John Kartch

Navigators Warned: Don't Leave Tax Returns on the Fax Machine


Posted by John Kartch on Monday, September 30th, 2013, 8:33 PM PERMALINK


As Obamacare enrollment begins, the Department of Health and Human Services has a helpful tip for the program's so-called Navigators: “Do not leave documents that contain PII [Personally Identifiable Information] or tax return information on printers and fax machines.”

The warning is contained in Section 2.4.3 of the 207-page Health Insurance Marketplace Navigator Standard Operating Procedures Manual.

The same section asks navigators to “double-check” the fax number before faxing Obamacare enrollee’s tax returns:

“When faxing PII or tax return information, double-check that the recipient’s fax number is correct and that someone is able to pick up the faxed information immediately.”

Because the key components of Obamacare will be enforced by the IRS, navigators will have access to highly sensitive identifying information. The Navigator manual describes Personally Identifiable Information as follows:

  • Identifying information such as consumers’ names, addresses, or SSNs
     
  • Information about consumers’ incomes, personal finances, debts, deductions and exemptions
     
  • Any action taken by the IRS against consumers, such as investigations or penalties
     
  • Any private written agreements (such as a pricing agreement) with the IRS and any background information about these agreements
     
  • Relevant information, even if not found on the return (e.g., expenses)


Additional excerpts from the Navigator Manual:

  • No fake smiles: "Do not pretend to smile, or produce a false smile; these are easy to spot and send the wrong messages." – Section 2.2.1
     
  • Listen: “By not listening you can become very frustrating to consumers.” – Section 2.2.3
     
  • Apologize: “Apologizing when things go wrong demonstrates that you care about consumers and their experiences.” – Section 2.2.4
     
  • "Be Memorable - For the Right Reasons." – Section 2.2.6


The Navigator manual can be found here.

A list of Obamacare taxes, arranged by effective date, can be found here.

Click here for a printable PDF of this press release.

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IRS Watchdog: $67 Million Missing from Obamacare Slush Fund


Posted by John Kartch, Ryan Ellis on Wednesday, September 25th, 2013, 5:10 PM PERMALINK


WASHINGTON, D.C. – The IRS is unable to account for $67 million spent from a slush fund established for Obamacare implementation, according to a Treasury Inspector General for Tax Administration (TIGTA) report released today. 

The “Health Insurance Reform Implementation Fund” (HIRIF) was tucked into Obamacare in order to give the IRS money to enforce the tax provisions of the healthcare law.  The fund, totaling some $1 billion of taxpayer money, was used to roll out enforcement mechanisms for the approximately 50 tax provisions of Obamacare. 

According to the report:  “Specifically, the IRS did not account for or attempt to quantify approximately $67 million [from the slush fund] of indirect ACA costs incurred for Fiscal Years 2010 through 2012.”

The report also found several other abuses of taxpayer funds, including:

Travel abuse:  The report states, “Specifically, we identified 38 IRS employees in two judgmentally selected business units whose travel was charged to the HIRIF in FY 2012, but no portion of their salary and related benefits was charged to the HIRIF.” In short, the IRS was not making sure that employee travel reimbursements had anything to do with the purpose of the fund. This is not the first time that IRS employee travel has created a scandal for the agency.

1,272 IRS Obamacare enforcement agents: The report estimates that total slush fund spending cost taxpayers the equivalent of 1,272 new full time IRS agents.

The IRS requested an additional 859 IRS Obamacare enforcement agents for Fiscal Year 2013: According to the report, “The IRS informed us that it requested $360 million and 859 FTEs for FY 2013 to continue implementation of the ACA. However, the IRS did not receive this requested amount for FY 2013.”

To add insult to injury, the IRS has told the Inspector General that it will comply with the recommendations made in the report; unfortunately, the slush fund has been fully spent, making that promise meaningless.

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Obama on Obamacare: "We did raise taxes on some things."


Posted by John Kartch on Wednesday, September 25th, 2013, 11:57 AM PERMALINK


During his Tuesday remarks at the Clinton Global Initiative, President Obama admitted that his health care law raises taxes:  “So what we did — it’s paid for by a combination of things. We did raise taxes on some things.”

