HAVING PROBLEMS BORROWING MONEY? YOU ARE NOT THE ONLY ONE.

Quarterly decline in bank lending is largest since 1984

Banks cut back the amount of money loaned to customers by $210.4 billion in the third quarter, the Federal Deposit Insurance Corp. said. The 2.8% reduction marks the sharpest drop since at least 1984. The biggest banks, which received billions of dollars in taxpayer bailouts, accounted for a disproportionately large part of the drop. "We need to see banks making more loans to their business customers," said Sheila Bair, the FDIC's chairwoman. The Washington Post (11/25) , CNNMoney.com/Fortune (11/24)

PLASTIC SURGERY TAKES A HIT IN HEALTH CARE DEBATE

Plastic Surgery Takes A Hit In The Health Care Debate and You Can’t Believe How They Do This

If I ran my business like the Congress I would be applying for unemployment right now.

It appears that the Senate, in its effort to tax everything possible to pay for health care reform (you’re right, I’m exaggerating) is forging ahead with its plan to tax cosmetic surgery.

Sen. Harry Reid (D-NV) has introduced a 5% excise tax on cosmetic surgeries that are “not necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma or a disfiguring disease.” In case you’re keeping score, that’s just half of the original tax that was earlier proposed.

I highly encourage you to read the various proposals involving health care reform floating around in the House and Senate. Only… it is really impossible to read since it’s a moving target.

This latest one? It’s actually a Senate Amendment to a House Bill. Follow me for a moment.

The bill number is HR 3590 – but there are four versions (!?) of this bill.

According to THOMAS (Library of Congress), the bill was introduced as the Service Members Home Ownership Tax Act of 2009 on September 17, 2009. It passed the House in October 2009 and was moved to the Senate. On November 21, 2009, a motion to proceed to consider the bill was passed, 60-39 (you can view the roll call here). That same day, Senator Reid proposed Amendment S.AMDT.2786 to the bill – a 247 page amendment. That amendment “in the nature of a substitute” is the Patient Protection and Affordable Care Act, introduced in the bill as follows:

SA 2786. Mr. REID (for himself, Mr. Baucus, Mr. Dodd, and Mr. Harkin) submitted an amendment intended to be proposed by him to the bill H.R. 3590, to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes; which was ordered to lie on the table; as follows:

An amendment “in the nature of a substitute” is a substitution of the body of a piece of legislation. The Senate describes it as “an amendment that would strike out the entire text of a bill or other measure and insert a different full text.” And yet, keep the name.

Huh? Now the bill is even longer. And better yet, it’s attached to popular items like modifying the first-time homebuyers credit for members of the Armed Forces. Who’d vote no to that?

Which brings me to my cynical question: Was the health care reform bill amended to another bill for purposes of consolidation and simplification? Or something else I don’t know.

As to the cosmetic surgery excise tax is specifically included in the Act at Section 9017 which adds, you guessed it, another amendment. It says, “Subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new chapter: CHAPTER 49–ELECTIVE COSMETIC MEDICAL PROCEDURES.” The specific language regarding the tax can be found at Section 5000B(a).

For those of you that have read this far… if any of you, I have serious concerns about substituting and amending parallel bills with a number of versions especially when the title you retain is not related to the most meaty part of the bill. Why? Because it renders it virtually impossible for the average taxpayer to follow along.

Do I think that’s purposeful? I’m not saying that it is. But is it transparent? Absolutely not.

HEALTHCARE REFORM BILLS WOULD REQUIRE RESTAURANTS TO DISCLOSE CALORIES

US News Weekly reports that for the "most part, the Democrats' healthcare reform legislation focuses on insurance coverage and insurance reforms," but "there are proposals on the table, experts say, that at least begin to address the obesity problem. In one of the more far-reaching approaches, both the House bill...and Senate Majority Leader Harry Reid's bill...would require that all large fast-food chains and restaurants put calorie labels on their menus and displays."

