issa writes. “At worst, the IRS may have a situation in which a contracting official is awarding sole source contracts based on false justifications, or receiving kickbacks in exchange for government contracts.” ... The IRS’ contracts with Signet Computers also may have been tailored so that Signet was the only company that could win them in open bidding, Issa writes.
Tuesday, February 19, 2013
The Treasury Inspector General for Tax Administration today released Inadequate Aircard and BlackBerry Assignment and Monitoring Processes Result in Millions of Dollars in Unnecessary Access Fees (2013-10-010):
In Fiscal Year 2011, the IRS had approximately 35,000 active aircards and more than 4,400 BlackBerrys assigned to employees, providing them with mobile Internet and e-mail access. TIGTA found that cost savings can be achieved if the IRS ensures that only those employees with a valid business need are assigned an aircard and/or BlackBerry and provides more effective oversight and monitoring of these devices. Improved policies and procedures can result in savings of $5.9 million over five years. ...
Processes for assigning and monitoring the use of aircards and BlackBerrys are not adequate to ensure that employees have a business need for the devices. Assignment of these devices is generally based on job series classifications without adequately ensuring a business need exists.
In addition, the IRS paid approximately $1.1 million during Fiscal Year 2011 for 13,878 aircards and 754 BlackBerrys that were not used for periods of three months to one year. For example, TIGTA identified 45 aircards and 68 BlackBerrys that were not used at all for the entire 12 months of the fiscal year.
Finally, 2,560 employees may have been assigned an aircard or BlackBerry without required management approval. These devices cost the IRS more than $950,000 in Fiscal Year 2011, or about $4.8 million over five years.
Saturday, February 16, 2013
The Congressional Budget Office yesterday doubled down on its report, Options for Taxing U.S. Multinational Corporations, in response to a January 24, 2013 letter from House Ways & Means Chair Dave Camp charging that the report was "heavily slanted and biased":
This letter responds to concerns you raised about the CBO's report, Options for Taxing U.S. Multinational Corporations, which was released on January 8, 2013. We continue to believe that it presents the key issues fairly and objectively and that its findings are well grounded in economic theory and are consistent with empirical studies in this area. Nevertheless, because of the complexity of the subject and the diverse views of experts in the field, we agree that it would have been desirable to seek comments from more outside reviewers. It is always our goal to seek outside reviewers for CBO studies who represent a broad range of views and perspectives. Following is a discussion of the various issues you raised regarding the report.
- The Hill, CBO Defends Tax Report From GOP Criticism
- Reuters, Lawmaker, Budget Agency Spar Over Taxing Corporate Profits
This dispute is similar to last year's charge by Senate Republicans that the Congressional Research Service had released a biased report on the impact of tax rates on economic growth:
- CRS: An Economic Analysis of the Top Tax Rates Since 1945 (Sept. 17, 2012)
- Dems, GOP Trade Barbs After CRS Pulls Report on Tax Rates and Economic Growth (Nov. 2, 2012)
- Republican Staff Study: CRS Report on Tax Rates Is Flawed (Nov. 14, 2012)
- CRS Re-issues Report: Tax Rates on Rich Have 'Negligible' Effect on Economic Growth (Dec. 14, 2012)
Friday, February 15, 2013
IRS Business Systems Modernization. The IRS made progress in addressing significant weaknesses in information technology and financial management capabilities. IRS delivered the initial phase of its cornerstone tax processing project and began the daily processing and posting of individual taxpayer accounts in January 2012. This enhanced tax administration and improved service by enabling faster refunds for more taxpayers, allowing more timely account updates, and faster issuance of taxpayer notices. In addition, IRS has put in place close to 80% of the practices needed for an effective investment management process, including all of the processes needed for effective project oversight.
But Enforcement of Tax Laws remains a high-risk area:
The IRS recently estimated that the gross tax gap—the difference between taxes owed and taxes paid on time—was $450 billion for tax year 2006. For a portion of the gap, IRS is able to identify the responsible taxpayers. IRS estimated that it would collect $65 billion from these taxpayers through enforcement actions and late payments, leaving a net tax gap of $385 billion. The tax gap has been a persistent problem in spite of a myriad of congressional and IRS efforts to reduce it, as the rate at which taxpayers voluntarily comply with U.S. tax laws has changed little over the past three decades. Given that the tax gap has been persistent and dispersed across different types of taxes and taxpayers, coupled with tax code complexity and a globalizing economy, reducing the tax gap will require applying multiple strategies over a sustained period of time.
IRS enforcement of the tax laws is vital for financing the U.S. government. Through enforcement, IRS collects revenue from noncompliant taxpayers and, perhaps more importantly, promotes voluntary compliance by giving taxpayers confidence that others are paying their fair share. GAO designated the enforcement of tax laws as a high-risk area in 1990.
Friday, February 1, 2013
The Joint Committee on Taxation has released Estimate of Federal Tax Expenditures for Fiscal Years 2012-2017 (JCS-1-13):
Tax expenditure analysis can help both policymakers and the public to understand the actual size of government, the uses to which government resources are put, and the tax and economic policy consequences that follow from the implicit or explicit choices made in fashioning legislation. This report on tax expenditures for fiscal years 2012-2017 is prepared by the staff of the Joint Committee on Taxation. ... As in the case of earlier reports, the estimates of tax expenditures in this report were prepared in consultation with the staff of the Office of Tax Analysis in the Department of the Treasury.
The Joint Committee staff has made its estimates (as shown in Table 1) based on the provisions in Federal tax law as enacted through January 2, 2013. Expired or repealed provisions are not listed unless they have continuing revenue effects that are associated with ongoing taxpayer activity. Proposed extensions or modifications of expiring provisions are not included until they have been enacted into law. The tax expenditure calculations in this report are based on the January 2012 Congressional Budget Office revenue baseline and Joint Committee staff projections of the gross income, deductions, and expenditures of individuals and corporations for calendar years 2011-2017.
Part I of this report contains a discussion of the concept of tax expenditures. Part II is a discussion of the measurement of tax expenditures. Estimates of tax expenditures for fiscal years 2012-2017 are presented in Table 1 in Part III. Table 2 shows the distribution of tax returns by income class, and Table 3 presents distributions of selected individual tax expenditures by income class.
