Singles: Paying More Taxes and Other Annoyances (our federal tax code contains over 1,000 laws where marital status is a factor, and in most cases single people lose out).

Eleanore S Wells for the HuffPo writes: There is a lot of upside to being single; in a nutshell, I love that my money and my time are my own and I get to spend them however I want. But there's a downside, too. A downside about which I've felt powerless to fight. You see, the Atlantic magazinerecently published an article by Onely.org on the economic burdens assumed by single people. I don't like it.

So, in honor of Tax Day, April 15, I am joining dozens of other bloggers who are writing about and expressing our frustration at what we call institutionalized discrimination against single people. Why Tax Day? Because, some of the most egregious examples of unfair treatment against singles occur in Income Tax, IRAs, and Social Security laws, which all largely favor married people.

In fact, our federal code contains over 1,000 laws where marital status is a factor, and in most cases single people lose out. According to the Atlantic article, a single woman making $80,000a year, could pay more than one million dollars more than her married female peer over her lifetime, because of some of these laws. (What, you think I can't think of anything more interesting to do with $1,000,000?)

But it's this law that really makes me want to cry "foul." There is a law that protects an individual from a stalker... a stalker as in someone who threatens to do harm and places a person in reasonable fear of bodily harm or death. This law can also protect the spouse of the person being stalked, if that person is married. But guess what? If the person being stalked is single, the same protection is not allowed. That's right: a close friend is not protected, even though s/he may be "like family" and equally in danger. That's just crazy.

And here's one that I think is just plain silly: A man and woman -- both DirecTV customers -- move in together. If the couple gets married, they can combine their previously individual accounts into a single account, so they don't lose all their saved shows or have to pay for an additional DVR. If they move in together but don't get married, it seems they cannot combine their accounts. Why?

So, even as the number of single people continues to grow, I -- and my fellow bloggers -- are hoping to call attention to the ways the country needs to re-examine some of its laws that treat singles as "less than." We're not. #UnmarriedEquality

Tax Time Tip: 3 Ways The IRS Is Tracking You Online

John Paul Titlow for readwrite.com writes:If you haven't filed your taxes yet, you might want to triple-check your math before you do. That's because the IRS employs a more watchful eye than ever, thanks to Big Data analysis and digital information-gathering tactics. 

With the ongoing budget crisis, pressure for the IRS to recover lost revenue has never been higher. Conveniently enough, the agency has made massive investments in its computing power and tools for crunching big data, allowing for more automation and rapid analysis. That means a greater capacity for robo-audits and less room for honest mistakes.

It's not just the tools that have improved. The data itself is richer and more varied than ever, drawing increasingly from whatever details about our digital lives the IRS can get its hands on, including information that isn't publicly accessible. We don't know the full extent of the IRS's data-mining capabilities, but recent reporting has revealed new details. 

1. Analyzing Your Social Media Updates 

The social Web has been a boon for IRS investigators, who can use updates from Facebook, Twitter and other services to bolster its cases against alleged tax cheats. Information about work history, one's physical whereabouts and even purchases can be gleaned from social networks. Some of it, like tweets and certain details from Facebook, are public. But should the IRS want to take a closer look, it supposedly has the means to do so, with or without a warrant. 

According to recent reports, the IRS cross-references data from social networks with Social Security numbers and then works in a host of other private data to look for suspicious patterns. 

2. Monitoring Digital Payments and Credit Card Activity 

The rise of commerce and digital payments have also given the IRS new sets of data to mine and analyze. The agency has long looked at taxpayers' activity on ecommerce sites like Ebay, but are now going deeper and getting a look at credit card transactions and other online payments. 

The agency looks for potential auditing targets "by matching tax filings to social media or electronic payments,"according to MSN Money. The exact mechanism of this monitoring isn't known, but MSN Money indicates that it includes examining credit card transactions "for the first time ever." 

It's not clear how detailed or widespread this monitoring is, and the IRS isn't likely to spill the beans (lest they tip off tax cheats), but suffice it to say that if the agency feels it has cause to take a peek at your online payment data, it won't have a problem doing so. 

3. Peeking At Your Email Usage 

Exactly when and how the IRS looks at email usage isn't entirely clear. The MSN Money report says the agency's big data analysis tools are used in part for "tracking individual Internet addresses and emailing patterns." That's pretty vague. In theory, the IRS could glean some details about email usage simply by looking at browsing activity, whether that insight comes from an ISP or email service provider. 

Does that mean that the IRS has blanket access to everybody's Gmail account for the purpose of feeding its data-crunching behemoth? That seems pretty unlikely. Instead, what it likely does is request access to individual accounts for people who are already suspected of wrongdoing. The American Civil Liberties Union recently uncovered documents that suggest the IRS doesn't feel a warrant is necessary to get such access. Good to know!

The IRS may be following you on Twitter / The tax agency reportedly plans to track tax cheats on social media. So be careful if your posts don't match your reported income.

Kay Bell for Bankrate.com & MSN Money writes: "An American has no sense of privacy. He does not know what it means. There is no such thing in the country."

That famous George Bernard Shaw quote was uttered well before the advent of social media. But it's worth pondering as we head into the home stretch of the 2013 tax-filing season.

