Friday, January 30, 2009

GAO Calls Out VA on Veterans Healthcare Costs

The Government Accountability Office recently released a report criticizing the Veteran's Administration for overestimating the number of veterans to be treated at hospices and community clinics, thus understating its estimated costs. Additionally, the VA did not fully account for the spending on 25,000 veterans at VA nursing homes. The VA acknowledged that they had problems in planning for long-term care and may have been overly conservative in cost estimates because of fears of "budgetary constraints." The nursing home shortfall came because while nursing home often used nursing homes for short-term (less than 90 day) care, the VA asserted that the government was not legally required to pay for such care in most cases.

Yowl!--the nursing home shortfall is hard to reconcile with any notion of disclosure or transparency and the understating of costs--while perhaps less egregious--still smacks of too much emphasis on the politics of a situation and too little on the substance. Unquestionably, federal spending is out-of-control; nevertheless, there would appear to be THOUSANDS of other forms of spending where constraints would be more justified compared to pinching pennies on the care of those who bravely fought to protect our country.

Tuesday, January 27, 2009

Making Sausage--or Stimulus Tax Legislation?

It's now the Senate Finance Committee's turn to consider the tax part of President Obama's stimulus package and Ranking Member Charles Grassley (R-IA, not necessarily to be confused with R-Roth Tax Updates) has ideas of his own, one of which is a patch (why not a FIX?) for the alternative minimum tax. Meanwhile, Chairman Max Baucus (D-MT) is proposing a higher income phase-out on the proposed Making Work Pay credit and a smaller "temporary" (I am always skeptical of temporary changes in tax or any other law) increase in the child tax credit, increases some businesses tax credits related to energy and suspends taxes on the first $2,400 of unemployment benefits. From the House, Minority Leader John Boehner (R-OH) wants (but is unlikely to get) a reduction (10-5 and 15-10) in the lower two tax rates, a small business tax deduction of 20% of their income, making unemployment benefits nontaxable again and a credit to homebuyers able to pay at least 5% down.

Most of the above proposals will not be in the final bill, but are interesting measures of what the Democrats plan to include and what the Republicans hope to include. Best ideas of the group are probably Boehner's reduction in the bottom rates and Baucus's partial suspension of unemployment benefits taxability.

Obama and Schapiro: Second Thoughts About IFRS Convergence

Incoming SEC Chairperson Mary Scharipo recently wrote Senator Carl Levin (D-MI) about sizable concerns that she had with International Financial Reporting Standards. Scharipo did not want financial reporting standards to beocme a "race for the bottom" and felt that the IASB (International Accounting Standards Board) was not up to being a sufficiently vigorous investor watchdog and that IASB at present did not meet the required high levels of transparency and disclosure. IASB's Mark Bynum response--let's talk. Small public companies may be concerned that Sharipo saw no need for relief from Section 404 requirements of Sarbanes-Oxley and intended to keep recent fair value rules but also indicated that she wishes to maintain the FASB's present place in accounting standard-setting without Congressional interference.

Quite a mouthful from the new SEC sheriff. I certainly see benefits in at least slowing the move to IFRS from the present 2014 date. The small company 404 relief has a valid case in either direction. On fair value, there are enough cost vs. benefit questions in my mind to give small and private companies a one-year delay to see some actual cost vs. benefit comparisions.

Wednesday, January 21, 2009

Geithner: I'm Sorry that I Overlooked Payroll Taxes

Timothy Geithner, Treasury Secretary appointee, confessed carelessness to the Senate Finance Committee regarding $34,000 in Social Security and Medicare taxes left unpaid during the 2001-04 period. He asserted, however, that the taxes have since been paid and that the mistake, though careless, was honest. Geithner came under some criticism from Republicans Charles Grassley (IA) and Jim Bunning (KY).

