Income Tax News

On this version of Hot off the Wire:

» The IRS says it is ending its decades-old policy of making unannounced home and business visits — in a an effort to keep its workers safe and combat scammers who pose as IRS agents. Effective immediately, the change follows a number of other actions the agency has taken to improve worker safety.

» Food manufacturers who deliberately add sesame to their products and include it on their labels are not violating a new federal allergy law. That’s according to the U.S. Food and Drug Administration. More companies are adding sesame flour to foods that didn’t have it before because they say its easier to do that than try to keep the allergen away from other foods and equipment.

» After a three-year exile driven by the pandemic, San Francisco’s downtown has waited for the crowds, the commuters and electric ambience to return. Instead, it has become a prime example of what downtowns shouldn’t look like: vacant, crime-ridden and in decay.

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» Japan’s population has declined in all of its 47 prefectures for the first time in a record drop, while its population of foreign residents reached a new high of almost 3 million people, highlighting the increasing role that non-Japanese people play in the shrinking and aging country.

» A system of ocean currents that transports heat northward across the North Atlantic could collapse this century, according to a new study. The Atlantic meridional overturning circulation has been weakening over the last several decades, scientists found. Scientists earlier have said a complete collapse could lead to more extreme weather in Europe and rising sea levels in the United States.

» A United Nations report says the Asia-Pacific region needs to drastically increase its investments in disaster warning systems and other tools to counter rising risks from climate change.

» Thousands of crime victims each year are confronted with the difficult financial reality of state compensation programs that are billed as safety nets to offset costs like funerals, medical care, relocation and other needs. Many programs require victims to pay for those expenses first and exhaust all means of payment before they reimburse costs, often at rates that don’t fully cover expenses.

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Jim Swift from The Bulwark discusses the mechanics of how a modern conspiracy theory goes viral.

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Originally Appeared Here

The Internal Revenue Service is trying to fully staff its in-person Taxpayer Assistance Centers around the country and set up temporary ones in remote areas where taxpayers can meet face-to-face with IRS employees, but first it has to make them easier to locate, according to a new report.

The report, released Thursday by the Treasury Inspector General for Tax Administration, looked at whether taxpayers could easily find accurate information about the centers’ hours of operation, office addresses and local phone numbers. In many cases, they couldn’t.

“Difficulties exist for taxpayers seeking information on the IRS’s website about TACs as the information is not prominently displayed and the search feature likely will not result in a taxpayer being directed to the TAC information they are seeking,” said the report. “Information the IRS provides to taxpayers on its website, the IRS2Go mobile App and the recorded information on local TAC telephone lines is inconsistent and inaccurate as it relates to key contact information, as well as the specific services offered at a particular TAC.”

An IRS office in New York

Timothy Fadek/Bloomberg

The report found that taxpayers who are looking for face-to-face help can have a hard time finding the office addresses, hours of operation and services provided, whether they’re looking for the information on IRS.gov, the IRS2Go mobile App, or calling the local phone number for a TAC. 

The IRS actually has a Contact Your Local IRS Office web page that’s supposed to offer that kind of information on the TACs. But a link to this web page wasn’t prominently displayed on the IRS.gov homepage at the time of the report, making it harder for taxpayers to locate the information. In addition, the search feature on IRS.gov didn’t give relevant links when searching for “taxpayer assistance center.” The TAC information was also challenging to locate using the IRS2Go mobile App.

What’s more, the face-to-face Saturday hours offered by the IRS at some of the offices during tax season couldn’t be found easily on the IRS’s website. TIGTA’s evaluation discovered that the details in the recorded messages on the local phone numbers weren’t always consistent, up to date or correct, and didn’t provide an option to hear the message in Spanish. 

Taxpayers aren’t always notified in time when the offices are closed, and information regarding whether the TACs furnish walk-in services is inconsistent and vague. TIGTA sent an email to the IRS in late January spelling out its initial concerns, so IRS officials were able to take action to improve taxpayer service this past filing season. 

TIGTA made 10 recommendations in the report, suggesting that the IRS:

• Update its website and IRS2Go mobile App to prominently show a link to the TAC information;
• Enhance the search engine;
• Make sure info on the Saturday office hours can be easily located and searched;
• Make sure its local phone numbers actually operate and that recorded messages offer basic, correct and consistent information;
• Update its website to include specific information on the centers in Spanish;
• Offer a Spanish-language option on the recorded messages;
• Evaluate whether walk-ins can be accommodated at the facilities and if not, that info should be clearly communicated to taxpayers.

The IRS agreed with eight of the 10 recommendations in the report. For the other two suggestions, IRS officials contended that updating the local TAC recorded messages to provide taxpayers with current information isn’t feasible and that its current processes and procedures prevent appointments from being scheduled outside each center’s hours of operation. 

The IRS has already taken steps to address many of the recommendations in the report.

“Our goal is to be easily accessible for taxpayers seeking assistance,” wrote Kenneth Corbin, commissioner of the IRS’s Wage and Investment Division, in response to the report. “To achieve this, we have updated the IRS.gov webpage design and IRS2Go mobile application, making them more flexible and functional while adhering to the objectives of the 21st Century Integrated Experience Digital Act.”