While all the information collected by the Internal Revenue Service is protected by strict privacy statutes, the federal tax collector is well within his investigative rights to peruse what you choose to make public. So you might want to reconsider bragging on Facebook about buying a Ferrari when you're reporting just a $30,000 annual income on your Form 1040. Or at least tighten up the privacy controls on your social media account.

The IRS reportedly plans to collect personal information from sites such as Facebook and Twitter as part of its continuing effort to catch tax cheats. The added social media attention reportedly will be given to individuals with tax returns that already have raised audit red flags.

This is not a surprise.

Social media 'spies'

Advertisers already are data mining all our social media activities, seeking ways to manage public attitudes and encourage us to buy their products.

On the legal front, criminals are regularly caught because of their ill-advised social media discussions about or videos of their illegal activities.

It's even happened in the tax area. Five years ago, a group of University of Central Oklahoma students bragged on MySpace that their party business had served thousands. That boast caught the attention of the Oklahoma Tax Commission, which promptly issued the young businessmen a $320,000 state tax bill.

I'll bet Mom and Dad weren't thrilled when their kids called to ask for help paying the tax collector.

Limited IRS surfing

Will the IRS do the same, using taxpayer information posted on today's popular social media outlets? Maybe.

But I don't expect the agency to bring in a lot more money based on social media prompted tax investigations.

The main reason is that the IRS already is running on a tight budget. Many workers face furloughs if sequestration cuts continue.

And the IRS also recently caught congressional flack for making what some lawmakers saw as frivolous and money-wasting videos, ostensibly for training purposes, in its own in-house production studio.

So I suspect that diverting already thin resources to monitor social media sites won't go over too well on Capitol Hill.

That said, remember that what you say on the worldwide web about your lifestyle could have consequences beyond just impressing your friends.

How a Roth IRA Could Save You $185,180 in Taxes

Dan Caplinger for Daily Finance writes: Tax season is almost over, and there are only a few things left that you can do to affect what you owe for 2012. But looking forward to the 2013 tax year and beyond, adding a Roth IRA to your arsenal of retirement investing tools could save you a ton in taxes in the long run.

The Best Way to Pay Zero Tax

Ever since they first became available to retirement savers in 1998, Roth IRAs have offered a unique opportunity. In a departure from past methods of saving for retirement that involved deferring taxable income until future years, Roth IRAs changed the timing of the tax break they offered. Rather than giving you an upfront tax deduction that can lead to tax savings right now, Roths give you all their benefits on the back end: Assets within an account grow free of tax, and the withdrawals you take at retirement are eligible for tax-free treatment as well.

With tax rates on the increase, the value of being able to shelter income from tax has gone up quite a bit this year. Moreover, with current proposals aimed at raising taxes even further in the years to come, getting money into a Roth IRA now -- while that opportunity is still available -- could be even more valuable in the future.

Just How Much Is a Roth Worth?

Skeptics might argue that the maximum contributions of $5,000 for the 2012 tax year and $5,500 for 2013 -- plus an extra $1,000 if you're 50 or older -- don't give you enough in tax savings to be worth the effort. But depending on how successful an investor you are, getting the tax-free growth that Roth IRAs provide can be worth a lot more than you'd expect.

As an example, turn back the clock to 1998, the first year Roth IRA contributions were available. Back then, you were allowed to contribute only $2,000 per year to a Roth IRA. Since that time, an investment in an S&P 500-tracking index fund has produced returns of about 5 percent per year, which would have taken your initial $2,000 investment up to almost $4,250. With maximum tax rates on capital gains and dividends of 20 percent, a Roth could have saved you as much as $450 in taxes.

That's nice, but it's far from extraordinary. Yet consider this: if you were fortunate enough to choose some of the top-performing stocks in the market for your Roth, the impact would have been much more substantial. The numbers will shock you:

Stock	Total Return Since 1998	Potential Tax Savings on $2,000 Initial Investment
Gilead Sciences(GILD)	3,941%	$15,364
Amazon.com(AMZN)	5,101%	$20,004
Apple (AAPL)	13,105%	$52,020
Celgene (CELG)	16,484%	$65,536
Monster Beverage (MNST)	46,395%	$185,180

Source: S&P Capital IQ. Assumes current maximum long-term capital gains rate of 20%.

Clearly, these results are extraordinary. And, sure, maybe you're not a star stock picker. But the examples above clearly illustrate the full power of the Roth IRA in action, as the tax-free retirement vehicle was custom-made for maximum-growth stocks.

Finding those successful stocks is certainly challenging, but when you do, having them within a Roth IRA unlocks their full profit-producing potential.

Ride Your Roth to Riches

Most people are eligible to contribute to a Roth IRA, with income limits putting restrictions only on certain high-income taxpayers. Moreover, even if you can't contribute directly to a Roth, you may be able to convert an existing IRA or 401(k) into a Roth account.

Either way, using a Roth IRA makes sense for many taxpayers, especially those for whom current tax deductions from traditional IRAs are either unavailable or of minimal value. The better the investments you find, the more they'll pay off for you in tax savings within a Roth.

H&R Block (HRB) vs. Intuit (INTU): Which is the Better Investment? Both H&R Block, Inc. (HRB) and Intuit Inc. (INTU) are in the tax preparation business, but which is the better stock for investors?

