Text mining: what do publishers have against this high-tech research tool?

May 25, 2012 Researchers are pushing to make tens of thousands of papers based on publicly funded research work available through open access to find links between genes and diseases — countering publishers’ default ban on text mining via computer scanning. http://www.kurzweilai.net/text-mining-what-do-publishers-have-against-this-high-tech-research-tool?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=f12a3db418-UA-946742-1&utm_medium=email

AlertMe and Smart Homes

The free cloud-based service is being trialed with up to 10,000 homes during the summer and rolled out widely from the autumn. Smart meters from British Gas will be rolled out to all homes in the UK over the next seven years. Meanwhile, the Alertme system can be added to older gas meters. http://tinyurl.com/dxs9f5g

Introducing Google’s Knowledge Graph

May 17, 2012 Google has launched the Knowledge Graph, which it says will help you discover new information quickly and easily, according to the Official Google Blog. http://tinyurl.com/89yddoz

Daniel Hood on the Buffet Rule (and Stephen King)

Daniel Hood on the Buffet Rule (and Stephen King): MAY 8, 2012 BY DANIEL HOOD I'm sure that, like me, you were relieved to hear that Stephen King has finally weighed in on the Buffett Rule, which would attempt to make sure that millionaires pay as high a tax rate as their secretaries. http://www.accountingtoday.com/news/Stephen-King-Buffett-Rule-Daily-Beast-tax-spend-62568-1.html?ET=webcpa:e2467:70848a:&st=email

ADP Finds Private Sector Added 119,000 Jobs in April

ROSELAND, N.J. (MAY 2, 2012) BY MICHAEL COHN, ACCOUNTING TODAY Employers in the private sector added 119,000 jobs from March to April, according to seasonally adjusted figures released Wednesday by payroll giant ADP, in the latest disappointing sign of employment activity.

1.3Gbps Wireless from Netgear

Netgear plans to be the first networking company with a next-generation 1.3 Gbps router (May, $200), based on the as-yet-unratified 802.11ac standard, which is theoretically three times faster than the preceding 802.11n standard.


http://tinyurl.com/89bt5bt

http://tinyurl.com/89bt5bt

Amended Tax Returns Offer a Second Chance

RIVERWOODS, ILL. (APRIL 25, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

In case your clients missed a pivotal tax deduction that could have saved them some serious cash, or you need to fix something on an old return to make sure your clients are in compliance with the IRS, filling out the Amended U.S. Individual Income Tax Return (Form 1040X) gives taxpayers and preparers another opportunity for an additional refund and potentially avoid headaches triggered by omissions and mistakes.

http://www.accountingtoday.com/news/Amended-Tax-Returns-Second-Chance-IRS-CCH-62428-1.html?ET=webcpa:e2419:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_042512

http://www.accountingtoday.com/news/Amended-Tax-Returns-Second-Chance-IRS-CCH-62428-1.html?ET=webcpa:e2419:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_042512

Perception (2011) gets flurry of views

A 'flurry' of views this morning has moved the December 2011 post entitled 'Perception' to the all-time top ten view list.  The post has link to graphic of AICPA memberships statistics that 'mininform.'


http://taxtechcpa.blogspot.com/2011/12/perception.html

NC State Improves Wireless Network Transmission

http://tinyurl.com/7mxtznn

March Retail Sales Surprise Some

Retired economist Scott Grannis often 'sees' trends before others:

http://scottgrannis.blogspot.com/2012/04/strong-retail-sales.html

7.8 Million Tax Refunds Delayed This Season at IRS

WASHINGTON, D.C. (APRIL 16, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

The Internal Revenue Service delayed tax refunds early this filing season for 7.8 million tax returns, according to a report by the Treasury Inspector General for Tax Administration, which also described steep cutbacks in customer service at the IRS.

http://www.accountingtoday.com/news/Tax-Refunds-Delayed-IRS-TIGTA-62355-1.html?ET=webcpa:e2394:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_041612

Tax Questions With Answers

By Sandy Block, USA TODAY

Your palms are sweaty, your breathing is labored and you feel a little dizzy. That can only mean one of two things: you're in the front row of a Justin Bieber concert, or you just realized that you've got less than a week to file your 2011 tax return. With the April 17 deadline approaching, we asked members of the American Institute of Certified Public Accountants to answer questions from readers.

http://www.usatoday.com/money/perfi/taxes/story/2012-04-12/cpas-answers-to-tax-questions/54206848/1