He pointed out that in February, the IRS’s Office of Online Analysis conducted a keyword analysis of the 2022 search data for “Contact Your Local IRS Office” page and reviewed home page visitor behavior on IRS.gov. On a seasonal basis, the office updates the top nine links on the home page based on visitor behavior and search metrics. The IRS has also improved the search results for TACs by adding another list of keywords and phrases to the “Best bets” at the top of the search results, increased promotion of the TACs by adding the Taxpayer Assistance Center Locator to the tools and applications carousel on the site, and added a link to the secondary navigation menu. The IRS has also updated the content on the page to make the Saturday face-to-face hours more prominent.

The agency recently announced ambitious plans for expanding in-person assistance. This year, the IRS began offering community assistance visits, setting up temporary TAC locations to give taxpayers from underserved areas face-to-face meetings with IRS agents.

Originally Appeared Here

Let’s say you agree with the Wyoming Freedom Caucus on many issues. Let’s say you prefer small government, few regulations and healthy support for religious views in the public sphere.

Even then, you should be worried about the Freedom Caucus’ lack of practical solutions for Wyoming problems. The rest of us, including more traditional conservatives, plus moderates and progressives, should be motivated to keep the caucus from obtaining the relatively few seats it needs to take control of the House.

It sets the stage for a legislative election in 2024 that will pit politicians who want to solve local problems against ideologues who just want power. Voters should elect leaders who will actually govern, not mire the political process in arguments about state government being too big or secessionist crusades to ditch the feds.

The Freedom Caucus has gained power each year by asserting it has both the moral high ground and conservative economic policies for nearly every issue lawmakers face, including taxes, gun rights, education and health care. If there’s a wedge issue that can divide the electorate in its favor, the caucus hammers on it.  

But hold on! Leaders need to do more than repeat a tired anti-tax mantra, while sticking to the futile idea that fossil fuels will make a comeback to provide enough tax revenue to pay for essential services and future needs. That includes a constitutionally mandated quality education for all students.

When ideological differences are so pronounced, as they now are in the Legislature, the ability for compromise and solutions that benefit most residents are greatly diminished.

The Wyoming Republican Party, controlled by a far-right slate of officials, has long made no tax increases or new taxes its top legislative priority. The philosophy has become its fundamental principle, which guarantees any GOP candidate who dares suggest a state personal or corporate income tax will have a primary opponent before even finishing the sentence.

A personal state income tax proposed by Democrats in 2021 would have raised an estimated $337 million a year, enough to wipe out the entire $300 million education shortfall. Low- and middle-income taxpayers would not be impacted, because it would be limited to individuals making more than $200,000 a year.

Now, that’s a practical, should-be populist solution to a massive problem the Legislature has sidestepped. When a state is historically conditioned to believe higher taxes are inherently bad, though, the far right wins every time.

Logic tells us there’s no chance to pass an income tax in a state that has refused to even raise the state’s 2 cents-per-gallon beer tax since Prohibition ended 90 years ago. But if an income tax is shown to be the most effective way to not gut the state government and save Wyoming from financial ruin, ideology should take a back seat to practicality.

One of the most damaging examples of being guided solely by ideology is the state’s decision to reject Medicaid expansion for the past decade. The benefits include providing health insurance to about 19,000 low-income residents over two years, reducing hospitals’ $100 million yearly charity care, adding $1.5 billion to its economic output and nearly 2,000 new jobs.

Even after some of the most conservative opponents changed their minds and now support Medicaid expansion, the Freedom Caucus claims — without evidence — that we can’t trust the feds to honor their commitment to pick up 90% of the tab. 

The caucus’ universal defense of “gun rights” ignores common-sense solutions, and demonstrates how Second Amendment absolutists leave many people vulnerable to shooting injuries or losing their lives, either at others’ hands or their own.

Pro-gun stances are so prevalent in the Legislature, even a non-Freedom Caucus member like Senate President Ogden Driskill (R-Devils Tower) claims many people won’t rest until gun ownership is completely eliminated.

“The path they take is toward disarming our population. That’s what it really does long term,” Driskill told the Wyoming Tribune Eagle. “I don’t care if it’s registering guns, putting gun locks on — they will not quit.”

At Gov. Mark Gordon’s second Mental Health Summit in Casper, Driskill bemoaned that the Legislature created a Suicide Prevention Trust Fund but refused to put any money in it. The bill would have allocated $46 million to permanently operate two 24/7, “988” suicide call centers in Wyoming.

Wyoming has the nation’s highest suicide rate per capita. Driskill asked anyone who has a solution to contact him, especially to improve access to mental health services. That’s commendable.

But Driskill balked at any solution that includes gun control. He admitted the number of suicides might drop if there are fewer guns, but insisted people who want to kill themselves will use other methods, like car wrecks.

“Because the root of suicide isn’t the gun, that’s the tool they use,” he maintained.

It’s not the gun? Come on. That’s an argument advanced by many legislators, but it ignores that Wyoming leads the nation in the number of suicide deaths by gun. Centers for Disease Control and Prevention data shows 86% of all gun deaths are suicides in Wyoming, while 10% are homicides.

