Tax Attic for 6-13-2019

One of the non-tax publications that I read is called “Imprimus”. It’s a monthly publication of Hillsdale College that Hillsdale reports has a total of 4,300,000 monthly readers. The written version is usually about six pages and is a adaptation of a speech recently delivered on a particular topic by a well-known expert. I get the electronic version of Imprimus a few days before I get the paper version.  The subjects Imprimus covers are very wide ranging and are interesting. They are topics that don’t usually make the front page of the Grand Rapids Press. For example, the June 2019 publication is titled “The Danger of the Attacks on the Electoral College” and was adopted by a speech by Trent England given in Washington D.C. on April 30, 2019. Mr. England is the Director of, among other programs, the “Save Our States” project. Please allow me to summarize and comment on Mr. England’s speech.

Countries throughout the world have different ways to choose their leaders. Some use a popular vote with the winner of the nationwide election being declared the leader.  Some leaders are chosen exclusively by the elected representatives of the people. The United States, however, uses a system as laid out in the Constitution where almost every state chooses electors based on that state’s popular vote in a winner take all format. For example, in the last presidential election, Candidate Trump won the popular vote in Michigan.  Electors pledged to vote for Candidate Trump are elected. If Candidate Clinton had won the Michigan popular vote, her electors would have been chosen. Each state has electors and in the last election, as we all know, Trump had enough electors chosen to upset Clinton. This sounds like a reasonable way to elect a President except if you actually had more votes on a national, popular vote basis, than the other candidate but the other candidate wins the electoral college process and is declared President. That same result happened previously in 1876 and 1888. We survived those elections. However, there is a challenge to the Electoral College currently being touted as a better alternative; an improvement, if you will. It’s called the “National Popular Vote Interstate Compact”.  The NPV pact would require states to appoint electors based on the National Popular Vote; regardless of how the individual state as a whole voted. In other words, under the NPV pact, it would be President Clinton right now.  An NPV win might result in the Founding Fathers collectively rolling over in their graves. Of course, they might be doing that anyway! The latest Imprimus can be found at https://imprimus.hillsdale.edu. It is always a thought provoking publication.

Another publication that I receive biweekly is “The Kiplinger Tax Letter”. It has been published since 1925.  Currently, it’s a four page summary of what is going on in the world of taxation. I don’t know the total subscription number of the publication but I do know several other tax professionals who are subscribers. It’s basically a matter of keeping up to date on current tax related developments. In today’s environment, this is not an option; it’s a requirement.  For example, the latest Letter provided valuable information concerning the latest Internal Revenue Service audit statistics.  Over the last few years, audit numbers have been dropping. 70,000 fewer audits were processed in 2018 compared with 2017.  One out of every 170 individual returns were audited. According to Kiplinger, 81% of those audits were of the correspondence audit variety where a client gets a letter in the mail asking to provide proof of a deduction or to explain a deduction.  The taxpayer mails back in the proof or explanation. By default, only 19% of individual audits were on a face-to-face basis where the taxpayer and an IRS auditor set down across from each other and discuss the items being audited.  That’s an old-fashioned audit. However, the IRS simply doesn’t have the personnel to perform any more face-to-face audits. It depends upon the correspondence audits to check taxpayers honesty. Congress has increased the budget for the IRS so it can hire more auditors as well as continuing to update its computer equipment.  We will see how these additions affect the audit picture in the coming years.  In the meantime,  this is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent.

Action Tax Service is a part of Integrity Tax Group on Northland Dr in Rockford.

Contact Jerry at www.actiontaxservice.com.