Thursday, May 31, 2007
Wednesday, May 30, 2007
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"It is clear that transparency and openness are pillars in encouraging our nation's charities to be responsive to the needs of the community," wrote the Senators. A more thorough form "will allow the IRS to better identify those entities that warrant additional review or further questions... and also mean that charities that are doing the right thing will be less subject to audit."
Among the topics the senators asked the Treasury Department to focus on as they revise the form:
- Executive pay and perquisites - including payments from other charities, joint ventures, contracts, and subsidiaries
- Endowments - charities that have endowments should show how much of the endowment is spent on their charitable mission
- Related organizations and joint ventures
- Fund raising - how much of the money they raise is spent on charitable programs rather than fund-raising costs
- Hospitals - more information about their charity care and billing and debt-collection practices
"Fast and loose games in this area undermines the mission of nonprofits and fosters a public cynicism that's detrimental to all charities as they rely on public support for their nonprofit work," wrote the Senators.
House conservatives are ready to stop the Senate immigration bill in its tracks with a procedural weapon should the contentious measure win passage in the upper chamber. The procedural weapon House conservatives may hold is a constitutional rule that revenue-related bills must originate in the House. The current Senate immigration measure requires that illegal immigrants pay back taxes before becoming citizens. This requirement opens the door to a House protest, dubbed a “blue slip”. The "blue slip" comes from the color of its paper.
House Republicans used the same back-taxes mandate for a blue-slip threat that derailed last year’s immigration conference. The new Senate bill still must survive two more weeks of voter scrutiny and contentious amendments, but several conservatives already are lying in wait for the Senate to “make the same mistake twice,” as one House GOP aide put it.
“If we get an opportunity to do it, believe me, we’ll do it,” the aide said. “I think it’s going to be a matter of who will get there first. A number of people in the House are dying to be fingered as the person who killed [the Senate bill].”
During a blogger conference call with Senator John McCain, one of the bill's architects, the conservative blogger, Captain Ed of Captain's Quarters, mentioned a Boston Globe story that reported the removal of a requirement to pay back taxes before entering either the Z-visa or Y-visa program. The White House reportedly requested that section be removed, and the blogger asked the Senator why illegal immigrants would get a pass on paying back taxes when American citizens don't get that privilege.
Senator McCain hadn't heard about the removal of the requirement. “I’d not heard that proposal on the part of the president,” McCain said, according to a transcript of the call. “I would resist that.” In fact, Senator McCain went back and reinstated the provision after the blogger conference call.
Inadvertently, Senator McCain may have provided an "out" for House Republicans to at least delay the bill's consideration. While any Representative can blue-slip a revenue-producing bill from the Senate, it takes a majority to enforce it. Given the heat from both sides of this debate, that may not be difficult to arrange, and it would require the Senate negotiators to start from Square One.
“We would certainly have the right [to a blue slip] and could exercise it,” another House GOP aide said.
Via Captain's Quarters.
Thursday, May 24, 2007
Today, the Committee is repeating history. We again are reviewing whether the Treasury Department should be allowed to contract with private debt collectors for federal taxes.
This is not a new question for the Ways and Means Committee. I would like to read from an 1874 Report of the Committee repealing Treasury’s authority to use private tax collectors and pay them a commission. It states:
The Committee are of opinion that any system of farming the collection of any portion of the revenue of the Government is fundamentally wrong . . . No necessity for such laws exist . . . the Secretary of the Treasury and the head of the Internal Revenue Bureau are empowered by law to make all collections of taxes . . . The Internal Revenue Bureau is possessed of full knowledge of the laws relating to the collection of the revenue . . . [and] has all the machinery necessary for their full and complete enforcement . . . The Committee, in view of the facts . . . believe that the law . . . should be repealed and the contracts made thereunder should be revoked and annulled.
H.R. Rep. No. 559, 43d Cong., 1st Sess. 9 (1874).
These words are true today–130 years later.
The collection of federal income taxes is a core government function. It is the mission and purpose of the Internal Revenue Service.
Today’s private collector program can never work. Taxpayers and the American public deserve better.
The IRS has 45 employees watching 90 contract employees yet no one has the full story on what they are doing. Debt collectors receive up to a 25% bounty on federal income taxes.
The IRS depends on the collectors to “self-report” complaints of taxpayers.
GAO investigators have confirmed that contractors have been exercising discretion over who gets offered to take the customer satisfaction survey.
The program targets low- and middle-income taxpayers rather than those who have the means to protect themselves.
At the end of the day, most Americans don’t even know that the harassing calls they receive are from debt collectors hired by the IRS.
To date, the collectors have made nearly one million calls in attempts to reach 35,000 taxpayers. Those called have been subject to harassment, confusion, and violations of taxpayer protections.
Mr. Chairman, I ask that a partial list of taxpayer complaints be included in the record. Mr. Chairman, I also would like to play five calls between an IRS private collector and one taxpayer. I want my colleagues to hear what our constituents are facing as the private collectors attempt to find the correct person owing taxes. I ask that a transcript of these calls be included in the record and that we play them for the Members to hear.
The “cat and mouse” game you are about to hear has captured over 300,000 members of the public. All but 10,000 of these were innocent parties who did not owe any tax. Social security numbers along with tax information must be protected to prevent identity theft and ensure the integrity of our tax system.
I ask, “Who is in charge here?” What have we done? We must end this.
Wednesday, May 23, 2007
Tuesday, May 22, 2007
Specifically, the problem was that the IRS requires a complete financial disclosure from all taxpayers who owe in excess of $25,000.00. The complete financial disclosure includes giving the IRS extremely personal information and private financial information. The disclosure is required even if you arrange to fully pay the amount owed within five (5) years, which is agreeing to a substantial payment. The disclosure also requires substantiation of all financial information claimed. This includes providing copies of all current financial records, such as bank statements, paycheck stubs, proof of payment for monthly expenses (i.e. medical expenses, child care, etc.). As you can imagine, such a system acts as a barrier for many taxpayers to get a fair resolution. In fact, it frightens many from even attempting to address their IRS tax debt.