Gun control advocates recommend several policies the Equality State should enact, including ones with strong support even among NRA members, like implementing universal background checks for all firearm purchases. Others include allowing law enforcement to issue extreme risk protection orders, and family members to petition a court to temporarily prevent someone in crisis from accessing guns.

Dr. Emmy Betz, co-founder of the Colorado Firearm Safety Coalition, recently told PBS News Hour that nine out of 10 people who survive a suicide attempt don’t go on to kill themselves later. Because firearms are so lethal, though, “nine in 10 don’t survive that particular method.”

PBS also interviewed a gun shop worker who outlined the danger of firearms in a suicidal situation. “You have got a person under big-time stress, you have got a gun in the same room at the same time,” he said. “That is a recipe for disaster.”

Domestic violence is another huge problem where courts have ruled that Second Amendment rights are not absolute, though they are treated as such in Wyoming.

The Violence Policy Center issues an annual report, “When Men Murder Women.” Last year it ranked Wyoming with the third highest domestic homicide rate in the country. None were killed by strangers; all were wives, common-law wives, ex-wives or girlfriends of the killers. Six of the seven women were shot and killed with guns.

The report noted Wyoming has some of the weakest gun laws in the country, and one of the highest rates of gun ownership. No state permit is required to buy or transfer ownership of a rifle, shotgun or handgun. The state has no laws regulating assault weapons or large capacity magazines.

Domestic violence is five times more likely to escalate to murder when the abuser has access to a firearm. Wyoming law doesn’t authorize, much less require, law enforcement to remove firearms or ammunition at the scene of a domestic violence incident. It should.

Lisa Geller, policy analyst for Johns Hopkins Center for Gun Violence Solutions, poignantly described what’s at stake.

“We fail victims and survivors of domestic violence the moment we choose to protect abusers — and their firearms — over the people being abused,” she wrote. “Ensuring that domestic abusers are prohibited from purchasing firearms and ensuring that firearms are actually removed from abusers is critical to saving lives.” 

To solve its problems, Wyoming needs more lawmakers willing to put ideology aside and work toward practical solutions that protect our citizens.

Originally Appeared Here

You don’t need the same olfactory skills as a hunting dog to know that something is rotten in the state of Delaware. The recent testimony from two IRS whistleblowers in the Oversight and Accountability Committee has exposed how the Department of Justice provided cover for the Biden family and obstructed the investigative efforts of both the IRS and FBI. When I travel across the 5th District, I speak with hardworking patriots who are downright infuriated with the two-tiered system of justice that has manifested itself under the Biden administration. I share their anger, and I’m working as hard as I can alongside my colleagues to expose the truth.

As a quick recap, the two IRS whistleblowers, Special Agent Joe Ziegler and Supervisory Special Agent Gary Shapley, were the ones who investigated Hunter Biden’s tax evasion on his $8.3 million in income. Special Agents Ziegler and Shapley testified that prosecutors assigned to Hunter Biden’s tax evasion case made the decision to slow walk the investigation by instituting “unnecessary approvals and roadblocks” that prevented timely requests for interviews, search warrants, and document requests. What’s more, on the day that investigators were set to interview Hunter Biden, the FBI notified both the Secret Service and the Biden transition team in advance. Investigators were then denied access to Hunter Biden’s residence and were sidelined from doing so until Hunter Biden contacted them directly. Does this sound normal to you?

The decision to run the clock out on this investigation by means of obstruction, on the part of prosecutors, raises many red flags and calls into question what political motives were at really at play. What evidence relating to Hunter Biden and the Biden family did the Department of Justice not want these two IRS whistleblowers to discover? Why was there a sharp deviation in operating procedure during this investigation – as noted by both Special Agents? In my line of questioning during the Oversight and Accountability Committee’s recent hearing, I laid out the case as to why there’s further evidence that must be brought to light, and why obstructionist tactics by the Department of Justice should be exposed to the fullest extent. The truth should be laid bare for everyone to see – and our investigative efforts will not cease until this is done.

The Schools Not Shelters Act

Recently, the House passed H.R. 3941, the Schools Not Shelters Act, legislation that sends a strong message to sanctuary states and cities that educational facilities should be used for educating students, not housing illegal aliens. Specifically, this legislation prohibits the use of the facilities of a public elementary school, a public secondary school, or an institution of higher education to provide shelter or housing for aliens who have not been admitted into the United States. It also reaffirms that academic success and safety of students should be our top priority. Here’s the bottom line: educational facilities should be used solely for educating – not housing illegal aliens and offering cover for the Biden administration’s glaring failures at our nation’s southern border.

To learn more about the Schools Not Shelters Act, click here.

My Latest Interview

On Wednesday, I joined Maria Bartiromo on Fox Business to discuss President Biden’s second attempt to pin a $1 trillion student loan tab on hardworking taxpayers. The Supreme Court’s ruling on student loans was a welcome victory that saved taxpayers over $300 billion. However, the Biden administration is working on an “end around” to the ruling that would still transfer billions more in student loan debt to taxpayers. Simply put, President Biden’s radical free college agenda is illegal, inflationary, and irresponsible.