World’s smallest full-page color scanner

April 11, 2012

[+]

ScanStik (credit: Planon)

The $160 pen-sized ScanStik just announced by PlanOn System Solutions is a compact portable color scanner for mobile professionals and students.

http://www.kurzweilai.net/worlds-smallest-full-page-color-scanner?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=300981f273-UA-946742-1&utm_medium=email

Wait, while I print you a house

Italian inventor Enrico Dini has developed a huge 3D printer called D-Shape that can print entire buildings out of sand, The printer sprays a thin layer of sand followed by a layer of magnesium-based binder from hundreds of nozzles on its underside. The glue turns the sand to solid stone, which is built up layer-by-layer from the bottom up to form anything from a sculpture to a sandstone building. (Credit: Monolite UK Ltd.)

http://www.kurzweilai.net/printable-houses-are-coming?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=300981f273-UA-946742-1&utm_medium=email

IRS Targeting Smaller Businesses-- Here's How To Fight Back

Dean Zerbe, Contributor

I write about tax policy and how it affects business.

+ Follow on Forbes

4/09/2012 @ 5:21PM |2,851 views

+ Comment now

Rocky (Photo credit: Wikipedia)

The IRS recently released its enforcement results for 2011.  Based on a number of conversations with senior IRS officials, reviewing the statistics and what we are seeing first hand in our tax controversy practice at alliantgroup – one trend is clear (and will be continuing) — that the IRS is focusing greater resources on small and medium businesses.   However, it is important for these businesses to recognize what the large corporations already know – it often pays to fight the tax man. 

http://www.forbes.com/sites/deanzerbe/2012/04/09/irs-targeting-smaller-businesses-heres-how-to-fight-back/

The computing trend that will change everything

April 10, 2012

The electrical efficiency of computing (the number of computations that can be completed per kilowatt-hour of electricity used) has doubled every year and a half since the dawn of the computer age

http://www.kurzweilai.net/the-computing-trend-that-will-change-everything?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=b0c3dd0f7e-UA-946742-1&utm_medium=email

Payrolls in U.S. Grow by Estimated 209,000 Workers for March

By Timothy R. Homan - Apr 4, 2012 8:47 AM ET
Companies in the U.S. expanded payrolls in March, showing the labor market is strengthening, according to data from a private report based on payrolls.

http://www.bloomberg.com/news/2012-04-04/adp-estimates-companies-in-u-s-added-209-000-jobs-in-march.html

How Long To Keep Tax Records

http://www.npr.org/people/14562108/bill-chappell


Tax Day 2012 is looming — and after we file our returns, many of us will try to figure out what to do with the seemingly innocuous but possibly crucial documents we use to prepare our returns. Filing electronically can make those records easier to manage. But what should we really keep, and for how long?


http://www.npr.org/blogs/alltechconsidered/2012/04/02/149714051/you-should-keep-tax-records-but-how-and-for-how-long

Guide to Social Security Planning

General Statistics


According to a report by the Trustees of the Social Security program issued in 2011, 54 million people 

received some type of Social Security benefit in 2010, totaling $706 billion.

According to the Employee Benefit Research Institute, Social Security represents 40% of the income of 

all elderly people in the United States.

The poverty rate for those age 65 and older was 35% in 1960 and was 9% in 2010.  Without Social 

Security, the poverty rate for people age 65 and older in 2010 would have been 45%, according to the 

AARP Public Policy Institute.

Obviously, Social Security has become an integral financial consideration for most Americans. To counsel 

them effectively, advisors must be aware of what the program can and can’t do. We’ll begin here with 

some basic background information that will come in handy as you move into subsequent chapters on 

client planning concerns. Beginning in this chapter and throughout the book, we’ll frame many sections

around questions that a client might ask a CPA so that practitioners can easily find the answers to 

common concerns

http://tinyurl.com/89r9a92

IRS Issues Annual Dirty Dozen List of Tax Scams

IRS Issues Annual Dirty Dozen List of Tax Scams (From CCH Practical Tax Bulletin)

The Internal Revenue Service issued its annual “Dirty Dozen” list of tax scams, advising taxpayers to use caution to protect themselves from being victims in a variety of schemes ranging from identity theft to return preparer fraud (IRS News Release IR-2012-23). The schemes peak during the filing season and they can be used in person, online, and by e-mail to mislead individuals with promises of refunds and free money. The IRS Criminal Investigation Division and the Department of Justice work closely to identify the scams and prosecute the criminals who commit them.

