Reality Check

Each year about this time I usually attend some kind of income tax seminar that updates CPAs on tax law changes for the upcoming filing season. As I do not work full time with income taxes it gets my head into the game for year end to assist my clients in planning to minimize their tax burden. I just completed an advanced update the past two days and, needless to say, there was a lot of information imparted. While it may be thoroughly stimulating to me (not) I will not bore you with the details. I will give you a brief snapshot of the state of income tax law and what you have to look forward to.

Much of the time and discussion over the past two days centered around the Affordable Care Act, it's requirements for compliance and the penalties if you don't. I consider myself pretty up to date on current events so I was not surprised that the material in the course, which was prepared about 3 months ago, was outdated. That was before the much touted roll out of the Healthcare.gov website and its abysmal failure. This was also before BHO was caught in one of his many lies. And before he went on TV to announce changes, delays, etc., that, the last time I checked, will require an actual change in the law to affect. So the takeaway from the seminar was "this is the law, subject to changes by Congress, executive order, or regal edict". There are a couple of things that are unlikely to change: you will be required to be covered by insurance for 2014 and if you are not you will be assessed a penalty on your 2014 income tax return. This penalty is assess on each month you are without qualifying coverage for each person on your tax return. And most people, including me, have no clue what the specific requirements for the insurance will be as the government will be making this up as they go along, apparently. So my clients and I will be having a discussion soon about the requirement to get the dialogue started.

And this debacle pretty much characterizes the state of current tax law. Since it's inception 100 years ago the collection of federal income taxes has been used for social engineering. How was the government funded the previous 130 plus years with out it? Then when FDR dreamed up the Social Security Act in 1937 and Lyndon Johnson the Medicare Act in 1965 the fix was obviously in. Most of the complexity in tax law is a result of making a commitment to redistribute wealth from one group of citizens to the other and the back door deals it takes to appease those that were just stolen from. The problem is that we haven't truly paid for all of this since the sixties and the piper needs to be paid. The deficit spending can't go on and I anticipate that, absent Draconian spending cuts, increased taxes will be coming to a return with your name on it! We haven't had adults in charge of this mess for a long time.

I have been a Certified Public Accountant since October 5, 1978. I began preparing income tax returns in 1976 and my longest client was my first in that year. Most of my clients are older folks and I will continue to get them through this mess as long as they want me to. For me it is not about the money. I believe our government will be unleashing an assault on the bank accounts of the achievers and people that have worked and saved and I will work to mitigate that assault as much as I can within the law. The tax code is much too complicated for the average taxpayer to understand and I just don't believe we can trust the government to look after our interests. It's a sad state of affairs but reality usually is.