“Some things” is an understatement. Below is just a partial list of Obamacare’s new or higher taxes on Americans:

Starting in tax year 2013:

Obamacare Medical Device Tax:  Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year.  In addition to killing small business jobs and impacting research and development budgets, this will make everything from pacemakers to artificial hips more expensive.

Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI).  Obamacare now imposes a threshold of 10 percent of AGI.  Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year. To learn more about this tax, click here. 

Obamacare Flexible Spending Account Tax:  The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars. 

Needless to say, this tax will especially impact middle class families.

There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  Nationwide there are several million families with special needs children and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.

Obamacare Super Saver Surtax: A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This tax hike results in the following top tax rates on investment income:

 

Capital Gains

Dividends

Other*

2013+

23.8%

23.8%

43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.

Obamacare Medicare Payroll Tax Increase:

 

First $200,000
($250,000 Married)
Employer/Employee

All Remaining Wages
Employer/Employee

Pre-Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/1.45%
2.9% self-employed

Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/2.35%
3.8% self-employed


Starting in tax year 2014:

Obamacare Individual Mandate Non-Compliance Tax:  Starting in 2014, anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services -- must pay an income surtax to the IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press:  “Most would be in the middle class.”

In addition, 100 percent of Americans filing a tax return (140 million filers) will be forced to submit paperwork to the IRS showing they either had “qualifying” health insurance for every month of the tax year or they obtained an exemption to the mandate.

Americans liable for the surtax will pay according to the following schedule:

 

1 Adult

2 Adults

3+ Adults

2014

1% AGI/$95

1% AGI/$190

1% AGI/$285

2015

2% AGI/$325

2% AGI/$650

2% AGI/$975

2016 +

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

(Delayed by Obama to 2015) Obamacare Employer Mandate Tax:  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2,000 for all full-time employees.  This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3,000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Obamacare Tax on Health Insurers:  Annual tax on the industry imposed relative to health insurance premiums collected that year.  The tax phases in gradually until 2018.  Fully imposed on firms with $50 million in profits.

Starting in tax year 2018:

Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:  Obamacare imposes

a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans. This Obamacare tax will be levied on insurance policies whose premiums exceed $10,200 for an individual and $27,500 for a family.  Middle class union members tend to be covered by such plans in states like Ohio, Pennsylvania, Wisconsin, and Michigan.  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. 

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ATR Statement on Marketplace Fairness Act


Posted by John Kartch on Wednesday, September 18th, 2013, 3:59 PM PERMALINK


Chairman Bob Goodlatte's (R-Va.) principles released today make clear that the Marketplace Fairness Act is a non-starter in the House. ATR maintains that there is no need for an Internet Sales tax.

Americans for Tax Reform’s Katie McAuliffe said, “Just because Chairman Goodlatte released principles, doesn't mean that it’s an endorsement of the Marketplace Fairness Act or remote sales tax collection, as some would have you believe.  It does not signal any momentum to pass anything.  What it does signal is that the Senate rammed though vastly unpopular and misguided legislation without any serious thought or discussion.

"In fact, polling data shows that 70 percent of likely voters nationwide are against the idea of any state reaching across its borders into their own to force businesses to collect taxes for states 'abroad.'

"Americans for Tax Reform will continue talking with members about the serious problems remote sales tax collection poses for federalism and audits.”

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Today: Five-Year Anniversary of President Obama's Shattered Middle-Class Tax Pledge


Posted by John Kartch on Thursday, September 12th, 2013, 1:33 PM PERMALINK


Speaking in Dover, New Hampshire on Sept. 12, 2008, then-candidate Obama said:

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” [video]

But Obama’s “firm pledge” to the American people was thrown out the window when he signed Obamacare into law. At least seven of the 20 new or higher taxes in Obamacare directly hit families making less than $250,000:

1. Obamacare Individual Mandate Non-Compliance Tax: Starting in 2014, anyone not buying "qualifying" health insurance - as defined by President Obama's Department of Health and Human Services -- must pay an income surtax to the IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press: "Most would be in the middle class."

