Tax bill for tax day

Finally the US House has agreed on something, a new tax bill for tax day!  Yesterday the House voted 399 to 9 to approve the Taxpayer Assistance Act of 2010.  In my dictionary assistance is kind of like help and this makes me think of the old joke that you know you are in trouble when you hear "I am from the government and I am here to help."  There are about a dozen items in the bill that are intended to HELP the US taxpayer.

One that gets a lot of mention is a provision to make it easier for taxpayers to have payment options for what they owe the government.  "Payment option" is another name for LOAN, that's what we get when we let the government buy banks.  They find out how banks make all that money and everyone wants a piece of that.  Banks loan money and charge you interest and fees.  If you have ever entered into a "payment option" with the IRS you probably know that they charge you....interest and fees.  Expect more of the same.

One provision that does make a lot of sense is they are taking cell phones out of the "listed asset" category.  A listed asset just means a business asset intended for business use, but that easily lends itself to personal use.  Cars, computers and cell phones are the most common listed assets.  If your business has any listed assets, you have to follow special rules to substantiate that you really are using the asset for business and not personal purposes, including tracking your business vs. personal use of the item.  Back when it cost a dollar a minute to    make a call on your cell phone this probably made sense.  Since every one over the age of 6 now has a cell phone with unlimited calling, text and data, there is no marginal expense to use a business cell phone to make a personal call.  In a moment of clarity and sane thinking the IRS and Congress agreed.

I am a CPA, I get paid to prepare tax returns for folks.  Starting next year I am REQUIRED to electronically file the returns I prepare for people.  Ten years ago when E-Filing first came out, a lot of people feared it.  You can be all conspiracy theorist on me if you want, but the truth is it makes sense.  The IRS themselves admit they make mistakes on as many as 20% of the returns they process manually.  When my computer talks to the IRS computer the error rate is under 1%.  I tell all my clients you want to e-file.  This new bill does contain an exception to next year's e-filing requirements for professional tax preparers, I can now be exempt from the mandate for religious reasons.  I don't really know what that is about, all I can figure is the Amish CPA society has a good lobbyist.

Tomorrow-The Day After Tax Day, I will tell you more provisions of the new law.