Estate Tax Repeal Advocates Giving It Another Go – Of course there will be same opposition to such a change from the usual suspects, such as Bill Gates, Sr. and Warren Buffett, who along with their Fellow Travelers, still idolize Karl Marx and his philosophy of having the central government confiscate and redistribute wealth. 

I’ve already written several times about how IRS has gone overboard in scrutinizing refund claims by auditing the returns as an over-reaction to their incompetence in actually paying out huge sums for nonexistent slavery tax credits.

Perusing the recent Tax Court cases, I saw that this slavery credit came up in a case that was decided yesterday, Hyler v. Commissioner (T.C. Memo 2005–26).  Kleinrock has a good summary of it in their bulletin.

To summarize, this couple filed a 2000 1040, where they claimed a “Black Investment Credit” of $92,861 by using Form 2439, which is for something completely different, Notice to Shareholder of Undistributed Long-Term Capital Gains.  Any competent tax pro would see that such a claim is ridiculous.  However, when the IRS received the 1040, they actually sent these people a check for $93,071, which included this bogus credit and the excess of their withheld taxes over their actual tax. 

After IRS learned of their own stupidity in paying out these kinds of claims, they had to try to recover them, such as the deficiency notice they sent the Hylers in March 2004.  The Hylers used the standard Willie Nelson defense, that it was all the tax preparer’s fault and the IRS should recover the money from him, even though the Hylers’ 1040 had no paid preparer listed.  

It was no surprise that the Hylers lost this case and will have to repay the bogus credit, plus penalties and interest.  Escaping scot-free with no punishment are the morons at the IRS service center who okayed the payment of the credit back in 2001.  In fact, they’ve probably already been promoted by now. 

Lookout for the sucker-punch tax – Another appropriate name for the insane AMT.

Class-Warfare Death Wish – I wish I could be as optimistic as Larry Kudlow is on this topic, but I still see a very pervasive hatred of success in this country that is exploited by the DemonRats.

Q:

Subject: mileage deductions

Can you tell me if the new rate of 40.5 up from 37.5 a mile can be used in my tax returns filed now feb of 05 for my 2004 income tax. Or do i have to wait till the end of the year to apply the new rate

A:

That is a new, but very wrong, interpretation of the rules for claiming business mileage deductions.  When you file the tax return is irrelevant.  Business miles driven during 2004 can use the 37.5 cents per mile standard rate, or the prorated actual expenses, whichever gives you the best total deduction.

The new rate of 40.5 cents per mile is only available for business miles driven during 2005, which will obviously be calculated on your 2005 1040 some time after the end of 2005.

It sounds as if you could benefit from the services of a tax pro to help make sure you interpret the tax rules properly.

Good luck.

Kerry Kerstetter

Double Crossed By Debt Counselors. Many Consumers Have Found Themselves Defrauded by Companies Offering Debt Help – There are cozy seats in Hell waiting for these scammers.

States Mull Taxing Drivers By Mile – Not exactly a surprise that this idea comes from the appropriately named Left Coast.  Whenever I see stories like this, I can’t help but think of the part of George Harrison’s “Tax Man” where he says:

If you drive a car-car I’ll tax the street

If you take a walk I’ll tax your feet

The full lyrics to this still very timely song, courtesy of SeekLyrics.com

Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman
Yeah, I’m the taxman

Should five percent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman
Yeah, I’m the taxman

(If you drive a car car) I’ll tax the street
(If you try to sit sit) I’ll tax your seat
(If you get too cold cold) I’ll tax the heat
(If you take a walk walk) I’ll tax your feet

Taxman!

‘Cause I’m the taxman
Yeah, I’m the taxman

Don’t ask me what I want it for
(Ah, ah, Mr. Wilson)
If you don’t want to pay some more
(Ah, ah, Mr. Heath)
‘Cause I’m the taxman
Yeah, I’m the taxman

Now my advise for those who die
(Taxman!)
Declare the pennies on your eyes
(Taxman!)

‘Cause I’m the taxman
Yeah, I’m the taxman

And you’re working for no one, but me

 (Taxman!)