Friday, January 25, 2013
Congressional Budget Office, Refundable Tax Credits:
The number and total costs of the refundable credits in the income tax system have grown considerably since 1975. The number of credits peaked at 11 in 2010 before dropping to 6 in 2013 (see Figure 1). Their total costs (that is, the reduction in revenues and the increase in outlays) reached a high of $238 billion in 2008. (That amount and other annual costs discussed in this report are expressed in 2013 dollars.) Those costs will drop to $149 billion in 2013, the CBO estimates, mostly for the earned income tax credit (EITC) and the child tax credit. By 2018, three more credits will have expired, and the EITC and the child tax credit will have been scaled back.
Those cutbacks in refundable tax credits will be more than offset, however, by new health-related subsidies provided through the tax system. Starting in 2014, a new refundable tax credit will be available to some people for the purchase of health insurance through newly created exchanges. The cost of that credit will be about. $110 billion by 2021, CBO and the staff of the Joint Committee on Taxation (JCT) project, bringing the total cost of refundable tax credits in that year to $213 billion— roughly the same as the costs in 2009 and 2010, even though the number of refundable tax credits will have fallen by more than half between 2010 and 2021.
Friday, January 18, 2013
While there have been efficiency gains and efforts to improve service, the IRS faced challenges providing telephone service and responding to correspondence, continuing trends experienced in recent years. In 2012, 82 percent of individual taxpayers filed their returns electronically (e-filed), reducing IRS's processing costs. IRS also increased calls answered using automated service and added a variety of self service tools, which helped gain efficiencies. However, IRS's level of telephone service (the percentage of callers seeking live assistance who receive it) declined to 68 percent. In addition, of the 21 million pieces of paper correspondence IRS received, about 40 percent were considered overage (meaning that IRS did not respond within 45 days of receipt), an increase compared to last year. While IRS plans to continue to pursue efficiency gains, its strategy for future years does not specifically address how it plans to reverse these negative trends. Reversing the declines in telephone and correspondence services may require IRS to consider difficult tradeoffs, such as reassessing which phone calls IRS should answer with a live assistor and which it should not because automated services are available.
Wednesday, January 16, 2013
The Treasury Inspector General for Tax Administration yesterday released Many Taxpayers Are Still Not Complying With Noncash Charitable Contribution Reporting Requirement (2013-40-009):
TIGTA estimates more than 273,000 taxpayers claimed approximately $3.8 billion in potentially erroneous noncash charitable contributions in Tax Year 2010, which resulted in an estimated $1.1 billion reduction in tax. ... IRS controls are not sufficient to ensure taxpayers are complying with noncash charitable contribution reporting requirements. Statistical samples of Tax Year 2010 tax returns that claimed more than $5,000 in noncash charitable contributions showed that approximately 60 percent of the taxpayers did not comply with the noncash charitable contribution reporting requirements. These taxpayers claimed noncash contributions totaling approximately $201.6 million. Taxpayers who donate motor vehicles must attach a Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, to their tax returns. However, the IRS is still not effectively identifying taxpayers who are not complying with reporting requirements for donations of motor vehicles.
- Accounting Web, TIGTA to IRS: Get Tough on Noncash Charitable Contributions
- Bloomberg, Donors Claim $1.1 Billion Skirting Tax Laws, Audit Says
- Washington Examiner, Bad Santa? Taxpayers Overestimate Charitable Giving, Get Undeserved Tax Refunds
- Washington Post, IRS Failing to Enforce Reporting Requirements for Charitable Contributions
Wednesday, January 9, 2013
Tax Foundation: CRS Study on Tax Rates and Growth Still Flunks the Test, by Stephen J. Entin:
Studies issued by the Congressional Research Service are intended to inform the Congress as it develops public policy and enacts legislation. A recent CRS publication on the effect of the top statutory tax rates on economic activity [Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945] may have influenced the debate over taxing the rich during the election and may have influenced the tax changes just enacted in the fiscal cliff legislation.
It is critical that such studies reflect the best guidance that the economics and tax professions can provide. The CRS study on the top tax rates did not meet that high standard. Its original release in the fall was met with widespread and justified disbelief, and it was withdrawn for review and examination of its methodology. It has now been reissued in an updated form. However, the re-issued CRS study does not contain any changes of note that would redeem the original report.
The paper purports to determine the link (or lack thereof) between changes in the top marginal tax rates on income and capital gains and the growth rate of the economy. Unfortunately, the method used to determine the relationship depends mainly on timing, looking to see if a change in the growth rate of the economy coincides with or follows soon after a rise or fall in the tax rates. The study makes no effort to determine the channels through which the tax changes ought to work to affect the economy, looks at the wrong measure of progress over the wrong time frame, and takes inadequate account of what other tax or economic events are occurring at the same time that might mask the results. ...
The CRS study omits important variables and poisons its results by not holding other factors constant. The variables it does examine are indirectly related to the relationship one should be studying, but the study does not follow them for long enough to get the whole picture. The study is as weak now as it was when it was first issued. Grade: F.
Prior TaxProf Blog posts:
- CRS: An Economic Analysis of the Top Tax Rates Since 1945 (Sept. 17, 2012)
- Dems, GOP Trade Barbs After CRS Pulls Report on Tax Rates and Economic Growth (Nov. 2, 2012)
- Republican Staff Study: CRS Report on Tax Rates Is Flawed (Nov. 14, 2012)
- CRS Re-issues Report: Tax Rates on Rich Have 'Negligible' Effect on Economic Growth (Dec. 14, 2012)
The Government Accountability Office has released Tax Expenditures: Background and Evaluation Criteria and Questions (GAO-13-167SP):
Tax expenditures are reductions in a taxpayer's tax liability that are the result of special exemptions and exclusions from taxation, deductions, credits, deferrals of tax liability, or preferential tax rates. Similar to spending programs, tax expenditures represent a substantial federal commitment to a wide range of mission areas. If the Department of the Treasury (Treasury) estimates are summed, an estimated $1 trillion in revenue was forgone from the 173 tax expenditures reported for fiscal year 2011. Tax expenditures are often aimed at policy goals similar to those of federal spending programs. Existing tax expenditures, for example, are intended to encourage economic development in disadvantaged areas, finance postsecondary education, and stimulate research and development. For some tax expenditures, forgone revenue can be of the same magnitude or larger than related federal spending for some mission areas. The revenue the federal government forgoes from a tax expenditure reduces revenue available to fund other federal activities, requires higher tax rates to raise any given amount of revenue, increases the budget deficit, or reduces any budget surplus.
