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Tax Reform: ???????

In the March 29, 2013 Kiplinger Tax Letter, it was reported that “One thing is clear about tax overhul: Lawmakers will include compliance measures”.  I believe it’s been said many times and Kiplinger reiterated in the 03/29/13 newsletter, that Congress will be looking to broaden the “tax base so that the maximum income tax rate can be lowered and the number of tax brackets can be trimmed”, which will supposedly cause Congress to look at “compliance changes” to help increase revenues yet shrink rates and reduce complexity.  Some of the things mentioned in the newsletter:

  • “Increasing funds for enforcement”; i.e.: getting more agents to do more audits.  Based on the House Appropriations Committee voting on July 17, 2013 to CUT the IRS administrative budget by 24% from that of last year (see my last post: “Update: IRS Issues: Not Political”), this concept may already be lost in… Continue reading

Update-IRS Issues: Not Political

As Roger Russell quoted Roger Harris, the former chair of the IRS Advisory Council in Russell’s August 2013 article in Accounting Today, “there is a danger of an over-reaction to the IRS scandals”, with budgets being cut even further. Based on a recent post in a National Society of Accountants (NSA) newsletter, on July 17, the House Appropriations Committee voted 27-21 to approve a bill that cuts IRS funding by 24% compared to the previous year and places new restrictions on the agency.  Voting was split down party lines, with Republicans pushing to further punish the IRS over past indiscretions, noting that, with record projected federal revenues in the upcoming fiscal year, the agency shouldn’t need more funding to operate efficiently.  Frankly, I tend to agree with the Republicans thoughts; however, the funds needed to operate will not be found automatically.  The government’s, including th IRS’s, method… Continue reading

IRS Issues: Not Political

In the August, 2013 edition of Accounting Today, Roger Russell makes a two pronged case for IRS Issues in his article: “The IRS: An institution in crisis”.  In the first case, a financial issue, he lays out a position that the organization is being asked to do more and more with less and less funding.  Russell quotes Nina Olson, the National Tax Advocate as stating in her annual report to Congress that the IRS is under a “radically transformed mission coupled with inadequate funding to accomplish that mission” … “limiting its attention to taxpayer rights or fundemental tax administration principles”. Russell also quotes Marty Davidoff, CPA, Esq., stating that the IRS “budget is down 8%in 3 years”, and Roger Harris, former chair of the IRS Advisory Council, that “there is a danger of an over-reaction to the IRS scandals”, with budgets being cut even further, yet more being… Continue reading

Government or For-Profit Accounting

I regret it has been quite sometime since I’ve been here; however, I hope to be rectifying that soon, starting with this post.  I’ve allowed myself to get behind on a lot of things, including my reading; however, today I read an EXCELLENT article in the August, 2013 issue of Accounting Today by Herbert M. Chubin, CPA, MBA, formerly the internal auditor of the public school system of Trenton, NJ, and an adjunct professor of accounting.  The article was entitled: “Time to abandon fund accounting in government”.

As Mr. Chubin put very succinctly: “Fund accounting is used to account for transactions of nonprofit entities and for governments at all levels…” which “is different from accounting used by for-profit businesses.”  Where financial statements prepared under fund accounting compare actual revenue and expenses against budgeted revenues and expenses, statements prepared for private sector businesses compare revenues against expenses to… Continue reading

IRS Interest & AICPA Framework

I am an analytical person; it’s in my nature, maybe in my DNA.  As an analytical person, I gather and evaluate information, put it into some type of order and come to a conclusion.  Also, as an analytical person, my original conclusion is never set in stone; it can and will be amended based on new information that becomes available.  With the IRS issue being discussed in Washington DC, at this time I’m leaning towards a conclusion that the issue can very possibly have political underpinnings.  My prliminary leanings are based on:

1.  The 2010 mid-term elections brought about a shift in the DC power structure, shifting the House of Representatives from Democratic to Republican control, a shift which many, including me, felt was helped by the “tea party” movement, a movement opposed to bigger government, which the current administration appears to be in favor… Continue reading

IRS Issues-Cont.