The following are the dirty dozen scams for the 2012: identity theft, phishing, return preparer fraud, hiding income offshore, offering free money from the IRS involving Social Security, false or inflated income and expenses, using false Forms 1099 for refund claims, frivolous arguments, falsely claiming zero wages, the abuse of charitable organizations and deductions, the use of disguised corporate ownership and the misuse of trust entities. The top scam is identity theft, and the IRS has stepped up its internal reviews to spot false tax returns before refunds are issued, as well as working with the taxpayers whose identity has been stolen.

The IRS has collected $3.4 billion from people who have participated in two voluntary disclosure programs to report income from offshore banks, brokerage accounts, and other foreign financial accounts. Taxpayers are advised that, if they are a party to scams that use a Form 1099 to create fake refund claims or falsify income, deductions or credits, they could be liable for financial penalties or even face criminal prosecution.

IRS examiners have uncovered intentional abuse by exempt organizations that shield income or assets from taxation and attempts made by donors to maintain control over donated assets or income from donated property. The IRS is working with state authorities to identify disguised corporate ownership that is being used to underreport income, claim fictitious deductions, avoid filing tax returns, and facilitate money laundering and other financial crimes. IRS personnel have also seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses; individuals should seek the advice of a trusted tax professional before entering into a trust arrangement.

20-fold (60 terabytes) increase in disk space

How Seagate’s terabit-per-square-inch hard drive works

March 26, 2012

http://www.kurzweilai.net/how-seagates-terabit-per-square-inch-hard-drive-works?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=972989a1ea-UA-946742-1&utm_medium=email

Significant Increase in IRS Audits of Wealthy

WASHINGTON, D.C. (MARCH 23, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

 

............
Last year, the IRS examined 29.93 percent of individual income tax returns, compared to about 18 percent the previous year, according to CNN Money. Taxpayers with incomes between $5 million and $10 million were examined at a rate of 20.75 percent, compared to about 12 percent in fiscal year 2010. Those with incomes between $1 million and $5 million were audited at a rate of 11.8 percent, compared to about 7 percent a year earlier. Overall, about 1.1 percent of taxpayers were audited in FY 2011, about the same rate as in FY 2010.

http://www.accountingtoday.com/news/IRS-Increases-Audits-Wealthy-62101-1.html?ET=webcpa:e2337:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_032612

When You Think Nobody Cares

https://skydrive.live.com/?cid=8B35ADFFC37790D0&id=8B35ADFFC37790D0%21253#!/view.aspx?cid=8B35ADFFC37790D0&resid=8B35ADFFC37790D0%21336

Abundance - The Future Is Better Than You Think

This just released book by Perter H. Diamandis and Steven Kotler, addresses future human needs by category - water, food, energy, health care and education.  Learn about Dean Kamen's Slingshot technology that can transform polluted water, salt water, or even raw sewage into high-quality drinking water for less than one cent per liter.  Also the Qualcomm Tricorder X PRIZE which promises a low-cost, handheld medical device that allows anyone to diagnose themselves better than a board ceretfied-doctor.  Lots of charts and graphs.

http://www.amazon.com/s/ref=nb_sb_ss_i_1_6?url=search-alias%3Dstripbooks&field-keywords=abundance+the+future+is+better+than+you+think&sprefix=abunda%2Cstripbooks%2C276

Ten Common Tax-Filing Errors

March 14, 2012, 7:30 AM

By Laura Saunders

Tax laws change with alarming frequency, but some taxpayer errors are perennial. Here are 10 common filing errors that often trip up taxpayers, according to Greg Rosica, a tax partner at Ernst & Young and the firm’s lead author of the Ernst & Young Tax Guide, now in its 27th year.

http://blogs.wsj.com/totalreturn/2012/03/14/ten-common-tax-filing-errors/?mod=google_news_blog

Supermarket scanner recognizes objects, makes barcodes obsolete

March 12, 2012

The latest supermarket scanner developed by Toshiba Tec may make conventional barcodes in supermarkets obsolete.

http://www.kurzweilai.net/supermarket-scanner-recognizes-objects-makes-barcodes-obsolete?utm_source=KurzweilAI+Daily+Newsletter&utm_campaign=97e6a6413b-UA-946742-1&utm_medium=email

