Tax Guru – Ker$tetter Letter

Don’t Tax and Don’t Spend

2004 State By State Corporate Tax Survey – As unpatriotic as it seems to some people that corporations would take steps to reduce their taxes, it is a big part of the managers’ fiduciary responsibilities to the shareholders to do whatever is legally possible to maximize their net income. This often means moving different parts of a business to other jurisdictions that are less confiscatory.

Another January, another Congressional pay raise – Unlike most private businesses, where compensation is related to performance, our rulers are rewarded for incompetence. It doesn’t hurt that they control the government funds and don’t have to answer to anyone when awarding themselves annual raises. This doesn’t even count the millions of dollars in annual tax free fringe benefits they are given.

It’s only January 5th and I’ve already seen people panicking about getting their W-2s and 1099s prepared for last year. What’s the big hurry? As I have seen all too often, mistakes are made on these forms when they are rushed without ensuring the accuracy of the figures. The forms aren’t required to be given to the payees until February 2 (January 31 is a Saturday). A little known secret is that there is no actual penalty for payers missing this deadline. The real deadline, with minor potential penalties, is March 1 (Feb 29 is a Sunday), when the 1099 and W-2 forms need to be mailed in to IRS and SSA.

As I’ve said on many occasions, it’s always wiser to take your time and make sure your tax forms are as accurate as possible than to rush something in that may or may not be able to be corrected. With erroneous W-2 and 1099 forms, what happens is that IRS and SSA will end up with two sets (the original and the corrected one) and will expect the combined amounts to be reported on the payees’ 1040s.

One other reminder — payments to corporations are not required to be reported to IRS on 1099s or any forms.

For tax pros who are preparing 1099s and W-2s for clients who don’t have them set up on QuickBooks, I can’t speak highly enough about the stand alone program from CFS Tax Software. This will be something like the 20th year I have used it.

Despite Rebound, States’ Budgets Are Still Reeling

Governor’s Budget Bill Comes Due

Tax puzzle pressure points – As always, every attempt to simplify the tax system just ends up making it even more complicated, ensuring us tax professionals a lifetime of never ending work.

Cash-Strapped States Face New Challenges

Dream Homes Come With Rural Wake-Up Call – Living in the boonies does take some getting used to and is obviously not for everyone. However, after almost eleven years living here in the Ozarks with the closest neighbors about a mile away, we could never go back to the other kind of life like we had in the Bay Area. It’s very nice here, where population density is measured in numbers of acres per human resident instead of dozens or hundreds of people per acre.

Why I’ve always considered those stock picking shows, including the ones on Fox News, to be nothing but a big joke.

Find a steadier tax stream – As I’ve long said, and which has been proven by recent history, basing all government financial projections on an increasing supply of income taxes is foolishness of the worst kind. It is the direct cause of the Sacramento fiscal disaster. They set in place huge new spending programs based on the assumption that income taxes would provide an increasingly steady stream of cash. It is also what happened to the imaginary Clinton budget surpluses. Those were based on the assumption of steady double digit annual increases in the stock market forever and ever. To blame Bush for those predictions not coming true, as the DemonRats have been doing, is just one more example of their utter lack of credibility of any kind.

Bush’s Budget for 2005 Seeks to Rein In Domestic Costs – Tax cuts and reduced spending are the proper formula. However, it is an election year, so all promises need to be taken with a grain of salt.

IRS Employees Targeted in Tax Review

10 Resolutions to Build a Fiscally Fit California

Arnold ought to question everything the state does – The mess in Sacramento requires much more than a trim here and there. It needs major severe surgery.

The out of control spending problems in the PRC do run extremely deep.

Treasury Issues Rules to Increase Transparency and Halt Abusive Tax Avoidance Transactions – Reins Tightened on Lawyers, Accountants, Other Tax Advisers

National Taxpayers Union 2004 Taxpayer Wish List

The Great Supply-Side Experiment of 2003 – It worked with the Reagan tax cuts and it’s working with Bush’s. Anyone who opposes the tax cuts (all the DemonRats) is openly wishing for a recession or depression and should be treated with all of the respect such a stand deserves.