In the book Team of Rivals, Doris Kearns Goodwin noted that early in Abraham Lincoln’s political career, he stated: “the fundamental test of a democracy was its capacity to elevate the condition of men, to lift artificial weights from all shoulders, to clear the paths of laudable pursuit for all.  A real democracy would be a meritocracy where those born in the lower ranks could rise as far as their natural talents and discipline might take them”.  In my opinion, this was exactly what America’s founding fathers had in mind when they wrote the Constitution, and Abraham Lincoln reiterated it more then 50 years later; however, over the 200+ years this great country has been in existence, those core beliefs have gone dramatically awry.

As I stated in my last post, I believe in the IRS; its mission to collect taxes from the populace to fund the… Continue reading

IRS Scandal

As I hope I stated in my original blog post, my direction in these posts will generally be the discussion of current accounting/tax standards, how I see these standards possibly affecting society, and how some current events taking place might relate to the accounting and tax standards I’ve been discussing.  In that regard, I’d like to discuss the recent IRS scandal in Washington concerning its scrutinizing of conservative groups applications to be recognized as 501(C)4 organizations, ones granted tax-exempt status as long as their primary goal is not political in nature.

Regardless of which groups were being scrutinized and which groups were being breezed through, in my opinion, the granting of tax-exempt status for “social welfare” groups, except for those that are strictly providing services for those less fortunate, has to be one of the most subjective processes imaginable.  I made my case for a Flat… Continue reading

Proposed Lease Accounting Change

For anyone not aware of where the way business financial statements are structured comes from, as it stands now, there are two entities responsible for determining all the particulars: in the U.S., the Financial Accounting Standards Board (FASB); overseas, the International Accounting Standards Board (IASB).  Over the past few years, the two entities have tried to converge their accounting standards, making accounting more uniform throughout the world.  These efforts have met with repeated delays and snags, but according to an article on WSJ.com by Michael Rapoport posted on 05/16/2013: Accounting Change Could Boost Companies Debt, the entities have prepared two new proposals that, with few exceptions, are virtually identical: requiring any lease with a term of longer than 12 months to be carried as debt on the Balance Sheet as opposed to the current practice of documenting them in a note… Continue reading

The IRS & ObamaCare

In my past couple posts, I’ve been sharing the “expansive” nature of the U.S. Tax Code, and most recently, how all this “expansion” was before the Affordable Care Act – “ObamaCare”.  As I’ve said before, in my opinion, the “code” will explode with ObamaCare due to the IRS’s being in charge of managing the program.  Based on an article on WSJ.com dated 05/14/2013Your Next IRS Political Audit:

  1. The IRS Inspector General recently reports: “ObamaCare’s 47 major changes to the revenue code represent the largest set of tax law changes the IRS has had to implement in more than 20 years”.
  2. The IRS has requested funding for close to 2,000 full-time employees for its Affordable Care (“ObamaCare”) office in 2014, whose sole responsibility will be to write and enforce regulations for which they have little if any competence: a. “Are ski-instructors or public school teachers… Continue reading

The Flat Tax

Well folks, I’m finally back.  Long lay-off; a lot has been going on.

My first posts concerned how convoluted the U.S. Tax Code has become, where I identified some of the far out perversions the “Code” has taken over the years:

  1. growing by 50,000+ pages in just 4 years between 2006 and 2010, BEFORE ObamaCare; with the IRS being the “gate keeper” for that “cluster”, there’s no telling what the Code will grow by in the near future;
  2. taxing assets at death, assets that were built from income that has previously been taxed, just like taxing corporate dividends as income, dividends paid out of corporate income that has already been taxed (let’s not forget, Congress raised the rate these dividends are taxed at from 15% to 20% for higher income individuals in the “Fiscal Cliff Legislation”);
  3. allowing spouses to gift, tax free, to each other in an… Continue reading