Taxable Talk

There's a great op-ed piece in today's San Francisco Chronicle about the hybrid vehicle tax credit. The op-ed, written by Edward McQuarrie, a professor at Santa Clara University, gives the unpleasant details of how many Californians won't get the full value of the credit: the AMT will eliminate the tax break for many. I've been warning clients about this for some time.

But if you're single, making between $25,000 and $115,000, you will likely get the full credit. Everyone else should read the article and learn why the AMT needs to be reformed (though that is very unlikely to happen in today's Congress).

A web spider, or web crawler, is a program that scours the Internet for data. Wikipedia has a good description of them. And guess who is starting to use them? The taxman.

The Belastingdienst, the Netherlands version of the IRS, started a program called Xenon in 2004. Four other countries have joined in: Austria, Canada, Denmark, and the United Kingdom. As this story in Wired notes, the goal of the program is to look on the Internet to find individuals and organizations that have not paid their taxes. The spider finds businesses, and using other tools, gets their addresses. The information is then compared to the data in the tax organization's files to see if that business has filed a tax return. Presumably, businesses that haven't filed get a knock on the door from the taxman.

Obviously, there are privacy concerns with such a program. But it's public information that's being examined, and if you post it on your web site, you had better assume that the IRS (or the foreign equivalent) is reading it.

The IRS is not part of the Xenon project. However, the IRS would not confirm or deny to Wired that they use web crawlers.

The IRS announced today that the deadline to file your tax return has been pushed back to Tuesday, April 17th (the deadline was originally Monday, April 16th because the 15th falls on a Sunday). The IRS release is available here.

California will follow along, according to today's release from the Franchise Tax Board.

Why the change? Because April 16th is Emancipation Day, a legal holiday in the District of Columbia. Under federal statutes enacted years (decades?) ago, when the tax deadline falls on a Saturday, Sunday, or legal holiday in the District of Columbia, the deadline is extended to the next business day. Emancipation Day is a new holiday in the District; thus, the change.

Today is the deadline to make your fourth quarter estimated tax payment. That payment must be postmarked today. It doesn't have to be received by the IRS today, but you do need it to be postmarked today. The easiest, best, and safest way to ensure compliance is to mail your payment using certified mail. When you do that, your receipt is stamped by the post office with the date it was mailed.

Why do I bring this up? Because yet again a case was decided by the Tax Court dealing with something sent a day late. Today's petitioner had a deadline of Monday, May 8, 2006, to file a petition with the Tax Court. The petition was received by the Court on May 10th, and showed a handwritten date sent (the petition was sent by FedEx) of May 8th. But the FedEx computer generated receipt showed it was sent on May 9th. Additionally, the tracking documentation showed it entered the FedEx system on the 9th.

The Court does an excellent job of summarizing the issues:

A timely mailed petition may be treated as though it were timely filed. Sec. 7502(a). Thus, if a petition is received by the Court after the expiration of the 90-day period, it is nevertheless deemed to be timely filed if the date of the U.S. Postal Service postmark stamped on the envelope in which the petition was mailed is within the time prescribed for filing. Sec. 7502(a); sec. 301.7502-1, Proced. & Admin. Regs.

The Tax Court takes two pages to note that the rules also apply to private delivery services. Handing the envelope to a hotel worker on the evening of the 8th was not equivalent to handing it to an employee of FedEx on the 8th. Suffice to say, the petitioner was a day late and a dollar (or more) short.

Case: Austin v. Commissioner, T.C. Memo 2007-11

Don't Mess with Taxes has the 9th Tax Carnival up. You can read it here. There's nothing from me, probably because I didn't submit anything....

Also, I will be attending a convention over the next several days. Posts will be very limited.

Finally, a reminder that the 4th quarter estimated tax payments must be postmarked (or submitted through the EFTPS system) next Tuesday, January 16th.