Capital Corner:  Appy-New Year!

Jim Brandenburg, CPA, MST, Shareholder - Tax   email | bio
January 2011

With its back against the wall, Congress finally acted to extend tax rates (which were set to expire at the end of 2010) for another two years through 2012. The tax bill did not cut tax rates from current levels; it just maintained the same rates. Had the bill not been enacted, tax rates would have jumped across the board. 

As Congress begins a new term and new leaders take control, what tax changes loom in 2011? With all these changes, the one constant seems to be the complexity of the tax code.   Every change calls for additional regulations and administration from the IRS, and frustration grows among taxpayers (and, at times, with tax practitioners). Many folks nowadays when faced with a concern or a problem, may think, "Hey, I wonder if there's an app for that." There are thousands and thousands of apps today for almost every task. So as we begin 2011, perhaps Congress could consider creating the following apps to address this tax complexity.

• Lame Duck App - This is not the first time that Congress enacted tax legislation late in the year. The uncertainty of tax laws, changing tax rates, retroactive reinstatement of expired deductions, etc. etc. makes tax planning very difficult. It also presents problems for the IRS to prepare and update tax forms. With this app, Congress would complete its tax law changes by the end of the government's fiscal year of September 30.

• AMT App - The Alternative Minimum Tax (AMT) is a growing concern among taxpayers. Even with the changes made in the recent extension, millions of taxpayers will incur the AMT.   Many taxpayers don't understand AMT, feel it is overly complex, don't believe it should app-ly to them, and are un-appy that there is often nothing they can do to avoid it.  This app would increase the AMT exemption and also cut the AMT tax rate so AMT would only apply in the manner it was originally intended.

• Tax Filing App - Finally, for basic tax returns, there should be an app to input information from Form W-2, answer a few questions, and then, zing, your tax return is sent off for processing by the IRS. Millions of tax returns are e-filed already. By using this app, tax filing could be done right from your computer or cell phone.  (Per-apps this technology is not far away.) 

I'm sure there are many other apps we could come up with to simplify the tax code and streamline the tax filing process. But, don't hold your breath that Congress will tackle these ideas anytime soon. In fact the only proposal they may come up with is how to find a new way to tax all these apps! Stay apprised