John Udovich for SmallCapNetwork.com writes: As April 15th approaches, you might be using the tax services of eitherH&R Block, Inc. (NYSE: HRB) and Intuit Inc. (NASDAQ: INTU) to figure out your taxes. However, which of these stocks is the better tax preparation investment for investors or are both a sure thing?

What Are H&R Block, Inc. and Intuit Inc.?

Brothers Henry W. Bloch and Richard A. Bloch founded H&R Block in 1955 and today its one of the world's largest tax services providers with more than 100,000 tax professionals and having prepared more than 550 million tax returns worldwide since its founding. In addition to providing tax return preparation services in-person, H&R Block offers online and desktop software products along with financial products to support its tax business through the H&R Block Bank.

Started in 1983 with the Quicken personal finance software, Intuit’s flagship products include QuickBooks, TurboTax and Quicken which are designed to help people manage their personal finances and run small businesses. Moreover, Intuit’s products have evolved from the desktop to the cloud with many being available both online and on mobile devices.

What’s There to Like (or Nor Like) About H&R Block and Intuit? 

Earlier this tax season, H&R Block received a dose of bad publicity after reports it improperly filed Form 8863, which is used to claim educational credits, leaving a mandatory field blank with the problem impacting about 10% or 660,000 of the 6.6 million tax returns containing the form. Initially it was thought the problem could delay refunds by as much as six weeks for impacted returns (later that figure was reduced to two to four weeks) as well as lead to lawsuits for the company to settle.

Otherwise, news of the refund problem seemed to have little impact on H&R Block because before the problem was revealed, the company gave an upbeat forecast despite an initial delay in tax season (Note: HRB does nearly 75% of its annual sales in the tax season quarter). Specifically, H&R Block’s CEO was expecting more business thanks to the expiration of the Bush era tax cuts along with the implementation of Obamacare. H&R Block is also cutting expenses to better compete Intuit plus there is an ongoing court case filed by the former against the later for alleged brand misuse and disparagement of the H&R Block tax professionals in TurboTax TV commercials.

Meanwhile and in late March, Intuit announced that from January 30 through March 16, sales of TurboTax Online units rose 29% versus the comparable prior-year period while Total TurboTax federal units were up 26% during the same period. However, Intuit has also had a snafu with the Minnesota Department of Revenue advising taxpayers not to use the company’s products to file Minnesota taxes in any form due to “multiple issues” the company is trying to fix.

Back in February, Intuit issued a forecast that current-quarter results would be ahead of Wall Street estimates thanks to higher demand in the unit offering tax services to small businesses. Intuit also earns 95% of its revenue from the United States, but the company is looking to expand globally.

Otherwise, H&R Block has a trailing P/E of 22.56 and a forward P/E of 15.06 while Intuit has a trailing P/E of 24.82 and a forward P/E of 17.18. H&R Block also has a forward dividend of $0.80 for a dividend yield of 2.80% while Intuit has a forward dividend of $0.68 for a dividend yield of 1.10%. 

Share Performance: H&R Block, Inc. vs. Intuit Inc.

On Thursday, H&R Block fell 0.66% to $28.76 (HRB has a 52 week trading range of $14.35 to $29.68 a share) for a market cap of $7.83 billion while Intuit rose 0.17% to $64.93 (INTU has a 52 week trading range of $53.38 to $68.41 a share) for a market cap of $19.24 billion. In addition, H&R Block is up 54.9% since the start of the year (despite the tax refund snafu), up 68.9% over the past year and up 37.7% over the past five years while Intuit is up 9.2% since the start of the year, up 8.6% over the past year and up 138.5% over the past five years.

Here is a quick visual comparison of the performance of both stocks:

Traders and investors who are technicians should also take a closer look at the following technical charts:

The Bottom Line. Perhaps the biggest threat for investors in H&R Block or Intuit would be some kind of tax reform that leads to simpler taxes, but let’s be realistic and conclude that the chances of taxes getting simple enough where we won’t need tax preparers or tax preparation software are remote – especially as Obamacare and all of Obama’s new taxes or regulations kick in over the next couple of years. That means either H&R Block or Intuit could be a good investment over at least the medium term.

11 Tax Freebies and Deals of the Day Get free things with these tax day 2013 savings deals

Leah Ingram for Home Goes Strong writes For many Americans April 15 is the most stressful day of the year. Because even though that old adage says that the only things that are certain in life are death and taxes—and we Americans have to deal with taxes every year—still filing our annual income taxes brings with it angst.

What if I told you that for Tax Day 2013 you could treat yourself to free things or save money on a meal out? Well, you're in luck because like with years past, a handful of businesses are offering tax freebies and deals of the day.

Since some of these tax day 2013 savings deals start before Monday, April 15 gets here, I wanted to give you a heads up so you can plan accordingly. In most instances you'll save the most on meals—no dining in for you; yeah, you get a break from the kitchen. However, some of the other free things I'm highlighting have to do with your home office—and cleaning it up after working on your taxes—as well as a way to get a free massage.

