RIP IRS?

Most Americans see the IRS and paying taxes as a necessary burden of living in society; most but not all.

Ron Paul, the libertarian candidate for the Republican presidential nomination, has garnered a lot of attention lately. His primary claim to fame has been his firm stance against the increasingly unpopular US occupation of Iraq. While this position has brought him support from voters of all political stripes it is some of his other positions that many find rather jarring.

One of these is his firm belief that the US government has no need for and should do away with the IRS. In an age when no working Americans can remember not paying an income tax to the IRS this can seem startling and a little exciting. Paul’s position, as laid out at his website RonPaul2008.com, is that every working American should bring home 100% of what they earned.

There’s a seductive quality to his position. During the first one hundred plus years of the Union, Americans paid no income tax to the Federal government. To varying degrees most of the US treasury came from tariffs. It worked then, Paul argues, and it can work again.

But a deeper look at this proposal reveals problems from many perspectives - political, economic, business, international relations, etc. Over the coming weeks, I’ll take a closer look at the potential impact of shuttering the IRS.

More On Tax Refund Scams

A few weeks ago I mentioned email scams that were attempting to imatate the IRS in order to trick US taxpayers into turning over valuable persanol information. Well, today I actually received one of these for myself. I though that I'd share it with you so you'll know what to be on the lookout for.

The sender listed on the message was "Internal Revenue Service (IRS)." That's certainly enough to get one's attention. When I looked closer, though, that actual email address had nothing to do with the IRS.

The subject line was "Tax Refund!" An exclamation point from the IRS? There's another tipoff that this is phony.

The body of the message read as follows:

After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $116.40. Please submit the tax refund request and allow us 6-9 days in order to process it.

A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.


To access the form for your tax refund, please:
Click Here


Thank you for your patience in this matter.

Regards, Internal Revenue Service

Please do not reply to this e-mail as this is only a notification. Mail sent to this address cannot be answered.



© Copyright 2007 Internal Revenue Service U.S.A.

There was only one link in the message and it was on the words "Click here." When I floated my cursor over it, the web address had nothing to do with the IRS. Clearly this was a fake.

Dear IRS,

Roni Deutch has written an open letter to the IRS urging them to update the allowable standards for living expenses. According to the press release, she highlights two problems with the standards.

The first is that the IRS uses statistical data that is two years old to determine the amount of the expenses. So taxpayers are buying whatever it is that is on the allowable list in today's dollars but they can only deduct these items' worth in the dollar of two years ago. This problem is exaggerated this year because the IRS decided not to compile new data; they are using the same numbers used last year.

The second problem she identifies is that the IRS apparently uses a national standard to determine the amount of these expenses. Deutch argues that some taxpayers live in communities that are more expensive than the national average and these taxpayers should be allowed a greater discount.

She asks that the IRS correct these problems and suggests that the US Treasury department reprimand the IRS for allowing them to persist.

If this works I may have to start putting my own letter together.

Hybrid Vehicle Tax Credit

Buy a car, save the planet, right? Political concerns aside everyone can agree that spewing a little less carbon into the atmosphere is a good thing. Even the IRS agrees with that. In fact they offer a tax credit for buying a hybrid. But don’t go thinking that claiming this credit is going to be a simple process. Attempting to claim it isn’t that hard, but actually receiving it may seem to be as much a matter of luck as it is anything else. That isn’t entirely the case; knowing how the IRS arrives at the amount of the credit will go a long way toward increasing it.

It is more complicated than simply subtracting the standard hybrid fuel deduction from the total tax. In the first place, there is no standard deduction; it is a credit that is calculated based on a number of complicating factors. In an article recently published at IRS Problems Resolved the qualifying factors for this deduction are described. The article can be found here.

Though most car buyers are probably considering more than the possible tax credits when they choose alternative vehicles it’s good to know that the government is willing to help a little. But it takes more than simply choosing a hybrid to get the maximum tax benefit. Knowing which models will bring the most benefit is important and can save the taxpayer quite a bit of money come tax season. So check out Hybrid Vehicle Tax Credit.