by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
Budget cuts to the IRS will be impacting citizens more drastically this year. The Taxpayer Advocate, Nina Olsen, painted a bleak picture for filing season and beyond in her annual report to Congress.
The Good:
— The number of audits will decline.
The Bad:
— Technology upgrades will be delayed, although the Commissioner, John Koskinen, is “reasonably confident — very confident” that upgrades needed to handle Obamacare related information has been successfully completed.
The Ugly:
— If you call, it is likely that only half of the estimated 100 million people will ever reach an IRS agent on the other end.
— Hold times will exceed 30 minutes or more.
— Low-income taxpayers will no longer receive assistance to fill out their tax return paperwork from the IRS.
— Processing a tax return filed by paper will ensure tax refunds will be delayed.
— The option to leave a voicemail to request an appointment face-to-face at a local office has been removed, instead instructing taxpayers to “send an email” (though not everyone has email).
— The IRS is mandated to provide callers with the option to speak to a live person on its helplines, but would not even clarify to the Taxpayer Advocate which lines are designated helplines when calling in.
The IRS budget was reduced by nearly $350 million for this fiscal year. Commissioner Koskinen claims the “agency’s $10.9 billion budget is its lowest since 2008. When adjusted for inflation, the budget hasn’t been this low since 1998.” Employees may even face a two-day furlough. You almost feel bad for the guy. Almost.
Don’t forget, the IRS had requested a $1 billion increase in order to hire another 6,700 agents to assist with Obamacare compliance. That was on top of the already extra $1.5 billion the IRS budget had received in recent, prior years, along with 1,200 new agents.
To be sure, the IRS has kindly provided increased information on its website for taxpayers and tax preparers, including a section dedicated to Obamacare compliance, in an effort to cut down on phone calls. I’m sure that particularly helps all the people without ready access to the internet.
The bottom line seems to be: do not call the IRS anymore unless it is absolutely necessary.
by | ARTICLES, BLOG, GOVERNMENT, OBAMA, OBAMACARE, TAXES
If you are an Obamacare enrollee, you will not be able to file your taxes next year until you receive a new Obamacare form, the 1095A. That means if the government is not on time getting the forms out, taxpayers who need the form could face a delay receiving anticipated refunds.
The proposed deadline to send out the forms is January 31, 2015, which also coincides with the date that employers must issue W-2 to their employees.
Form 1095A is necessary: filers need the forms to calculate whether they received the correct subsidy from the government, or if they owe money to cover a difference”. The IRS has a working draft on the form, but doesn’t yet include the instructions on how to calculate the proper subsidy amount — and that’s the key.
Because of the extensive problems during the Obamacare rollout and initial signup period, some folks may find that the did not receive the proper subsidy. Additionally, changes to income during the year might also affect the outcome. The Form 1095A is designed to match up the income for 2014 with the subsidy amount received. Some might find they will didn’t get enough of a subsidy and will receive money back, while others could have the opposite problem: their subsidy was too high, and they now owe money back.
So Obamacare users — be on the lookout for the 1095A early next year. Even if you have all your documentation to file your taxes, you still may not file until you receive that form. Hopefully the government will not be as late on issuing it as it was with other Obamacare related items.
by | FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
If you are one of the millions of Americans who declined health insurance and decided to pay the fee tax fine penalty, be aware that it will be a part of your 2014 tax calculations. The penalty for 2014 is relatively cheap, a means to transition Obamacare into your life, but next year and subsequent years, the penalty goes up swiftly — pressuring you to get a health insurance plan or else pay a somewhat hefty price.
Here’s how it works:
“Beginning in 2014, absent a qualified exemption, you will be required to obtain health insurance. If you fail to comply, you will be subject to a penalty of 1.0% of your annual income or $95.00, whichever is greater. In 2015, the penalty increases to the greater of 2.0% of annual income or $325 per person. The following year it becomes the greater of 2.5% of income or $695 per person. After 2016, it will be indexed to the cost of living. It should also be noted that the maximum penalty is capped at three times the per person penalty. For example, if you earn $28,500 in 2014, 1.0% of your income would equal $285. Therefore, if you earn more than this, your maximum penalty would remain the same. All penalties will be due and payable with your annual federal income tax return. Hence, the penalty for 2014 would be due by April 15, 2015 and the IRS will be the collection agency used.”
The method of assessing and collection the fee is through the Internal Revenue Service (IRS). The fee will be collected by deducting its cost from a person’s tax refund. But for those who don’t get a refund, the IRS isn’t allowed to demand payment either, so it is unclear how those fees will be attained. This ambiguity also leads to further questions about how Obamacare is being actually being paid for (as the penalty is one of the revenues to help offset the costs).