Here now are 11 tax freebies and deals of the day for Tax Day 2013:

Free Food

• AMC Theaters: Enjoy a free small popcorn when you go to the movies April 12-15. You'll need to grab this coupon  from the AMC website and present it at the theater.
• Arby's: Stop in for a free value-sized curly fries or a small potato cakes—your choice. This tax freebie deal is available on April 15 only, no coupon needed.
• Cinnabon: Get two free Cinnabon bites on April 15, between 6 p.m. and 8 p.m. Since I think of Cinnabons as more of a breakfast items than a dinnertime snack, I wish this freebie of the day was offered at 6 a.m. instead!
• Great American Cookie: Finally, a dessert offer—get a free cookie on April 15 at participating Great American Cookie locations.
• Schlotzsky's: Stop by a participating Schlotzsky's on Monday, April 15 and get a free small The Original sandwich when you purchase a 32-ounce drink plus chips. TheSchlotzsky's Facebook page says you don't need a coupon for this freebie deal offer.

Food at a Discount

• Boston Market: Its tax day deal is called The Big Ribbate. Get it? A play on the word "rebate." Anyway, here's what you get—two rib meals for $10.40. This is available on April 15 only and doesn't seem to require any special coupon.
• Bruegger's Bagels: Restaurant News reports that "April 12 through Tax Day, April 15, guests pay just $10.40 (a "deduction" of nearly $3.50 per bundle) at participating locations for their choice of 13 fresh-baked bagels and two tubs of Bruegger's Bagels 100 percent made-in-Vermont cream cheese." Get more information on this tax day promotion on Facebook.
• Sonic: Enjoy a non-alcoholic happy hour at Sonic drive-in restaurants on April 15 with half-price drinks—that is, your favorite Sonic slush, tea, or soda drink, that is.
• White Castle: You probably grew up on White Castle burgers, so why not enjoy some at a discount as part of these tax day savings deals? White Castle is offer a 15 percent discount on orders at all restaurants and online from now through tax day. Just visit the White Castle Facebook page to get your coupon for one of these deals of the day.

Free Services

• HydroMassage: How does a free massage sound? This year marks the fifth year that HydroMassage is provided free massages during tax season. You'll need to visit theHydroMassage site to find a location near you.
• Office Depot: Here's what I wrote in my Tax Day Freebies 2013 post on Suddenly Frugal about the free things at Office Depot—"Office Depot will help you safely and securely get rid of your sensitive personal financial information for free with its free shredding offer. You can bring in up to five pounds of paper for free shredding when you present this coupon."

Five Insider Secrets Every Investor Needs to Know at Tax Time

Tyrone Jackson for The HuffPo writes: There are at least two experiences most of us don't look forward to. The first: going to the dentist. The second: preparing your taxes. While we can't pay someone to go to the dentist for us, we can pay someone to do our taxes and that is what most of us choose to do.   Here's the problem. Most tax preparers follow a cookie cutter approach to preparing your taxes. They incorrectly assume that one size fits all and seek to be paid for volume rather than quality.

If you want to maximize your tax deductions this year and beyond, you'll need to know the following five insider secrets that are frequently overlooked by most investors and accountants.

1) Use Dividends to Pay Taxes

Instead of investing in Mutual Funds, consider investing directly in Dow stocks. Dow stocks are the most conservative investments around, the Steady Eddies of the U.S. market. They have long track records of generating profits and rising stock prices. They also have a history of raising their dividend over time.

As an example, Coke Cola (KO) has raised its dividend from $.11 per share to $.28 per share over the last ten years. Dividends are your share of a company's profit paid directly to shares holders every 13 weeks. Your dividends can even be mailed to your home and are spendable cash.

Yes, these dividends are taxable but they put cash in your pocket for things like home repair and vacations. Here's the best part. You can even use your dividend income to pay your tax bill if you owe taxes at the end of the year. For the past 25 years many of the world's wealthiest investors have paid their annual tax bill with first quarter dividend income.

2) Use Online Brokerage Fees to Your Advantage

You pay a commission to your online broker every time you buy or sell a stock online. That commission can range from $5.99 to $39.95 depending on the broker that you use. The commissions that you pay are also tax deductible. However, if you don't tell your tax preparer, you could be losing thousands of dollars per year in deductions.

3) Margin Interest

Margin is a line of credit extended to you by your online broker for trading purposes. If you choose to use that line of credit and borrow your broker's money to trade stocks, your broker will charge you interest on any outstanding balance. Margin interest should be added up at the end of the year, as it is also tax deductible.

4) Short Term vs. Long Term Capital Gains on Stocks

When you buy and sell a stock for a profit, you will owe capital gains tax. Capital gains are higher when you buy and sell the same stock within a year. However, when you hold a stock for longer than one year and then sell it, the IRS will tax you at a lower rate. The good news is that if you owe capital gains tax, you must have had some capital gains!

5) Take Advantage of Losses
This is really important. Understanding how to handle losses is where most of my Wealthy Investor Program students how learn to be great stock market traders and tax strategists. If you own a stock that has declined in value over the last 52 weeks and sell it at a loss you can reap the tax benefits.

Here's how it works. Let's say you purchased shares of XYZ stock at $50 per share and they decline in value to $40 per share. If you then sell those shares for a loss of $10 per share, that loss is tax deductible.

