Carbon tax might be offset by tax cuts

 
Australians earning less than $80,000 a year could be given two rounds of tax cuts as compensation for any price rises under the Gillard government's proposed carbon tax. But wealthier people "will pay a price" as the country moves to a low-carbon economy under a 10-year plan unveiled by Labor climate alter adviser Ross Garnaut.

Both sides of politics were fast to use the economist's final update to his landmark 2008 climate alter review to push their own barrow. Labor noted, properly, that the report was scornful of Tony Abbott's direct action policy because it would cost more than placing a price on carbon but not raise any revenue to compensate households with.

But the opposition leader held on another claim in the report. Prof Garnaut made clear on Tuesday that "Australian households will in due course bear the full cost of a carbon price". "So how can (the prime minister) continue to preserve that her tax only makes big polluters pay," Mr Abbott asked parliament.

"Who pays? Big polluters or households? The truth is households." A carbon price of $26 a tonne would raise about $11.5 billion in 2012/13. After the tax transitions to an release trading scheme in 2015 it could rake in much more - up to $16 billion by 2022/23.

Prof Garnaut wants 55 per cent of the revenue raised in the first three years to go to low and middle-income earners in the form of tax cuts and senior welfare payments. That could rise to 65 per cent by 2021/22. The rest of the revenue would be used to help business, drive innovation and stock up carbon in land systems.

Wealthier Australians would pick up the tab. That's because in the long run business will pass carbon costs from side to side to the users of their products. "High-income earners who don't get a tax cut or something else will experience a reduction in real incomes," Prof Garnaut told reporters.

"That's just the economics of it... people on high incomes will pay a cost." Most of the household assistance under Prof Garnaut's 10-year plan would be in the form of tax cuts, with the tax-free threshold raised to $25,000. That would result in 1.2 million Australians paying no tax.

Other rates would be rejigged to ensure people earning more than $80,000 a year wouldn't benefit. Prof Garnaut argued that as transitional aid to business declines there would be further opportunity for "a second round of tax cuts". Such a move wouldn't be bad politics, the adviser said. Ms Gillard seems to agree. She told parliament on Tuesday "tax cuts are a serious option".

The impact of a carbon price on petrol prices would be lessened by a one-off cut to the fuel excise. But business would get less under Prof Garnaut's plan than was on offer under Kevin Rudd's carbon pollution reduction scheme. Emissions-intensive, trade-exposed industries would get 30 per cent of the revenue pie for the first three years but that would decline by 1.5 percentage points annually after that.

Electricity generators would receive just three per cent until 2015 and then nothing. When it comes to pollution reduction targets, Prof Garnaut wants them determined by an independent committee. In 2014, it would review Australia's current pledge to cut emission by five per cent in 2020 relative to 2000 levels. The committee could advise much deeper reductions depending on international developments.

The world's developed countries have, on average, already vowed to cut emissions by between 10 and 16 per cent by 2020.

A Texas Attorney Is Disbarred from Practicing Before the IRS for Willful Failure to File Tax Returns

The Internal Revenue Service’s Office of Professional Responsibility (OPR) has prevailed in a Texas attorney’s appeal of an order for disbarment to practice before the IRS for willfully failing to file his federal tax returns, according to the Decision on Appeal.

The Treasury Secretary’s Delegate to hear appeals (Appellate Authority) has confirmed the basis for, and result of, the summary judgment granted by Administrative Law Judge (ALJ) Susan L. Biro in the case of Director, Office of Professional Responsibility vs. Donald J. Petrillo, according to the Decision on Appeal.

OPR alleged that Texas attorney Petrillo willfully failed to timely file his federal individual income tax returns for 2001 through 2006 and willfully failed to file his 2007 tax return. The untimely filings were from two to four years late. OPR further alleged that Petrillo willfully failed to pay the outstanding tax balances due on the late filed returns.

Petrillo did not deny the allegations but argued that his failures to file and pay were not the result of willful conduct but were due to personal circumstances beyond his control. Using the standard for “willfulness” set forth in previously published Circular 230 cases (“a voluntary, intentional violation of a known legal duty”), the ALJ found that the various explanations given by Petrillo for his failures to file did not negate his willfulness.

However, the ALJ explicitly declined to adopt OPR’s position that willful evasion of payment for purposes of Cir 230, sec 10.51(a)(6) should be analogous to Trust Fund Recovery penalty assessments. Finding that the failures to file were significant enough by themselves, the ALJ ordered disbarment without addressing the failures to pay.

In his appeal, Petrillo argued that (1) the ALJ applied a willful negligence standard rather than a willfulness standard; (2) the ALJ applied the wrong standard for willfulness; (3) material facts were in issue making summary judgment inappropriate; and (4) he was denied due process because the standards were changed from willfulness to willful negligence after the Complaint was filed.

