A Streamlined and Simplified IRS

February 11, 2009

            You heard it here first – the Revenooers are reinventing themselves.  According to a notice issued in January, IRS has “unveiled its first redesigned notices that are part of an on-going effort to improve the way it corresponds with taxpayers.”

             Quoth Commissioner Shulman, “One of my priorities is to ensure that we have clear and simple communication with taxpayers.  In the past, our notices often looked more like legal documents and not an effort to communicate clearly.”

            Really.

            “The differences between the old and new notices are like night and day.  They show the potential of our on-going effort in this area,” Shulman went on to say.

            All of this emanates from Shulman’s 2008 appointment of the “Taxpayer Communications Taskgroup” to review IRS correspondence.  The group found that IRS notices have different looks, messages and do not use consistent language.  Because of this, notes IRS, “Some notices are creating unnecessary confusion for taxpayers.”

            The new format for all of these notices includes a plain language explanation, we hear, of the nature of the correspondence, clearly stating what action the taxpayer must take and presents a consistent “clean” design.

            Nice.

            The new format also guides taxpayers to appropriate pages on the IRS’ website where they can find accurate and relevant information quickly and easily.

            Time will tell.

            And from our “Barack – Now Hear This!” department comes word that even some Democrats will be sorry to see the so-called “Bush tax cuts” go, as is expected to be the case once Obama gets his way this year.

            We actually hear that Arizona congressman Harry Mitchell has written to Obama to urge extension of the 15% rate on capital gains and dividends, presently scheduled to expire next New Year’s Eve.  Better yet, Mitchell wants to retain the present top ordinary income tax rate of 35%, which would revert next year to a Clintonian 39.6% unless action is taken.

            And even Gerry Connolly (Virginia) concurs, telling Dow Jones that, “I think there is a certain logic to leaving well-enough alone for now, given the fragility of the economic recovery.  It’s a question of prudent judgment and timing.”

            What “recovery?”

            And speaking of tax increases, we hear the big banks have hired a big gun to study a potential legal battle against a bank tax proposed by Obama, on a theory of unconstitutionality.

            Seems the Securities Industry and Financial Markets Association has hired Carter G. Phillips of law firm Sidley Austin, a vet when it comes to arguing cases before the Supremes.  His mission:  figure out whether a proposed tax on a single industry could be considered arbitrary and punitive, providing a basis for a constitutional challenge.

            Stay tuned.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

            Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He is also a contributor to the recently published 13th edition of Tax Savvy for Small Business, published by Nolo.  He can be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.

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