Posted: Apr 30, 2005 By: John A McElheny

Subject: Almost died preparing taxes

Comment: My wife and I have been preparing tax returns since 1973. This past year was the most frustrating. We have tried for years to hire qualified personnel to help prepare returns but the fact is there are none. No one wants a job for 60 days at seven days a week. Some of the clients have the idea that they have to file before the deadline and do not back down. We use to be able to process considerable returns between Feb 15 and March 15. Because of the brokerage firms sending out 1099 form wrong because of the deadline, it has pushed all those returns into processing at the same time as the returns we normally process between March 15 to April 15. The returns that we do are very high end mostly in the alternative minimum tax bracket. The governments real problem is going to be that there are not many of us around that will continue to try and do our best job to be accurate. The software is great, but the pressure and the inability to find real help is a sad state of affairs. Several solutions to the problem:





Send a message to the taxpayers that complicated returns need to be filed later than earlier.



Do not allow a brokerage firms to send out a 1099 unless they know it to be true. Make the 1099 deadline April 5 so that the accountants can estimate for extensions.



Make the filing date for alternative minimum tax returns to be June 15.





Ideas for The future of Taxes---



From a bean counter that has spent all his life preparing taxes; I would suggest the following simplified tax system to be phased in over a 10 basis so it allows everyone to adjust:



All business entities should file the same form that should pattern itself after the Sub S Corporation form 1120S. All Owners and employees should pay withholding in on either a W-2 or a K-1 form. The rates paid in on these forms should be based on earnings at 10%,20% 30% 40% BRACKETS. This is not a flat tax, it is just a table tax. All business profits not distributed on W-2, K-1, 1099 dividend would carry a flat 30% tax to be able to capitalize the business. When a business is sold the seller would pay a 5% of the sale as a tax. Business rules would be very simple, depreciation would be straight line 3,5,7 years on equipment and property 20 years. Meals entertainment gifts dues and other taxes paid carry no deduction but would still be reported on the tax form. Automobiles maximum deduction would be business mileage deduction of 40 cents per mile.



Investment income:

All sales of securities or property would carry a 5% tax on the sale no matter if gain or loss. If the loss is greater than the 5% tax the taxpayer can file for refund on a special form that details that particular sale.



All 1099 interest and dividends and gross rental income would carry a 5% flat rate tax that would be withheld at payment or paid in like and employment tax.



Individual tax forms should be eliminated. Individuals that have certain loss situations, disasters, college, can file for certain refunds from the above withholdings.



Tax rates on earnings to individuals would decrease 1% per year for 10 years on each bracket and a national sales tax would be implemented to increase 1% per year for 10 years.



The IRS would electronically maintain records on each individual so that the person could see all the above forms and earnings for credit purposes in buying houses, cars, college loans, etc.



Foreign businesses bringing products or services into the United States would carry a sales or Use tax on those items from the person who is purchasing those items. United States companies doing business outside the United States would pay on profit less foreign taxes paid on that profit.



In summary, the entire focus of taxation and collection should be at the business level. All those systems of calculation and collection are already in place. The IRS can then focus on whether the businesses are reporting correctly.



John A McElheny CPA

Columbus Ohio