The AICPA Tax Insider

Goodbye State Tax Deduction

Ron Tang — Thu, 08 May 2008 00:52:00 -0400

The 1984 Treasury Department report (PDF) that laid the foundation for the base broadening and rate reductions of the Tax Reform Act of 1986, called for complete repeal of the itemized deduction for state and local taxes. Citing similar reasons, the 2005 final report of the President’s Advisory Panel on Federal Tax Reform also called for repeal. Yet, there are also proposals to make permanent the ability to deduct either state income or sales tax (for example, HR 3592, 110th Congress).

Below we’ll get some background on the state and local tax deduction and then… more

New Taxes And Tax Policy

Ron Tang — Thu, 10 Apr 2008 10:54:00 -0400

In recent years, there have been enactments and proposals for a variety of new taxes at both the U.S. state and local levels. A key impetus for these changes is the need for more revenue to fund state and local governments. While existing taxes could be increased to generate revenue, other sources have been considered for a variety of reasons. This article looks at a few recent examples and how they stack up under the principles of good tax policy.

Examples

Sources of new tax revenue are sometimes tied to activities that lawmakers believe may have some type of adverse social policy… more

What's Your Tax System IQ?

Ron Tang — Wed, 12 Mar 2008 02:00:00 -0400

While tax season tests our technical tax knowledge daily, here is an opportunity to take a break and test your knowledge about our federal tax system.

Answers to this quiz can be found at the bottom of this article.

Questions IRS tax revenue collections for fiscal year 2006 were approximately $______ trillion. The individual income tax was the largest portion of these tax collections, representing ___% of the total. For 2005, _____ million individual tax returns were filed showing combined taxable income of $_____ trillion. 108; 2.8 124; 3.5 134; 5.1 149; 6.8 For… more

Tough Tax Questions for Presidential Candidates

Ron Tang — Thu, 14 Feb 2008 00:00:00 -0500

The current crop of Presidential candidates sound a lot like they did in prior years with promises of new targeted tax breaks, loophole closures, increased taxes on the rich and new spending programs. Have the candidates not read the doom and gloom budget reports from the Government Accountability Office (GAO), Congressional Budget Office (CBO) and others?

The fiscal agenda for the next President and Congress must include some very difficult decisions that go beyond just tweaking the tax system. Below, we’ll look closer at some key fiscal issues that have tax implications. Questions are posed that could help gauge how… more

Internet Era Questions for Individual Clients

Ron Tang — Thu, 10 Jan 2008 00:00:00 -0500

The Internet has become ubiquitous for much of the population, but your clients may not be aware that their Web activities could produce tax liabilities and some may change in their individual tax status (for example, to sole proprietor). As a practitioner, you need to remind your clients to ensure that all of their Internet-related income is reported and that they are compliant with all relevant taxes. This article provides a set of questions to aid in this endeavor.

Why Ask?

Internet applications, from shopping to investing to game playing, continue to grow in size and variety. About 70 percent of individuals… more

Worker Classification -- Is Congress Ready to Take Action?

Ron Tang — Thu, 13 Dec 2007 00:00:00 -0500

Proper classification of workers for tax purposes is important as different rules apply to employees versus independent contractors. Contractors may deduct expenses for adjusted gross income (AGI), owe self-employment tax and take advantage of tax-favored benefit plans for those who are self-employed. Employees have unemployment benefits, split payroll taxes with the employer and can be covered under employer-provided benefit plans.

Some employers misclassify workers to reduce employment tax liabilities. Tax compliance by contractors is not as high as it is for employees. In addition, misclassified workers may be deducting business expenses as a contractor that they would not be able to… more

Strategy for Major Tax Reform

Ron Tang — Thu, 08 Nov 2007 00:00:00 -0500

On October 25, 2007, House Ways and Means Committee Chair Charles Rangel introduced H.R. 3970 (text, summary (PDF)), the Tax Reduction and Reform Act of 2007, a bill he informally calls the “mother of all tax reforms.” Based on what we have learned from the last major reform effort -- the Tax Reform Act of 1986, are we likely to see H.R. 3970 enacted?

Strategy

Briefly described below are actions and techniques that can improve the chances of a major income tax reform proposal becoming law. These features are also compared with TRA ’86 and H.R. 3970… more