QUESTION ON 1099s

Larry,

Could you answer a quick question? Several elderly friends have asked me to help them with administrative work in their home. I would probably do this on an ongoing basis and I am sure each would end up paying me more than $600 a year. I would report all of this money but am concerned for the people I would be doing the work for. Do they have to issue a 1099 for the work I would do for them? Could I just report the money quarterly without ever getting a form from them and have it be legal, I don’t want to get them into trouble?

Alison

Alison, if I understand it, you’re going to be kind of like a Girl Friday? Opening mail, paying bills, that sort of thing, at times that are convenient for you – and for a number of different people? Assuming that you can’t be classed as a household employee (which I think you’re not if my understanding of your situation is correct), then there is no obligation for your customers to report payments made to you.

Forms 1099-MISC are generally issued when payments are made in the course of trade or business. You do not need to report payments for personal items on a 1099.

For example, a painter paints my office for $1,000. I must give him a 1099. A painter paints my house for $1,000. I do not need to give them a 1099.

If your customers are making payments to you for services in much the same way that they would pay their hairdresser or a kid that occasionally mows the lawn, there’s no reason to submit a 1099 to you. Again, this assumes that you’re self-employed and that you control how the work is done. A self-employed worker also usually provides his or her own tools and offers services to the general public in an independent business – which sounds like what you’re doing.

If, however, you could be classified as a household or other employee (which would result in a form W-2 issued to you), or if you’re performing services for your customer’s trade or business (which would result in a form 1099-MISC issued to you), that’s a different story. I hope that helps. Good luck with your business!

Larry Kopsa CPA

THE JOB - URINE TEST (THIS IS A GREAT IDEA)

I don't know if any of you have seen this email that's going around. It's an interesting concept. The only thing that I would add is that if someone flunked the test, we would assist them in getting help as opposed to cutting them off cold turkey. Here is the email that has popped up on my machine.

"Like most folks in this country, I have a job. I work, they pay me. I pay my taxes and the government distributes my taxes as it sees fit. In order to get that paycheck in my case, I am required to pass a random urine test (which I have no problem). What I do have a problem with is the distribution of my taxes to people who don't have to pass a urine test.

So, here is my Question: Shouldn't one have to pass a urine test to get a welfare check, because I have to pass one to earn it for them? Please understand, I have no problem helping people get back on their feet. I do have a problem with helping someone sitting on their a** - taking drugs while I work. . . . Can you imagine how much money each state would save if people had to pass a urine test to get a public assistance check? I guess we could title that program, 'Urine or You're Out'.

Hope you will pass this along. Something has to change in this country, and soon!!!!"

QUOTE OF THE WEEK

"We don't see things as they are;
we see things as we are."
Anais Nin

DEFICIT MAY SIGNAL HIGHER TAXES

We all know that our government has a huge deficit. This year alone is $1.8 trillion. Remember from one of my previous postings, just counting to a billion would take 31.5 years. Be prepared, some day taxes are going to go up.

The Tax Foundation just issued a report estimating where tax rates will have to go to close the deficit. And it's not someplace any of us want to visit. The sad reality is that - all other things remaining the same - Washington would have to nearly triple every tax rate to close the deficit with income taxes alone. And while that's clearly not possible, the numbers do show that painful tax hikes in some form lie ahead. Take a look at the following rates.

RECESSION NOT OVER FOR SMALL BUSINESSES

According to all the business publications, the recession is supposed to be over. How come most of my small business clients would not agree? Well, surprise surprise! As stated in the article below, the business magazine economists forgot about the importance of us small business people. We do make up a large part of the economy.