To watch my full interview, click here.

Originally Appeared Here

The IRS is drastically cutting back on its decades-long practice of surprising taxpayers at their homes or businesses because of concerns about the safety of employees and confusion caused by scam artists who also knock on doors, IRS Commissioner Danny Werfel said Monday.

“Starting today, if someone’s ringing your doorbell, it’s extremely unlikely to be an IRS collection employee unless you made an appointment for a home visit,” Werfel said Monday during a call with reporters.

The duties of the IRS’s 2,300 unarmed revenue officers included making unannounced visits to taxpayers to resolve outstanding account balances by collecting unpaid taxes and unfiled tax returns. Going forward, the IRS will advise taxpayers through a mailed letter that they are delinquent and advise them on how to set up an appointment with a revenue officer, Werfel said.

And if the taxpayer does not respond? The IRS has a series of steps to take, all remote, but then “you start to get into a situation where a levy or a lien becomes applicable,” he said. Those can also be handled remotely, Werfel said.

Revenue officers will still make some unannounced home visits — for example, to serve a subpoena or a summons or to seize assets — but the number of those visits should drop from tens of thousands annually to a few hundred, he said. Werfel also clarified that the change does not apply to IRS criminal investigation agents.

Unannounced home visits typically involve taxpayers who are in deep debt to the government, with $110,000 being the median amount that a revenue officer is trying to recover. Collecting that money is still a priority, Werfel said.

“We are just as intent on making sure these owed debts are collected,” he said. “But in 2023 and moving forward, we believe there’s a better way to do it when you account for all the other issues that are at play in the United States today.”

The IRS received $80 billion from the Inflation Reduction Act, P.L. 117-169, a figure that was cut as part of the debt ceiling deal. Congressional Republicans who want to claw back more money from the IRS also have publicly questioned home visits.

In response to a question about congressional concerns about home visits, Werfel said the visits were on the IRS’s radar before he became commissioner earlier this year and have been an ongoing concern of IRS staff and the National Treasury Employees Union (NTEU), which represents federal employees in 34 agencies, including the IRS. But he acknowledged that the end of the visits could assuage some elected officials.

“I have heard concerns from employees, from the NTEU, and . . . questions from the public, and sometimes those questions from the public have been communicated to us through the U.S. Congress,” he said. “I do think that as a result of this policy, the issues raised by unannounced visits, including ones raised to us by the U.S. Congress, will be significantly mitigated in the future.”

The NTEU endorsed the change.

“The safety of IRS employees is of paramount importance and this decision will help protect those whose jobs have only grown more dangerous in recent years because of false, inflammatory rhetoric about the agency and its workforce,” NTEU President Tony Reardon said in a statement. “We applaud Commissioner Werfel’s quick action after hearing the safety concerns raised by NTEU leaders and IRS Field Collection employees who faced dangerous situations that put their safety at risk.” 

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.

Originally Appeared Here

ANI |
Updated: Jul 23, 2023 11:17 IST

Islamabad [Pakistan], July 23 (ANI): Pakistan International Airlines (PIA), the country’s main airline, has reached a point where it needs money from the national fund to operate for even one day. The government is thinking of bringing in specialists to draw a time-bound restructuring plan through shadow management in light of the total accumulated losses, which have exceeded PKR 600 billion, according to The News International. 
“The financial position of the PIA is so bleak that it could not pay USD 50 million navigation charges to Saudi Arabia, so they at one point had barred the national flag carrier to continue its operation after June 30, 2023,” The News International quoted a top official in background discussions, and added that the PIA would be closed down on the day when the government stopped injecting money into the loss-making entity. 
The official wondered how long a PIA that is operating at a loss would continue to operate and added that first and foremost, leaks needed to be sealed, a reorganisation plan needed to be created with deadlines, and the major functions needed to be gradually privatised.
“Now PIA has come up with a plan to include Boeing-777 in its fleet by securing a plane on a lease after which the number of planes will come at 11. However, the overall financial position of the PIA is so bleak that it is left with no other option but to make a time-bound restructuring plan and then divide the PIA into three to four companies,” The News International reported quoting top official sources on Saturday.
The International Monetary Fund (IMF) had claimed that the agriculture and construction sectors were undertaxed and could be fully brought into the tax net if the need arose to raise more money, but Ishaq Dar, the federal minister for finance and revenue, reiterated that there was no plan to do so.
The minister Saturday tweeted that there would be no more taxes on agriculture and construction sectors. 
The management of PIA met with Ishaq Dar, the minister of finance, in Islamabad to discuss the future plan for reviving the national airline. The News International claimed that it was also brought up in the official meeting that the PIA could not be privatised under the scope of the most recent statute passed by parliament in 2016 because it had been transformed from a statutory organisation to corporatization. 

