Press release from the Internal Revenue Service today on the delay in refunds caused by Congress's procrastination on passing a patch for AMT:
The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax "patch."
Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.
The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.
Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.
In an odd way, it will not affect all of those filing Form 6251, which is the AMT form. It will affect those who file for other credits whose structure within the 1040 and the AMT was set to revert to 1993 law unless a patch was passed. (Structure refers to whether credits are pre-or-post AMT.) These changes, according to the IRS, take longer for the IRS to reprogram their computers compared to the mere change in exemption levels. Specifically, here are the forms that could cause delays:
Form 8863, Education Credits.
Form 5695, Residential Energy Credits.
Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
Form 8396, Mortgage Interest Credit.
Form 8859, District of Columbia First-Time Homebuyer Credit.
A Merrier Christmas in Oregon
I hope Santa Claus brought you exactly what you wanted this morning. Oregon residents might have us beat, though, in that the state refunded part of their income tax payments just before the holiday:
Checks have arrived in mailboxes all over the state, thanks to an only-in-Oregon law that requires rebates to taxpayers when income tax collections top projections by more than 2 percent.
All told, the state has doled out $1.1 billion in rebates.[...]
"It is pretty well spent," said Portland resident Linda Stockton, who got a check for about $600. "And I bought $100 worth of canned goods, and gave it to the food bank. I bought about 20 pairs of mittens for foster kids."
The rest, she said, was spent on "clothes for me."[...]
"I don't trust (government) to spend our money wisely," said Paul Hansen of Portland, whose family got a check for $1,161. "The private sector is smart enough to spend the money more wisely and more efficiently."
Hansen said about 20 percent of his check will go to charity, and the rest is earmarked for his daughter's private school tuition.
Charities could be particular beneficiaries of the kicker, since many families are accustomed to making their donations at Christmas time. Greg Chaille, president of the Oregon Community Foundation, which tracks charitable giving in the state, said the rebate checks could increase donations by $100 million or so this year.
Oregon's tax refund rebate system has been around since 1979, and is similar to Alaska's Permanent Fund dividends and Colorado's TABOR refunds (which was suspended in 2005):
The Oregon rebate, known locally as the "kicker," also is written into the state constitution.
In the national consciousness, Oregon is firmly classified as a liberal state, whose residents were among the first in the nation to approve medical marijuana, and support strict environmental policies.
But when it comes to taxes, the state's residents are decidedly libertarian. Voters have shot down just about every proposal for a new tax in the last decade, from sales to gas to cigarettes.
That predisposition has made the "kicker" an untouchable sacred cow, especially because its backers timed the rebate to appear in mailboxes at Christmas, when bills are pilling up.
The refunds have their opponents, of course, in this case interestingly from the same person who sent her overcollected income taxes to charity and clothes for herself::
"As a former teacher, I don't get why the money isn't just reallocated to an area that has a tremendous need," Stockton said. "There are cheerleaders out in front of the supermarket begging for money to keep their sports program alive."
Oregon residents have that option, too. According to the AP, 12,000 residents sent $6.7 million in rebate checks to the state schools fund. It's a choice left to each taxpayer to decide the best use of their refund check.
Wisconsin Legislator Proposes Tax on Video Games
Every time you turn around, some ridiculous tax policy is being proposed in Wisconsin. Whether it's Governor Doyle's proposed tax on oil companies, Governor Doyle's proposed tax on hospitals, a proposal to tax soft drinks put forth by some legislators, a gigantic payroll tax hike to pay for universal healthcare within the state that would basically double the state's tax burden, or the state's continuous support of tax credits for specific industries and companies, the state is a bastion of bad tax policy. (It actually makes you appreciate the federal tax system.)
Now one state senator is proposing a special tax on video games to fund the juvenile detention system in the state. Here's the story from DailyTech:
This week, Wisconsin state Senator Jon Erpenbach proposed a bill that would add an additional tax on video games and gaming equipment, like consoles and accessories.
The new tax would levy a 1% surcharge on the sale of video games and related equipment, with funds applied towards the cost of moving non-violent, delinquent 17-year-olds into the juvenile detention system, as they are currently treated, prosecuted, and incarcerated as adults.
According to Erpenbach, the tax has nothing to do with dissuading gamers or casting videogames in an undesirable light; rather the idea is that the tax is "a kind of kids-kids thing," with gamers helping out fellow youth stuck behind bars in an adult prison system.
Despite the fact that the bill's emphasis is on moving non-violent youth offenders into the juvenile court system, gamers have latched onto the tax as an unfair attack on their hobby. Justin Sallows, an adult Wisconsin gamer speaking to WISC-TV, thinks that the tax is "a real problem ... even if that's not what the intention is, it creates the impression that there's something wrong with the video games because we need to put some extra tax on there to try to dissuade people from playing them."
Erpenbach's logic is this: kids should have to pay a tax on video games to help out other kids their age that engage in bad behavior. There are many problems with this logic. First, the move that Erpenbach is suggesting within the juvenile detention system would benefit everyone in the state, not just children who play video games. His ridiculous "kids-kids logic" could be extended to every program that sends government funds to children. Maybe a video game tax and a tax on other products that children disproportionately buy should pay for public schools too.
But even if one buys the "kid-kids" argument, there are many more industries where young people buy products at a disproportionately higher rate than others. Why not put taxes on certain types of music, clothes, or entertainment? Or why not go directly at the source and put a special tax within the income tax system on people who work at ages 16 or 17, or raise the drivers license fees on people those ages? This may sound stupid and discriminatory, but that's exactly what this proposal is.
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