Small-business recession is still holding back recoveryhttp://www.smartbrief.com/images/briefs2/common/storyicons/icon_analysis.gifGoldman Sachs economist Jan Hatzius has argued that troubled small businesses aren't being taken into account in the official estimation of gross domestic product. "We have argued that the weakness of the small business sector may mean that real GDP in the third quarter in fact grew more slowly than the 3.5% 'advance' estimate," Hatzius wrote, according to this blog post quoting him. In fact, Justin Fox writes, the unemployment numbers for small business are substantially worse than those for big business. Small business isn't getting the credit it needs, and is still suffering in the recession, Fox argues. TIME/The Curious Capitalist blog

TAX CREDIT MAY HAVE BEEN TOO BIG

Remember the increase in your paycheck back in April? This was because instead of sending you a $400 check the government decided to just decrease your withholding. What did that mean? Just less withheld.

I said at that time that you might have to pay for this additional money when you file your return because your withholding was less, therefore your refund would be less or, heaven forbid you might actually have to pay in. Well now the government has figured this out. Below is an article from Money.

Tax credit may have been too big for some recipients
As many as 15.4 million tax filers may have received too much under the Making Work Pay tax credit, the Treasury Department says. As a result, those people will get a smaller refund or may even have to repay some of the over-payments when they file their 2009 taxes. The tax credit was part of the stimulus package passed in February. CNNMoney.com (11/17)

QUOTE OF THE WEEK

"If the only tool you have is a hammer,
you tend to see every problem as a nail."
Abraham Maslow, American psychologist

GOVERNMENT TRUE-ISMS

I don't make jokes. I just watch the government and report the facts. -Will Rogers

COMMENT ON CASH FOR CLUNKERS

Hi Larry,

I also enjoyed your cash for clunkers article. This is in response to the comment you posted in the last blog. Someone mentioned "selling" all the clunkers causing sales of auto parts for repairs. My understanding was the opposite. All the cars had to be destroyed, thus less sales of auto parts and fewer repairs.

Conner

Conner, you are correct - they did have to be destroyed. We have yet to see the total impact. As you know, most of the sales were foreign cars. Thanks for your kind comment.

Larry Kopsa CPA

IS THIS ANY WAY TO RUN A BUSINESS?

I wonder if you think this is the way a business should be run. Let’s assume that you are purchasing a piece of furniture. After shopping around for some time, in negotiating with the furniture store, you find the perfect couch for $4,000. You agree with the furniture store that you’ll pay $4,000 for the couch and all they have to do is deliver it. You haven’t written the check yet, but as soon as that couch is in your living room, you will. Everyone is happy with the deal but then the furniture store owner calls you up and says, “Hey, I changed my mind, I’m only going to charge you $3,000 for the couch.” "Why," you ask? He replies, “If I sell that couch for only $3,000, I think I’ll sell more couches.” You explain to the furniture dealer that it’s fine and you’d be glad to save $1,000 but you don’t get why he’s doing this. It doesn’t seem like good business.

That’s actually what’s happening right now with the federal government. Just yesterday, a person stepped into my office and said, “You’re not going to believe this?” We’ve been building our house since this summer. We’re planning on moving in sometime before the end of the year. We did not qualify for the new home buyer credit because we own a house. Now with the new home owner credit that was just passed, we do qualify for the $6,500 credit. When we file our tax return, we get $6,500 off on our taxes and we didn’t do anything.

That just does not make sense to me. Our deficit is going up because of the new home buyer credit that was just passed by 10 billion dollars. The person who came into my office was building a house without the credit. They’ll take the $6,500. More power to them, but what was the government thinking when they passed this law? Is this any way to run a business? I’m sure that furniture store dealer who keeps discounting below cost on his furniture won’t be in business long. I hope our country is.

THE NEW HOMEBUYER CREDIT - EXPANDED

On November 6, the President signed into law H.R. 3548, the ''Worker, Homeownership, and Business Assistance Act of 2009.'' The new law extends and generally liberalizes the tax credit for first-time homebuyers, making it a much more flexible tax-saving tool. It also includes some crackdowns designed to prevent abuse of the credit. These important changes could make it easier for you or someone in your family to buy a home. And because the changes generally aid buyers and aim to improve residential real estate markets nationwide, they also could make it easier for you or someone in your family to sell a home. Here is what you need to know about the first-time homebuyer credit.

