Many Push for Repeal of Tax Provision in Health Law

According to the New York Times, both liberal and conservative members of Congress are speaking out against a new tax provision related to the President’s health care reform package. The law in question would require businesses to file a 1099 tax form identifying anyone to whom they pay $600 or more for goods or merchandise in a year.

Businesses will also have to send copies of the form to their vendors, suppliers and contractors.

Businesses denounce the requirement, and even the national taxpayer advocate at the Internal Revenue Service, Nina E. Olson, said the reporting burden might “turn out to be disproportionate as compared with any resulting improvement in tax compliance.”

The White House is nervous about a repeal, fearing that it could set a precedent for rolling back other unpopular features of the law. Moreover, the reporting requirement is expected to lead to a significant amount of revenue — $17 billion over 10 years — to help pay for the expansion of coverage and other health initiatives. It is unclear whether Democrats and Republicans can reach agreements on repealing the provision and on finding a way to offset the loss of money.

Under the law, businesses will be required to report purchases of items like office equipment, food and bottled water, gasoline, lumber and plumbing supplies if payments to any vendor in the course of a year total at least $600. They will, in many cases, also have to report payments for things like travel and telephone and Internet service.

The annual reports must include the vendor’s address and taxpayer identification number.

Continue reading at NYTimes.com…

America Goes Dark

In a new opinion piece for the New York Times, author Paul Krugman explains some of the drastic measures being taken to save money. Cities like Colorado Springs have gained nation media attention in their attempt to reduce expenses by turning off a third of their streetlights. I have included a snippet of Krugman’s piece below, but you can find the full text at NYTimes.com.

Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.

We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases.

And the federal government, which can sell inflation-protected long-term bonds at an interest rate of only 1.04 percent, isn’t cash-strapped at all. It could and should be offering aid to local governments, to protect the future of our infrastructure and our children.

But Washington is providing only a trickle of help, and even that grudgingly. We must place priority on reducing the deficit, say Republicans and “centrist” Democrats. And then, virtually in the next breath, they declare that we must preserve tax cuts for the very affluent, at a budget cost of $700 billion over the next decade.

Continue reading at NYTimes.com…

Interesting Opinion on Charitable Contributions

The New York Times posted an interesting new opinion on charitable contributions by Ray D. Maddiff. Below is a snippet of the opinion, but you can check out the full text at: Dog Eat Your Taxes?

“The latest news from the Palace, that Leona Helmsley left instructions that her charitable bequest of as much as $8 billion be used for the care and welfare of dogs, rubs our noses in the tax deduction for charitable gifts and its common vehicle, the perpetual private foundation. Together these provide a mechanism by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality.

The charitable deduction enables people to donate as much of their assets as they like for charitable purposes without paying a tax. While some choose to contribute to broad public goals, the law does not require it. In recent years, charitable status has been recognized for organizations with purposes as idiosyncratic as promoting excellence in quilting and educating the public about Huey military aircraft. Indeed, Mrs. Helmsley might have limited her beneficence to the Maltese breed of dogs she favored, and that, too, would have been allowed as a “charitable” purpose.

If this were only a matter of Leona Helmsley wasting her own money, no one would need to care. But she is wasting ours too.

The charitable deduction constitutes a subsidy from the federal government. The government, in effect, makes itself a partner in every charitable bequest. In Mrs. Helmsley’s case, given that her fortune warranted an estate tax rate of 45 percent, her $8 billion donation for dogs is really a gift of $4.4 billion from her and $3.6 billion from you and me."

Restaurateurs in NYC Plead Guilty to Tax Evasion

According to the New York Times, two members of the Cipriani family, who own high quality restaurants in New York and Venice, pleaded guilty to tax evasion yesterday. The two agreed to pay $10 million in restitution and penalties to the resolve a tax fraud case they were facing. The two the men both face a potential prison sentence of at least one year. Sentencing is scheduled for October.