Given the interest in tax expenditures' effectiveness, Congress asked GAO to develop a framework that could be used to evaluate their performance. In response, this guide describes criteria for assessing tax expenditures and develops questions Congress can ask about a tax expenditure's performance.
Congressional Budget Office, Options for Taxing U.S. Multinational Corporations:
In 2008, 12% of all federal revenues came from corporate income taxes; about half was paid by multinational corporations reporting income from foreign countries. How the federal government taxes U.S. multinational corporations has consequences for the U.S. economy overall as well as for the federal budget.
Tax polices influence businesses’ choices about how and where to invest, particularly the profitability of locating in the United States or abroad. The tax laws also can create opportunities for tax avoidance by allowing multinational corporations to use accounting or other legal strategies to report income and expenses for their U.S. and foreign operations in ways that reduce their overall tax liability. U.S tax revenues decline when firms move investments abroad or when they strategically allocate income and expenses to avoid paying taxes here.
This study examines options for changing the way the United States taxes multinational corporations or addressing particular concerns with the current system of taxation. All of those options would affect multinational corporations’ investment strategies and reporting of income, as well as U.S. revenues from corporate income taxes.
(Hat Tip: Ed Kleinbard.)
Sunday, January 6, 2013
The Government Accountability Office has released IRS Could Significantly Increase Revenues by Better Targeting Enforcement Resources:(GAO-13-151):
The IRS spends most of its enforcement resources on examinations. Correspondence exams of individual tax returns, which target fewer and simpler compliance issues, are significantly less costly on average than the broader and more complex field exams. GAO estimated that the average cost (including overhead) of correspondence exams opened in 2007 and 2008 was $274, compared to an average of $2,278 for field exams. IRS spent almost 20 percent of the $1.6 billion per year that it devoted to exams on returns from taxpayers with positive income of at least $200,000, even though such returns accounted for only 3 percent of the 136 million individual returns filed per year. (Positive income, a measure that IRS uses to classify returns for exam planning purposes, disregards losses that may offset this income).
GAO estimated that, for the 2 years of cases reviewed, correspondence exams were significantly more productive in terms of direct revenue produced per dollar of cost than field exams. Both types of exams of taxpayers with positive incomes of at least $200,000 were significantly more productive than exams of lower-income taxpayers.
GAO demonstrated how these estimates could be used to inform resource allocation decisions. For example, a hypothetical shift of a small share of resources (about $124 million) from exams of tax returns in less productive groups shown in the figure to exams in the more productive groups could have increased direct revenue by $1 billion over the $5.5 billion per year IRS actually collected (as long as the average ratio of direct revenue to cost for each category of returns did not change). These gains would recur annually, relative to the revenue that IRS would collect if it did not change its resource allocation. This particular resource shift would not reduce exam coverage rates significantly and, therefore, should have little, if any, negative effect on voluntary compliance.
Friday, December 7, 2012
Congressional Budget Office, Taxing Businesses Through the Individual Income Tax:
Since the individual income tax was instituted in 1913, the profits of most businesses have been allocated, or “passed through,” to their owners and subjected to that tax—rather than to the corporate income tax. However, most business activity (specifically, the total revenue that businesses receive as receipts from sales of goods and services) has occurred at firms subject to the corporate income tax (C corporations) because those firms tend to be larger than pass-through entities.
Over the past few decades, the proportion of firms organized as pass-through entities and their share of business receipts have increased substantially: In 1980, 83% of firms were organized as pass-through entities, and they accounted for 14% of business receipts; by 2007, those shares had increased to 94% and 38%, respectively.
This report examines those shifts in organizational structure, the effect they have had on federal revenues, and the potential effects on revenues and investment of various alternative approaches to taxing businesses’ profits.
Thursday, August 2, 2012
The Treasury Inspector General for Tax Administration today released There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft (2012-42-080):
Undetected tax refund fraud results in significant unintended Federal outlays and erodes taxpayer confidence in our Nation’s tax system. Our analysis of tax returns using characteristics of identity theft confirmed by the IRS identified approximately 1.5 million undetected tax returns with potentially fraudulent tax refunds totaling in excess of $5.2 billion. TIGTA estimates the IRS could issue $21 billion in potentially fraudulent tax refunds resulting from identity theft over the next five years.
Monday, July 16, 2012
TIGTA reviewed a random sample of 50 of the 747 seizures conducted from July 1, 2010, through June 30, 2011, to determine whether the IRS is complying with legal and internal guidelines when conducting each seizure. In the majority of seizures, the IRS followed all guidelines, and TIGTA did not identify any instances in which the taxpayers were adversely affected. However, in 11 seizures, TIGTA identified 14 instances in which the IRS did not comply with a particular I.R.C. requirement. Specifically, TIGTA found:
When legal and internal guidelines are not followed, it could result in the abuse of taxpayers’ rights.
- The sale of the seized property was not properly advertised. (I.R.C. § 6335(b))
- The amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer. (I.R.C. § 6335(a))
- Proceeds resulting from the seizure were not properly applied to the taxpayer’s account. (I.R.C. § 6342(a))
- Information relating to the sale of the seized property was either incorrect or not provided to the taxpayer. (I.R.C. § 6340(c))
Friday, July 6, 2012
The Government Accountability Office yesterday released Appraised Values on Tax Returns: Burdens on Taxpayers Could Be Reduced and Selected Practices Improved (GAO-12-608):
Misstated appraisals used to support tax returns have long caused concern. In 2006, Congress adopted the Pension Protection Act, which changed the criterion for when appraisals are considered to be substantially misstated and created a penalty for improper appraiser practices and qualifications for appraisers with respect to noncash charitable deductions. The Tax Technical Corrections Act of 2007.
Among its objectives, GAO was asked to (1) describe the extent to which individual, estate, and gift tax returns are likely to involve an appraiser and the extent to which IRS audits them; (2) describe how IRS selects returns likely to involve appraisals for compliance examinations, and assess whether the current appraisal threshold is useful; and (3) assess IRS procedures for ensuring that its appraisal experts are qualified.
Appraisers’ most prominent role relative to the three types of tax returns GAO studied is in the valuation of estates. In the most recent years for which GAO had data, appraisers were likely involved in the valuation of property worth from $75 billion to $167 billion reported on estate tax returns in 2009. In contrast, less than $17 billion worth of gifts in 2009 and less than $10 billion in noncash contributions in 2008 likely involved an appraiser. Gift tax returns that likely used appraisers had higher audit rates than gift returns that were unlikely to have appraisers. The use of appraisers was not associated with higher audit rates for estate tax returns and individual returns with noncash contributions.
