On the Hill. Today the Senate Finance Committee will consider a bill to prevent identity theft and tax refund fraud, and the House Ways & Means Committee will mark up trade legislation. Yesterday the Senate voted to reauthorize the Federal Aviation Administration, and included the passenger ticket excise taxes that fund the FAA through the end of fiscal year 2017.
But that anti-fraud bill won’t allow the IRS to regulate paid preparers. Lawmakers constantly complain about taxes that are owed but not paid and about fraud among filers for the Earned Income Tax Credit. Half of EITC returns are filed by paid preparers. Some lawmakers want Congress to give the IRS authority to set minimum standards for tax shops, but the Finance panel is unlikely to OK the measure. TPC’s Howard Gleckman explains the missed opportunity. And lawmakers will still complain.
Liberty Tax is at less liberty to help prepare taxes. In the last month, at least 70 franchises have been shuttered, seized, sued by federal prosecutors, criminally investigated or had their electronic filing privileges suspended by the IRS, according to The Virginian-Pilot, including 12 in Los Angeles and Las Vegas for filing fraudulent returns. Regarding this recent raid, Liberty Tax’s corporate headquarters says it is “moving swiftly to investigate the action and understand the implications, to the extent related to the franchisee’s tax business.” Nearly 60 Liberty Tax franchises have been likewise prohibited from conducting business since 2014.
Kansas’ tax cuts aren’t cutting it anymore. In eleven out twelve months last year, Kansas collected less tax revenue than it expected. Some allies of GOP Governor Sam Brownback have had enough, and want him to scale back tax cuts to help ease the budget crunch. If he’s unwilling, he’ll have to figure out how to balance Kansas’ budget on his own.
What do Georgia and Connecticut have in common? Well, for one, GE dashed both states’ hopes of becoming the multinational’s new US home. Carolyn Bourdeaux, director of the Center for State and Local Finance at Georgia State University, examines how the two states compare in their tax policies and efforts to build prosperity and economic growth.
How might tax credits increase college attendance? As it stands, college attendance increases not because of tax credits, but because of a household’s adjusted gross income. Susan Dynarski of the University of Michigan argues that “If the billions spent on the tax credits are to have any effect on college attendance, you would want them delivered when tuition bills are due.” In a paper written with Judith Scott-Clayton, she concludes, “Simplification would clarify incentives and increase investments in human capital.”
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