US Congress

THE TAX ATTIC with Jerry Coon

January 27, 2011 // 0 Comments

Congress is using new tactic   It goes without saying that our tax system is very complicated. Our Congress helps to make that system more complicated when they pass laws that are not first and foremost tax laws. Buried within those non-tax laws, however, are tax provisions; sometimes very complicated tax provisions. The most glaring example of late is the Health Care Reform bill passed last year. In many ways, Congress tied Health Care Reform directly to the tax code. For example, all taxpayers will eventually be required to buy a health insurance policy. If a health insurance policy is not purchased, the taxpayer may pay a penalty on his/her tax return. The “may” part comes into play because if the taxpayer’s income is low enough, there won’t be a penalty. The taxpayer’s final out-of-pocket cost for the policy itself will also be tied to his/her level of income as reported on the tax return. The lower the income, the lower the taxpayer’s final cost of insurance. Congress has just given another incentive to keep total income down. A second example is the provision that requires all businesses to file 1099s to all other businesses from which they buy at least $600 of goods and services. I’m not exactly sure at this moment what filing 1099s has to do with Health Care Reform. What I do know is that if this provision is not repealed, an additional 40,000,000 form 1099s will have to be filed and will be clogging up an already overburdened tax system. Businesses will be paying for those additional 40,000,000 forms to be prepared and filed. We all know that businesses don’t pay taxes or for tax preparation—consumers pay those costs. Tax and tax preparation costs are just another part of the cost of doing business that a business simply passes on to the buyer of the product. When these types of costs go up, our costs go up as consumers. It’s a thought to keep in mind two years from now when this particular provision kicks in. A third example is the provision that requires all charge card companies to report to the IRS all transactions for all taxpayers. If you sell one item on e-bay and accept a credit card […]