The IRS’s procedures for selecting returns to audit do not specifically target noncash contributions or gift or estate tax returns supported by appraisals. Nevertheless, returns with appraisals do get included in the population of audited returns because certain types of returns on which IRS does focus, such as higher-income ones, are also the most likely ones to have noncash charitable contributions that require appraisals.
Wednesday, June 27, 2012
The Government Accountability Office today released Tax Debtors Have Received FHA Mortgage Insurance and First-Time Homebuyer Credits (GAO-12-592):
The Federal Housing Administration insured over $1.44 billion in mortgages for 6,327 borrowers with $77.6 million in federal tax debt who benefited from the 2009 American Recovery and Reinvestment Act. Of these borrowers, 3,815 individuals claimed and received $27.4 million in Recovery Act First-Time Homebuyer Credits.
Saturday, March 17, 2012
GAO: IRS Continues to Put Taxpayer Information at Risk; 89 of 105 Internal Control Weaknesses Remain
The Government Accountability Office yesterday released IRS Needs to Further Enhance Internal Control Over Financial Reporting and Taxpayer Data (GAO-12-393):
IRS implemented numerous controls and procedures intended to protect key financial and tax-processing systems; nevertheless, control weaknesses in these systems continue to jeopardize the confidentiality, integrity, and availability of the financial and sensitive taxpayer information processed by IRS’s systems. Specifically, the agency continues to face challenges in controlling access to its information resources. For example, it had not always (1) implemented controls for identifying and authenticating users, such as requiring users to set new passwords after a prescribed period of time; (2) appropriately restricted access to certain servers; (3) ensured that sensitive data were encrypted when transmitted; (4) audited and monitored systems to ensure that unauthorized activities would be detected; or (5) ensured management validation of access to restricted areas. In addition, unpatched and outdated software exposed IRS to known vulnerabilities, and the agency had not enforced backup procedures for a key system.
An underlying reason for these weaknesses is that IRS has not fully implemented a comprehensive information security program. IRS has established a comprehensive framework for such a program, and has made strides to address control deficiencies—such as establishing working groups to identify and remediate specific at-risk control areas; however, it has not fully implemented all key components of its program. For example, IRS’s security testing and monitoring continued to not detect many of the vulnerabilities GAO identified during this audit. IRS also did not promptly correct known vulnerabilities. For example, the agency indicated that 76 of the 105 previously reported weaknesses open at the end of GAO’s prior year audit had not yet been corrected. In addition, IRS did not always validate that its actions to resolve known weaknesses were effectively implemented. Although IRS had a process in place for verifying whether each weakness had been corrected, this process was not always working as intended. Of the 29 weaknesses IRS indicated were corrected, GAO determined that 13 (about 45 percent) had not yet been fully addressed.
Considered collectively, these deficiencies, both new and unresolved from previous GAO audits, along with a lack of fully effective compensating and mitigating controls, impair IRS's ability to ensure that its financial and taxpayer information is secure from internal threats. This reduces IRS's assurance that its financial statements and other financial information are fairly presented or reliable and that sensitive IRS and taxpayer information is being sufficiently safeguarded from unauthorized disclosure or modification. These deficiencies are the basis of GAO’s determination that IRS had a material weakness in internal control over financial reporting related to information security in fiscal year 2011.
Monday, February 27, 2012
By the end of the coming decade, unless we cut federal spending apart from Social Security and the major health care programs below the unusually low share of GDP it is already projected to reach, stabilizing federal debt relative to GDP will require us to cut spending on Social Security and federal health care programs by about one-quarter, raise taxes by about one-sixth, or do some combination of those approaches. That’s the fundamental choice we face.
Friday, February 24, 2012
This individual will be responsible for leading GAO reviews of tax policy and tax administration, specifically analyzing whether specific provisions of the tax code are achieving their purpose and whether those involved in tax administration are efficiently meeting their responsibilities. To qualify, you must have:
- A broad knowledge of federal tax policy and tax administration, including tax legislation and IRS processes/operations
- The ability to leverage knowledge of tax policy and administration to produce reports and testimonies that assist Congress in its decision-making
- M.S. Taxation and/or Ph.D. in Economics/Public Finance is preferred
Compensation: To $174,000 + bonus eligibility (Senior Executive Service)
Deadline: To be considered, application packages (resume/CV and responses to the PTQs and ECQs) must be received by midnight, March 15, 2012.
Tuesday, January 31, 2012
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2012 to 2022:
[U]nder current law, revenues will rise considerably as a share of GDP—from 16.3% in 2012 to 20.0% in 2014 and 21.0% in 2022. In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30%, mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the AMT, and the imposition of new taxes, fees, and penalties that are scheduled to go into effect. Revenues continue to rise relative to GDP after 2014 largely because increases in taxpayers’ real (inflation-adjusted) income are projected to push more of them into higher tax brackets and because more taxpayers become subject to the AMT.
Tuesday, January 17, 2012
The Government Accountability Office yesterday released Processing Gains, but Taxpayer Assistance Could Be Enhanced by More Self-Service Tools (GAO-12-176):
GAO recommends that IRS develop a new refund timeliness performance measure to better reflect current capabilities, create an automated telephone line for taxpayers seeking information about amended returns unless IRS has a convincing costbenefit analysis suggesting the costs exceed the benefits, assess the costs and benefits of automating a TAC/VITA locator line, and finalize a strategy for determining which self-service tools to provide on its website.
The Joint Committee on Taxation today released Estimates of Federal Tax Expenditures for Fiscal Years 2011-2015 (JCS-1-12):
Tax expenditure analysis can help both policymakers and the public to understand the actual size of government, the uses to which government resources are put, and the tax and economic policy consequences that follow from the implicit or explicit choices made in fashioning legislation. This report on tax expenditures for fiscal years 2011-2015 is prepared by the staff of the Joint Committee on Taxation. ...As in the case of earlier reports, the estimates of tax expenditures in this report were prepared in consultation with the staff of the Office of Tax Analysis in the Department of the Treasury.
The Joint Committee staff has made its estimates (as shown in Table 1) based on the provisions in Federal tax law as enacted through January 10, 2011. Expired or repealed provisions are not listed unless they have continuing revenue effects that are associated with ongoing taxpayer activity. Proposed extensions or modifications of expiring provisions are not included until they have been enacted into law. The tax expenditure calculations in this report are based on the January 2011 Congressional Budget Office revenue baseline and Joint Committee staff projections of the gross income, deductions, and expenditures of individuals and corporations for calendar years 2010-2015.
