Tuesday, May 13, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


* Please say it isn’t so!  Kay Bell warns that “Private Debt Collectors Could Be Coming After Taxpayers Again” at DON’T MESS WITH TAXES.

Read my lips – The IRS, or a state tax agency, should NEVER be allowed to use an outside collection agency to collect outstanding tax debt!!

A collection agency makes money by collecting money from alleged debtors, whether or not the debt is genuine.  A collection agency could care less if the person they are dunning actually owes the money – they only care about collecting money. 

The function of the IRS, or a state tax agency, is tax administration.  They have a fiduciary, and perhaps even legal, responsibility to make sure that any alleged outstanding tax debts are genuine.

It has been proven again and again that using an outside collection agency is not financially beneficial.  The last two times the IRS tried this were disasters, as Kay explains (highlights are mine) -

The 1996 debt collector pilot program produced a $17 million net loss for Uncle Sam. Plus, the participating collection firms were repeatedly found to violate the Fair Debt Collection Practices Act.

A reboot authorized as part of the American Job Creation Act of 2004 allowed the private debt collectors to keep up to 24 percent of what they recovered as a bounty payment. It turned out such financial rewards again prompted debt collector abuse and harassment of taxpayers.

This second time, the government's net loss was smaller, only around $4.5 million, but the private debt collectors pocketed more than $16 million in commissions.

My advice to anyone who is contacted by an outside collection agency regarding an alleged tax debt has always been to tell the agency that they refuse to deal with anyone other than the applicable government agency.

* POLITICAL TICKER reports “Tax-writing Congressman Violated Tax Law”.  It’s not Chuck Rangel this time.

Republican Rep. Todd Young violated Indiana state, not federal tax law, by “claiming a property tax deduction for a house he didn’t live in”.

* Kay Bell, the yellow rose of taxes, pondered the question “Are Child-Related Tax Breaks Appropriate, Fair? in her Mother’s Day post at DON’T MESS WITH TAXES.

I don’t believe we should tax married couples differently than singles.  There should be neither a marriage tax penalty nor a marriage tax benefit - the Tax Code should be marital-status neutral.  And, while I believe that the Tax Code should neither encourage nor discourage having children, I do believe there should be some additional deductions/benefits for families, or singles, with children and other dependents.
 
* Laurie Ehlbeck, New Jersey state director for the National Federation of Independent Business, tells it like it is in a guest editorial in the ASBURY PARK PRESS titled “High Taxes Spur N.J. Exodus”.

Laurie points out that -

Between 2001 and 2010, New Jersey lost a net 179,000 income tax filers, according to IRS data compiled by the nonpartisan Tax Foundation. They left with more than $13 billion in adjusted gross income.”

Why the moves?  NJ has very high state income taxes.  And -

Don’t forget that New Jersey also imposes the highest property taxes in America, and its sales tax is higher than all but a handful of states. Add it all up, and moving out of New Jersey is an easy decision for the people who can most easily move.”

* Jason Dinesen’s latest post at DINESEN TAX TIMES - “Glossary of Tax Terms: Community Property” -only applies to residents of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
 
TTFN

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