IRS Expands Help to Struggling Taxpayers

WASHINGTON, D.C. (MARCH 7, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

The Internal Revenue Service is expanding its “Fresh Start” initiative to help more unemployed and financially stressed taxpayers with installment agreements and relief from failure-to-file penalties.

http://www.accountingtoday.com/news/IRS-Expands-Help-Struggling-Taxpayers-61958-1.html?ET=webcpa:e2280:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_030812

Mixed Economic/Employment News

ADP's estimate of February private sector job gains came in about as expected, but they also issued revisions to past data that had the effect of increasing prior estimates to bring them more into line with BLS data. As the chart above suggests, ADP's estimate doesn't point to any surprising strength in the BLS number to be released tomorrow, so the market's current guess of 225K is probably reasonable. A number like that would be similar to what we have been seeing in recent months, and is neither impressive nor disappointing.

http://scottgrannis.blogspot.com/2012/03/mixed-news-today.html

Canceled credit card debts come back to haunt taxpayers

By Sandra Block, USA TODAY

Billions of dollars in credit card debt that was charged off during the Great Recession— some of it decades old — is coming back to haunt borrowers in the form of unexpected tax bills.

http://www.usatoday.com/money/perfi/taxes/story/2012-03-02/irs-taxes-on-forgiven-debt/53357844/1

IRS Warns of New Emerging Tax Scam

The scheme promises refunds to people who have little or no income and normally don’t have a tax filing requirement. The scam promoters informs victims about a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.

http://www.accountingtoday.com/news/IRS-Warns-Emerging-Tax-Scam-61915-1.html?ET=webcpa:e2271:85046a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_030512

8th Circuit affirms S corporation shareholder’s compensation was not reasonable

BY SALLY P. SCHREIBER

FEBRUARY 24, 2012

The Eighth Circuit affirmed the District Court for the Southern District of Iowa’s decision that an S corporation shareholder’s $24,000 salary was not reasonable compensation and that the $91,044 salary determined by the government’s expert witness was (David E. Watson, P.C., No. 11-1589 (8th Cir. 2/21/12)).

http://www.journalofaccountancy.com/Web/20125206.htm

$1 Billion Awaits People Who Haven’t Filed 2008 Taxes

WASHINGTON, D.C. (FEBRUARY 23, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

Tax refunds amounting to over $1 billion are awaiting an estimated 1 million people who still have not filed a federal income tax return for 2008.

http://www.accountingtoday.com/news/Billion-Dollars-2008-Taxes-61819-1.html

IRS Experiences Further Tax Refund Delay Problems

WASHINGTON, D.C. (FEBRUARY 20, 2012)

BY MICHAEL COHN, ACCOUNTING TODAY

The Internal Revenue Service has been having more problems with delayed tax refunds.

http://tinyurl.com/7b8r7hf

Congress Passes 2012 Payroll Tax Holiday Extension

CCH Tax Briefings,2012 MIDDLE CLASS TAX RELIEF AND JOB CREATION ACT,(Feb. 17, 2012)

Printable Version

For a printable pdf version of this tax briefing, click to launch.

Special Report

Congress Passes 2012 Payroll Tax Holiday Extension

Congress has extended the employee-side payroll tax cut through the end of 2012. After weeks of uncertainty over whether an agreement could be reached, the House passed the Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) by a vote of 293 to 132 on February 17, 2012. Senate approval quickly followed, also on February 17, by a vote of 60 to 36. Lawmakers agreed not to require the $93.2 billion estimated cost for the payroll tax cut extension to be offset by revenue-raising provisions. A potential impasse over revenue increases was avoided entirely when both parties agreed to offset costs of the full-year, two percentage point payroll tax cut through transfers from the general fund of the Treasury to the OASDI trust fund. In a revenue neutral provision, however, the new law eliminates a timing-shift in the estimated tax payments that had been required of certain large corporations under previous laws. Non-tax provisions within the new law extend unemployment benefits and implement a"doc fix" for Medicare. President Obama is expected to sign the bill as soon as it reaches the White House.

IMPACT:

The Joint Committee on Taxation (JCT) has estimated that approximately 170 million wage earners and self-employed individuals will benefit from the payroll tax reduction in 2012. The White House figures that taxpayers on average will see a $1,000 increase in take-home pay in 2012. The extension benefits both employees and those self-employed. The IRS has indicated it would be ready to quickly implement a full-year extension of the payroll tax cut.