Part I of this report contains a discussion of the concept of tax expenditures. Part II is a discussion of the measurement of tax expenditures. Estimates of tax expenditures for fiscal years 20112015 are presented in Table 1 in Part III. Table 2 shows the distribution of tax returns by income class, and Table 3 presents distributions of selected individual tax expenditures by income class.
Friday, January 13, 2012
The IRS receives a great deal of personal information about individuals and businesses. While taxpayers are required to provide this information to IRS under penalty of fine or imprisonment, confidentiality of information reported to IRS is widely held to be a critical element of taxpayers’ willingness to provide information to IRS and comply with the tax laws. As a general rule, anything reported to IRS is held in strict confidence—Internal Revenue Code Section 6103 provides that federal tax information is confidential and to be used to administer federal tax laws except as otherwise specifically authorized by law.
Although tax information is confidential, nondisclosure of such information is not absolute. Section 6103 contains some statutory exceptions, including instances where Congress determined that the value of using tax information for nontax purposes outweighs the general policy of confidentiality. Since making amendments to Section 6103 in 1976, Congress has expanded the statutory exceptions under which specified taxpayer information can be disclosed to specific parties for specific purposes. Today, Section 6103 exceptions enable law enforcement agencies to use relevant tax information to investigate and prosecute tax and nontax crimes and allow federal and state agencies to use it to verify eligibility for need-based programs and collect child support, among other uses.
Periodically, new exceptions to the general confidentiality rule are proposed, and some in the tax community have expressed concern that allowing more disclosures would significantly erode privacy and could compromise taxpayer compliance. In evaluating such proposals, it is important that Congress consider both the benefits expected from a disclosure of federal tax information and the expected costs, including reduced taxpayer privacy, risk of inappropriate disclosure, and negative effects on tax compliance and tax-system administration. This guide is intended to facilitate consistent assessment of proposals to grant or modify Section 6103 exceptions. This guide consists of key questions that can help in (1) screening a proposal for basic facts and (2) identifying policy factors to consider.
Wednesday, October 26, 2011
After-tax income for the highest-income households grew more than it did for any other group. (After-tax income is income after federal taxes have been deducted and government transfers—which are payments to people through such programs as Social Security and Unemployment Insurance—have been added.) CBO finds that, between 1979 and 2007, income grew by:
- 275% for the top 1% of households
- 65% for the next 19%
- 40% for the next 60%
- 18% for the bottom 20%
Friday, October 21, 2011
Recently, concerns have arisen about the use of certain financial derivatives to avoid or evade tax obligations. As requested, this report (1) identifies and evaluates how financial derivatives can be used to avoid or evade tax liability or achieve differing tax results in economically similar situations, (2) evaluates IRS actions to address the tax effects of investments in financial derivatives through guidance, and (3) evaluates IRS actions to identify financial derivative products and trends through information from other agencies. GAO reviewed research and IRS documents and interviewed IRS and Treasury officials and other experts. GAO analyzed the completion of financial derivative projects on the agencies’ Priority Guidance Plans (PGP) from 1996 to 2010.GAO recommends that (1) Treasury determine whether alternatives to the current approach to taxing financial derivatives would promote consistent treatment of economically similar positions and be beneficial, that (2) Treasury and IRS provide more public information on the status of PGP projects, including those related to financial derivatives, and that (3) IRS strengthen information-sharing partnerships with relevant agencies.
Wednesday, June 29, 2011
The report expresses particular concern about the impact of IRS budget cuts on taxpayer service and tax compliance and about IRS lien filing practices. ...
Impact of Possible Budget Cuts on Taxpayer Service and Compliance. ... “In recent years, the IRS has been given more and more tasks, but it is not receiving the resources it needs to fulfill these tasks without cutting corners,” the report says. “And when the IRS cuts corners, taxpayers can be harmed and revenue collection may suffer.” The National Taxpayer Advocate has previously suggested that the IRS generally be exempt from budget caps or reductions. She has noted that the “tax gap” (i.e., the amount of tax due but not paid voluntarily and timely) is estimated to be about $345 billion a year. ... On a budget of about $12.1 billion, the IRS collected $2.35 trillion in FY 2010, or about $194 in federal revenue for each dollar it spent. ...
IRS Collection Practices. The National Taxpayer Advocate has expressed concern about IRS collection practices in prior reports and has, in particular, made recommendations to reduce the harm that unproductive liens can inflict on taxpayers. This report praises several recent changes the IRS has announced, including making lien withdrawals available to taxpayers in a wider range of cases. However, the report expresses continuing concern about the IRS’s practice of automatically filing tax liens based on a dollar threshold instead of basing lien-filing decisions on an analysis of the taxpayer’s financial situation. The National Taxpayer Advocate believes that such an analysis “should balance the need to protect the government’s interests in the taxpayer’s assets with a corresponding concern for the financial harm the lien will create for that taxpayer.”
In cases where the IRS has determined a taxpayer is suffering an economic hardship or possesses no significant assets, the filing of a lien is unlikely to further tax collection but will further damage a taxpayer’s credit rating, thus harming the taxpayer, increasing the taxpayer’s cost of living, and reducing the chance the taxpayer will be able to obtain a job and pay off the tax debt. ...
Other Areas of Focus. Additional areas on which the National Taxpayer Advocate intends to focus in the coming year include the following:
- Taxpayer Impact of Possible Government Shutdown
- Tax Reform and Tax Complexity
- Earned Income Tax Credit (EITC) Improvements
- Tax-Related Identity Theft
- Innocent Spouse Relief
Media and blogosphere coverage:
Tuesday, June 21, 2011
During our audit of IRS's fiscal year 2010 financial statements, we identified  internal control issues for which we do not already have recommendations outstanding. ...These issues increase the risk that IRS may not prevent or promptly detect and correct (1) unauthorized or improper refunds, purchases, or promotions; (2) errors in the hours credited or amounts paid to staff; (3) loss or theft of cash receipts or taxpayer information; (4) security and control deficiencies at its SCCs and processing facilities; (5) data errors in its property records; and (6) improper disclosure of taxpayer and other sensitive data.. ... This report provides 29 recommendations to address the internal control issues we identified. These recommendations are intended to bring IRS into conformance with its own policies, the Standards for Internal Control in the Federal Government, or both.
