Economics Finance

It is a little known fact that the IRS is under a mandate from the Congress to achieve 80% electronic filing by the year 2012. The IRS Restructuring and Reform Act (RRA) was passed in 1998. In the nine years since the enactment of RRA 98, the percentage of individual e-filed returns nearly tripled, from 20 percent in 1998 to about 58 percent in 2007. There has also been steady growth in the number of self-prepared individual returns filed electronically. As the Electronic Tax Administration Advisory Committee (ETAAC) noted in its 2007 e-file report to Congress, this progress is very gratifying as it indicates that e-file is catching on with those who had previously resisted it. As per IRS data, nearly 80 million returns were filed electronically in 2007, out of which about 22.5 million were filed from home computers.

There are major benefits to filing taxes electronically. The IRS tax code is enormously complicated, and it requires considerable patience and skill to navigate the tax code in order to figure out the best possible tax situation for an individual. If one attempted to sit down with the many forms pertaining to one’s tax situation and proceed to accurately fill them out, it could be many days’ work, and even then possibly with unintended errors. This is why trained tax professionals and accountants are in such great demand during the tax season. But for an individual filer, the possibility of e-file is a heaven send. There are many quality internet tax sites managed by tax professionals that make the process of preparing an individual return straightforward and error free. All one needs is an internet connection.

The most important advantage of e-file is that the individual does not have to understand the intricacies of tax code. The rules also change from year to year, and this adds a layer of complexity to an already complex enterprise. The way most internet tax sites work is that one creates a user account with the site with a personal login and a password. The user is then asked a series of simple questions such as age, birthday, marital status, number of children, the kinds of income that the user plans to report, information from W2 forms etc. Thus, for example, the W2 form is replicated on the screen with the possibility of inputting the information exactly as it appears on the W2. Once the user has input all the information asked for by the site, the program calculates the best possible tax situation. All of the relevant information is then input into the appropriate forms and the return is electronically filed with the IRS. Once the return is filed with the IRS, an acknowledgment is usually received from the IRS within a couple of days. If there are no unintended errors, the return is accepted by the IRS. Continue reading ‘The Benefits of Electronically Filing Taxes on the Internet’ »

There are way too many families in America that are feeling this crisis to an extreme degree. The utility bills are piling up, the mortgage has been sitting there for weeks, there’s not enough food in the house, and the children need books for school again. It’s a real crunch on finances in the everyday life, but then the IRS goes and adds to this by giving you a bill for back taxes. Now you just don’t know what to do. You are already working as much as you can and the income simply isn’t going far enough. What do you do?

Check into applying for a tax settlement with the IRS. If you can prove that you are in a really financially tough situation right now and it certainly isn’t going to be looking up any time in the near future, then grab an application and start moving on it. The faster that you do this, the quicker you can have some of that debt removed and less penalties tacked on because for sure by now they already have done that. They will keep on adding them as well until you either pay if off or make this move. Continue reading ‘Are Your Back Taxes Getting You Down? Apply For a Settlement With the IRS!’ »

The biggest problem with missing a tax due date is that it gets a little less stressful every day. April 15th is awful, April 16th is bad, but after a while, you might notice that the IRS hasn’t caught up to you. But after a few weeks, it fades into the background: maybe they’ll forget, maybe they filed your information for you. Unfortunately, this is rarely the case. The IRS often takes a while to catch up to delinquent taxpayers, but they definitely try to ensure that people who miss filing have a good reason to file late taxes.

The first incentive the IRS uses is that even if they’re not keeping in touch, you’re accumulating fees and penalties. There are multiple fineable offenses associated with the failure to file taxes on time, even if you do end up getting it done late, and they add up pretty fast. In addition, the IRS charges a brutal rate of interest before you file late taxes — generally, the rate is 1% per month. With your debt accumulating so fast, it’s a good idea to hurry up and slow this process down.

Once you do file late taxes, the situation improves. First, you’ll stop accumulating so many fines. Second, the interest you owe drops to about a quarter of a percentage point per month — one of the lowest-interest borrowings available to any consumer. When you file late taxes, the IRS will ask you to pay them back pretty quickly (immediately, or over a period of months), but this is also not as daunting as it might seem. Continue reading ‘File Late Taxes – How To, Why To’ »

What is VAT? And why VAT

Value-Added Tax, one of the most radical reforms to be proposed for the Indian economy, could finally become a reality after four years of political and economic debate.

Yet, the biggest hurdle before the government is not making India ‘a common market’ through a uniform sales tax structure, but removing a complicated tax structure that also allowed for fraudulent practices.

The decision to introduce VAT was publicly discussed first at a conference of state chief ministers and finance ministers in November 1999. At that time, the deadline of April 2002 was agreed upon to bring in VAT.

However political instability and a lack of initiative pushed this reform to the backburner.

Now a year later, despite a backlash from the trading community and some political circles, there appears to be a realistic scope for VAT to be introduced.

Twelve states have so far passed legislation to implement the VAT regime and of these five have sent their Bills for Presidential assent.

Continue reading ‘Value-Added Tax’ »