I think I see why the Republicans are outraged at Obama's bailout plans. They aren't outraged that the government's bailing out corporations. They're perfectly happy to have the government simply buy up and write off bad loans, for instance, leaving the banks and borrowers who dug the hole financially undamaged by it and the taxpayers holding the bag. And they'd be perfectly fine with the government letting those corporations go bankrupt, leaving their executives to walk away with their bonuses and payouts and leaving the taxpayers to pick up the tab for unemployment and welfare for all the employees put out of work by it.
No, what outrages the Republicans is that Obama has the temerity, the audacity to put conditions on the bailout. To say "We'll loan you the money to keep you in business, but you're expected to pay it back with market-rate interest just like any other loan.". To say "We'll help you out, but we won't let you use the money to give rewards and bonuses to the executives whose fuck-uppery got you into this mess.".
They're outraged because Obama is expecting business to man up, admit that they screwed up by the numbers and accept the consequences instead of playing Uncle Sugar and shovelling money at them no strings attached like they want.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Thursday, April 16, 2009
Tuesday, February 3, 2009
Daschle nomination withdrawn
Tom Daschle is withdrawing from his nomination as Health and Human Services secretary in the Obama adminisration. This is good. There's too many issues with taxes among nominees lately. Potential nominees need to be more careful about their taxes, and clear up things before their nomination is announced. The Obama administration needs to be more careful about vetting potential nominees, and prod them to clean up their records ASAP. And both need to be clearer about whether the problem is a real, clear error or just a disagreement about an item that could arguably go either way.
Now, personally I don't consider tax "errors" to be a killer simply by existing. The plain fact is, most of those "errors" haven't been found to be errors. They're cases where either the IRS or an auditor disagrees with the original preparer as to how to classify a particular item. This isn't anything odd on a moderately complex tax form. Besides the IRS regulations there's a huge body of administrative and case law government what can be considered how, and even IRS agents aren't familiar with it all (one reason good tax accountants are in such demand is that they know that body of law better than the IRS agents and, when the IRS wants to disallow a deduction, they can point to a ruling that says it is too allowable). For instance, take a home office. Expenses related to it are deductible, however if it's also used for personal use some things are deductible and some aren't. For instance, if it's mixed-use you can't deduct a portion of the utility bills. You can, though, deduct business calls on a mixed-use phone. And not all mixed-use disqualifies it. The IRS will try to argue it, but occasional and incidental personal use has been ruled to not disqualify the office. The personal use has to be regular and consitute a not-insignificant portion of the use to disqualify the office. You can have endless arguments with the IRS over this if you aren't careful. Get into investments or foreign earnings and it gets really fun. Eg. you were paid $50,000 for work done in a foreign country, the money was deposited into a bank in that country and used only in that country, and taxes were paid on it in that country per their rules. How much of that money must be reported as US income, how much of it is taxable as US income and how much of a credit against US taxes paid are you entitled to? What if the foreign country says you owed $20,000 in taxes to them on that money but the IRS says only $10,000? Note that in that last case, if you paid $20,000 to the foreign country for taxes and claim $20,000 in foreign taxes paid, you have an error on your return even though you're in compliance with what the rules say simply because the IRS disputes your (and the foreign country's tax people's) interpretation of the foreign tax laws.
Now, personally I don't consider tax "errors" to be a killer simply by existing. The plain fact is, most of those "errors" haven't been found to be errors. They're cases where either the IRS or an auditor disagrees with the original preparer as to how to classify a particular item. This isn't anything odd on a moderately complex tax form. Besides the IRS regulations there's a huge body of administrative and case law government what can be considered how, and even IRS agents aren't familiar with it all (one reason good tax accountants are in such demand is that they know that body of law better than the IRS agents and, when the IRS wants to disallow a deduction, they can point to a ruling that says it is too allowable). For instance, take a home office. Expenses related to it are deductible, however if it's also used for personal use some things are deductible and some aren't. For instance, if it's mixed-use you can't deduct a portion of the utility bills. You can, though, deduct business calls on a mixed-use phone. And not all mixed-use disqualifies it. The IRS will try to argue it, but occasional and incidental personal use has been ruled to not disqualify the office. The personal use has to be regular and consitute a not-insignificant portion of the use to disqualify the office. You can have endless arguments with the IRS over this if you aren't careful. Get into investments or foreign earnings and it gets really fun. Eg. you were paid $50,000 for work done in a foreign country, the money was deposited into a bank in that country and used only in that country, and taxes were paid on it in that country per their rules. How much of that money must be reported as US income, how much of it is taxable as US income and how much of a credit against US taxes paid are you entitled to? What if the foreign country says you owed $20,000 in taxes to them on that money but the IRS says only $10,000? Note that in that last case, if you paid $20,000 to the foreign country for taxes and claim $20,000 in foreign taxes paid, you have an error on your return even though you're in compliance with what the rules say simply because the IRS disputes your (and the foreign country's tax people's) interpretation of the foreign tax laws.
Monday, January 26, 2009
Treasury appointment
For those pontificating about Geithner's tax problems, bear this in mind: if you hand the exact same set of original income/expense documents to 5 different IRS agents, you'll get 5 different numbers for the amount of taxes owed. If you take each one and hand it to one of the others to audit, you'll likely end up with 10 different numbers. And that's for returns a lot less complex than his likely is. Income from the IMF means dealing with international income and tax rules, and those are even more complex than the ones for purely domestic income. It's not hard to end up with a dispute about the amount of taxes owed, and it's not always the IRS that has the right numbers.
I'm minded of advice my tax instructor gave: "Never go into an audit or IRS hearing aiming to justify why you can take that deduction. Be ready to do that, but start off by making the IRS justify why they think you can't take it. And if they can't come up with a reason, dig your heels in and make them explain clearly why they're trying to disallow something without any justification."
I'm minded of advice my tax instructor gave: "Never go into an audit or IRS hearing aiming to justify why you can take that deduction. Be ready to do that, but start off by making the IRS justify why they think you can't take it. And if they can't come up with a reason, dig your heels in and make them explain clearly why they're trying to disallow something without any justification."
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