The IRS redesigned and centralized the Employee Tax Compliance (ETC) Program in Calendar Year 1995 to ensure that employees are held to a high standard of compliance with the tax laws. The IRS has developed processes to educate employees on their tax responsibilities and detect employees who may not have timely filed or timely paid their taxes; however, not all potential employee misconduct concerning noncompliance with tax laws is being assessed, and additional analyses are needed to periodically reevaluate the direction of the Program. ...TIGTA independently reviewed IRS computer files over a 2-year period and identified 133 employees who were potentially noncompliant with their taxes and were not detected by the ETC computer application. ... TIGTA determined the IRS significantly reduced the focus of the ETC Program from its original mission and goals partially based on a study it conducted showing that IRS employees were more compliant compared to the general taxpaying public. While TIGTA understands the IRS’s decision to use resources as efficiently as possible, the IRS should document this change and conduct three additional analyses to periodically reevaluate the Program’s direction to ensure proper oversight of employees’ compliance with their tax obligations.
- Forbes, IRS Employees In Tax Trouble
- Fox News, IRS Watchdog: Tax Agency Failed to Detect 133 Employees Behind on Tax Filings
- Going Concern, Some IRS Employees Living by the Motto ‘Do as I Say, Not as I Do’
- Market Watch, Some Tax Cheats Work at the IRS
- Wall Street Journal, IRS Must Beef Up Oversight of Its Own Workers, Report Finds
Thursday, June 16, 2011
In conducting its statutory review, TIGTA reviewed a random sample of 50 of the 578 seizures conducted from July 1, 2009 through June 30, 2010, to determine whether the IRS is complying with all requirements and guidelines when conducting each seizure. In the majority of seizures, the IRS followed all guidelines, and TIGTA did not identify any instances in which the taxpayers were adversely affected. However, ... TIGTA identified 25 instances in which the IRS did not comply with a particular I.R.C. requirement, involving 19 of the 50 seizures reviewed.
Wednesday, June 15, 2011
This document ... provides a description and analysis of the revenue provisions modifying the Internal Revenue Code of 1986 that are included in the President's fiscal year 2012 budget proposal, as submitted to the Congress on February 14, 2011. The document generally follows the order of the proposals as included in the Department of the Treasury’s explanation of the President’s budget proposals. For each provision, there is a description of present law and the proposal (including effective date), an analysis of policy issues related to the proposal, and a reference to relevant prior budget proposals or recent legislative action.
Thursday, June 9, 2011
The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides individuals with a Qualified Motor Vehicle (QMV) deduction, which is an additional deduction for State sales tax and excise tax on the purchase of certain motor vehicles. The amount of the QMV deduction reduces an individual’s taxable income and taxes owed. The QMV deduction is phased out for individuals with a modified AGI between $125,000 and $135,000 for single individuals and between $250,000 and $260,000 for married individuals filing a joint tax return. Individuals with modified adjusted gross income equal to or above the phase-out amounts are not eligible for the QMV deduction. Figure 1 shows the number of individuals claiming the QMV deduction by schedule type and the amounts allowed through November 12, 2010.
Figure 1: QMV Deductions for Tax Year 2009
Total QMV Deductions
The IRS cannot verify whether individuals claiming a QMV deduction are entitled to the deduction at the time their tax returns are processed. The reason is that individuals do not have to provide any third-party documentation to support that they actually purchased a qualified motor vehicle and, if a qualified vehicle was purchased, the amount paid in sales and excise taxes. Based on our review of a statistically valid sample of 150 individuals allowed a QMV deduction of less than the amount the IRS considers excessive, it appears that some individuals may have erroneously been allowed QMV deductions for vehicles that were not purchased.
In addition, the process to identify potentially erroneous QMV deductions is not effective. The IRS failed to identify 4,257 individuals claiming what the IRS defines as an excessive QMV deduction during tax return processing so it could hold and prevent the possible issuance of erroneous tax refunds. These individuals claimed a total of more than $151.1 million in QMV deductions. TIGTA also identified 473 cases for which information that the IRS maintains identifies the individuals as ineligible to claim about $1.02 million in QMV deductions they were allowed. These individuals were in prison, deceased, or underage.
Tuesday, June 7, 2011
- Energy Tax Policy: Issues in the 112th Congress (R41769)
- International Corporate Tax Rate Comparisons and Policy Implications (R41743)
- Reducing the Budget Deficit: Tax Policy Options (R41641)
- Should the United States Levy a Value-Added Tax for Deficit Reduction? (R41602)
Friday, June 3, 2011
My testimony today will cover (1) when IRS detects identity theft-based refund and employment fraud, (2) the steps IRS has taken to resolve, detect, and prevent innocent taxpayers’ identity theft-related problems, (3) constraints that hinder IRS’s ability to address these issues, and (4) the potential for more rigorous screening to prevent refund or employment fraud now and in the future. ...
The number of tax-related identity theft incidents (primarily refund or employment fraud attempts) identified by IRS has grown:
- 51,702 incidents in 2008
- 169,087 incidents in 2009
- 248,357 incidents in 2010.
- Fox News, IRS Chief Apologizes for Employees' Rudeness
- The Hill, GAO: Taxpayer Identity Theft on the Rise
- Network World, Does the IRS Need More Options to Fight Identity Theft?
- New York Times, From the IRS, a Rare Return: an Apology
- Wall Street Journal, IRS Chief Warns Lawmakers on Identity Theft
- Wall Street Journal, IRS Experienced 'Significant Increase' In Identity Theft Issues
Thursday, June 2, 2011
The hearing will inquire about the potential benefits to companies and workers of lowering marginal tax rates on business income, and the trade-offs that such companies might be willing to make given current fiscal constraints. The hearing also will examine major elements of business and corporate taxation in anticipation of future efforts to evaluate policy options that might encourage job creation in the United States.
Here is the list of witnesses with links to their testimony:
- Ashby T. Corum (Partner, KPMG)
- Walter J. Galvin (Vice Chairman, Emerson Electric Co.)
- Judy L. Brown (Executive Vice President & CFO, Perrigo Company)
- James H. Zrust (Vice President, Tax, The Boeing Company)
- James Misplon (Vice President, Tax, Sears Holdings Management Corp.)