Homebuyer credit basics. Before the new law was enacted, the homebuyer credit was only available for qualifying first-time home purchases after April 8, 2008, and before December 1, 2009. The top credit for homes bought in 2009 is $8,000 ($4,000 for a married individual filing separately) or 10% of the residence's purchase price, whichever is less. Only the purchase of a main home located in the U.S. qualifies. Vacation homes and rental properties are not eligible. The homebuyer credit reduces one's tax liability on a dollar-for-dollar basis, and if the credit is more than the tax you owe, the difference is paid to you as a tax refund. For homes bought after Dec. 31, 2008, the homebuyer credit is recaptured (i.e., paid back to the IRS) if a person disposes of the home (or stops using it as a principal residence) within 36 months from the date of purchase.

Before the new law, the first-time homebuyer credit phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase.

Your guide to the revised homebuyer credit. The new law makes four important changes to the homebuyer credit:

(1) New lease on life for the homebuyer credit. The homebuyer credit is extended to apply to a principal residence bought before May 1, 2010. The homebuyer credit also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010. In general, a home is considered bought for credit purposes when the closing takes place. So the extra two-months (May and June of 2010) helps buyers who find a home they like but can't close on it before May 1, 2010. They can go to contract on the home before May 1, 2010, close on it before July 1, 2010, and get the homebuyer credit (if they otherwise qualify). Note that certain service members on qualified official extended duty service outside of the U.S. get an extra year to buy a qualifying home and get the credit; they also can avoid the recapture rules under certain circumstances.

(2) The homebuyer credit may be claimed by existing homeowners who are “long-time residents.” For purchases after November 6, 2009, you can claim the homebuyer credit if you (and, if married, your spouse) maintained the same principal residence for any 5-consecutive year period during the 8-years ending on the date that you buy the subsequent principal residence. For example, if you and your spouse are empty nesters who have lived in your suburban home for the past ten years, you are potentially eligible for the credit if you “move down” and buy a smaller townhome. There's no requirement for your current home to be sold in order to qualify for a homebuyer credit on the replacement principal residence. Thus, the replacement residence can be bought to beat the new deadlines (explained above) before the old home is sold. For that matter, you can hold on to your prior principal residence in the hope of achieving a better selling price later on.

The maximum allowable homebuyer credit for qualifying existing homeowners is $6,500 ($3,250 for a married individual filing separately), or 10% of the purchase price of the subsequent principal residence, whichever is less.

(3) The homebuyer credit is available to higher income taxpayers. For purchases after November 6, 2009, the homebuyer credit phases out over much higher modified AGI levels, making the credit available to a much bigger pool of buyers. For individuals, the phaseout range is between $125,000 and $145,000, and for those filing a joint return, it's between $225,000 and $245,000.

(4) There's a new home-price limit for the homebuyer credit. For purchases after Nov. 6, 2009, the homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000. It's important to note that there is no phaseout mechanism. A purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit.

The new purchase price limitation applies whether you are buying a first-time principal residence or are a qualifying existing homeowner purchasing a replacement principal residence.

Other homebuyer credit changes. The new law includes a number of new anti-abuse rules to prevent taxpayers from claiming the homebuyer credit even though they don't qualify for it. The most important of these are as follows:

... Beginning with the 2010 tax return, the homebuyer credit can't be claimed unless the taxpayer attaches to the return a properly executed copy of the settlement statement used to complete the purchase of the qualifying residence.

... For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed unless the taxpayer has attained 18 years of age as of the date of purchase (a married person is treated as meeting the age requirement if he or his spouse meets the age requirement).

