The Scarlet Pimp
Supreme Member
- Apr 2, 2008
- 1,234
- 4,184
Fatten your wallets fast, kids. 'Cuz the Gov. says they didn't deduct enough moolah from yer bank account last year. Bribes just aren't what they used to be, and blackmail and mistresses are very expensive... 
Millions To Owe IRS Due To Stimulus Credit
http://online.wsj.com/article/SB125839933609750931.html?mod=rss_economy
WASHINGTON -- More than 15 million households might owe more money to the Internal Revenue Service next year because a tax credit in stimulus legislation meant that not enough taxes were withheld from paychecks, according to an inspector general report.
The $400 tax credit was proposed by President Barack Obama during his campaign for the White House and was a centerpiece of this year's stimulus bill. The tax credit was delivered by reduced withholding, leading to an increase in take-home pay aimed at jolting consumer spending.
But 15.4 million taxpayers may have had too little withheld and will have to pay some of the tax credit back to the IRS when they file in 2010, according to the Treasury Department inspector general's audit released Monday.
In addition, more than 1 million taxpayers might face new underpayment penalties or see penalties increased as a result of the under-withholding, the report said.
"If corrective actions are not taken, this problem will continue to plague taxpayers in 2010," said J. Russell George, the Treasury inspector general for Tax Administration.
While the IRS "is not in a position to account in advance for every taxpayer's circumstance," it could have done more working with the Treasury Department to prevent widespread under-withholding, George said in an interview.
The problem comes because certain groups of taxpayers were advanced more than they were entitled to receive under the credit. That includes working teenagers who are claimed by their parents as dependents; single taxpayers with more than one job; or married couples where both spouses work.
Sen. Charles Grassley (R., Iowa) called the credit a "bait and switch" for some taxpayers, in a Monday statement. "This is another unfortunate example of what can happen when Congress and the White House rush through legislation like the stimulus without thinking through the consequences," he said.
The IRS strongly contested the findings in its official response to the report, saying that TIGTA's estimate of those who will owe the IRS is "overstated." The IRS said TIGTA didn't take into account that some taxpayers adjusted their withholding on their own in anticipation of having too little withheld.
The IRS also noted that many taxpayers will see larger refunds because of the stimulus tax credits -- particularly low- to middle-income households who already have little taxes withheld from their paychecks.
"The IRS has worked quickly and effectively to ensure that taxpayers received the benefit of this credit as soon as possible, and will continue to do so going forward," said Nayyera Haq, a Treasury Department spokeswoman.
Elaine Maag, a research associate at the nonprofit Tax Policy Center, said Congress and Treasury officials knew from the outset that the credit could get money into the economy quickly, but at the risk that some taxpayers would ultimately have to pay money back.
"They had to make a judgment call, and this was the simplest thing to do," said Ms. Maag. "They definitely wanted to err on the side of getting money out the door."
Also on Monday, the Treasury Department released withholding tables for the 2010 tax year. Treasury didn't make any changes to specifically address the under-withholding identified in the TIGTA report -- meaning the problems could continue in 2010.
The IRS said it will continue outreach efforts to inform taxpayers that they may need to adjust withholding as a result of the stimulus credit.
Estimated tax penalties may apply if a taxpayer's year-end tax bill exceeds $1,000. But many taxpayers may qualify for a penalty waiver if withholding changes due to the stimulus credit played a role, the IRS said.
An aide to Senate Finance Chairman Max Baucus (D., Mont.) said Mr. Baucus "expects the IRS and Treasury to make every reasonable effort to get the withholding tables right." The aide also said the IRS should waive penalties wherever they are applied unfairly as a result of the stimulus credit.
Millions To Owe IRS Due To Stimulus Credit
http://online.wsj.com/article/SB125839933609750931.html?mod=rss_economy
WASHINGTON -- More than 15 million households might owe more money to the Internal Revenue Service next year because a tax credit in stimulus legislation meant that not enough taxes were withheld from paychecks, according to an inspector general report.
The $400 tax credit was proposed by President Barack Obama during his campaign for the White House and was a centerpiece of this year's stimulus bill. The tax credit was delivered by reduced withholding, leading to an increase in take-home pay aimed at jolting consumer spending.
But 15.4 million taxpayers may have had too little withheld and will have to pay some of the tax credit back to the IRS when they file in 2010, according to the Treasury Department inspector general's audit released Monday.
In addition, more than 1 million taxpayers might face new underpayment penalties or see penalties increased as a result of the under-withholding, the report said.
"If corrective actions are not taken, this problem will continue to plague taxpayers in 2010," said J. Russell George, the Treasury inspector general for Tax Administration.
While the IRS "is not in a position to account in advance for every taxpayer's circumstance," it could have done more working with the Treasury Department to prevent widespread under-withholding, George said in an interview.
The problem comes because certain groups of taxpayers were advanced more than they were entitled to receive under the credit. That includes working teenagers who are claimed by their parents as dependents; single taxpayers with more than one job; or married couples where both spouses work.
Sen. Charles Grassley (R., Iowa) called the credit a "bait and switch" for some taxpayers, in a Monday statement. "This is another unfortunate example of what can happen when Congress and the White House rush through legislation like the stimulus without thinking through the consequences," he said.
The IRS strongly contested the findings in its official response to the report, saying that TIGTA's estimate of those who will owe the IRS is "overstated." The IRS said TIGTA didn't take into account that some taxpayers adjusted their withholding on their own in anticipation of having too little withheld.
The IRS also noted that many taxpayers will see larger refunds because of the stimulus tax credits -- particularly low- to middle-income households who already have little taxes withheld from their paychecks.
"The IRS has worked quickly and effectively to ensure that taxpayers received the benefit of this credit as soon as possible, and will continue to do so going forward," said Nayyera Haq, a Treasury Department spokeswoman.
Elaine Maag, a research associate at the nonprofit Tax Policy Center, said Congress and Treasury officials knew from the outset that the credit could get money into the economy quickly, but at the risk that some taxpayers would ultimately have to pay money back.
"They had to make a judgment call, and this was the simplest thing to do," said Ms. Maag. "They definitely wanted to err on the side of getting money out the door."
Also on Monday, the Treasury Department released withholding tables for the 2010 tax year. Treasury didn't make any changes to specifically address the under-withholding identified in the TIGTA report -- meaning the problems could continue in 2010.
The IRS said it will continue outreach efforts to inform taxpayers that they may need to adjust withholding as a result of the stimulus credit.
Estimated tax penalties may apply if a taxpayer's year-end tax bill exceeds $1,000. But many taxpayers may qualify for a penalty waiver if withholding changes due to the stimulus credit played a role, the IRS said.
An aide to Senate Finance Chairman Max Baucus (D., Mont.) said Mr. Baucus "expects the IRS and Treasury to make every reasonable effort to get the withholding tables right." The aide also said the IRS should waive penalties wherever they are applied unfairly as a result of the stimulus credit.