There might be no need for additional revenue measures at present but if the need arises on the occasion of first or second reviews under the existing USD 3 billion Standby Arrangement (SBA) programme for nine months period, then undertaxed sectors like agriculture and construction would be considered as major revenue spinners in the future, The News International reported.
The World Bank has already done an analysis of different sectors of the economy, so agriculture and construction would be fully brought into the tax net in the future at the time of any additional revenue measures related to requirements to bridge the gap between revenues and expenditures.
Ironically, tax collection in Punjab and Sindh of the agriculture sector, which contributes over 22 per cent to the GDP growth, stood at a meagre amount of just PKR 4 billion per annum, The News International reported.
In the letter of Intent (LoI) dully signed by Ishaq Dar and SBP Governor Jamil Ahmed, which was tabled before the IMF’s Executive Board on the occasion of granting approval of USD 3 billion under the SBA programme, it is written that the FY24 budget, “Parliamentary approval of an FY24 budget in line with IMF staff agreement to meet programme targets (prior action for programme approval). 
Khaqan Najeeb, former Ministry of Finance adviser, said it is not possible to raise additional revenue without targeting the undertaxed sectors, including agriculture and real estate. 
Agriculture remains a main employer of the economy with more than 35 percent of the workforce and 22.7 percent of GDP. Estimated collection for FY23 across the country from agriculture income tax is less than PKR 4 billion with Punjab contributing PKR 2.85 billion and Sindh PKR 0.44 billion, The News International reported. 
Provincial governments can significantly increase their tax-to-GDP through direct taxes like the agricultural income tax and urban immovable property tax. 
He felt that a substantial raise in the flat tax rates in agriculture is required given the income per acre has increased over the years, with irrigated lands to be charged at a much higher rate. On the property, serious research is required to levy a capital gains tax on the marginal rate, and some kind of land tax along with correction in property valuations. 
The domestic revenue mobilisation of Pakistan is currently heavily skewed towards the industrial sector — something we have to seriously reform, the economist said. (ANI) 

Originally Appeared Here

WASHINGTON (AP) — An IRS plan to test drive a new electronic free-file tax return system next year has got supporters and critics of the idea mobilizing to sway the public and Congress over whether the government should set up a permanent program to help people file their taxes without needing to pay somebody else to figure out what they owe.

On one side, civil society groups this week launched a coalition to promote the move toward a government-run free-file program. On the other, tax preparation firms like Intuit — the parent company of TurboTax — and H&R Block have been pouring millions into trying to stop the idea cold.

The advocacy groups are exponentially out-monied.

An April AP analysis found that overall, Intuit, H&R Block, and other private companies and advocacy groups for large tax preparation businesses, as well as proponents in favor of electronic free file, have reported spending $39.3 million since 2006 to lobby on “free-file” and other matters. Federal law doesn’t require domestic lobbyists to itemize expenses by specific issue, so the sums are not limited to free-file.

Intuit spent at least $25.6 million since 2006 on lobbying, H&R Block about $9.6 million and the conservative Americans for Tax Reform roughly $3 million.

In contrast, the NAACP has spent $140,000 lobbying on “free-file” since 2006 and Public Citizen has spent $110,000 in the same time frame.

“What we have on our side is public opinion,” said Igor Volsky, executive director of the liberal Groundwork Action advocacy group.

Volsky’s organization and leaders from Public Citizen, the Center for the Study of Social Policy, Code for America, the Economic Security Project and others launched the “Coalition for Free and Fair Filing” on Wednesday. The group’s mission is to “ensure all U.S. taxpayers can easily file tax returns and get the tax credits they deserve by safeguarding and expanding” the new IRS program.

“The overwhelming majority of people demand a free-file option,” Volsky said. “Now the question for us is how do you channel that into effective political pressure.”

The IRS in May released a report that said most taxpayers are interested in filing their taxes directly to the IRS for free, and concurrently announced plans to launch the pilot program for the 2024 filing season. The goal is to test a direct file system that will help the IRS decide whether to move forward with a more permanent program.

That idea has faced the immediate threat of budget cuts from congressional Republicans.

Republicans on the House Appropriations Committee in June proposed a budget rider that would prohibit funds to be used for the IRS to create a government-run tax preparation software, unless approved by a group of House and Senate committees.

The move “safeguards the IRS from an obvious conflict of interest where the tax collector becomes the tax preparer,” the bill’s summary states.

A Government Accountability Report in April 2022 found that 70% of taxpayers were eligible to use an existing free-file program but just 3% actually used the service. That program consists of a public-private partnership of tax software companies that offers free services to certain taxpayers outside of the IRS website.

Additionally, anyone can prepare and mail in their taxes for free, but the tax code is so complex that almost 50% of Americans use a tax prep company. IRS officials have estimated individual taxpayers pay an average of $140 preparing their tax returns each year.

Derrick Plummer, a spokesman for Intuit, stressed the free options that already were available.

“An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer said, adding that it “will unnecessarily cost taxpayers billions of dollars.”

H&R Block said in a statement the direct e-file pilot “continues to be a solution in search of a problem.”

Citing the free-filing options for Americans under a certain income threshold through the existing Free File Alliance, H&R Block said, “this pilot is unnecessary and faces significant barriers to providing comprehensive tax preparation services.”

H&R Block came under fire after congressional Democrats last week released a report stating that it was one of three large tax preparation firms that sent “extraordinarily sensitive” information on tens of millions of taxpayers to Facebook parent company Meta and Google over the course of at least two years.