The Appellate Authority determined that the ALJ had correctly and consistently applied the existing standard for willfulness to Petrillo’s conduct; that the ALJ had correctly determined from the deposition testimony and briefs that there were no material factual issues remaining to be heard; and that the ALJ’s findings of fact were well supported by the record and not clearly erroneous. Finding, during the periods in issue, that Petrillo was not mentally or physically incapacitated; was gainfully employed; prepared tax returns for others; engaged in legal work for clients; and conducted his own personal business, the Appellate Authority concurred in the ALJ’s decision to disbar, noting that Petrillo had been previously suspended by OPR from 1993 through 1997.

“This is yet another in a line of Final Agency Decisions in the past two years which reiterate that practitioners cannot expect to be excused for not filing or late filing their own tax returns when the record reflects their active engagement in other tax and business matters on behalf of paying clients, or active involvement with their own personal activities which belie any debilitation,” said OPR Director, Karen L. Hawkins.

April 18 Filing Deadline Approaching; IRS Offers Tips to Taxpayers

The Internal Revenue Service today reminded taxpayers that they have two weeks remaining until the April 18 filing deadline and that they can use IRS Free File to do their taxes or file an extension.
As of March 25, the IRS has received more than 82 million individual income tax returns, which is 58 percent of the 141 million returns expected this year. The IRS has received about the same number of returns so far this year as it did at this time last year, while processing of returns is up 3 percent from the same time last year.
Numerous economic recovery tax credits are also still available. The IRS reminded taxpayers that for some credits, such as the Making Work Pay Credit, individuals must claim the $400 ($800 for married couples) in order to receive it. (Use Schedule M to calculate your Making Work Pay credit.)
Usually, 20 to 25 percent of all taxpayers file in the final two weeks of the tax season. And, usually, about 7 percent of taxpayers seek a six-month extension to file.
Taxpayers have an extra weekend to file this year because of a District of Columbia holiday. The deadline for 2011 is Monday April 18, instead of April 15.
The IRS offered these filing tips as the final countdown begins:
Start now to gather information and prepare your return to avoid hasty and possibly costly errors;

• Many tax credits from the American Recovery and Reinvestment Act (ARRA) are available. There’s an expanded American Opportunity Credit of up to $2,500 for tuition, books and fees; a larger energy credit of up to $1,500 and an expanded Earned Income Tax Credit for larger families of up to $5,666. The $8,000 first-time homebuyer credit is still available for people who entered into a binding contract by April 30, 2010, and went to settlement by September 30, 2010;
• Consider using IRS Free File, which is brand-name software or online fillable forms, to prepare and e-file your returns – at no charge. Software is available to the 70 percent of taxpayers – those who earn $58,000 or less. And, fillable forms have no income limitations. Get started at IRS Free File;
• File electronically to get a faster refund, have secure, encrypted transmission and a more accurate tax return. You can e-file through your tax preparer, through commercial software or through IRS Free File;
• If you cannot meet the April 18 deadline, file an extension, Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. All taxpayers can use Free File to submit a Form 4868 for an automatic six-month extension. And, Free File will be available through the October 17 extension deadline for late filers.
• The six-month extension is to file a return only; it is not an extension to pay taxes due. If you are unable to pay your taxes, file a tax return anyway to lessen the penalties and pay all that you can. Then work with the IRS to set up a payment plan or you can go to IRS.gov and use the Online Payment Agreement Application.

In addition to Free File, the IRS offers other free tax help services through volunteers at 12,000 sites nationwide. The Volunteer Income Tax Assistance (VITA) sites serve taxpayers whose 2010 incomes were $49,000 or less. Tax Counseling for the Elderly sites serve taxpayers who are 60 and older.
Note to editors, PSA directors and Web managers: Multi-media products are available. Public Service Announcements to support IRS Free File and the Earned Income Tax Credit are available in video and audio formats. Both IRS Free File and EITC have Spread the Word campaigns that offer tax-day countdown widgets, electronic banners and posters.

2011 FILING SEASON STATISTICS
Cumulative through the weeks ending 03/26/10 and 03/25/11
Individual Income Tax Returns	2010		2011		% Change
Total Receipts	82,533,000		82,276,000		-0.3%
Total Processed	77,812,000		80,318,000		3.2%
E-filing Receipts:
TOTAL	66,542,000		71,067,000		6.8%
Tax Professionals	42,354,000		44,712,000		5.6%
Self-prepared	24,188,000		26,355,000		9.0%
Web Usage:
Visits to IRS.gov	141,109,467		151,305,611		7.2
Total Refunds:
Number	68,587,000		69,955,000		2.0%
Amount	$204.260	Billion	$206.477	Billion	1.1%
Average refund	$2,978		$2,952		-0.9%
Direct Deposit Refunds:
Number	54,738,000		57,251,000		4.6%
Amount	$175.038	Billion	$179.827	Billion	2.7%
Average refund	$3,198		$3,141		-1.8%

Tax On Funk Food

In an effort to alter bad eating habits of its citizens, the Hungarian government plans to bring in “tax on hamburgers.”

“Ministry of studying the likely effects of introducing taxes called” hamburger tax ‘, “said economics minister Gjergi Matolči on the site of the Assembly.

“Psychoanalysis of dietary habits in recent years and their effects on health shows that eating too much fatty and salty food reasons more problems,” noted the minister.

