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Sunday, August 29, 2021

More Necessary But Overlooked Tax Changes

tool box that spells out needed tax reforms
Well, back to what I started with a June 21, 2021 post where I'm sharing my ever-growing list of what I think are necessary but usually overlooked tax changes. It would be terrific to see these in the next tax reform bill or even some picked up in other legislation. I hope you'll review my first list and this one, check back for future posts (I have more reform ideas on my list) AND please post a comment with your reaction and your tax reform ideas.

  • Reform the personal income tax to its basic framework where reasonable deductions to produce income are deductible (they are not limited to 2% AGI or disallowed for 8 years (2018 through 2025)).

  • Modernize §197 to include 21st century intangibles – see page 5 of my 2017 article.

  • Update §170(f)(11) on qualified appraisals to expand situations where an appraisal is not needed because there are public listings of value, such as for most virtual currencies.

  • Update §7503, Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday – Some language here is outdated, such as reference to “internal revenue district.” Also, to avoid confusion regarding state holidays or those celebrated in the District of Columbia, consideration should be given to just using the national list of holidays at 5 USC 6103. This change will avoid confusion particularly when a DC or state holiday falls on the weekend so is possibly celebrated on Friday or Monday instead. For example, see Notice 2006-23 where the IRS had to clarify tax due dates where Patriots’ Day (relevant in Maine, Massachusetts, New Hampshire, New York, Vermont, Maryland, and DC) fell on Monday April 17, 2006 (Patriot’s Day is the third Monday of April and an April 15 Saturday makes April 17 Monday the date with Patriot’s Day then making the due date for those states April 18 Tuesday).

  • Update §7523, Graphic presentation of major categories of Federal outlays and income, to not only include them in the 1040 instructions but have them on the IRS website, those of elected officials and other agencies. Consider having a more interactive tool to help taxpayers understand all federal taxes they pay, info on the taxes, marginal rates, etc. See Nellen, “Time to move Sec. 7523 budget information into the Digital Age,” AICPA Tax Insider, 11/8/12.

More later ...

What do you think? and please post your tax reform ideas in the comment box. Thanks!


James Kronenberg said...

Greetings Annette ! Hope you & Your family are in GOOD HEALTH ! One suggested addition to your very "THOUGHTFUL" & "INSIGHTFUL" suggestions to IRC --- Payments made to attorneys ?legal advisors related to personal injury damage awards should be permitted as "offset" to amount of settlement / judgement reducing the amount TAXABLE. I've always felt this was "UNJUST" ON BASIS OF THE "CONSTRUCTIVE RECEIPT" DOCTRINE

21st century taxation (Annette Nellen) said...

James, thanks for the comment. I agree. This should fall under the basic personal income tax structure of taxing income and allowing reasonable expenses of producing that income (and not as an itemized deduction subject to the 2% AGI floor).