Better revenues through form additions? The short-term highway funding extension gets about $1.8 billion in revenue over ten years from a change to an IRS form, reports Tax Analysts (paywall). The change goes into effect in 2017, even though the spending it helps pay for ends on October 29. Mortgage lenders will have to report the outstanding principal, origination date, and property address of borrowers who pay at least $600 in mortgage interest during the calendar year. It’s a relatively low-cost way to improve compliance on the mortgage interest deduction, but TPC’s Eric Toder noted that “This is in a way a fiscal scam… To say that ten years' worth of money is paying for three months' worth of spending... that's not something they can continue to do.”
Better budgeting through tax transparency… The Wall Street Journal reports (paywall) that the Governmental Accounting Standards Board approved a new disclosure rule about state and local tax breaks for 2016. State and local governments will have to share the costs of discounted tax bills, special tax zones, and waivers that they award under agreements with companies or other taxpayers. “These agreements reduce the amount of tax revenue you get, but you never see that, because it’s not reflected in the accounting system,” said GASB research manager Dean Mead.
More confusion through dynamic scoring? The Joint Committee on Taxation completed its first dynamic score of a tax bill this week. Bloomberg explains that the Senate bill that resurrects dozens of dead tax breaks would boost the economy enough to offset about 10 percent of the bill’s static revenue loss. Rather than adding $96.9 billion to the deficit over ten years—the static estimate—the bill would add $86.6 billion to the deficit. The estimate is “subject to some uncertainty.”
Online criminals still target tax returns. Social media channels and tax prep software continue to present a big opportunity for identity theft. Criminals can use stolen identity information to access tax returns and then file fake returns in subsequent years. The IRS says over 19 million tax returns filed between 2011 and 2014 were suspicious.
Online sales tax evaders—are you among the many? When states don’t collect, consumers still owe, and the TaxVox Tax Hound is on the case. In her latest post, she considers the awareness and willingness of consumers to pay their fair share of use tax on purchases made online.
On the Hill… The Senate Finance Committee voted to submit to the Senate its report on the IRS handling of tax-exempt status. The report, released yesterday, puts the blame on former IRS official Lois Lerner and management problems. The panel did not agree on whether anybody outside the IRS was involved.
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