Currently, the IRS will allow you to deduct $3,000 per year of losses. This deduction lowers the tax bill that you owe at the end of the year. However, if you have a $9,000 loss for the year, you can then carry your loss forward to the next calendar year. In this case you would have a $3,000 deduction for the next two years against future stock gains.

In the stock market losses are not a bad thing. You just have to know how to use them to your advantage. That's part of being an educated investor and something that I teach in my Wealthy Investor Program.

So what's the moral of the story? Getting a financial education can pay off big time. It's a topic making new daily and was just this week discussed on the CBS Early Show with Charlie Rose. 
Trading stocks online can be profitable as well as produce tax benefits that your Mutual Fund cannot. It is your job to learn how to be a self-directed investor so that you can invest in the stock market, trade stocks on your own, and realize all of these benefits along with the wealthy.

Fun with the U.S. Tax Code / America’s tax code is a 74,000-page unintentional comedy.

Deroy Murdock for the National Review writes: As the Monday, April 15, tax-filing deadline mercilessly approaches, millions of Americans will cry as they calculate what they owe Washington and then fork it over. But amid those tears there will be plenty of laughs. The U.S. Tax Code is so tangled and twisted that University of Florida law professor Steven J. Willis speaks amusingly about “tax humor.” While not exactly the stuff of stand-up routines, America’s surreal tax code is a masterpiece of dark comedy.

When UF started its Graduate Tax Program in the College of Law, Willis recalls, “one requirement of the graduate school was knowledge of a foreign language. Well, that just wasn’t going to work. Then, the faculty showed the Graduate School the Internal Revenue Code, and they said that would do.”

Willis points to section 467(e)(1), which concerns pre-paid rent. It reads: “The term ‘constant rental amount’ means, with respect to any section 467 rental agreement, the amount which, if paid as of the close of each lease period under the agreement, would result in an aggregate present value equal to the present value of the aggregate payments required under the agreement.”

“I love the sentence because of the poetry,” Willis says. “I always have a student read it aloud and watch the faces.”
Also droll is Section 509(a), which defines private foundations: “For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3).”
For depreciation purposes, Section 168(i)(2)(B) delineates “computers and peripheral equipment:”

For purposes of this paragraph –
(i) IN GENERAL. — The term “computer or peripheral equipment” means –
(I) any computer, and
(II) any related peripheral equipment.

The Tax Code’s treatment of gambling is a hall of mirrors. IRS Form 730  covers “excise taxes for both legal and illegal wagers of certain types. For state authorized wagers placed with bookmakers and lottery operators there is a tax of 0.25% of the wager, if it is legal. If the wager is not legal, the tax is 2% of the wager.” So, one must pay legal federal taxes on gambling revenues obtained illegally under state law. According to Willis:

I’ve seen so many charities hold raffles. In Florida, such a thing is legal only if conducted by a particular type of charity and also only if the charity charges nothing for the raffle tickets. It may request a donation, but if someone asks for a free ticket, it must be provided free. . . . Under Chapter 496 of the Florida Statutes (under which all charities must register with the Department of Agriculture), soliciting a contribution while committing a crime is a third-degree felony. I suspect none of the charities that conduct such raffles have a federal illegal gambling permit, and I suspect none pay the illegal gambling tax. So, add on at least two counts of tax fraud to that, and we have multiple felonies every time a school band has a raffle.

Willis adds: “I once saw a school raffle a basket of wine and fruit. It lacked a liquor license, so add that crime. A minor won the raffle, so add providing alcohol to minors.”
The Tax Code defines contest thusly: “A contest is any competition involving speed, skill, endurance, popularity, politics, strength, or appearance, such as elections, the outcome of nominating conventions, dance marathons, log-rolling contests, wood-chopping contests, weightlifting contests, beauty contests, and spelling bees.”
Log rolling? Wood chopping? This gets deep into Monty Python territory. They’re lumberjacks, and they’re okay!
Pete Sepp of the National Taxpayers Union notes that IRS Publication 529, Miscellaneous Deductions, offers this guidance to those in military school: “If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. However, you can deduct the cost of insignia, shoulder boards, and related items.” On the other hand, “You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school.”

The Tax Code is highly precise about what constitutes luxury cars. According to Section 280F(a)(1)(A)(iii), for bonus depreciation, a “luxury automobile” must cost at least $24,935. Willis had to use algebra to calculate this figure!

Under Section 1.170A-12(e)(2), the Treasury explains the “special factor” used for “the valuation of a remainder interest following two lives”:

The Tax Code is a museum of run-on sentences. Just the first sentence of Section 509(a) — on private foundations — contains one period, three semi-colons, six dashes, nine parentheticals, and 25 commas. Professor Willis sees 327 words in that sentence. I find 373, using Microsoft Word’s word-count function. Perhaps it depends on what the meaning of the word “word” is. Word considers “170(b)(1)(A)” a word. I would call it something else — although that word fails me.
Now, take a deep breath and try to read this sentence aloud without fainting:

For purposes of this title, the term “private foundation” means a domestic or foreign organization described in section 501(c)(3) other than–
(1) an organization described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)); (2) an organization which –
(A) normally receives more than one-third of its support in each taxable year from any combination of –
(i) gifts, grants, contributions, or membership fees, and (ii) gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity which is not an unrelated trade or business (within the meaning of section 513), not including such receipts from any person, or from any bureau or similar agency of a governmental unit (as described in section 170(c)(1)), in any taxable year to the extent such receipts exceed the greater of $5,000 or 1 percent of the organization’s support in such taxable year,
from persons other than disqualified persons (as defined in section 4946) with respect to the organization, from governmental units described in section 170(c)(1), or from organizations described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)), and (B) normally receives not more than one-third of its support in each taxable year from the sum of –
(i) gross investment income (as defined in subsection (e)) and (ii) the excess (if any) of the amount of the unrelated business taxable income (as defined in section 512) over the amount of the tax imposed by section 511;
(3) an organization which –
(A) is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified organizations described in paragraph (1) or (2), (B) is –
(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2), (ii) supervised or controlled in connection with one or more such organizations, or (iii) operated in connection with one or more such organizations, and
(C) is not controlled directly or indirectly by one or more disqualified persons (as defined in section 4946) other than foundation managers and other than one or more organizations described in paragraph (1) or (2); and 
(4) an organization which is organized and operated exclusively for testing for public safety.

A 373-word sentence is a mere monosyllable compared to the totality of the U.S. Tax Code. The CCH Standard Federal Tax Reporter includes every page of the Code, plus the swarm of regulations, decisions, and other fine print that govern federal taxes. CCH estimates that the Tax Code spanned just 400 pages when Congress imposed the income tax in 1913. By 1984, as Ronald Reagan chopped rates and streamlined the tax thicket, it stretched to 26,300 pages. Today, the U.S. Tax Code runs 73,954 pages. That equals 57 copies of Vintage Classics’ 1,296-page edition ofWar and Peace. And the only thing more hilarious than Tolstoy’s saga is 57 copies of it, standing side by side.

America needs a universal 10 percent flat tax with no deductions. This would be far less knee-slapping than the status quo. However, shutting every loophole, macheteing rates, and requiring every American to have some skin in the game and pay the same fair share would replace today’s vaudeville act with a tax code worthy of earth’s sole surviving superpower.
Meanwhile, the Tax Foundation reports that Tax Freedom Day will fall on Thursday, April 18. That is five days later than last year. So, the biggest joke of all is that if you pay your taxes on April 15, you still must pay your taxes. You will owe Uncle Sam three more days of hard labor in 2013 before you start working for yourself.

Market Sourcing Comes To New Jersey … Or Not / Taxpayers that perform services in New Jersey could see their Corporation Business Tax liability significantly reduced beginning in 2014. On the other hand, many out-of-state service providers could see significant tax increases.

 Kyle O. Sollie and David J. Gutowski  for Reed Smith writes: Later this month, the New Jersey Division of Taxation is expected to propose a regulation that will adopt a market-based approach to source receipts from services. On the surface, it appears difficult to reconcile the language of this new apportionment regulation with the statute (which sources receipts based on location of performance). The statute remains unchanged, so taxpayers will need to decide whether to conform to the regulation or to continue following the historical statutory method.

Taxpayers that perform services in New Jersey will want to follow the regulation and use the market-sourcing method.

Taxpayers that perform services outside New Jersey will want to follow the statute and continue using the cost-of-performance method.

The new regulation will apply to tax years beginning on or after January 1, 2014, which is also when New Jersey's single sales-factor apportionment formula takes effect.¹

Mechanics of the New Rule

Under the statute, service receipts are sourced to New Jersey only if the service is "performed within the State."² New Jersey courts as well as the Division itself have interpreted this to mean that service receipts are sourced to the location where the costs of performance are incurred, or where the time performing the service was spent.³ By contrast, under the proposed regulation, service receipts would be sourced based on the location of the customer, regardless of where the services are performed.

If a customer has operations in multiple states, the proposed regulation provides that service receipts are sourced to where the benefit is received. If the benefit is received in more than one state, a taxpayer can estimate the proportion of the benefit received in New Jersey. For example, census data may be used to determine the extent of the taxpayer's New Jersey market. The proposed regulation will include a number of examples for specific industries, such as real estate services, engineering services, computer software services, advertising services, prescription services, market analysis services, legal information services, and payroll processing services.

Winners and Losers

Taxpayers that perform services in New Jersey could see their Corporation Business Tax liability significantly reduced beginning in 2014. Not only will such taxpayers get to use market sourcing, but the elimination of the property and payroll fractions will also mean a much lower apportionment percentage. On the other hand, many out-of-state service providers could see significant tax increases.

The new regulation will have other, though perhaps less obvious, consequences, such as:

• The proposed apportionment change could affect the value of your Net Operating Loss carryover. New Jersey NOLs are carried over on a pre-apportioned basis. As a result, NOLs have less value if applied in years when the taxpayer's apportionment percentage is lower. If a New Jersey-based service provider has NOLs that decline in value because of the new market-sourcing rule, it should consider carrying over its NOLs on a post-apportioned basis to alleviate the distortion.
• Service providers that were taking advantage of the "25:50:25 option" could also face potential tax increases. Under the 25:50:25 option, certain taxpayers (including financial businesses, technology companies, and media companies) could reduce their sales fraction by 50 percent if their back-office functions were performed outside the state.⁴ The Division's proposal removes this option from the regulation.

