FYI: Who Shoulders the Burden of Federal Income Taxes?

NSTPInternal Revenue Service (IRS), Taxpayer

FYI: Who Shoulders the Burden of Federal Income Taxes?

From an internet article posted by Erica York with the Tax Foundation Data from the Internal Revenue Service (IRS) shows us who pays federal income taxes. As illustrated below, higher-income taxpayers are responsible for paying a significantly higher share of the tax, and this trend has increased over the past three decades. For instance, in 2016, the top 1 percent of taxpayers paid about 37 percent of federal income taxes, more than twelve times the tax burden of the bottom half of taxpayers. The bottom 90 percent of taxpayers accounted for about 45 percent of the overall tax burden in 1986, compared to approximately 31 percent in 2016. Conversely, the top 10 percent of taxpayers have seen an increase in their tax burden over the same period, from 55 percent of total income taxes in 1986 to almost 70 percent in 2016. Average tax rates, which are income tax liabilities divided by income, are another way to illustrate the current tax system. Using IRS data, we see that the top 1 percent of taxpayers paid a rate much higher than the average taxpayer, while the remaining 99 percent of taxpayers paid below the average rate. The top 1 percent paid … Read More

Taxpayer Advocate Report

NSTPInternal Revenue Service (IRS), Taxpayer

Taxpayer Advocate Report

IRS Taxpayer Advocate Service (TAS) dropped its annual report to Congress late last week. The two-volume report was issued with the accompanying list of legislative recommendations –the so-called Purple Book. Many of its issues and recommendations may be familiar from past reports. The report makes a number of interesting contributions to understanding IRS. For the first time, TAS lays out its recommendations consistent with the so-called IRS “Pipeline,” namely: pre-filing, filing, and post-filing: examination, notices, collection, and litigation. Writing the report in this fashion should help congressional policymakers and appropriators understand better how IRS does its work. Additionally, the report points out how collections areas such as the Automated Collection System and correspondence audits should be operated and funded as more service-oriented accounts management functions. Too often over the last decade, executive and congressional budgeteers have not funded these units when allocating resources, not realizing that by doing so they are harming taxpayers and their representatives who are in good faith attempting to contact the IRS to respond to notices and manage their tax bills. Finally, the report highlights the problems the president and Congress caused by shutting down the IRS (for example, increasing phone and correspondence wait times and … Read More

TAX SECURITY 101: TAX PROFESSIONALS MUST MAINTAIN, PROTECT EFINS; MONITOR EFINS, PTINS AND CAF NUMBERS

NSTPElectronic Filing Identification Number (EFIN), Fraud, Individual Taxpayer Identification Number (ITIN), Preparer Tax Identification Number (PTIN), Security, Security Summit, Uncategorized

The Internal Revenue Service and the Security Summit partners warned tax professionals that savvy cybercriminals target IRS-issued identification numbers to help impersonate practitioners as well as taxpayers.