- Mark Stutman (National Managing Partner of Tax Services, Grant Thornton)
In coinnection with the hearing, the Joint Committee on Taxation released Present Law and Background Relating to Selected Business Income Tax Provisions (JCX-34-11):
This document ... describes present Federal income tax rules applicable to businesses with respect to capital expenditures, capital cost recovery, other types of cost recovery, tax accounting methods, general business credits, the corporate alternative minimum tax, and differences between tax accounting and financial accounting for selected items of expense of businesses.
- Bloomberg, Boeing, Emerson Executives Press Congress to Lower Tax Rates
- Wall Street Journal, Companies Willing To Give Up Tax Breaks For Lower Top Rate
It gives me great pleasure to submit this Semiannual Report to Congress summarizing the accomplishments of the TIGTA for the reporting period of October 1, 2010 through March 31, 2011. This report highlights the most notable audits, investigations, and inspections and evaluations performed by TIGTA as we have continued to work diligently to provide oversight of the IRS and protect the integrity of the Federal system of tax administration.
During this reporting period, TIGTA’s combined audit and investigative efforts has recovered, protected, and identified monetary benefits totaling $2.08 billion. Our Office of Audit has completed 33 audits and the Office of Investigations has closed 1,823 investigations over the past six months. In this time of continuing economic challenge, all Americans are being asked to do more with less. American citizens and their Government must work smarter, harder, and better, with fewer resources and greater purpose. Against this backdrop, TIGTA must redouble its efforts to promote economy, efficiency, and integrity in the administration of the Internal Revenue laws. We have never felt the need for greater commitment to our oversight of the IRS, nor has it ever been more important to improve compliance and reduce the Tax Gap – the $345 billion difference between what taxpayers owe and what they pay timely. Underreporting of taxes constitutes over 70% of the Tax Gap.
Friday, May 27, 2011
Tuesday, May 24, 2011
At least 3,700 Recovery Act contract and grant recipients—including prime recipients, subrecipients, and vendors—are estimated to owe more than $750 million in known unpaid federal taxes as of September 30, 2009, and received over $24 billion in Recovery Act funds. This represented nearly 5% of the approximately 80,000 contractors and grant recipients in the data from www.Recovery.gov as of July 2010 that GAO reviewed.
- Accounting Today
- Associated Press
- The Hill
- USA Today
- Wall Street Journal
- Washington Post
Friday, May 13, 2011
Each year, the CBO issues baseline projections of federal spending and revenues for the following 10 years. Those projections are not intended as a forecast of future outcomes; rather, they are estimates of spending and revenues under the laws that are in effect at that time and are designed to provide a benchmark against which to measure future policy changes.
In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections.
The table below summarizes the differences between CBO’s baseline projections in January 2001 and the actual or currently projected results for each of the years over the 2002-2011 period.
Thursday, May 5, 2011
Section 6103(p)(3)(C) provides that the Secretary of the Treasury shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation for disclosure to the public a report which provides, with respect to each Federal agency and certain other entities, the number of: (1) requests for disclosure of returns and return information (as such terms are defined in § 6103(b)); (2) instances in which returns and return information were disclosed pursuant to such requests or otherwise; and (3) taxpayers whose returns, or return information with respect to whom, were disclosed pursuant to such requests.In addition, the report must describe the general purposes for which such requests were made.
Pursuant to § 6103(p)(3)(C), the IRS prepared a disclosure report for public inspection covering calendar year 2010. This document sets forth the report of the IRS.
The report reveals that the IRS made 7.1 billion disclosures of tax return information to federal and state agencies. Here are the Top 5 recipients of taxpayer information:
- States: 4.2 billion disclosures
- Congressional Committees: 1.5 billion disclosures
- Bureau of Census: 1.3 billion disclosures
- Medicare Premium Subsidy Adjustment: 39.0 million disclosures
- Child Support Enforcement Agencies: 13.6 million disclosures
Tuesday, April 19, 2011
Federal agencies reported an estimated $125.4 billion in improper payments for fiscal year 2010. The $125.4 billion estimate of improper payments federal agencies reported in fiscal year 2010 was attributable to over 70 programs spread among 20 agencies. Federal agencies’ fiscal year 2010 estimated improper payment amount is an increase of $16.2 billion from federal agencies’ prior year reported estimate of $109.2 billion.
The report named the Earned Income Tax Credit as the federal government program with the fourth highest amount of overpayments in FY 2010 (after Medicare, Medicare, and Unemployment Insurance) -- $16.9 billion, a 37.6% increase over FY 2009. The report lists as the primary causes of the improper EITC payments: "High turnover of eligible claimants, confusion among eligible claimants, complexity of the law, structure of the program, unscrupulous return preparers, and fraud."
Monday, April 11, 2011
State issued passports to about 16 million individuals during fiscal year 2008; of these, over 224,000 individuals (over 1%) owed over $5.8 billion in unpaid federal taxes as of September 30, 2008. State is not authorized to restrict the issuance of passports to individuals because they owe federal taxes. In addition, federal law does not permit IRS to disclose taxpayer information, including unpaid federal taxes, to State officials unless the taxpayer consents. In contrast, federal law permits certain restrictions on the issuance of passports to individuals, such as individuals owing child support debts over $2,500. For 2008, the estimated amount of unpaid federal taxes is likely understated because it excludes individuals who have not filed tax returns or underreported income. In addition, according to State officials, State cannot compel a passport applicant to provide a Social Security Number (SSN). As a result, State’s records sometimes did not contain a valid SSN, which is necessary to match passport data to IRS data. Also, the number of passport holders and dollars owed only includes 1 year of passports that were issued, substantially understating the total tax debt for all passport holders.
Friday, April 1, 2011
- 2011 Tax Filing: IRS Dealt with Challenges to Date but Needs Additional Authority to Verify Compliance (GAO-11-481)
- Tax Preparer Regulation: IRS Needs a Documented Framework to Achieve Goal of Improving Taxpayer Compliance (GAO-11-336)
Thursday, March 24, 2011
The CBO this week released a report that said taxing people based on how many miles they drive is a possible option for raising new revenues and that these taxes could be used to offset the costs of highway maintenance at a time when federal funds are short.
The report discussed the proposal in great detail, including the development of technology that would allow total vehicle miles traveled (VMT) to be tracked, reported and taxed, as well as the pros and cons of mandating the installation of this technology in all vehicles.
