$1 BILLION AWAITS PEOPLE WHO HAVEN’T FILED 2008 TAXES

Tax refunds amounting to over $1 billion are awaiting an estimated 1 million people who still have not filed a federal income tax return for 2008.

To collect, taxpayers and preparers must file a return with the Internal Revenue Service no later than Tuesday, April 17. The IRS estimated that half of the potential tax refunds are for more than $600.

In some cases, the IRS acknowledged, people may not have filed because they had too little income in 2008 to require filing a tax return, even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.

HOW MANY DAYS DO WE WORK JUST TO PAY FEDERAL TAXES?

TAX FACTS

Here are some statistics to put the nation’s income tax system in perspective.

     ► 143 million tax returns were filed with the IRS in 2010, some of which represent households and married couples. 

     ► Only 85 million actually paid taxes out of the 143 million filers.  In other words, 58 million, or 41%, were non-payers.  96% of these non-payers made less than $50,000.

     ► The IRS paid out $105 billion in refundable credits to filers who paid no income tax.

     ► The effective tax rate for those making less than $50,000 was 3.5%, and their share of taxes paid was 6.7%.

     ► The effective tax rate for those making more than $50,000 was 14.1%, and their share of taxes paid was 93.3%.

     ► The effective tax rate for those making more than $250,000 was 23.4%, and their share of taxes paid was 45.7%.

     ► The IRS estimates that it takes more than 7 billion hours to comply with the tax code each year.

     ► The tax code is now 3.8 million words long.

DEATH AND TAXES

Death and taxes aren’t only certain; they also seem to share a same deadline in the U.S., according to a study that points to the role of stress in fatal accidents.

According to Bloomberg.com: Deaths from traffic accidents around April 15, traditionally the last day to file individual income taxes in the U.S., rose 6 percent on average on each of the last 30 years of tax filing days compared with a day during the week prior and a week later, according to research published in the Journal of the American Medical Association.

Even allowing Americans to file their taxes electronically hasn’t negated the crash trend, lead researcher Donald Redelmeier said. The findings suggest stress, lack of sleep, alcohol use and less tolerance to other drivers on tax deadline day may contribute to an increase in deaths on the road, Redelmeier said.

“An increase of risk in this magnitude is about the same as what we observe on Super Bowl Sunday, a time notorious in the U.S. for drinking and driving,” said Redelmeier, a professor of medicine at the University of Toronto in Canada, in an April 6 telephone interview.

The research showed that there were 226 fatal crashes for each of the 30 tax days and 213 fatal accidents for each of the 60 control days.

Stressful Deadlines

“Our research suggests that stressful deadlines can contribute to driver error that can contribute to fatal crashes,” Redelmeier said. “People have, for a long time, speculated that psychological stress may contribute to real world crashes, but this is the first study to pin that down.”

The study, which appears as a research letter in the medical journal, looked at tax deadline data from the Internal Revenue Service and fatal traffic accident data from the National Highway Traffic Safety Administration from 1980 to 2009. The researchers then used a database to identify crashes that led to deaths. For every tax day, they also identified a day one week before and one week after as a comparison.

Redelmeier said drivers who are stressed should remember to buckle their seat belts, obey the speed limit, avoid alcohol, minimize distractions and refrain from driving recklessly.

“Under normal circumstances, everyone nods their heads agreeable,” he said. “Under stressful circumstances, it’s when you tend to forget these pieces of advice.”

To read the article: CLICK HERE

WE MADE IT

We finally made it to the  end of the 2012 tax season and due to our office changing software, I must say it has been a little more difficult than normal and all of the returns took a little longer than usual, but our team did a great job and our clients, as usual, gave us some grace.

I just want to take this time to say thanks to all of our readers for their questions during the season and our readership continues to grow each month and I look forward to my 41st tax season next year.

I will be traveling New York City this weekend to speak at the IBS show at the Jacob Jarvis Center and then meet with some of our New York clients and some clients  that are in attendance.  My wife Maggie is going with me so there will be a little R&R between meetings. 

TAX FREEDOM DAY 2012

OBAMA'S REVENUE SOUP

Wall Street Journal editorial, Obama's Revenue Soup: A History Lesson on Capital Gains Taxes:

In "Annie Hall," Woody Allen tells the joke of two women complaining about a restaurant. The first says the food here is awful and the second replies, yes, and they serve such small portions. Sounds like President Obama's proposal to raise the capital-gains tax: It will hurt the economy and it won't raise much new revenue.

Mr. Obama's plan would raise the capital-gains rate on January 1 to 20% on those who earn more than $200,000 ($250,000 for couples), plus a 3.8% investment surtax to finance ObamaCare. That 23.8% rate amounts to a nearly 60% increase from the 15% rate in effect since 2003. And that's without his new "Buffett rule," which would take the rate to 30% for many taxpayers.

This and other rate hikes aimed at higher-income earners are supposed to raise about $700 billion in tax revenues over the next decade. Fat chance. Ever since the famous 1978 bipartisan capital-gains tax cut sponsored by the late William Steiger of Wisconsin, the same pattern has repeated itself: raising the capital-gains rate reduces revenues, and lowering it leads to revenue increases.

The nearby chart shows the 35-year trend in capital-gains revenue and tax rates—through 2008, the last year data are available.

The data clearly show that the overall economy is the single biggest factor in capital-gains realizations and revenue. But the data also show that time and again revenue has multiplied despite a lower rate, and arguably because of it. ... Congress shouldn't be fooled by government forecasters who predict a revenue boom from a higher capital-gains rate. They have blown this call every time. ...

In our view the optimal capital-gains tax rate is one that leads to the most capital investment, jobs and wealth gains for American workers. That economically optimal rate is somewhere close to zero and would lead to more overall tax revenue as the economy grew faster. But if Congress wants a capital-gains tax, history suggests the revenue maximizing rate is closer to 15% than to 23.8%.

As John F. Kennedy put it in 1963 when he endorsed a cut in this tax: "The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital" as well as "the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy."

Today's Democrats in Washington are no Jack Kennedys. As President Obama told Charlie Gibson of ABC News in 2008, whether or not a higher capital-gains tax raises more revenue is irrelevant to him. He wants a higher rate as a matter of "fairness." The soup may be lousy but he wants more of it.