In one sense, the payment of taxes, though late, argues for forbearance. On the other hand, the Rangel tax problems and Obama's executive order today regarding ethics and lobbyists leave a sense of disconnect/internal inconsistency regarding the nomination. Best would probably be a step-down by Geithner; elsewise, Senators will have a difficult decision as Geithner, though this issue leaves an ethical problem, does have the technical knowledge for the job.

Thursday, January 15, 2009

Taxpayer Advocate Olson--Tis the Season for Compassion

IRS National Taxpayer Advocate Nina Olson called in her annual report for compassion to delinquent taxpayers with economic hardships such as lost jobs. She called for more clear guidance on the recent IRS steps to provide relief through suspension of collection actions and greater use of offers in compromise and partial payment installment collections. Ms. Olson also called for protection for low-income Social Security recipients against automatic tax levies, regulation of unenrolled tax preparers and a reasonableness check on the size of certain tax penalties.

I hope that incoming President Obama will seriously consider keeping Ms. Olson on as Taxpayer Advocate. During the time that I have been posting on this blog, Ms. Olson has been consistent and usually theoretically sound in her advocacy for American taxpayers.

Monday, January 12, 2009

Planning to Choose a Financial Planner--10 Questions to Consider

  • 10 Questions for Planner

  • The Certified Financial Planner Board of Standards recently provided ten tips on selecting a financial planner. The tips include: what is the planner's experience, what is his or her qualifications, what services are offered, what is the planner's approach, does he or she work with others, how is the service fee determined, how much is a typical fee, are there others who can benefit from your recommendations, has the planner been formally sanctioned by a state board or ethics group and how much can I get in writing.

    The tips mentioned here are reasonable enough; unfortunately, with few exceptions, only quite wealthy people can afford financial planners. Nevertheless, some of the same questions can be asked of tax professionals, life insurance agents and other financial professionals used by a broader segment of the population.

    Wednesday, January 07, 2009

    A "Kinder, Gentler" IRS?--At least during the recession?

    The Internal Revenue Service has announced a number of programs designed to make tax preparation and even payment of taxes (at least in some cases) less painful during the recession. IRS employees have been granted greater latitude to suspend collection activities when the taxpayer is in financial distress, such as loss of job or medical crisis. Along the same line, negotiated installment tax payments will not automatically be cancelled if a previously complaint taxpayer misses a payment because of a financial crisis and releases of tax levies for financial hardship will be easier to obtain. Additionally, the website now offers a page addressing payment options in a frequently answered question (FAQ) format and has expanded the free file program (fully available to AGI < $56K) to allow a self-serve "fillable forms" option to allow taxpayers of almost all income levels to effectively e-file for free.

    I commend the IRS for trying to assist taxpayers in this recession and hope that these programs will not be abused by those who are undeserving.

    Monday, January 05, 2009

    "Brother (or Sister), Can You Spare a Dime (a Gallon)?"

    The National Commission on Surface Transportation Infrastructure Financing is set to recommend a 10 cent per gallon gasoline and 12 to 15 cent per gallon diesel federal tax increase. Present levels are 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel. The presumed extra proceeds (assuming no Laffer curve issues and demand for fuel is somewhat inelastic) would be used to fund infrastructure projects.

    Two separate issues here: [1] the tax itself: I will acknowledge that the present gasoline prices will allow a tax increase to be COMPARATIVELY painless for personal vehicles but my sense is that truckers are not doing well at the moment and an additional tax will put additional pressure on the industry, probably leading to more economic concentration and long-term higher transportation costs to consumers. Translation--almost all the diesel increase will be absorbed by consumers. [2] WHAT infrastructure projects will the funds be used on? The fear is a huge porkfest; at best, the funds could be used to improve rail and bus options and improve highways in the Midwest, which seems to me to have the biggest problems keeping highways in good condition. Another good option might be to use some monies to develop alternative fuel sources such as liquidified natural gas, cellulosic biofuel (biofuels using inedible plant sources) and developing oil sands in the Rockies.

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