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Congress encourages tax cheating

By Kay Bell · Bankrate.com
Tuesday, September 14, 2010
Posted: 3 pm ET

Dear Representatives and Senators, Bankrate Taxes Blog reader Jackie has a message for you:

I did take the original tax credit and ... felt cheated when the revised 2009 credit was passed. This is especially true since I closed just 11 days too soon to take the revised credit. So I will dutifully pay back the $500 credit on my 2010 tax return, but I will also find a way to skim $500 (read: cheat) somewhere else on the return (not hard to do since I'm self-employed and can easily "forget" to report some income) and will continue to so for the next 15 years

Washington, pay attention. This is not the type of feedback Capitol Hill wants.

Jackie was talking specifically about the original 2008 version of the first-time homebuyer tax credit. It has to be paid back beginning with the filing of 2010 returns while subsequent iterations of the tax credit offered later home purchasers a more generous tax break.

But Jackie is not alone, in either the frustration of constantly changing tax laws, the infuriation at how arbitrary the laws seem and the attitude that "I'm going to get it back" somewhere else when it's time to file Form 1040.

Lots of taxpayers, and not just angry Tea Party members, feel the same way about a lot of other tax laws. And even if the tax code provisions actually benefit them, Congress is making them way too convolulted and, in many cases, taking so long to enact them that all of us taxpayers have very little time to decipher them, figure out what they mean to us and them take the appropriate tax planning steps.

And I suspect most IRS employees share the same sentiments. IRS staff have to draft the regulations to implement the laws and then enforce them. When you members of Congress write legislation that is unclear or do so late in the year, it puts added pressure on the IRS as well as taxpayers trying to file returns.

I bring this up now, Representatives and Senators, because you've already dropped the ball on the estate tax and it looks like you might well do the same thing with the expiring 2001 and 2003 tax cuts. Obviously deadlines don't mean that much to y'all, but come Jan.  1, 2011, income tax rates for every U.S. taxpayer will go up unless you lawmakers in Washington, D.C., take action. Other tax breaks will disappear, too. And that estate tax y'all blew off in 2009 will be back in an even stricter form.

So, members of Congress, Jackie and I beseech you: Do your jobs and do them in a timely manner. If you don't, your performance reviews at the polls on Nov. 2 might not be what you're hoping to hear.

More importantly, you'll be sending the proper message to the people you represent. I have faith in America's taxpayers. They really don't want to cheat on their taxes.  They just want clear and fair laws with which they can comply. Give it to them!

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