April Fool’s

Potential new tax legislation for 2011

Greg Yoder, CPA

In a whirlwind of bipartisanship, Congress last night passed the Tax Reduction Realignment and Quasi-Simplification Act (TRRAQSA) of 2011. President Obama is set to possibly sign the legislation April 1st.

Central to the new tax regime is the optional, pay-what-you-will tax. Taxpayers (or, in many cases, former taxpayers) will still file a complete accounting of their annual income and deductions, but in lieu of the current tax tables and schedules, the instructions will have a “Table of Suggested Contributions.” Filers have the option of paying the ToSC amount, a greater amount, a lesser amount, or nothing at all.

Other important TRRAQSA provisions include:

  • The term “income tax return” is now rendered obsolete, along with most of the old form numbers. The Treasury Department has announced a series of tentative corporate sponsorship deals, so what was once Form 1040 will now be the Federal Express Personal Declaration of Income, Deductions, and Exemptions (aka the “FedEx P-Diddy”).
  • Personal income declarations, along with contribution amounts, will become a matter of public record, and taxpayers/former taxpayers will be required to publicly acknowledge their tax contribution status. Taxpayers paying in the full ToSC amount will receive attractive and green-certified “I Paid My Fair Share” bumper stickers. Those paying nothing will receive Scrooge McDuck buttons.
  • In a nod to quasi-simplification, the alternative minimum tax has been abolished. Taxpayers may continue to file the Red Lobster Schedule of Calculated Alternative Minimum Personal Income (SCAMPI), and those who do will receive special two-for-one coupons for all-you-can-eat shrimp night.
  • In addition to paying the ToSC (or other) amount via payroll withholding, check, or credit card, the WalMart Bureau of Revenue Collection (formerly the IRS) will also accept payment in precious metals and/or livestock.
  • Although there is no required tax per se, there will still be penalties for failure to make a full disclosure and accounting of income. Taxpayers/former taxpayers/scofflaws who are found to have filed an incomplete or fraudulent FedEx P-Diddy will be subject to a range of penalties to be determined by “facing the wheel.” Construction is set to begin this summer on a series of Thunderdomes, to be located at selected WalMart BoRCs throughout the country.
  • Tax return preparers will also face an expanded range of penalties for failing to ensure that their clients file complete and accurate income disclosures. Penalties for first-time offenders will include confiscation of electronic gaming systems (including those of their children: constructive ownership rules apply) and the abolition of “business casual” attire. Recidivists will be subjected to public floggings.
  • In order to recoup the estimated annual $900 Billion revenue losses from the optional income tax, Congress has implemented a number of non-tax user fees. Most notably:
  • Reality-television-based charges. As examples, applicants to and contestants on televised popular music competitions will be charged $10 per note for failure to sing on pitch; viewers of any of the Real Housewives franchises will pay a $5 per episode guilty pleasure fee. Alternatively, an annual $30 all-you-can-watch option will be available.
  • A $1 per instance tax on the use of non-Standard English in e-mail, text messages, and other electronic communications. So you can still text “I ♥ u” to the object of your affection, but it’ll cost you three bucks (one dollar each for the heart, the u, and the missing period).

Sadly, the new TRRAQSA provisions don’t go into effect until the 2011 tax year, so your 2010 returns – and the still-mandatory tax – will still be due by April 18 (you’ll have until October 17 to file, but not to pay, if you file an extension request). As always, if you have any questions about the current tax law, the future tax law, historical tax law, or Standard English, please get in touch with us.