“To stop this process, various ministries are studying taxes that could be introduce, their economic effects, but it is still unclear which products will be to relate, and how to used the profits from these taxes,” he added.

If being a “hamburger tax”, a fast food restaurant chains will be able to protest to him as a discriminatory measure, since the Hungarian cuisine is not easy.

IRS Announces VCAP Relief from Debt Extinguishment for Certain Issuers of Tax-Exempt Bonds

Internal Revenue Service (“IRS”) Announcement 2011-19 provides relief from debt extinguishment for certain issuers purchasing and holding their own tax-exempt securities under the Tax Exempt Bonds Voluntary Closing Agreement Program (“TEB VCAP”).

Notice 2008-41, modified by Notice 2008-88, and extended by Notice 2010-7 to December 31, 2010, provided temporary rules allowing state and local governmental issuers to purchase and hold their own tax-exempt obligations for temporary holding periods. This rule prevented extinguishment of the purchased obligations under § 103 and §§ 141-150 of the Internal Revenue Code (“Code”). These temporary rules provided relief from liquidity constraints in the tax-exempt bond market during the financial crisis.

For various reasons, some issuers that purchased their bonds under the temporary rules were unable to resell their bonds by December 31, 2010. Other issuers are experiencing an ongoing need to purchase and hold their own tax-exempt obligations due to certain financial challenges.

Closing agreements executed under this program provide that the extinguished bonds are treated as remaining outstanding for purposes of § 103 and §§ 141-150 beginning from the later of January 1, 2011, the expiration of the temporary rules, or the date the issuer purchases its obligations.

The closing agreement will require the issuer to:

(1) submit a resolution of its intent to resell or currently refund the extinguished tax-exempt bonds no later than 180 days after the closing agreement is signed;

(2) submit representations or an unqualified bond counsel’s opinion the bonds are outstanding legal, valid and binding obligations of the issuer under State law and, if treated as outstanding under the closing agreement, will qualify as tax-exempt obligations of the issuer under § 103 of the Code;

(3) pay a fee based on the formula described in the Announcement. The TEB VCAP requests are due no later than December 31, 2012 under the operating procedures described in section 7.2.3 of the Internal Revenue Manual.

Simplifying federal tax code will decrease fraud

USA TODAY's article "Inmates stole $39 million from the IRS in 2009" serves to highlight that the wealthy are not the only ones trying to get extra money back, avoid taxes or pay less than their compulsion under the current federal tax system. Income tax evasion and fraud cut across all income tax brackets.

A complex system of exemptions, deductions and credits creates a state of mind that others aren't paying their fair share, so why should I? It creates a false insight of tax evasion and fraud as victimless crimes. But the victims are the countless taxpayers who pay and file their taxes in a timely, precise manner. They are supporting financially all the tax cheats.

It is time to make simpler the tax code and stop using it to advance political agendas or to accomplish social engineering.

Every year, I pay my Pennsylvania income tax, and I am reminded how simple and fair it is. Take your income and increase it by the current tax rate, a flat 3.07%, and arrive at your tax obligation. Simple. There are very few adjustments, credits or exemptions. The system is fair. Low-income Pennsylvanians have their tax compulsions forgiven. For Pennsylvania retirees, Social Security and pension income do not count as taxable income.

By using the Pennsylvania income tax system, much of the fraud and abuse that occur with the current federal income tax system could be eliminated

Obama to recommend break for states on jobless aid

President Obama is expected to recommend easing the burden on states that on loan to provide jobless benefits during the economic downturn by allow them to postpone debt payments to the federal unemployment trust fund for two years.

The proposal in his upcoming 2012 budget is likely to be embraced by states frantic for help as they struggle to shore up budget shortfalls. But it is being disapproved of by congressional Republicans as a job-killer that will eventually inflict higher taxes on employers who pay the cost of most jobless aid.

Obama is likely to discuss the suggestion with Republicans on Wednesday, when House Speaker John A. Boehner (R-Ohio) and other House GOP leaders join him for lunch.

White House Press Secretary Robert Gibbs said the president thinks the steps future in his budget outline would reduce the burden on states providing jobless aid, and would give state officials time to "reduce what they offer and how they pay for it." Obama's budget is expected to be revealed Monday.

The proposal is not the only gauge to help states run the fiscal fallout from persistent unemployment, said one person familiar with the discussion.

Yet Republican leaders in the House and Senate have made it clear they have little interest in providing federal help to cash-strapped states, as Democrats did last year when they forbidden Congress. At the time, Obama approved a states' aid bill to keep teachers on the job and give medical care for lower-income residents.

"There will be no post security of the states," Rep. Eric Cantor (R-Va.), the House majority leader, said recently.

Thirty states owe almost $42 billion to the federal unemployment insurance trust fund, and the president's proposal would congeal for two years their interest payments to the federal government. Obama's plan would also halt the tax adds to that kick in automatically to pay it off.

Congressional Republicans say the Obama proposal would obstruct job growth by allowing states to eventually increase the tax on employers who pay for unemployment benefits.