3Q 2010 Tax Collections up Nationwide

According to tax collection data released yesterday by the U.S. Census, considerable economic gains were made during the third quarter of 2010.

The City Wire.com reports:

Overall state and local tax revenues grew in the third quarter compared to the third quarter of 2009, marking the fourth straight quarter of positive growth. Property tax, general sales tax and individual income tax revenues increased, while corporate income tax revenue declined. The decline in corporate income tax revenue is the third consecutive quarter of decline.

In Arkansas, general sales tax collections at the state level were up 7.8% in the quarter, individual income tax collections were up 3.2%, corporate net income taxes received were up 38.2%, and the severance tax total was up 41.5%.

It’s likely the fourth quarter report will show continued gains for Arkansas. The Arkansas Department of Finance & Administration reported Dec. 2 that year-to-date (July-November) total revenues are $2.198 billion, up 2.4% over the same period in 2009. Year-to-date gross receipts collections — primarily sales and use tax collections — total $891.9 million, up 7.8% above the 2009 period and up 0.9% above forecast.

Oklahoma saw the general sales tax totals up 9.8% in the quarter, individual income tax collections up 3.4%, corporate net income tax up 33.4%, and the severance tax up 26.4%.

During the 2010 third quarter 2010 tax revenues for state and local governments totaled $284.3 billion, up 5.21%, but down compared to the $285.6 billion in the third quarter of 2008.

Continue reading at The City Wire.com...

Dancing Tax Collectors

According to FOX News, tax collectors in the Philippines have released a new viral video to make taxes "a little less taxing." A spokesperson claims that they like to see happy faces on taxpayers, and it looks like their effort has been successful. The department has reportedly doubled their collections as a result of the video. You can find the embedded video below.

Tax Receipts Rebound as 15 Biggest States Foresee Gain

From Bloomberg.com:

The two-year slide in tax collections that opened a $196 billion gap in U.S. state budgets has stopped, easing pressure on credit ratings and giving leeway to lawmakers as they craft spending plans for next year.

The 15 largest states by population forecast a 3.9 percent gain in tax revenue in fiscal 2011, budget documents show. The 50 states on average may increase collections by about 3.5 percent, the first time in two years the figure is expected to grow, said Mark Zandi, chief economist at Moody’s Economy.com,

California took in 3.9 percent more since December than projected in January, Controller John Chiang said this month. New York got $129 million above forecasts in its budget year through February, according to a report from Comptroller Thomas DiNapoli. In New Jersey, the second-wealthiest state per capita, January sales-tax collections were 1.9 percent higher than a year earlier, the first annual increase in 19 months, forecasters said in a report last month.

“This time last year, we were sliding down a mountain,” said David Rosen, chief budget officer for the New Jersey Legislature. “I don’t think we are now; it’s stabilized.”

States collected about $79 billion less in sales, income and corporate taxes in 2009 than in 2008, the U.S. Census Bureau said today in a report, as the economy struggled through its deepest slump since the Great Depression. Emergency spending cuts and tax increases became routine during the recession that began in December 2007.

California Tax Collectors Want Their Cut n Out-Of-State Sales

State tax collectors in California plan to target businesses that made expensive purchases online to avoid California’s high sales tax rates. The LA Times posted an interesting article about the states latest attempt to increase revenue and you can find a segment from their story below.

Under a law passed over the summer, the state Board of Equalization will send 184,000 letters by the end of the year to service businesses such as law firms, child care companies and Lasik eye surgery centers that have more than $100,000 a year in revenue.

The tax board is looking for out-of-state purchases, especially of expensive equipment, fixtures or software that might be subject to the levy, known as a "use tax."

The notices order the companies to register with the tax board and, by April 15, report and pay tax owed for the last three years or prove why they are exempt.

If the tax board doesn't hear back from a business, the agency will automatically register it in February.

"The idea is to give us a means to contact them where we didn't have that before," said Anita Gore, a tax board spokeswoman.

Federal Employees Owe $3 Billion in Taxes

Last week the IRS reported that over 276,300 current and retired federal employees owe approximately $3.04 million in unpaid taxes from 2008. Although high, this number is actually down from $3.59 million in unpaid taxes in 2007.

According to Washington Post.com, the list includes White House and Congressional staffers and current and former active-duty and reserve members of the military.

In a sign that the IRS practices what it preaches, the Treasury Department, which includes the tax-collecting agency, had the best compliance rate of Cabinet-level departments. Less than 1 percent of employees were delinquent with their taxes.

The Department of Housing and Urban Development fared worst among Cabinet departments, with slightly more than 4 percent of workers owing a combined $4.76 million.

Among all government agencies and departments, the U.S. Postal Service had the greatest number of tax delinquents. The government's second-largest employer had 28,913 workers -- or just under 4 percent -- owing roughly $298 million.

Fifty White House staffers owed a combined $812,917 in 2008, the IRS said. Up on Capitol Hill, slightly more than 4 percent of House staffers owed Uncle Sam $5.8 million, compared to 3.2 percent of Senate employees that owed almost $2.5 million.

IRS Suspends Penalty Collections Against Some Small Firms

From the Wall Street Journal.com:

The Internal Revenue Service said it will suspend through Sept. 30 efforts to collect penalties assessed against certain small business owners, after key lawmakers said the penalties were more punitive than Congress intended.

Small business owners who bought employee benefit plans that the IRS has condemned as "listed" tax shelters are facing hundreds and thousands in penalties, in some cases more than 10 times any tax benefit derived from the transaction.

IRS Commissioner Doug Shulman said in a letter Monday to lawmakers that the agency will suspend collection activities in cases where the transaction resulted in an annual tax benefit of less than $100,000 to individuals or less than $200,000 for businesses.

"I am dismayed by the feedback that I have received from some of the most seasoned IRS examination professionals that this statutory provision, in certain cases, requires them to assess penalties that are way out of line with penalties for other similar cases of non-compliance," he wrote.

Last month, lawmakers including House Oversight Subcommittee Chairman John Lewis, D-Ga., and Rep. Charles Boustany, R-La., and Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, told Shulman they aim to pass legislation to make penalties in such cases less stringent.

They asked the IRS to cease efforts to collect the penalties until Congress has passed legislation reducing them for small businesses.

At issue is a penalty for failure to report a listed tax shelter transaction, among transactions the IRS considers most egregious. Set up by a 2004 law, the penalties are assessed at $100,000 per individual per year, and $200,000 per business entity per year. Under the law, the IRS has no discretion to reduce the penalty amounts and they cannot be challenged in court.

Report: Tax Collections Down In Nearly Every State

From BusinessWeek.com:

Tax collections continued to drop in almost every state during the first quarter of 2009, off an average 13 percent from a year earlier as the recession and wary consumers cut into income and sales tax revenue.

The Rockefeller Institute of Government's latest report shows a nearly 16 percent average decline in personal income taxes. That's the steepest drop since 2002.

An institute analyst says tax revenue is expected to decline further in the quarter ending in June, which will include April income tax returns hit hard by financial market declines in 2008.

The report released Wednesday says corporate income taxes fell 16 percent and sales taxes were off almost 8 percent. It was the second quarter in a row with income, sales and corporate tax collections all dropping.