The IRS has stopped mailing out tax booklets and forms. You can download the forms, instructions and various publications directly from the IRS.gov Web site. The IRS also has recently re-designed their forms and publications page. In the redesign, the most common forms and instructions have been placed near the top of the page, making it easier for taxpayers to find and download the files they need. The IRS has also redesigned their archive page for tax forms from previous years. I've had trouble finding specific files using this page, and I much prefer utilizing this page that organizes forms by year.
...IRS Launches Smartphone App
People can now check the status of their federal tax refund, not just online, but also using their smartphone. The Internal Revenue Service launched the IRS2Go smartphone application, which is currently available for Android-based mobiles and Apple's iPhone.
...South Dakota Governor Praises Tax Foundation Ranking, Seeks More Control Over Tax Credits
South Dakota Governor Dennis Daugaard (R) delivered his State of the State address on January 11, in which he called for extension of a half-cent increase to the tourism tax, which would otherwise revert to 1% on June 30, 2011. The tourism tax, imposed on everything from campgrounds to carnival rides (click here for a complete list), brought in $8.4 million in revenue in fiscal year 2011, of which $1.8 million (2/3 of the ½% increase) went to the South Dakota Department of Tourism, to promote tourism.
Daugaard also spoke proudly about "South Dakota having the lowest per capita tax burden in the nation," as well as the state's top ranking in our State Business Tax Climate Index.
Governor Daugaard also called for increasing the size of the "Revolving Economic Development Initiative" (REDI) Fund, and limiting tax breaks from the Large Project Refund Program (LPRP) to projects that would not happen otherwise. Of course, that's hard to know in advance, and South Dakota has a pretty good business climate that makes it unlikely that it's attracting much additional business (or at least, desirable business) with some grants or credits.
Rather than reforming the program to give Governor Daugaard more power in selecting which companies are "worthy" of tax breaks, the legislature should consider scrapping the program altogether. The Governor is probably right that South Dakota is awarding tax credits for behavior that would have happened anyways, but that's a flaw central to the REDI and LPRP funds.
Federal Judge Issues Injunction Against Colorado "Amazon Tax"
Colorado legislators in 2010 recognized that New York-style "Amazon taxes"-claiming that Amazon.com and other out-of-state businesses are physically present in the state if they have relationships with in-state independent affiliates who refer customers-don't raise revenue, lead to lots of constitutional litigation, and signal business unfriendliness. Contrary to claims that they create a level playing field with brick-and-mortar businesses, the result sought would be brick-and-mortar businesses tracking and collecting one sales tax while online businesses track and collect 8,000+.
So rather than go that route, Colorado adopted a disclosure-focused requirement, a second generation of "Amazon tax." All online retailers are found to be present in Colorado, but are "only" obliged to disclose to customers that they need to pay tax on their purchases. This disclosure, however, requires analysis of the base and computation of the rate in each taxing district (8,000+ nationwide, many local ones in Colorado), can't be sent with the shipment, must be sent by U.S. mail, and all purchases must be disclosed to the Department of Revenue. It's a regulatory scheme so complicated and burdensome that its purpose is to force Amazon to just collect the tax itself.
On January 26, a federal judge in Colorado enjoined enforcement of the Colorado law, in a suit brought by the Direct Marketing Association. Judge Robert E. Blackburn wrote that "the plaintiff has shown a substantial likelihood that it will succeed in showing that the act and the regulations are discriminatory because, in practical effect, they impose a burden on interstate commerce that is not imposed on in-state commerce." Judge Blackburn's ruling follows a ruling against a similar North Carolina regulation.
So far this year, quite a few states are considering bills to adopt New York-style taxes (which also exist in North Carolina and Rhode Island). This has surprised me, since they haven't worked anywhere and indeed have done significant harm. Illinois Gov. Pat Quinn has one on his desk he is mulling, and bills have been introduced in Arizona (H.B. 2551), Hawaii (H.B. 1183), Mississippi (H.B. 363), and New Mexico (H.B. 95 and 102), with others rumored in California and Connecticut. In Rhode Island, H.B. 5115 would repeal that state's "Amazon tax."