Susan Harley, Congress Watch managing director at Public Citizen, said “we’re outgunned as far as money being spent, but we have the moral higher ground” in supporting the free-file program over third-party tax preparers.

Nations like Germany, Japan, the U.K. and other Organization for Economic Cooperation and Development countries already offer their taxpayers some form of pre-populated tax document.

Some countries also use “tax agency reconciliation,” where taxpayers who opt to participate provide the government with basic employment status information and the tax administrator sends them a return with their calculated tax liability.

Research conducted last year by a group of Treasury, Federal Reserve and other academics shows that the IRS could pre-populate 42 to 48% of all tax returns.

The IRS has already seen cuts to its funding since the passage of the Inflation Reduction Act that President Joe Biden signed last August gave the agency $80 billion to modernize and hire more workers and move toward the free-file program.

House Republicans built a $1.4 billion reduction to the IRS into the debt ceiling and budget cuts package passed by Congress this summer. The White House said the debt deal also has a separate agreement to take $20 billion from the IRS over the next two years and divert that money to other non-defense programs.

Originally Appeared Here

The Internal Revenue Service 1040 tax form for 2022 is photographed, Monday, April 17, 2023. The IRS will test a pilot program to let people file taxes for free directly to the IRS. Are pre-filled 1040s on the horizon? | Jon Elswick, Associated Press

If you lived in Estonia, your income tax forms would be sent to you each year with everything already filled in — income tax there is a flat rate, the same for everyone, making it easy. The workinestonia.com website boasts it can take as little as three minutes for an average Estonian to file online.

By contrast, in the United States the average person takes about 13 hours to prepare income tax returns by mid-April each year. The Congressional Research Service says people who pay someone to do this, and the IRS says about 53% of us do so, have to shell out an average of $240 apiece. That varies widely depending on how much someone owns, has invested or qualifies for one of countless credits or deductions.

The U.S. tax code contains about 10,000 sections, according to eFile.com. This figure is in hot dispute, although politifact.com studied the matter and concluded no one is really sure of its actual length.

Which is the same answer you get if you want to know the vastness of outer space.

It’s also going to be close to the answer to how many politicians I’ve heard, in my 40 years in this business, say we need to find a way to fit our tax returns on a postcard. They never specify how big that postcard would be.

Related

As I wrote a few months ago, no one would ever deliberately design such a system from scratch.

Well, never fear, folks. The IRS is hard at work at, perhaps eventually, bringing us a pre-filled basic tax return.

The misnamed Inflation Reduction Act (remember that?) requires the IRS to set up software that would allow people to file returns directly, online, without having to use third-party tax preparation software. A pilot program is expected to be in place by 2024.

A lot of people think this is the first step toward offering pre-filled tax forms, Estonian style, to the American people. A working paper by a number of academic researchers indicates that 1040 forms for as many as 42% to 48% of Americans “could be accurately pre-populated using only current-year information returns and the prior-year return.”

Story continues

The Congressional Research Service says the IRS could make this happen in one of two ways. The first is to try to withhold from paychecks the exact amount people will owe the federal government. The other method would require the IRS to use third-party information, from a bank and employer, to fill in the blanks, which a taxpayer could then check for accuracy.

If only it were so easy.

Related

Ryan Ellis, an IRS enrolled agent who heads the Center for a Free Economy, wrote an op-ed for The Hill explaining why he thinks this won’t work. It turns out the IRS already pre-fills tax forms for thousands of taxpayers who fail to turn in returns each year, using a little-known program called “Substitute for Return.”

Ellis and a fellow tax expert conducted a double-blind study using hypothetical returns for “representative” taxpayers. One of them prepared returns using the IRS program. The other did it with commercial tax preparation software that examined eligible deductions and credits. He found substantial differences.

For example, a single mother of two young children with $24,000 in annual income was liable for $1,198 in taxes using the IRS program, but received a $7,731 refund using the commercial software.

Ellis wrote that “the IRS does not have and can never gain access to the very consequential details of our lives, including who lives in our households or the allowable expenses we incur as property and business owners.”

He said more than 70 million tax-paying households claim deductions and/or credits.

The problem, he said, is the tax code is too complicated.

That ought to be obvious. It’s also the conclusion of the nonprofit Tax Foundation, a Washington-based research group that concludes the code is too complicated even for a free direct-filing software program.

Last month, the Tax Foundation studied what would happen if the U.S. adopted a system similar to Estonia’s. Among other things, it could boost our economic output by 2.5%, increase wages by 1.4% and add 1.3 million full-time jobs. Also, it would begin to reduce the nation’s debt burden.

It would, in other words, remove a lot of heavy bureaucratic nonsense.

But in a nation where a lot of that nonsense is protected by powerful lobbies, and where tax preparation has become a huge industry, I wouldn’t bet my next refund on it happening.

Originally Appeared Here

The Sobrato Organization is a multigenerational, family-owned firm based in California’s Silicon Valley. For more than 65 years, the Sobrato family has been developing commercial real estate for high-growth companies, building multifamily communities and investing in entrepreneurial enterprises.