IMPACT:

To offset the payroll tax extension, Democrats had proposed a surtax on millionaires, which met with strong Republican resistance. Failure to include that provision in the new law—possibly the last tax-related bill to be passed by Congress in the near future—significantly lowers the likelihood of any new tax on higher income individuals being approved by Congress before the November elections.

FULL-YEAR EXTENSION

The Temporary Payroll Tax Cut Continuation Act of 2011 (2011 Payroll Continuation Act) had extended the employee-side payroll tax rate reduction of two percentage points through the end of February 2012. The new law extends the employee-side payroll tax holiday through the end of 2012.

Under the new law, individuals who receive wages and salaries will pay Old-Age, Survivors, and Disability Insurance (OASDI) taxes at a rate of 4.2 percent for calendar year 2012. The OASDI tax rate for selfemployed individuals for 2012 similarly has been extended at a reduced 10.4 percent level through the end of 2012.

IMPACT:

All wage earners and individuals who are self-employed share in the two percentage point payroll tax cut extension, up to the Social Security earnings cap of $110,100 for 2012. Taxpayers earning more than $110,100, benefit from the two percentage point reduction up to the $110,100 wage base. Workers under the Railroad Retirement System also benefit from a similar reduction in 2012 (as they did for 2011) with respect to the rate of withholding, from 6.2 percent down to 4.2 percent.

IMPACT:

Reduced OASDI withholding has no effect on an individual's future Social Security benefits.

OASDI. Individuals contribute to Social Security through payroll taxes (the Federal Insurance Contributions Act (FICA)) or self-employment taxes (Self-Employment Contributions Act (SECA)). Both FICA and SECA are composed of two parts: (1) the Old-Age, Survivors, and Disability Insurance (OASDI) tax and (2) the Medicare Hospital Insurance (HI) tax. The OASDI tax normally requires employers and employees each to pay 6.2 percent of wages up to the maximum taxable wage base ($110,100 for 2012). Self-employed individuals pay both portions (normally equal to 12.4 percent). The new law reduces those rates to 4.2 percent and 10.4 percent, respectively, for 2012.

COMMENT 

Starting in 2013, the Patient Protection and Affordable Care Act (PPACA) is set to impose an additional 0.9 percent Medicare tax on wages in excess of $200,000 ($250,000 in the case of a joint return, $125,000 in the case of a married taxpayer filing separately).

RECAPTURE REPEALED

When Congress passed the two-month extension of the payroll tax cut, the extension included a recapture provision, which was intended to apply to individuals who receive more than $18,350 in remuneration in January and February 2012. The recapture tax would have been payable in 2013 when the individual filed his or her income tax return for the 2012 tax year. The House Ways and Means Committee explained that the recapture provision would not apply when Congress approved a full-year extension of the payroll tax cut for 2012. The new law holds true to that promise by amending the definition of "Payroll Tax Holiday Period" in the 2010 Tax Relief Act to mean calendar years 2011 and 2012, and by repealing the January-February recapture provisions.

COMMENT 

On February 16, Treasury Secretary Timothy Geithner told the Senate Budget Committee that he does not anticipate the payroll tax cut would be extended for a third year (into 2013). "This has to be a temporary tax cut. I don't see any reason to consider supporting its extension."

IRS RESPONSE

In a February 15, 2012 letter to the Joint Committee on Taxation, IRS Commissioner Douglas Shulman reported that the IRS had taken measure to prepare for the expiration of the two-month extension, including revising forms and instructions and programming systems. He further wrote that the IRS will be making "small modifications to certain notices to, and publications for, employers"but that no new guidance would be required and only minimal impact on IRS training and the Internal Revenue Manual would take place because of the full-year extension.

IMPACT:

Shulman concluded that, as an extension of current law (except for the recapture repeal), the full-year extension of the payroll tax holiday "should not add significant burden to taxpayers and the public in general." Shulman added,"computer software providers and large employers may have programmed their systems for current law and would need to make … adjustments."

EMPLOYERS

The employer's share of OASDI taxes is not reduced to 4.2 percent but remains at 6.2 percent for all of 2012. That 6.2 percent"half" of OASDI taxes on self-employment income is effectively built into the 10.4 percent rate for 2012.

COMMENT 

For tax years beginning in 2009 and 2010, a less generous Making Work Pay credit was available for workers, capped at $400 ($800 for a joint return) and a phase out for modified adjusted gross income above $75,000 ($150,000 for joint returns). An employer-side payroll tax holiday was also available for wages paid from March 19, 2010 through December 31, 2010, to qualified workers hired after February 3, 2010, and subject to certain limitations.