Americans liable for the tax will be forced to pay according to the following schedule:

 

1 Adult

2 Adults

3+ Adults

2014

1% AGI/$95

1% AGI/$190

1% AGI/$285

2015

2% AGI/$325

2% AGI/$650

2% AGI/$975

2016 +

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

 

 

2. Obamacare Flexible Spending Account Tax: The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family's basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.

Needless to say, this tax will especially impact middle class families.

There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. Nationwide there are several million families with special needs children and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.

 

3. Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year. To learn more about this tax, click here.

 

4. Obamacare Medicine Cabinet Tax. Thanks to Obamacare, since January 2011 Americans have not been able to purchase non-prescription, over-the-counter medicines from their Flexible Spending Accounts or Health Savings Accounts. Families often rely on over-the-counter medicines to get themselves through the colds, fevers, and aches and pains of daily family life.

 

5. Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:  Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans. 

6. Obamacare 10 Percent Excise Tax on Indoor Tanning: This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). Slipped into the bill by Sen. Harry Reid (D-Nev.) behind closed doors in the middle of the night, this tax hike replaced the planned Obamacare "Botax" on cosmetic surgery. This petty, burdensome, nanny-state tax affects both the business owner and the end user. Making matters worse: According to aTreasury Inspector General for Tax Administration report, the Obama IRS didn't bother to issue compliance guidelines until three quarterly filing deadlines had passed: "By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." This is yet another sign that the Obama administration is ill-prepared for Obamacare implementation.

 

7. Obamacare HSA Withdrawal Tax Hike: In effect since 2011, this Obamacare levy increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

 

None of the above Obamacare tax increases contain any exemption whatsoever for families making less than $250,000 per year: All are violations of Obama’s “firm pledge.”

 

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Internet Tax Freedom Forever - Taking it to the House


Posted by John Kartch on Thursday, September 12th, 2013, 12:30 PM PERMALINK


Today Chairman of House Judiciary Committee Rep. Bob Goodlatte (R-Va.) and Rep. Anna Eshoo (D – Calif.) introduced the Permanent Internet Tax Freedom Act (PITFA) along with Rep. Spencer Bachus (R-Ala.), Rep. Steve Cohen (D-Tenn.) and Rep. Steve Chabot (R-Ohio).  PITFA permanently bans taxes on Internet access, and bars multiple and discriminatory taxes on electronic commerce.  

The current law banning state taxes on Internet access and discriminatory taxes on electronic commerce was first enacted on a temporary basis in 1997 and has been reauthorized three times.  That law currently know as the Internet Tax Moratorium is scheduled to expire in November 2014. PITFA would make the Internet Tax Moratorium, which bans taxes on Internet access and bans discriminatory taxes on e-commerce, permanent with one important change.  

The original iteration of the law grandfathered in preexisting Internet taxes with the intent of a gradual phase out.  Because PITFA eliminates the grandfathered Internet connection taxes, many Americans will see their broadband service bills decrease.

PITFA would also ensure the continued growth of online commerce by forever barring states from taxing online purchases at a higher rate than the general sales tax rate.

The companion Senate version of PIFTA, the Internet Tax Freedom Forever Act, was introduced shortly before the August recess by Sen.John Thune (R-S.D.) and Sen. Ron Wyden (D-Ore.).

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ATR Marks the 28th Anniversary of its Kickoff Event with President Reagan


Posted by John Kartch on Thursday, September 12th, 2013, 11:19 AM PERMALINK


Highlights of the Tax Reform Act of 1986 include:

  • Lowered the top marginal individual income tax rate from 50 percent to 28 percent.
  • Lowered the corporate income tax rate from 46 percent to 34 percent.
  • Reduced the number of tax brackets from fourteen to two.
  • Increased the standard deduction and personal exemption amounts such that income earned in poverty faced no taxation.
  • Remains the most sweeping simplification of the modern history of the income tax.Photo of President Ronald Reagan Signing ATR's Petition in 1985

In this September 12, 1985 photo taken in Tampa, Florida, President Ronald Reagan signs an Americans for Tax Reform petition to the House Ways & Means Committee urging the passage of what became the Tax Reform Act of 1986.