Is Cost of Performance Still an Option?

Whereas the statute sources service receipts based on where the service is performed, the new regulation looks to where the benefit is received. The Division's proposal thus faces potential taxpayer challenges. If the regulation is challenged, it could be years before the New Jersey courts ultimately resolve the issue. In the meantime, taxpayers will have to choose which method to use. Taxpayers that benefit from the new rule can source their receipts based on market. By contrast, taxpayers that do not benefit can take the position that the statute controls, and that they are still entitled to source their services receipts based on where the service is performed.

More Expansive Nexus Standard?

New Jersey statute imposes CBT nexus over companies "deriving receipts from sources within the state ...."⁵ Regardless of physical presence, the Division has asserted nexus over out-of-state intangible holding companies, financial businesses, software providers, and media companies based on its historical policy that these companies derive receipts from New Jersey to the extent their customers are located in the state.

By contrast, the Division generally has not asserted nexus over out-of-state service providers unless they have physical presence in the state. Under the Division's historical cost-of-performance rule, out-of-state service providers would not be deriving receipts from New Jersey. Therefore, these companies could not have CBT nexus. But under the proposed regulation, such companies would be deemed to be deriving receipts from New Jersey to the extent they had customers within the state. It remains to be seen whether the Division—consistent with its treatment of intangible holding companies, financial businesses, software providers, and media companies—will assert nexus over out-of-state service providers regardless of physical presence.

Small Companies May Have to Offer IRAs / The federal government proposes to mandate that small businesses automatically enroll workers who have shunned participation in 401(k) plans into payroll-funded individual retirement accounts.

David McCann for CFO.com writes: Small companies could be required to set up individual retirement accounts funded by pre-tax deductions from participating employees’ pay, if the federal government gets its way. Several present and former finance chiefs contacted by CFO said they support the idea, though in some cases with reservations.

The fiscal-2014 federal budget plan unveiled on Wednesday includes a proposal to require that small employers – defined as those with less than $20 million in annual payroll – automatically enroll employees in an IRA, from which they could opt out. The measure would apply to companies that offer 401(k) programs and employees who don’t participate in those plans.

The purpose is to stimulate retirement savings through the automatic-enrollment feature. The budget proposal states, “About half of American workers have no workplace retirement plan. Yet fewer than 1 out of 10 workers who are eligible to make tax-favored contributions to an [IRA] actually do so, while nearly 9 out of 10 workers automatically enrolled in a 401(k) plan continue to make contributions.” Small companies would get tax credits to partially defray the costs of administering the new retirement-savings option.

Small-company CFOs interviewed for this article unanimously expressed strong concern for their employees’ retirement savings. “I’m in favor of any proposal that fosters more retirement savings,” says Hank Funsch, former longtime CFO and now president of Dayton T. Brown, a $40 million defense contractor. “Social Security will be challenged in the decades ahead and cannot remain the primary source of retirement income for younger generations. This proposal could help.”

But Funsch doesn’t give the government high marks overall. “I fear that in its search for more sources of revenue, Washington may attack the 401(k) concept by taking away the tax deduction for contributions so that the IRS gets the revenue now instead of after employees retire,” he says. He suggests the tax agency instead might allow Roth-like contributions – which are also taxed up front – through 401(k) plans.

Don Doherty, also a veteran CFO and now chief executive at specialty-equipment-finance firmFleetwood Industries, says he is in favor of the proposal in theory only. Both he and Funsch say they can vouch for the idea that automatic enrollment greatly boosts 401(k) participation. But, says Doherty, “I am philosophically opposed to it being a government mandate or in any way regulated, since it will inevitably cost more than it needs to if done that way.”

If the rule is to be mandatory, Doherty would prefer that the government carve out a portion of the FICA tax and deposit it into an IRA-like plan on behalf of the employee. The funds would be placed in trust for the employee and inaccessible for general use by the federal government.

Kathleen Wolf, finance chief at Atari International Contracting, a small construction company, agrees that offering the IRA plan should be optional. “I think this is a good thing, because so many people have so little saved for retirement,” she says. “But forcing it is like adding another layer of Social Security.”

She also frowns at the costs small companies will incur. “It’s like when the minimum wage jumps. You have to balance that out with something. Generally speaking, it’s probably going to reduce someone’s compensation.”

To Paul Remington, who runs finance at document-management-software vendor Westbrook Technologies, the proposal “makes a lot of sense. Most employees will not miss the funds invested in their IRAs, but if they do they can opt out. It’s a great way to get individuals to save for retirement.”

But there are potential concerns for CFOs besides being forced to set up the plans and absorbing incremental costs. For one, they may be liable for mistakes made with regard to the plans.

The proposal as stated in the budget plan is silent on that count. In fact, formulating an opinion on the proposal’s worthiness isn’t yet feasible, says Gregory Marsh, vice president and corporate retirement plan consultant at Bridgehaven Financial Advisors, whose clients are mostly small and midsized companies.

“This proposal is very lacking in detail,” he says. “Funds will be deferred out of payroll to an investment vehicle, so there has to be a fiduciary. Who’s that going to be? The CFO? What happens, for example, if the company fails to automatically enroll someone who’s eligible to participate?”