ELEVENTH-HOUR ADDITIONS/DELETIONS

House Republicans introduced the Payroll Tax Cut Continuation Act of 2012 as a stand-alone payroll tax cut bill without an extension of unemployment benefits and a Medicare "doc fix." Last-minute negotiations added an extension of unemployment benefits and the Medicare "doc fix" (as well as a name-change for the bill to the Middle Class Tax Relief and Job Creation Act of 2012).

The GOP dropped a proposal to require claimants for the earned income credit to have a Social Security number. Also dropped was a proposal to extend 100 percent bonus depreciation one more year, through 2012. The so-called "tax extenders" provisions were tabled. These include the research tax credit, the state and local sales tax deduction, the higher education tuition deduction, and many others.

CORPORATE ESTIMATED TAX PAYMENTS

Generally, a corporation is required to make quarterly estimated tax payments during its tax year based on its income tax liability. For a corporation whose tax year is a calendar year, these estimated tax payments must be made by April 15, June 15, September 15, and December 15. A fiscal year corporation pays estimated tax installments for a tax year on the 15th day of the fourth, sixth, ninth, and twelfth months of the year.

A number of recent laws have accelerated the estimated tax payment required to be made by certain large corporations (those with assets of at least $1 billion) from one quarter into the previous quarter. Congress had enacted these changes solely as accounting maneuvers designed to make certain budgetary requirements over shifting budget windows from one fiscal year to another. For example, such shifts were required under the trade agreements with Colombia, Korea and Panama enacted in 2011; the Hiring Incentives to Restore Employment Act of 2010; and the Corporate Estimated Tax Shift Act of 2009. Under this regime, the next required installment of estimated tax would be reduced accordingly to reflect the increase. None of these shifts has yet to take place.

The new law provides that these recently enacted timing shifts are repealed. The regular payment schedule that applied prior to the enactment of the timing shifts is restored.

IMPACT:

According to the Joint Committee on Taxation, repeal has no revenue effect over 2012-2021.

PAYROLL TAX RATES - 2012

Program	Employee	Employer	Self-Employed
OASDI	4.2%	6.2%	10.40%
HI	1.45%	1.45%	2.90%

COMMENT 

President Obama called for repeal of these timing shifts in his fiscal year (FY) 2013 budget proposals.

WHAT's NEXT

AMT Patch. President Obama has proposed abolishing the AMT and recouping at least some of the lost revenue with the so-called Buffett Rule. Until (and if) Congress should enact the Buffett Rule, President Obama has proposed to provide for AMT patch for 2012 and subsequent years. The AMT patch provides taxpayers with increased exemption amounts.

Corporate Tax Reform. There is a growing groundswell among tax professionals that tax reform is necessary both to reduce complexity and streamline economic competitiveness. The administration is expected to unveil a "framework" for corporate tax reform later in February. Administration officials have said that the corporate tax rate could be reduced in exchange for the closing of unspecified tax loopholes. The framework could also include the President's proposed minimum tax on overseas profits, which like the Buffett Rule has not yet been described in detail by the administration.

Carried Interest. As part of his FY 2013 budget, President Obama proposed to designate a carried interest in an investment partnership as a services partnership interest (SPI). A partner's share of income from an SPI that is not attributable to invested capital would be taxed as ordinary income. Self-employment tax would attach to that income. The President's proposal has been described as a non-starter by the GOP.

Bonus Depreciation. One hundred percent bonus depreciation generally expired at the end of 2011. President Obama and many lawmakers support extending 100 percent bonus depreciation through the end of 2012.

Extenders. A host of temporary individual, business and energy tax incentives expired at the end of 2011. President Obama has indicated his support for extending the extenders as have many lawmakers. However, the cost of extending the expired provisions could be an obstacle to their passage.

COMMENT 

While the tax extenders could be retroactively reinstated by Congress to January 1, 2012, if passed even late in 2012, proponents argue that their effectiveness is significantly diminished the later they are taken up by Congress.

Sunsetting of the Bush-Era Tax Cuts. President Obama and the GOP remain far apart over the fate of the Bush-era tax cuts. The President has frequently reiterated his proposal to allow the Bush-era tax cuts to expire for higher income taxpayers after 2012, most recently in his State of the Union address and FY 2013 budget proposals. Both sides expect little progress over the fate of the Bush-era tax cuts until after the November elections.