Wednesday, March 16, 2011
Although IRS made progress in correcting previously reported information security weaknesses, control weaknesses over key financial and tax processing systems continue to jeopardize the confidentiality, integrity, and availability of financial and sensitive taxpayer information. Specifically, IRS did not consistently implement controls that were intended to prevent, limit, and detect unauthorized access to its financial systems and information. For example, the agency did not sufficiently (1) restrict users’ access to databases to only the access needed to perform their jobs; (2) secure the system it uses to support and manage its computer access request, approval, and review processes; (3) update database software residing on servers that support its general ledger system; and (4) enable certain auditing features on databases supporting several key systems. In addition, 65 of 88—about 74%—of previously reported weaknesses remain unresolved or unmitigated.
Friday, March 11, 2011
The CBO regularly issues a compendium of budget options to help inform federal lawmakers about the implications of possible policy choices. This volume—one of several reports that CBO produces regularly for the House and Senate Committees on the Budget—presents more than 100 options for altering federal spending and revenues. Nearly all of the options would reduce federal budget deficits. The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees.
Individual Income Tax Rates
Option 1 Increase Individual Income Tax Rates
Option 2 Raise Tax Rates on Capital Gains
Individual Income Tax Base
Option 3 Use an Alternative Measure of Inflation to Index Some Parameters of the Tax Code
Option 4 Gradually Eliminate the Mortgage Interest Deduction
Option 5 Limit or Eliminate the Deduction for State and Local Taxes
Option 6 Curtail the Deduction for Charitable Giving
Option 7 Limit the Tax Benefit of Itemized Deductions to 15 Percent
Option 8 Include Employer-Paid Premiums for Income Replacement Insurance in Employees' Taxable Income
Option 9 Include Investment Income from Life Insurance and Annuities in Taxable Income
Option 10 Tax Carried Interest as Ordinary Income
Option 11 Tax Social Security and Railroad Retirement Benefits in the Same Way That Distributions from Defined-Benefit Pensions Are Taxed
Option 12 Reduce Limits on Contributions to Retirement Plans
Option 13 Replace the Tax Exclusion for Interest Income on State and Local Bonds with a Direct Subsidy for the Issuer
Individual Income Tax Credits
Option 14 Modify or Eliminate the Child Tax Credit
Option 15 Eliminate Certain Tax Preferences for Education Expenses
Social Security Payroll Tax
Option 16 Increase the Maximum Taxable Earnings for the Social Security Payroll Tax
Option 17 Expand Social Security Coverage to Include Newly Hired State and
Local Government Employees
Corporate Income Tax Rates
Option 18 Increase Corporate Income Tax Rates by 1 Percentage Point
Option 19 Set the Corporate Income Tax Rate at 35 Percent for All Corporations
Taxation of Income from Businesses and Other Entities
Option 20 Repeal the "LIFO" and "Lower of Cost or Market" Inventory Accounting Methods
Option 21 End the Expensing of Exploration and Development Costs for Extractive Industries
Option 22 Extend the Period for Depreciating the Cost of Certain Investments
Option 23 Repeal the Deduction for Domestic Production Activities
Taxation of Income from Worldwide Business Activity
Option 24 Eliminate the Source-Rules Exception for Exports
Option 25 Tax the Worldwide Income of U.S. Corporations As It Is Earned
Option 26 Exempt Active Foreign Dividends from U.S. Taxation and Change the Tax Treatment of Overhead Expenses
Consumption Taxes and Excise Taxes
Option 27 Impose a 5 Percent Value-Added Tax
Option 28 Increase Excise Taxes on Motor Fuels by 25 Cents
Option 29 Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon
Health Care Provisions
Option 30 Accelerate and Modify the Excise Tax on High-Cost Health Care Coverage
Option 31 Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1 Percentage Point
Option 32 Repeal the Individual Health Insurance Mandate
Other Taxes and Fees
Option 33 Impose a Fee on Large Financial Institutions
Option 34 Reinstate the Superfund Taxes
Option 35 Impose a Price on Emissions of Greenhouse Gases
Options That Would Increase the Deficit
Option A-1 Permanently Extend the Individual Income Tax Provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
Option A-2 Provide Relief from the Individual Alternative Minimum Tax
Option A-3 Modify Estate and Gift Taxes.
Monday, March 7, 2011
- Electronic Tax Return Filing: Improvements Can Be Made Before Mandate Becomes Fully Implemented (GAO-11-344) (Mar. 7, 2011)
- Illicit Tobacco: Various Schemes Are Used to Evade Taxes and Fees (GAO-11-313) (Mar. 7, 2011)
Thursday, February 10, 2011
The Treasury Inspector General for Tax Administration yesterday released Reduction Targets and Strategies Have Not Been Established to Reduce the Billions of Dollars in Improper Earned Income Tax Credit Payments Each Year (2011-40-023):
The GAO has listed the Earned Income Tax Credit (EITC) Program as having the second highest dollar amount of improper payments of all Federal programs. The IRS has made little improvement in reducing EITC improper payments since 2002 when it was first required to report estimates of these payments to Congress. The IRS continues to report that 23% - 28% of EITC payments are issued improperly each year. In Fiscal Year 2009, this equated to $11 billion to $13 billion in EITC improper payments.
- Accounting Today, IRS Can’t Stop Paying Billions in Bogus EITC Claims
- Associated Press, IRS Not Stopping Billions Improper Tax Credits
Thursday, February 3, 2011
Approximately $33 million in credits for plug-in electric and alternative-fueled vehicles credits were erroneously claimed by at least 12,920 taxpayers through July 24, 2010. ... That means about 20% of the $163.9 million in credits claimed by taxpayers from January 1, 2010 to July 24, 2010 for plug-in electric and alternative motor vehicle credits were claimed in error. In the course of its review, TIGTA also found that 1,719 of the 12,920 individuals also erroneously reduced the amount of Alternative Minimum Tax they owed by almost $5.3 million.
According to TIGTA’s review, approximately 29 prisoners also received $49,926 in vehicle credits even though they were in prison all of Calendar Year 2009. The erroneous claims TIGTA identified resulted from inadequate IRS processes to ensure information reported by individuals claiming the credits met qualifying requirements for vehicle year, placed in-service date, and make and model. TIGTA’s review of electronically filed tax returns identified individuals who erroneously claimed the same vehicle for multiple plug-in electric and alternative motor vehicle credits or claimed an excessive number of vehicles for personal use credits. TIGTA also determined that the IRS cannot track and account for plug-in electric and alternative motor vehicle credits claimed by individuals on paper-filed tax returns because it has not established processes to capture this information from those returns.