Creative Like-Kind Exchanges – From Practical Accountant magazine.

A new hip-hop version of George Harrison’s classic TaxMan song by that out of control crazy tax and spend lunatic, New Jersey Governor Corzine.  

Confirmation of New FEMA Director Hits Snag Over “Questionable” Personal Deductions – Those hypocritical imbeciles in DC are at it again. The very idea of Congress Critters (CC) auditing and passing judgment on income tax returns is just one more example of how the inmates are running the asylum in this country. They seem to care more about a non-CC’s travel expense deductions than the proper handling of congressional bribe money stored in freezers.

The fact that most of our elected rulers don’t have to pay their own travel expenses because lobbyists pony up for those costs is just one more illustration of how out of touch our royal leaders are and how badly we need a thorough house-cleaning, as in kick all of the bums out this November.

Local Doctor Found Guilty of Tax Evasion – This idiot from our area hoped to convince the jury that just because he believed taxes were voluntary, he had no intent to defraud the government and should be found innocent of the 25 criminal charges he was facing.  The jury obviously was smarter than the doctor and didn’t agree with his ludicrous line of reasoning. 
Update – Other Arkansas Coverage:
      Arkansas Democrat Gazette
      Harrison Daily Times

Florida Snowbirds Question Fairness of Property Tax – Taxation without representation is growing in popularity with local government officials.  Just as they love to hit tourists with huge taxes on travel and lodging costs, nailing property owners who can’t vote with higher property taxes than on voters is another underhanded tactic that they have no qualms about using in their insatiable thirst for tax dollars.

From a reader:

Subject: 2006 Tax Law

 

Thanks for a link to the new tax law. The following item was a shock:

New law, IRC §6049(b)(2): Effective for interest paid after December 31, 2005, the payment of tax exempt municipal bond interest of $10 or more must be reported to the recipient and the IRS on a 1099.

Good grief; the noose tightens [retroactive to the January 1, 2006 coupon payments] for items which are not taxable. I wonder which of our masters sneaked in that provision.

My reply:

One of the many insane aspects to how our rulers draft tax laws is the fact that despite constant real world proof that lower tax rates result in higher overall revenues, they persist in using static analysis numbers that assume lower rates will lower revenues. 

There is also a rule that, whenever possible, any new tax law has to be revenue neutral. This send those financial geniuses scrambling all around for any little bit of new revenue they can find to offset the expected costs.  This often ends up with assorted provisions to plug up suspected “tax leaks.”  This new law has a good assortment of those, especially the expansion of the Kiddie Tax to cover children under 18 instead of just 14.

I haven’t read all of the background info on this new tax law; but I tried to think of the potential revenue justification for the new muni interest reporting rule.  If you look at the worksheet for computing taxable Social Security benefits, tax exempt interest income is added in to the calculation of gross income to see if the individuals qualify as evil rich and subject to the tax.  Our rulers’ staff flunkies probably figured being able to match up 1099s for this income will generate a few million dollars in new revenue by catching evil rich senior citizens who fail to pay enough tax on their SS benefits.

Thanks for writing.

Kerry Kerstetter

Follow-up:

Thanks for your swift & incisive reply.

When those “staff flunkies probably figured being able to match up 1099s” they probably over looked the accrued interest paid on purchase that is paid buy the buyer to the seller which is going to put the 1099s out of balance OR is the IRS going to start requiring non-issuer sellers to report accrued interest received & buyers to report accrued interest paid? I buy munis 6 times a year & usually have to pay some accrued interest to the seller, so there are potentially 6 items that  won’t agree with the 1099s sent to the IRS.

Next up for the IRS? They will require all buyers of securities to report their purchases in detail, sort of an anticipatory Schedule D.

 

The folks at The TaxBook have just released a very handy summary of the recently signed tax legislation.  In spite of its actual name, I will continue to refer to it as the 2006 Tax Law. 

This temporary legislation is just another example of the incompetence of our rulers in actually tackling substantive tax reform.  How can we ever expect anything resembling tax simplification from those Bozos in DC, when a law that is passed and signed in 2006, and is effective as of 2006 is given the name 2005? 

Save Money by Researching The Tax Climate Before Moving – And you need to factor in all of the types of taxes.  States with no income tax normally make it up through higher sales and property taxes.

Pensions Still Work Well For Some Businesses – Especially for small businesses with no other employees to cover.

Get a Head Start In Planning a Hand-off – Succession planning for family businesses is always important and one of the many areas that offer plenty of opportunities for tax practitioners to assist their clients.

Religious Groups Seek Faith-Based Profits – They need to be very careful of violating IRS rules that could jeopardize their tax exempt status.

I generally don’t comment on items in the DemonRats’ official propaganda publication, which has less credibility in regard to accuracy than the National Enquirer; but I couldn’t resist this item that Ohio CPA Dana Stahl passed along:

Subject: NYTimes on the new Roth IRS provisions

 

Mr Guru – more of the same BS from the NY(Commie)Times.

DS

My reply:

Dana:

While they are true to their nature in attacking another “Bush bonanza for the evil rich,” it’s based on the ridiculous assumption that the tax free status of Roths will remain intact decades from now.

As I’ve written several times, I have never trusted our imperial rulers in Congress to be able to keep their hands off of that provision long enough to advise clients to pay real taxes today on IRA conversions in anticipation of tax free benefits later down the road.  Congress royally screwed Social Security recipients by breaking this exact same kind of promise, and they will have no qualms about doing the same thing to “evil rich” owners of Roth IRA accounts. 

Since they have already defined “evil rich” to be any single person with more than $25,000 of annual income, or married couple with over $32,000 of annual income, for Social Security purposes, to feel that they won’t nail just about everybody is very naive thinking.

However, the Times couldn’t make their point about Bush only caring about rich folks if they were to mention that these same rich folks are almost certainly going to get screwed over when their tax free income promise is revoked.

Kerry

Dana wrote back:

Mr Guru – amen to that, bro’.  I’ve advised any of my clients who want to convert over to or start a Roth IRA not to trust that the withdrawals will be tax free years down the road, citing Social Security as an example, as you just did, that government promises are, like Lenin once said, “pie crusts made to be broken”.  It seems that most people would be better off to set up a regular IRA and take immediate deduction, so at least they get something out of it.

DS