... For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed by a taxpayer if he can be claimed as a dependent by another taxpayer for the tax year of purchase. It also can't be claimed for a home bought from a person related to the buyer or the spouse of the buyer, if married.

... Beginning with 2009 returns, the new law makes it easier for the IRS to go after questionable homebuyer credit claims without initiating a full-scale audit.

What hasn't changed. The tax law still gives you the extraordinary opportunity to get your hands on homebuyer credit cash without waiting to file your tax return for the year in which you buy the qualifying principal residence. Thus, if you buy a qualifying principal residence in 2009, you can treat the purchase as having taken place this past December 31, file an amended return for 2008 claiming the credit for that year, and get your homebuyer credit cash relatively quickly via a tax refund. Similarly, you can treat a qualifying principal residence bought in 2010 (before the new deadlines) as having taken place on December 31, 2009, and file an original or amended return for 2009 claiming the credit for that year.

What also hasn't changed is the need for getting expert tax advice in negotiating through the twists and turns of the new beefed-up homebuyer credit. Please call us today for details on how the homebuyer credit can help you or your family members.

FEATHER IN MY HAT

I don’t know if you’ve ever heard the term, “That’s a feather in my hat.” Well, I have a feather in my hat right now but before I get into that, I thought you might be interested in where the term comes from.

Apparently, when lawyers in Washington D.C. presented a case before the U.S. Supreme Court, they stood at a podium facing the Supreme Court Judges. On the podium was a quill. Although it was stealing (apparently, being lawyers it made no difference) they took the quill when they left the podium. Then to brag about themselves that they had presented a case to the Supreme Court, they would put the quill in their hat as they marched around Washington D.C. I understand that many popular attorneys had several feathers in their hat, hence the statement.

Now, for the feather in my hat. I was asked again this year to speak at our state CPA conference presenting the federal income tax update before the Nebraska CPAs. It is always an honor to be recognized by your peers. Now, I did put a feather in a hat but my wife made me take it off before I left the house. She said it looked stupid so you won’t see me marching around with a feather in my hat, but I still feel honored.

THE IRS IS LOOKING FOR YOU - AND THAT MAY BE A GOOD THING

The IRS just issued the release below looking for people that have refunds that they were not able to deliver. Check it out.

IRS Seeks to Return $123.5 Million in Undeliverable Refunds to Taxpayers-IRS Reminds Taxpayers to Use E-file and Direct Deposit

WASHINGTON — The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will be given instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

The IRS encourages taxpayers to choose direct deposit when they file their returns because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds.

E-file coupled with direct deposit is your best option; it’s easy, fast and safe.

HOUSING CREDIT EXTENDED - WHAT ELSE IS NEW?

If you’re opposed to extending the first-time homebuyer’s credit (I am), you’re probably in the minority. And you’re definitely not in the Senate. The Senate voted unanimously to approve the bill and the House is expected to follow suit. (At least the approval bit.)

Under the new law, the first-time homebuyer’s credit would be extended to April 30, 2010 to sign a contract to buy a home and another sixty days to close. The bill also extends the credit to homeowners who have lived in their current home for five of the last eight years – those folks get a reduced credit of $6,500 for homes purchased after November 30, 2009 (but before the April deadline).

Additionally, income caps were raised to $125,000 a year for individuals and $225,000 a year for married couples. Raising the income caps? The only sensible part of the plan.

The new law will cost taxpayers about a billion dollars a month. Yes, a billion. Don’t forget the Law Of Big Numbers. If you were going to count to a billion it would take you 31.5 years.

According to a recent report released by Goldman Sachs economist Alec Phillips, all but about 200,000 of the 1.4 million first-time buyers who claimed the first-time homebuyer’s credit in 2009 would have purchased a home even without the incentive. The cost to taxpayers? $8.5 billion. If you do the math, that means that the real “cost” to taxpayers for increasing home sales is about $42,500 per home. Let that sink in for a minute.

