INCLINE VILLAGE, Nev. - In the never-ending search for more "balance" in the tax system, here comes Obama, suggesting a little "reform" when it comes to the time-honored exemption from tax of interest from municipal bonds.
There's just too darned much revenue "lost," don't ya see - something like $30 billion a year.
Obama has suggested a maximum of 28% in tax savings related to your muni income. So, if you're in the 39.6% (plus 3.8%) tax rate bracket, you would end up paying about 15% on that previously totally exempt income!
Just another "loophole" ripe for the picking, we guess. How will all of the cities and states like this one?
And from our "good news for a change" department, this week, comes word from the D.C. District Court that all of us tax return preparers out here are not just a bunch of cops, working for the Revenooers to assure that they get all of the dough to which they think they are entitled.
That's the way IRS would like it, in any case, but in a pretty big slam (by the court), the IRS effort to regulate the tax return preparation business has been significantly shot down - the court struck down the IRS' licensing requirement for some tax preparers, including testing and continuing education requirements.
"Today's ruling is a victory for hundreds of thousands of tax preparers across the country and the tens of millions of taxpayers who rely on them to prepare their taxes," quoth attorney Dan Alban (working for the tax preparer side). "This was an unlawful power grab by one of the most powerful federal agencies and thankfully the court stopped the IRS dead in its tracks. The court ruled today that Congress never gave the IRS the authority to license tax preparers, and the IRS can't give itself that power."
"They found that the IRS misinterpreted the statute and was basically trying to use it to expand its own authority in ways that the statute didn't authorize," said Alban. "On the first page of the opinion, they said that 'the statute's text and context unambiguously foreclose the IRS' interpretation.'"
The IRS power grab had targeted, generally, unlicensed preparers (not attorneys, CPAs and enrolled agents who are otherwise generally self-regulated).
And if you're a California limited liability company (LLC), and you may not have filed your tax return for a while, get ready for a nastygram from the Franchise Tax Board. They started sending these in January, based on their info that certain entities which previously filed, and for which they have no record of a return for the most recent year, setting you straight!
- CONSULT YOUR TAX ADVISER - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He may be reached at 775-831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.