“For Americans unsure how the mandate applies to them, there’s plenty of information available from the government itself and from many third-party web sites. The law was designed to make it cheaper for most people to buy insurance than pay the penalty fee, which rises from $95 per person or 1% of your income (whichever is greater) in 2014, to $325 per person or 2% of your income in 2015. (In 2015, the maximum penalty is the national average premium for a bronze plan.)”
Don’t forget too: if you are an Obamacare user, you will have to file an extra form with your taxes, the 1095A. The IRS has a working draft on the form, but doesn’t yet include the instructions on how to calculate the proper subsidy amount. This could potentially cause issues for those who wish to file their taxes right away, because they will have to wait until they receive their form in the mail from the government. To learn more, read here.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
Tens of thousands of Lerner emails have been found by the U.S. Treasury Inspector General for Tax Administration (TIGTA). This past Friday, TIGTA announced to congressional staffers that they were located “among hundreds of “disaster recovery tapes” that were used to back up the IRS email system.”, and that it “took them several weeks and some forensic effort to get these emails off these tapes”. TIGTA has estimated it could contain nearly 30,000 emails.
The emails date back to 2009 – 2011, an important time frame for the IRS scandal. This covers specifically the era during which Lois Lerner, as head of the IRS exempt-organizations division, engaged in targeting of conservative and Tea Party organizations which sought tax-exempt status ahead of the 2012 Presidential elections. Lerner claimed her computer crashed in Spring 2011, and the IRS declared those emails “lost”.
Washington Examiner noted that this past June, IRS Commissioner John Koskinen testified before Congress that the disaster recovery tapes — the ones recovered — only hold data for about six months, and “even if the IRS had sought the emails within the six-month period, it would have been a complicated and difficult process to produce them from the tapes.”
On the contrary, TIGTA has examined 744 tapes so far, and they are not finished, but have found an estimated 250 emails on the various tapes. Besides the estimated 30,000 of Lerner’s emails, TIGTA surmised that it is likely more missing emails will be recovered from the slew of other IRS workers who also experienced computer crashes.
The IRS issued a statement as a response to the TIGTA find, stating, “the IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”
This is a ridiculous statement, as it was revealed just a couple of weeks ago from court documents pertaining to an IRS lawsuit over the matter, that the IRS hadn’t even bothered to look for the emails. In the document, the IRS wrote that they have not searched IRS servers because “the servers would not result in the recovery of any information.” The IRS further claimed no search was performed on the back-up tapes, because there was “no reason to believe that the tapes are a potential source of recovering” any lost emails.
Rep. Darrell Issa, who is overseeing the process, spoke about the IRS’s behavior upon hearing of the TIGTA find. “This discovery also underscores the lack of cooperation Congress has received from the IRS. The agency first failed to disclose the loss to Congress and then tried to declare Lerner’s emails gone and lost forever. Once again it appears the IRS hasn’t been straight with Congress and the American people.”
Issa also stated that the “The Oversight Committee will be looking for information about her mindset and who she was communicating with outside the IRS during a critical period of time when the IRS was targeting conservative groups”, once the emails have gone through the proper redacting process by TIGTA to make sure taxpayer information remains protected. It is expected to take several more weeks before the tapes are ready for presentation to Congress.
It appears that the IRS was playing a huge game of chicken and just lost. They were betting that the public and Congress and TIGTA would not expend the time and money to bother combing through the disaster recovery tapes, and that we would just take their word for it that the emails were lost. More obfuscation from the “most transparent Administration ever”.
by | BUSINESS, ECONOMY, FREEDOM, GOVERNMENT, HYPOCRISY, TAXES
Last week, I wrote about the population shift from the northeastern states to other parts of the country due to the high taxation. It seems that the Yankees aren’t the only ones concerned enough with crushing taxes that they are willing to relocated — the French are too.
From the Independent:
“France’s unemployment rate is hovering around 10 per cent. As for high-earners, almost 600 people subject to a wealth tax on assets of more than €800,000 (£630,000) left France in 2012, 20 per cent more than the previous year. Manuel Valls, the Prime Minister, announced in London this week that the top income tax rate of 75 per cent would be abolished next January after a number of business tycoons and celebrities moved out.”
Hélène Charveriat, the delegate-general of the Union of French Citizens Abroad, concurs. Charvariat noted that the “young people feel stuck, and they want interesting jobs. Businessmen say the labour code is complex and they’re taxed even before they start working. Pensioners can also pay less tax abroad.”
Though the repeal of the 75% is a start, the loss of French citizens to other parts of the world is going to hamper economic recovery in France. I wrote about this probability in 2012 when Hollande first proposed his “rich tax” scheme. The Laffer Curve effect has been proven here in France as it did in England last year: namely, that increasing tax rates beyond a certain point will be counterproductive for raising further tax revenue.
As we can see, high taxes drives away citizens who wish not to hand over to the government the money they have saved and earned — just to see it misspent and frittered away.
