Following the class discussion on September 24th concerning "cookie jar reserves", please read the attached article and comment.
Abusive Earnings Management and Early Warning Signs - The CPA Journal
Wednesday, September 25, 2013
Monday, April 30, 2012
While we await the Supreme Court decision on the Health Care Act, the IRS is working on the format for information they will share with Health and Human Service (HHS).
That's right, information on your tax returns will be sent from the IRS to HHS. Gone is the concept your tax information would be held confidential by the IRS. I don't know what safeguards will be placed on the information once it is the hands of HHS.
You didn't know that was part of the deal? Not surprising. Congress was very good at concealing parts of the legislation that might have turned the public against the politicians voting for the legislation.
Items such as your name, filing status, number of exemptions, modified adjusted gross income, and municipal interest will be sent to HHS for use in determining compliance with provisions of the Health Care Act.
While I haven't read the entire bill, and neither did the Congressional politicians that voted for it, I suspect that penalties for disclosure of confidential information by the HHS didn't make it into the bill. What I can't understand is why Congress didn't just let the IRS do the work. The IRS would already have the information and be subject to privacy rules. The IRS has been calculating credits for decades. Just give the IRS the criteria and they could have sent back reports in a qualified/unqualified format. No confidential information would leave the IRS. But in typical government thinking, it is better to create a new, additional bureaucracy than to utilize the bureaucracies already in place.
But that's just my opinion . . .
That's right, information on your tax returns will be sent from the IRS to HHS. Gone is the concept your tax information would be held confidential by the IRS. I don't know what safeguards will be placed on the information once it is the hands of HHS.
You didn't know that was part of the deal? Not surprising. Congress was very good at concealing parts of the legislation that might have turned the public against the politicians voting for the legislation.
Items such as your name, filing status, number of exemptions, modified adjusted gross income, and municipal interest will be sent to HHS for use in determining compliance with provisions of the Health Care Act.
While I haven't read the entire bill, and neither did the Congressional politicians that voted for it, I suspect that penalties for disclosure of confidential information by the HHS didn't make it into the bill. What I can't understand is why Congress didn't just let the IRS do the work. The IRS would already have the information and be subject to privacy rules. The IRS has been calculating credits for decades. Just give the IRS the criteria and they could have sent back reports in a qualified/unqualified format. No confidential information would leave the IRS. But in typical government thinking, it is better to create a new, additional bureaucracy than to utilize the bureaucracies already in place.
But that's just my opinion . . .
Saturday, April 21, 2012
All the discussions in Washington about taxes are pretty quiet on two important items.
First is the Alternative Minimum Tax (AMT). Originally designed to capture a few taxpayers paying little or no tax it has expanded to capture millions in its web. By failing to index for inflation and subsequent increases in the AMT rate, middle income taxapyers are being deprived of much of the itemized deductions to which they beleive they are entitled.
The second item which has yet to take effect is the new Medicare tax on investment income. As a means of helping to fund the Health Care act, a 3.8% additional tax will be placed on investment income. So someone in the 33% tax bracket will find they have their taxes on in vestment income increased by 11.52%! That is the amount of increase from 33% to 36.8%. Most taxpayers are unaware of this impending jump in their taxes.
These are what I can "back door taxes". Congress makesa a lot of noise about rate, brackets and not taxing the middle class. But as Congress shows the taxpayers rates and deductions with one hand, the other hand reaching into your pocket and taking away the dedections given with the first hand.
First is the Alternative Minimum Tax (AMT). Originally designed to capture a few taxpayers paying little or no tax it has expanded to capture millions in its web. By failing to index for inflation and subsequent increases in the AMT rate, middle income taxapyers are being deprived of much of the itemized deductions to which they beleive they are entitled.
The second item which has yet to take effect is the new Medicare tax on investment income. As a means of helping to fund the Health Care act, a 3.8% additional tax will be placed on investment income. So someone in the 33% tax bracket will find they have their taxes on in vestment income increased by 11.52%! That is the amount of increase from 33% to 36.8%. Most taxpayers are unaware of this impending jump in their taxes.
These are what I can "back door taxes". Congress makesa a lot of noise about rate, brackets and not taxing the middle class. But as Congress shows the taxpayers rates and deductions with one hand, the other hand reaching into your pocket and taking away the dedections given with the first hand.
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