Congress, the U.S. Treasury, and the IRS can work together to create a more efficient and effective program. Simply raising the bar to when the IRS requires a complete financial disclosure will go a long ways towards creating that program.
Thursday, May 17, 2007
The Internal Revenue Service (IRS) is backing the U.S. Treasury Department’s efforts to include a proposal in the 2008 budget requiring many Internet businesses to collect personal data from their users. The proposal is part of an effort to close the ever-present gap between what Americans should pay in income taxes and what they actually do. This amounts to an estimated $300 billion per year. However, collecting the targeted data is going to be a difficult task for the site-operators and small business owners. Furthermore, the process will create security issues for millions of users in a time when online identity theft is rampant.
In 2001, the "tax gap" – difference between what the IRS should collect in taxes and what it actually does collect – was over $345 billion. Underreporting on individual income tax returns accounted for $197 billion of the gap. Underreporting on business tax returns accounted for $88 billion. This left the IRS collecting only about 85% of owed taxes. Since taking over the White House, the Bush Administration has seen this gap as an opportunity to increase the federal government’s revenue without raising taxes.
At the behest of the Bush Administration, the IRS has implemented a variety of new enforcement and collections measures to reduce the gap over the last five years. The efforts have paid-off: the IRS increased its enforcement revenues by nearly 44 percent from $33.8 billion in 2001 to $43.1 billion in 2004 to $48.7 billion in 2006. "Clearly, more work needs to be done by the IRS to improve service and enforcement," states IRS Commissioner Mark W. Everson. "But we are clearly making progress, and these numbers underscore that point."
Now, more enforcement and collection measures are on the table. As part of its ongoing campaign to close the tax gap, the Bush administration has allocated over $400 million of next year’s budget for these new measures. A main goal of the proposed measures is to increase the taxes paid by many sole-proprietors and small businesses. Currently, sole proprietors and small businesses report most of their income to the IRS through an "honor" system. The IRS claims some of these small businesses report only half of their total income, leaving millions of dollars in unpaid taxes. One specific target of the proposal is to collect taxes from income generated through online auction sites such as eBay and Ubid.com. Recent studies show over 700,000 Americans making their sole income from auction sites like eBay, and without any formal method to monitor these sales the government is assuming most of this income is being underreported.
Specifically, the new proposal would force auction sites acting as online brokers to file income statements for all customers using their sites to conduct 100 or more transactions or generating more than $5,000.00 per year in income. In order to comply, the sites would need to collect personal data from their users including name, address, and taxpayer identification or social security numbers (SSNs). Essentially, the IRS is forcing the collection of the data under the threat of liability and further legal consequence.
Typically, people generating income form auction sites are small businesses and self-employed individuals who do not have taxpayer identification numbers. Therefore, they will have to provide the sites with their SSNs, which will be stored and maintained by the individual sites in massive data banks of personal information. Although the IRS claims the sites will only need to collect data from high volume users, it is very likely that the sites will have to collect data from all of their users.
Having the proposed amount of personal data exchanged over the Internet could prove to be very problematic. Illegal phishing scams already target sites collecting personal data. Phishing is already problematic for eBay, where scammers create fake re-direct sites that retrieve users' personal data.
With so many issues of identity theft online, many people are going to be reluctant to provide their SSNs to sites like eBay. According to the Center for Democracy and Technology, "forcing businesses to collect SSNs could have a chilling effect on legitimate e-commerce if consumers balk at providing their SSNs for simple transactions -- something most people are not accustomed to doing."
In addition, the government is putting the entire financial burden on the Internet businesses. Collecting and safely maintaining this confidential data could cost millions of dollars. These large costs might not be a problem for huge companies like eBay, but it might be too much to bear for small businesses. More than likely, they will have to take on an additional and sizeable expense to store and secure the data.
Scott Weber, owner of GunrunnerAuctions.com, a site that auctions about 400 guns per month, said the additional paperwork would be a huge burden and additional cost. "I'm pretty much a one-horse operation here," Weber said. "I do everything myself. I would have to hire a whole bunch of people. I would have to hire someone full-time to do this. You'd need to track people all over the country, and you'd have to get their SSNs."
Some sites are already beginning to make changes with anticipation of this new proposal. Just a few days after the IRS’s announcement, Yahoo! Auctions announced they would close their auction sites in the United States and Canada effective June 16, 2007. Though Yahoo! Auctions only account for under 1% of total online auctions and they recently established an alliance with eBay, many are still wondering if Yahoo’s decision had anything to do with the IRS’s recent announcement.
Currently no lawmaker has come out for or against the new proposal. However, it is likely to go unnoticed as part of the President’s 2008 budget plans. As part of a representative democracy, it is the job of the citizen to notify their member of Congress when they disagree with an important issue. If you want your voice heard, you can write your representative through House.gov.
For more information on this topic, please see the following suggested readings:
Tuesday, May 15, 2007
The allowable credit amount for the vehicles is as follows:
Altima Hybrid — Nissan’s only certified hybrid vehicle — $2,350.
Chevrolet Silverado Hybrid 2WD — $250
Chevrolet Silverado Hybrid 4WD — $650
GMC Sierra Hybrid 2WD — $250
GMC Sierra Hybrid 4WD — $650
Saturn Vue Green Line — $650
Saturn Aura Hybrid — $1,300
Source: CBS News
Monday, May 07, 2007
Friday, May 04, 2007
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