Archive for the ‘Tax Administration’ Category

Billions in Tax Refund Fraud–and How to Stop Most of it

The Treasury may be losing as much as $5 billion a year from fraudulent tax refund claims—and most of that fraud is entirely preventable. The New York Times reportedyesterday about the rampant use of identity theft to exploit weaknesses in the IRS’s tax refund processes, sometimes resulting in thousands of fraudulent refunds. The most common form […]

Five Challenges for the IRS’s New Capital Gains Reporting Rules

Sellers of stocks and other assets have always had to calculate their cost basis (generally, what they paid for the investment) in order to figure their taxable capital gains. In the past, this was often a hit-or-miss experience that required lots of tedious research (occasionally with help from brokers) and more than a bit of […]

Tax Extenders and Tax Reform

On Tuesday, I testified before the Senate Finance Committee at a hearing titled “Extenders and Tax Reform: Seeking Long-Term Solutions.” I was already depressed about the state of our tax system before I started preparing. As I drafted my testimony, I became distraught. Our tax system is a mess and unless we send a clear […]

Why the Tax Code is a Mess, Graphically

I just came across this bar chart, which illustrates graphically why the tax code is such a mess.  The Joint Committee on Taxation (JCT) is the official scorekeeper for all tax legislation passed by the Congress.  The chart shows the number of requests for estimates and other analysis that they’ve received from Congressional offices since […]

Unearned Interest in the Homebuyer Tax Credit

Taxpayers who took the 2008 tax credit for new homebuyers were unhappy when Congress made the credit much more generous in 2009. People who bought homes in 2008 have to repay the $7,500 credit over 15 years. Those who bought in 2009 or 2010 don’t have to pay their credits back. It turns out that […]

Too Many Cooks on Tax Policy?

I’m preparing a presentation on our tax system for a group of visiting foreign tax officials and they wanted to know how responsibilities are divided within the federal government.  Seems like a fair question. In other countries, the process is often quite streamlined:  a Ministry of Finance, which makes the political decisions, a Treasury Department, […]

IRS: “Don’t Hurry to File Your 2010 Taxes”

If you’re among the one-third of taxpayers who itemize deductions on their federal tax returns, the IRS says you can take your time filing your 2010 tax return. Or rather you have to take your time. The IRS won’t let itemizers (or people who claim either the college tuition or educator expense deductions) file until […]

Salience and Subways

I use the Washington subway—the Metro—to commute from my home in the D.C. suburbs to my downtown office. The system has just approved a $109 million fare increase. But, in a tour de force of obfuscation, it has designed the hike so that few riders will have any idea what a given trip will cost.

Shutting Down Virginia’s iFile

Okay, this one’s personal. For years I’ve filed my state tax return using iFile, Virginia’s free on-line tax filing service. I do that partly because I’m cheap—I don’t want to pay Intuit $15 to send my return electronically—and partly because it reduces errors and saves the state money.
But this year the General Assembly, with the concurrence of new governor Robert McDonnell, voted to end the iFile program. So next year I’ll go back to mailing in a paper return. A 44-cent stamp costs just 3 percent of Intuit’s bill. I did say I’m cheap, didn’t I?

Why We Run Subsidies through the Tax System

I disagree with former IRS Commissioner Don Alexander. Sometimes the IRS is the best, most efficient agency to administer a subsidy. And if we want to encourage low-income families to work—a key premise of welfare reform—refundable tax credits make a lot of sense.