THE TAX ATTIC with Jerry Coon, April 21, 2011

Filing an extension?

Most everyone has a favorite day of the year. To deer hunters, it’s either October 1, the opening day of bow

Jerry Coon

season, or November 15, the opening day of gun season. To many trout fishermen, the last Saturday of April is almost a national holiday. To baseball fans, it’s opening day for the Tigers at Comerica Park. To NASCAR fans, it’s the green flag dropping on the Daytona 500 in February. To golfers, it’s the Masters Golf Tournament in April. There has to be some students somewhere who really like the first day of school in September. Christmas Eve is a favorite of many.

Come to think of it, I like all of those days. Well, maybe the first day of school was not so high on my list, but I enjoy all of the others. However, my personal favorite day of the year is the day after the end of the tax season. The last day of the tax season is my second most favorite day because it’s the day before my favorite day.

Tax professionals all across the land were preparing to sleep in on Tuesday morning for the first time in three months. I know two area tax professionals who are in warmer climates even as I write this article. I’m sure my wife, Deb, has a nice list of items for me to get started on. I wonder how many of those I can start on this coming weekend instead of on my favorite day of the entire year.

President Obama signed into law a significant piece of legislation on Thursday, April 14. The provision of the Health Care Reform Act (HCRA) that was going to force business taxpayers to send in 1099 forms to anyone and everyone to whom they paid $600 was repealed, as if it did not exist. It was simply stricken from the law. This provision was going to take effect for payments made as of January 1, 2012. It was going to result in business taxpayers sending in 32,000,000 Form 1099s above the projected 2011 figures.

At least twice the law to repeal had been passed through the House but did not make it through the Senate. Even if it had made it through the Senate, the President had promised to veto the bill to repeal because this additional 1099 reporting was a significant part of the revenue funding mechanism of the total HCRA package. Processing an additional 32,000,000 Form 1099s was going to force the IRS to greatly expand its auditing and support staff. Why have businesses report 32,000,000 pieces of information if you aren’t going to follow up on those 32,000,000 pieces of information and hope to raise revenue in the process?

These increased costs and the subsequent revenue increases were built into the HCRA. What was not factored in to the equation was the cost of the bookkeeping, compiling, preparing and submitting those 32,000,000 Form 1099s that was going to be borne by all businesses. This did not seem to be an issue for the politicians who passed the original law.

I am somewhat surprised that this provision being repealed was not highly trumpeted by the media. I do believe the President signing the law was a negotiated item that had to do with the budget agreement reached between the Republicans and Democrats that kept the government from being shut down. This gives us some insight into how very hard it is to keep your eye on the bouncing ball when it comes to politics.

In my opinion, the 38 billion dollars of budget savings that was released was window dressing and was a diversion. They had all of us concentrating on that bouncing ball. Would or would not the government be shut down?

Perhaps the real bouncing ball was going on behind-the-scenes items in the back room and it was repealing the 1099 provision. That was the real ball and was huge. The President’s arm, as well as the Senate’s collective arms, was successfully twisted and he was allowed to somewhat silently sign the repealing of a key provision of the Health Care Reform Act. It kind of makes you wonder how often this type of thing goes on in Washington.

A further question is what are the bouncing balls we are looking at in Lansing that are keeping our attention when there are negotiations going on behind the scenes that we know nothing about? Hmmmm. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns Action Tax Service on Northland Dr. Contact Jerry at www.actiontaxservice.com.

 

Other Stories from the Squire

Top News…

Michigan ChalleNGe cadet meets Dale Earnhardt Jr. ALEXANDRIA, Va. – Respect, hard work, … [Continue Reading...]

Attention veterans! A call to action. Please stand for those who have fallen.   The Moving … [Continue Reading...]

The Rockford Girls’ Lacrosse team has been ranked number one in the Division One poll for most of … [Continue Reading...]

By JOHN HOGAN Rockford - and most of West Michigan, became a water wonderland last week as a … [Continue Reading...]

More Posts from this Category

In Other News

Knowing Your Competition   by David Broyles SCORE Counselor   Regardless of … [Continue Reading...]

Downtown Rockford was as busy this sidewalk sale week as in past years, despite a heat index of over … [Continue Reading...]

Rockford resident, writer and photographer John Hogan shared this picture with the Squire. The … [Continue Reading...]

David S. Fry

They wrote the book on cottage law—literally Recently, Attorney David S. Fry opened the … [Continue Reading...]

More Posts from this Category

Speak Your Mind

*