Marsh says he’d rather see enhancements to law regarding 401(k) plans, like greater tax credits for companies that offer investment-education programs to employees. He also finds problematic that there are no laws at present governing employer-run IRA programs. “With 401(k) plans we have a strict existing body of law, ERISA [the Employee Retirement Income Security Act], that CFOs and others who make decisions on how to offer the plans must follow to make sure they don’t breach their fiduciary obligations,” he says.

It makes no sense, Marsh adds, to bog down CFOs or CEOs with more administrative activities when the new rule “would still not solve the savings crisis.” He notes that while the maximum annual contribution to an IRA is $5,500, the ceiling for a 401(k) plan is $17,500.

Last Minute Tax Filing Tips

Kelly Phillips Erb for Forbes writes: With Tax Day just around the corner, it’s go time for taxpayers. If you’re struggling to get those returns finished, here are thirteen last-minute filing tips:

1. Get some free help. Free help is still available for qualifying taxpayers. If you have a simple return and income less than $50,000, contact IRS VITA at 1.800.906.9887 for site locations and hours.
2. File timely. This year, Tax Day falls on April 15. It is not being pushed back because of the sequestration and it does not fall on a holiday this year. Your return is considered timely filed if it’s postmarked or electronically submitted on April 15, 2013.
3. File even if you can’t pay. Don’t make a bad situation worse by racking up extra penalties: the IRS can impose a failure to file penalty for returns that aren’t filed timely. So file even if you can’t pay. You can enter into an agreement to pay what you owe over time (or try one of these strategies).
4. Put some money into your individual retirement account (IRA). You still have time to contribute to your IRA and make it count for the 2012 tax year. You can claim a tax deduction – above the line, so you don’t need to itemize in order to take the deduction – for contributions made to your traditional IRA (but not a Roth IRA). You can make those deductions all the way up to April 15; be sure to tell your financial advisor that the contribution is for 2012 so that it’s coded properly. For 2012, you can contribute up to $5,000 or the amount of your taxable compensation (whichever is smaller) to your traditional and Roth IRAs. And don’t forget about a spousal IRA: if you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation.
5. Pay attention to the details.Many schedules and forms have additional questions and checkboxes that are easy to overlook. For example, if you have interest and dividends of more than $1,500 to report on a Schedule B, you have to answer the questions at Part III even if you don’t have any foreign interests. Be sure to read to the bottom of each form and if you’re using tax software, use the long form interview (it only takes a few more minutes).
6. Run the numbers. Sometimes, taxpayers are faced with a choice to take a credit or a deduction (a classic example is the tuition & fees deduction versus education credits). Don’t always choose the biggest number since the two aren’t equal: deductions are a dollar for dollar reduction in taxable income while credits are a dollar for dollars reduction in tax payable. Additionally, sometimes phaseouts and other restrictions might apply to one and not the other. Take a few extra minutes to run the calculations both ways to determine how to maximize your savings.
7. Don’t forget about mileage and other “small” things.Numbers add up. When you’re double-checking your return one more time (see the next tip), don’t forget to include deductions for mileage (for business, charity, medical and moving), donations to Goodwill and other relatively small numbers. It’s easy to remember the big ticket items but keep in mind that, if you itemize, those dollars can add up quickly.
8. Double-check your return.Even if you file electronically or use a paid tax preparer, look your return over before you sign it to make sure that you don’t have silly errors that could slow down processing times. Transposed numbers, names spelled wrong and bad math are all errors that taxpayers make all of the time – but you could catch them before you submit those returns.
9. Ask questions. If you’re a college student and you’re not sure whether your parent claimed you – or if you’re not sure how your spouse might be filing in a divorce (Married Filing Separate versus Married Filing Jointly), ask. So much of the confusion and letters after the fact could have been avoided if you’d just picked up the phone first.
10. Attach the proper documentation. These days, IRS has most of the information they need from you already – especially if you file electronically. But in some instances, you might need to attach forms, schedules and other information (such as appraisals for certain charitable gifts). Make sure you package your return properly – leaving out information will just cause confusion.
11. Mail your forms to the right place. You can find a listing“where to file addresses” for individual tax forms, organized by state, on the IRS website. If you’re using a private delivery service, be aware that those addresses are different and you can find a list of those delivery addresses on the IRS website.
12. Don’t leave money on the table. According to the IRS,almost $1 billion is available to thousands of taxpayers for the 2009 tax year. If you didn’t file in 2009 but think you might be subject to a refund, you have until April 15, 2013 to claim it.
13. File electronically. Returns that are filed electronically tend to be processed faster and have fewer mistakes (no pesky math errors). Bonus? No waiting in line at the Post Office.
14. Use direct deposit. If you’re expecting a refund, consider using direct deposit. It’s the fastest way to get paid from the IRS – and no chance that the check will got lost in the mail!
15. Consider filing for extension.If you’re not ready to file your taxes, you can file for an automatic six month extension using a form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return(downloads as a pdf). Contrary to popular belief, filing for extension doesn’t make you an audit target – and may, in fact, do just the opposite since a correct, complete return filed on extension is always better than a sloppy, flawed return filed on April 15. Don’t forget, however, that the form allows an extension of the time to file, not the time to pay.