 |
|
Be the first to know about legislative action that affects you and your business.
|
|
|
March 30, 2005
Trustees Project Earlier Insolvency for Social Security
Last week, the board of trustees for Social Security and Medicare projected that Social Security will pay out more for benefits than it receives in payroll taxes in 2017, one year earlier than estimated last year. Additionally, the program’s trust funds are predicted to be exhausted by 2041, one year earlier than last year’s projections.
These findings contrast with similar projections by the Congressional Budget Office (CBO). Last year, the CBO said Social Security would start running in deficit in 2018 but this year changed the projection to 2020. So far, it is unclear why there is such a gap between the two groups’ findings.
The board suggests that in order for Social Security funds to remain in the black throughout the 75-year projection period, the payroll tax rate would have to be increased, benefits would have to be reduced, or $4 trillion of general revenue need to be allotted to the program.
Secretary of the Treasury John Snow said that payroll taxes would have to be raised by up to 3.5 percent or benefits would have to be cut by as much as 22 percent. While President Bush claims he will not raise payroll taxes, he has not rejected the idea of raising the $90,000 cap on incomes subject to the payroll tax.
The board also pushed back the projected insolvency date for Medicare by one year to 2020. The cost for Social Security is expected to rise from 4.3 percent of the GDP to 6.1 percent in 2030 and to 6.4 percent in 2079.
The Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds is made up of six members. Four members automatically serve on the board by virtue of their position in the federal government. Those four consist of the Secretary of the Treasury (Snow), the Secretary of Labor (Elaine Chao), the Secretary of Health and Human Services (Michael Leavitt), and the Commissioner of Social Security (Jo Anne Barnhart). Two other members (John Palmer and Thomas Saving) were appointed to 4-year terms in 2000 by the President. The Social Security Act requires that the board report annually to Congress on the status of the funds.
To contact your Members of Congress regarding Social Security reform, visit the online NASE Legislative Action Center at http://advocacy.NASE.org
|
IRS Releases Preliminary Tax Gap Findings
Findings in the IRS tax gap study for Tax Year 2001 could have repercussions for the self-employed and micro-business owners. The National Research Program was developed to evaluate compliance with tax laws, with which most Americans fully comply.
For Tax Year 2001, nearly 85 percent of total tax amount due was collected on time. The three components of noncompliance making up the final 15 percent are non-filing, underpayment, and underreporting. Underreporting accounts for more than 80 percent of noncompliance. Understated income accounts for 80 percent of underreporting, not overstated deductions.
According to the IRS, one of the areas where tax compliance has worsened is the reporting of net income from flow-through entities, such as partnerships and S corporations.
While it searches for ways to increase compliance, the NASE urges the IRS to proceed with caution and not to punish all small businesses for the errors of a few. The tax process is burdensome and time-consuming. The NASE has long stood with other small-business organizations in advocating for simplification of the tax code to address confusion as the root cause of reporting and filing errors. It is the systemic and well-chronicled problem of code complexity for sole proprietors that policy makers should be looking to rather than concluding deliberate under-reporting on the part of these tax payers.
Certainly, accurate tax reporting and compliance is extremely important to micro-business owners and the self-employed. Those who make a good faith effort, yet are inaccurately complying should be assisted through education and tax simplification efforts. Of course those willfully disregarding their tax liability should be held accountable.
For more information on the NASE position on tax reform, visit the online Legislative Action Center at http://advocacy.NASE.org.
As Tax Time Approaches, IRS Information is Plentiful
Ten Ways to Avoid Problems at Tax Time
Looking for ways to avoid the last-minute rush for doing your taxes? The IRS offers these tips: www.irs.gov/newsroom/article/0,,id=108273,00.html
New Web Feature Helps with Lost Refund Checks
Expecting your federal tax refund already? For all you early birds (and of course those filing later), the IRS offers Internet access to check the status of your refund on the IRS Web site. There are now two new features to trace lost or missing refund checks and update flawed mailing addresses. To track down your refund, visit www.irs.gov/individuals/article/0,,id=96596,00.html.
IRS Invites Small Business Taxpayers to Apply for Taxpayer Panel
The IRS is inviting civic-minded individuals to help improve the tax agency by applying to be members of the Taxpayer Advocacy Panel. The panel provides a forum for citizens from each state to make suggestions regarding IRS decision making. To request an application to become a TAP member, you can apply on-line at www.improveirs.org or call 1-888-912-1227.
For more information during tax season, visit www.irs.gov/ or check out the Tax Central and TaxTalk features on the MyNASE Web site at http://my.nase.org/.
|
|
|
|
|
|