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IRS: Compliance Burden for Obamacare Individual Mandate Tax Totals 7.5 Million Hours Each Year


Posted by John Kartch on Tuesday, August 27th, 2013, 1:39 PM PERMALINK


The IRS today released its final rule on the Obamacare individual mandate non-compliance penalty tax. Key numbers for taxpayers:

7.5 million hours: Taxpayers will be forced to spend a total of 7.5 million hours each year complying with the new tax.

30 Minutes: Taxpayers will be forced to spend up to 30 additional minutes filling out paperwork each year, just for this one new tax.

63: The number of times the final rule uses the Orwellian term “Shared Responsibility Payments” to describe what is actually a tax.

Americans for Tax Reform takes a look back at well-known “Shared Responsibility Payments” quotations throughout history:

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Obamacare Advocates Hurl Desperate Hail Mary Pass to NFL


Posted by John Kartch on Wednesday, August 14th, 2013, 10:06 AM PERMALINK


A month after big labor front group "Moms Rising" (check out their policy priorities and lack of mailing address) began circulating a petition to have the NFL reconsider its decision to not push Obamacare on its fans, the group now has "thousands" of signatures that they are dropping off at the league's New York City headquarters today at 11:00 a.m.  

 

According to the  U.S. Department of Labor, women make approximately 80 percent of the healthcare decisions for families. With that in mind, Ryan Ellis, Director of Tax Policy for Americans for Tax Reform, points out in his 2012 Daily Caller piece, "The Obamacare law contains 20 new or higher taxes. Many of these taxes fall on basic healthcare decisions. Thus, the Obamacare tax hikes on healthcare will disproportionately burden women." Two of the most detrimental tax hikes contained in the controversial healthcare law especially harm  families with special needs children and families facing high out-of-pocket medical expenses.

 

 "Moms Rising" might consider joining their fellow union groups in noting the harmful effects of the healthcare law. In a joint letter to Congress signed by Jimmy Hoffa (President, Teamsters), Joseph Hansen (President, The United Food and Commercial Workers International Union), and D. Taylor (President, Union of Needletrades, Industrial, and Textile Employees- Hotel Employees and Restaurant Employees International Union), the leaders of three of the largest U.S. unions warned Democratic leaders the President's healthcare law will "destroy the foundation of the 40 hour work week that is the backbone of the American middle class." They went further to say:
 

 "The unintended consequences of the ACA are severe... Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees' work hours below 30 hours a week. Numerous employers have begun to cut workers' hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits."

 

Even professional athletes from the major sports leagues HHS and the Obama administration want to use to promote Obamacare will incur higher tax rates. Promoting Obamacare would be a personal foul against the fans and taxpayers who tune in to watch their favorite team and athletes each season.

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Obamacare Tax Dollars Wasted on Custom Sunscreen, Concert Port-a-Potties, and Airplane Beach Banners


Posted by John Kartch on Thursday, July 11th, 2013, 11:42 AM PERMALINK


As reported in the Washington Post, taxpayer dollars are being used to finance several questionable advertisements for the unpopular law:

“In Connecticut, selling Obamacare involves airplanes flying banners across beaches. Oregon may reel in hipsters with branded coffee cups for their lattes. And in neighboring Washington, the effort could get quite intimate: The state is interested in sponsoring portable toilets at concerts.”

--

“Access Health CT, Connecticut’s marketplace, plans to head to the beach this summer to promote its new insurance marketplace. Officials will hand out sunscreen customized with a ‘get covered’ slogan and hire an airplane to fly over beaches with a banner that advertises the new agency.”

--

“We’ve talked about everything we could use, even whether we could do some branding on porta-potties,” he said. “I want to sponsor charging stations, too. Talk about a captive audience. They’re standing there, charging their iPhones.”

The full article can be read here.

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