The Sobrato family is now trying to help with one of the region’s most enduring challenges: creating more affordable housing. In May, the Sobrato Family Foundation paid $26.1 million for a 68-unit apartment building in Santa Clara, California. The purchase is part of a pilot project to test solutions for solving the housing crisis.

John Sobrato, the chairman of the organization, told NCR in a recent interview that he and his family hoped the purchase of the building will keep rents affordable for middle- and low-income individuals and families. “Our goal is to offer current and future residents safe and stable affordable housing,” he said.

Following is the interview with Sobrato, edited for length and clarity. 

NCR: What led you and the Sobrato Organization to decide to tackle one of the most challenging problems of our time — affordable housing — especially here in the middle of Silicon Valley?

Sobrato: My two sons and their cousins have been really pressing my generation (the ones running the business) to think a little more holistically, which is not easy. The objective now is to add mission, where it makes sense to, in what we’re doing.

There are three components to what we’d like to do: preservation, production and policy.

I think we can actually make the most difference in preservation and policy. We certainly need to produce more housing, but it’s difficult because for 50 years there’s been a lack of political will to build enough housing to meet demand.  

The cost to build housing in Silicon Valley today is $750,000 to $800,000 per unit. The only way to make that affordable is by buying the project down through grants and low-income housing tax credits. We have been a bridge for Catholic Charities as they layer up all their financing to build affordable housing, providing some grants to help get projects over the finish line. We can help a little bit there, but I didn’t see that as an area where we could make a big difference over what was already being done. Therefore, we have focused on preservation because nobody else is doing that. 

We are executing this preservation strategy by purchasing what is known as “naturally occurring affordable housing” or NOAH. This refers to the tens of thousands if not hundreds of thousands of units that were built in the ’60s and in the ’70s that are at affordable levels today. 

We just bought our first one in Santa Clara called Vista Pointe Apartments. Because it was built in 1969, the current rents are relatively affordable. Although it is older, the bones are very good and the basic requirements of an apartment unit in the ’60s are no different than what we build today.

When these types of units come on the market, they’re never marketed to just leave it as is and continue to keep the rents affordable. They’re always marketed as a value-add opportunity and the value-add aspect comes from redoing the kitchens, the bathrooms and adding fancy gyms. 

The buyers force the current residents to relocate as they shut the place down to make these extensive renovations. The upgrades then trigger rent increases that run 30 or 40% higher. The apartments go from the affordable level to or above the middle-income level. That’s what happens when you don’t build enough housing. There’s huge pressure to upgrade everything because there’s demand and if somebody can’t go buy a new unit because it doesn’t exist, they’ll go down a step. The whole thing trickles down to the bottom and those people that are in the affordable category of apartment communities get priced out because it gets upgraded.

Our goal is to offer current and future residents safe and stable affordable housing. If you operate the project voluntarily at 80% of the Area Median Income (AMI) or less, you can record a regulatory agreement that forces you to do it for some period of time and then once you have that regulatory agreement you just voluntarily agree to continue it. With the regulatory agreement we get a property tax exemption from the county because it’s affordable housing and it’s required now to be affordable housing even though we entered into it voluntarily. We’ve now forced ourselves to do it. 

We can keep the rents very flat and still cover expense increases and the median income of tenants should grow at least a few percent a year. 

From a developer’s perspective, what changes might you suggest in policies and/or regulations that would make affordable housing more possible without compromising unacceptable harms to people or the environment?

On the policy side we need to advocate for more low-income tax credits. Typically, low-income tax credits provide 60% of the funding of the project cost. That is significant because without it you can’t make the project affordable. Another policy area would be less control at the municipal level so that the entitlement process is more streamlined for new housing construction.

The Sobrato Organization website declares: “The Sobrato Organization’s mission is to build a more equitable and sustainable world through business and philanthropic leadership.”

You also have a commitment to social justice mentioned on the Family Foundation website. What is it about the growth of the Sobrato family over time that led to this statement of mission and values?

We have been blessed with tremendous success and it is an absolute fallacy to think as some do, that it’s just a matter of hard work and grit. It’s just not true. Yes, that is one of the ingredients. However, in our family’s case the wealth was built partly because my father is a white male who came into his career in 1960 and happened to live in Silicon Valley. Had he been born in Detroit, had he been born a person of color, had he been born a woman, we would not be in the position we are: end of story. 

Our commitment to justice comes from the recognition that our success in large part was a function of what Warren Buffett would say: winning the genetic lottery: being very lucky as to when we were born, where we were born, and what color we were born and therefore having a moral obligation to right some of these structural inequities of the past that continue to this day. 

Why is the capital gains tax lower than the ordinary income rate? Why is the tax on money earning money — where you’re not really putting your daily sweat into the “work” — less than someone working a job, whether it’s a doctor at a very high salary level or whether it’s somebody working at McDonald’s? Why is there a home mortgage deduction that benefits homeowners? We have a tax system that is not progressive at all in that context. 

Originally Appeared Here

David C. Weiss, the federal prosecutor in Delaware who has led the criminal investigation of Hunter Biden, on Monday rebutted a key element of testimony to Congress by an Internal Revenue Service official who said that Mr. Weiss complained about being blocked from pursuing the case the way he wanted.

