In light of the recent government bailouts of several high profile companies, some pundits are rushing to attempt to correct the idea that taxpayers are paying the tab. Some analysts are trying to push the idea that the billion dollars’ worth of bailouts are merely structured as loans or investments by “the government” and thus don’t cost taxpayers anything… which is fair enough except that “the government” isn’t some enigmatic entity, nor is its funding. Government dollars are largely tax dollars. They belong to you and I. Our tax dollars are footing the bill for the bailout whether or not you believe that those dollars are actually at risk (and I believe that they are).
And yes, I realize that the cash that is generated to fund these bailouts is not funded by an immediate tax increase. No one will come knocking on our doors tomorrow looking for more cash. I know that most of this type of funding comes from money in the government’s portfolio (um, guess where most of that comes from?). And I realize that doesn’t immediately add to the deficit.
But just as when you or I raid our reserves, less money in the bank means less more for both existing and unexpected expenditures. What happens when you can’t pay your bills? You either search for ways to generate more revenue (raise taxes), borrow more (adding to the deficit) or you make cuts. All of those options affect taxpayers.
Does this mean the bailout isn’t a good idea? I’m not saying that at all. But let’s call a spade a spade. It’s our money being offered up, so stop pretending that it’s not.
Taxpayer asks:
I paid a contractor $855 for a roof repair. He did not furnish his TIN or complete and return a W-9. Must I pay the 28% withholding tax on the $855 to the IRS?
Taxgirl says:
I am going to assume from your question that you are an individual taxpayer and not a business entity. Individual taxpayers generally do not provide forms 1099-MISC for payments made to vendors for personal services.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the Taxgirl!
Maybe the Internal Revenue Service has some of your cash!
The IRS is looking for 115,478 taxpayers who are due refund checks worthabout $110 million after the checks were returned as undeliverable. Yep, that averages out to nearly $1000 a pop.
If you are expecting a refund and have not received one for the 2006 tax year, you can check the status by phone (1.800.829.1954) or online (www.irs.gov). You must be prepared to provide your Social Security number, filing status and amount of refund.
Why all the undeliverable returns? A refund check is normally returned as undeliverable when a taxpayer moves without updating his or her address with either the U.S. Postal Service or the IRS. You can update your address by completing form 8822, available for download here as a pdf.
Of course, if you sign up for Direct Deposit when you complete your returns, you can avoid all of the misdelivered mail issues all together. Direct Deposit is available for filers of both paper and electronic returns.
Pennsylvania State Senator Vincent Fumo has lately found himself in a whole heap of trouble. He is facing a whopping 139 indictments including 2 counts each of filing false tax returns and aiding and assisting in the filing of false tax returns.
To pay for some of his massive legal bills in conjunction with the charges, Fumo is selling his Philadelphia manse – for $7 million. While that kind of dough wouldn’t cause anyone to blink in New York or LA, that’s a pretty nice abode here in Philly. But what’s more interesting is that the Philadelphia Inquirer is reporting that many of the improvements to the house were made at taxpayer’s expense. That’s ironic, huh? Using money from taxpayers to fight charges of tax fraud?
The evidence that the Inquirer offers includes an email to a Fumo aide that reads:
We are still having trouble with the front door intercom. Please get this fixed ASAP.
Apparently, the aide who was paid out of government money spent most of his 18 months in “nearly a full-time capacity” as project manager for the renovations to Fumo’s home (note to self: next time planning home renovations, consider full-time project manager – that extra powder room took far too long to coordinate on your own). Did the aide do a good job? He must have. In just 13 years, the value of the home went from $175,000 to $7 million. Even in a health real estate market, that’s quite a climb.
Another aide allegedly cleaned Fumo’s home on a regular basis on a taxpayer’s dime.
Of course, Fumo denies the indictments, blah, blah, blah and claims that the charges are political.
The bit that I love the most? On this web site listing, which I believe is the home in question (how many $7 million homes are for sale on Green Street?), the description points out that “no expense was spared” – they left out the “at taxpayer’s expense” part.