Goldman Sachs also estimates that all of that money only resulted in boosting prices by 5% – and that includes the idea that sellers increased their prices in anticipation of the credit, something that I was concerned about.I don’t think anyone will argue that the bill did nothing. It clearly did something – at least 200,000 felt compelled to buy under the plan. But I am concerned about the cost. I don’t think we can fix everything by throwing more money at it. I guess I’m oddly more laissez-faire than Congress about the notion of letting the housing market right itself? We’ve had two years of housing credits (yes, there was a stimulus credit in 2008) and now we’re pushing off to 2010. When does it end?

7 FACTS ABOUT THE NONBUSINESS ENERGY PROPERTY CREDIT

The IRS just released a reminder of the energy credits that are available for 2009 and 2010. If you are making some improvements, don’t forget that these credits reduce your tax bill. Let us know if you have any questions.

Seven Facts about the Nonbusiness Energy Property Credit

Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.

Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

1. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
2. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
3. To qualify as "energy efficient" for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
4. Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers' Website.
5. Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
6. The improvements must be made to the taxpayer's principal residence located in the United States.
7. To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.

For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/recovery.

QUOTE OF THE WEEK

"I am not young enough
to know everything."
Oscar Wilde

LUCKY NUMBER 13

My son Ben and his wife Halie recently had their first child, Madalyn. She's the bald one on the left sporting the Kopsa Otte t-shirt.

Some of you may know Ben. We are all very proud of his service overseas in Iraq.

The addition of Madalyn brings my grandchild total to Lucky #13. I couldn't be more proud.

Larry Kopsa CPA

HUGE LOSSES THROW PUBLIC PENSION FUNDS INTO CRISIS

Losses of $1 trillion on investments by U.S. state and local pension funds covering police officers, teachers and other government employees are forcing managers of the retirement plans into a difficult choice. They must either try to boost returns by taking on even riskier investments or start cutting benefits. An analysis by PricewaterhouseCoopers concludes that within an average of 15 years, public pension funds will have less than half of the money needed to pay promised benefits. The Washington Post

COMPETITION FOR JOBS IS TOUGHER THAN EVER

There is an average of about 6.3 unemployed workers for every job opening, a Labor Department report indicates. There is a "jobs gap" of 10 million that needs to be filled just to keep up with population growth, economists said. "Fewer people are facing job loss, but once you have lost your job, you are in serious trouble," said Heidi Shierholz, an economist at the Economic Policy Institute in Washington. TIME/The Associated Press

NEWS FROM THE NATIONAL TAX CONFERENCE IN WASHINGTON

I just returned from the National Tax Conference in Washington D.C. It was a great conference in that the speakers are inside the belt-way and can give us some indication of what they think might be happening in 2010.

A lot of the talk was on the possibility of tax increases and the impact that tax increases would have on the upcoming 2010 elections. No currently seated congress person wants to go home and say, “vote for me” but at the same time having voted for a tax increase. That being said, the consensus was that the politicians will just let President Bush’s tax reductions expire at the end of 2010. By doing this they can say that they did not vote for a tax increase. I’m having a little trouble understanding the logic because it seems if taxes go up it would be an increase, but apparently the politicians can put some kind of spin on this.

There was a lot of talk about health care reform. There were three bills in the House and two bills in the Senate and they were trying to narrow these down to one bill that everyone could vote on. Since I returned back to the office, Harry Reid, majority leader of the Senate, has decided on the bill that he wants to bring forward. It’s amazing the cost of this whole thing. According to the congregational budget office, the total cost would be $1 trillion $55 billion dollars. The House bill is at about $894 billion dollars.

It does look like the IRS is going to be more aggressive with 1099’s and 1099 matching. They are looking under every rock to try to find money to reduce the deficit.

More on the session in future issues.

QUOTE OF THE WEEK

"There is no such thing as a

great talent without

great will power."
Honoré de Balzac