In a letter to the Senate Judiciary Committee, Mr. Weiss said that he had never asked Justice Department officials to give him special counsel status to pursue the case, contradicting testimony to the House Ways and Means Committee by the I.R.S. official, Gary Shapley, who said Mr. Weiss had sought that status and been turned down.

Mr. Weiss suggested that Mr. Shapley might have misunderstood him during an October 2022 meeting. Mr. Weiss, the U.S. attorney for Delaware, who was appointed to the role under President Donald J. Trump, said in the letter that he had approached a department higher-up about the possibility of requesting status as a special attorney, not as a special counsel.

Deputizing a federal prosecutor as a special attorney is distinct from making one a special counsel. The special attorney provision is, in essence, a workaround that allows an outsider to intervene in cases that span multiple jurisdictions or have special conditions. The special counsel regulations, by contrast, contain internal Justice Department reporting requirements and congressional oversight provisions.

“To clarify an apparent misperception and to avoid future confusion, I wish to make one point clear: In this case, I have not requested special counsel designation,” Mr. Weiss told Senator Lindsey Graham of South Carolina, the top Republican on the Senate Judiciary Committee.

Instead, Mr. Weiss said he “had discussions with departmental officials regarding potential appointment” as a special attorney, “which would have allowed me to file charges in a district outside my own without the partnership of the local U.S. attorney.”

Mr. Weiss added in the letter to Mr. Graham that he had “never been denied the authority to bring charges in any jurisdiction.”

Mr. Weiss has sought to defend the integrity of the five-year investigation after a plea deal announced last month under which Mr. Biden will plead guilty to two misdemeanor tax charges and accept terms that would allow him to avoid prosecution on a separate gun charge.

Republicans have assailed it as a “sweetheart deal” for the president’s son and have used Mr. Shapley’s testimony to promote the idea that political interference played a role in the outcome. Speaker Kevin McCarthy has left open the possibility of pursuing impeachment charges against Attorney General Merrick B. Garland.

In Monday’s letter — a follow-up to a less detailed response he sent to House Republicans in late June — Mr. Weiss backed up an earlier statement by Mr. Garland that he had been given full authority in the case. At the same time, Mr. Weiss acknowledged publicly for the first time that he had considered seeking a way to bring potentially more serious tax charges against Mr. Biden outside Delaware.

Mr. Weiss, who has described the Hunter Biden investigation as “ongoing,” did not say if he had followed through and requested to be appointed special attorney to the career official who served as his contact at Justice Department headquarters.

Nor did he explicitly address a key assertion made by Mr. Shapley: that Biden-appointed U.S. attorneys in California and Washington had discouraged Mr. Weiss from prosecuting Hunter Biden on felony tax charges stemming from a period when the president’s son was earning millions working with foreign-controlled businesses and investors.

The investigation was initiated by the Trump Justice Department in 2018 and eventually handed to Mr. Weiss, a Republican whose reputation for nonpartisanship had earned him the support of Delaware’s two Democratic senators during his confirmation a few months earlier.

After President Biden was elected, the department’s interim leadership kept Mr. Weiss in place and in charge of the inquiry. Mr. Garland, after being confirmed, continued that arrangement and was eager to avoid any suggestion of political meddling.

Mr. Shapley, testifying before the House Ways and Means Committee in May under what Republicans said were whistle-blower protections, said he and other investigators had witnessed Mr. Weiss saying last year that he would not be the “deciding official” regarding whether to prosecute Mr. Biden. Mr. Shapley said that Mr. Weiss had been turned down when he sought special counsel status after being told by local prosecutors that he could not bring charges. House Republicans released the testimony last month.

Mr. Shapley recounted arguing in meetings with Mr. Weiss and other prosecutors to aggressively pursue charges against Hunter Biden stemming from his failure to pay taxes in 2014 and 2015, two years not covered under Mr. Biden’s agreement to plead guilty on the misdemeanor tax charges. During those years, Mr. Biden was earning income from work for a Ukraine-based energy company and Chinese clients that Mr. Shapley suggested was being channeled through entities that had a presence in Washington and the Los Angeles area.

In mid-2022, Mr. Weiss reached out to the top federal prosecutor in Washington, Matthew Graves, to ask his office to pursue charges and was rebuffed, according to Mr. Shapley’s testimony. A similar request to prosecutors in the Central District of California, which includes Los Angeles, was also rejected, Mr. Shapley testified.

A second former I.R.S. official, who has not been identified, told House Republicans the same story. That episode was confirmed independently to The New York Times by a person with knowledge of the situation.

Mr. Shapley, who oversaw the agency’s role in the investigation of Mr. Biden’s taxes, also told House committee aides that his criticism of the Justice Department led to him being denied a promotion. In his testimony, he blamed Mr. Weiss for criticizing him to his superiors.

Mr. Weiss denied that charge in a June 30 letter to Representative Jim Jordan, Republican of Ohio and the chairman of the House Judiciary Committee, saying that he “did not retaliate” against Mr. Shapley.

Originally Appeared Here