Posted on 03/31/2010 8:56:04 AM PDT by taildragger
My prediction all along......Jan 1, 2011 the gov will let the Bush tax expire on the top two rates. Others stay same. Why? Well the budget will be out before elections. Jan 1, 2012...The threshold will drop to 75K for singles 150,000 for married. Jan 1, 2013 5% VAT tax on all goods except food.
Im a genius.
I am a CPA. In October of 2008, just prior to the last presidential election, I made a prediction at a combined Pennsylvania Institute of CPA’s meeting with the Internal Revenue Service Regional Managers(Stakeholder’s
Group) that the VAT Tax or a national sales tax similar to Europe’s would be in effect within two years. They laughed. My time line was off a little, but it is coming. It’s the only way they can come close to balancing the budget.
Here is the framework:
Credit Card Merchant Services Now Required to Report Credit Card Transactions
According to the IRS, “The provision was enacted as part of the Housing Assistance Tax Act of 2008 and is designed to improve voluntary tax compliance by business taxpayers and help the IRS determine whether their tax returns are correct and complete.”
As part of the Housing Assistance Tax Act of 2008 Congress passed yet another new information reporting requirement that will cost small businesses money at a time when cash flow is critical to survival. Beginning in 2011 banks and credit card merchant services companies will be required to prepare and file Form 1099 K reporting a variety of different merchant transactions, despite objections raised by the financial services industry.
Small businesses already reeling from the recession will be hurt hardest by these increases and will be forced to increase their prices for goods and services to compensate for the additional costs.
Waiters and waitresses who are paid a reduced minimum wage and depend on their tips to make ends meet will be hammered by this new law as most restaurant customers pay by credit card, including tips. Restaurant owners have little choice but to reduce the server’s tips by the credit card merchant fees, and so the servers will see less at the end of the shift. For those servers who have already seen a decline in business resulting from the recession as well as a dramatic reduction in tips received as a percentage of the tab, these new merchant fees will hurt them even more.
Many small businesses, especially retailers, will find it difficult to increase prices to pass on the added cost and remain competitive will see their margins shrink as well.
Although it has long been acknowledged that the Tax Gap primarily results from the underground cash economy, according to IRS Commissioner Doug Shulman, Time and time again, we have seen that better information reporting helps the tax system work better by ensuring that everyone pays what they owe. The new law gives us an important new tool for closing the tax gap and also provides business taxpayers better documentation to compute and report their income and expenses. The IRS will work closely with stakeholder groups to ensure a smooth implementation of this new program.”
I don't believe I indicated that I think this is related to a possible VAT tax implementation.
On the VAT point - fair enough; that was the OP’s question, though, so I just carried on through and related my answer back to that question. Sorry if you thought I was ascribing something to you that you didn’t say.
I apologize if I came across as a curmudgeon (well, I am but not all the time...;-)
My post in #22 is about the new requirement that credit card companies report each person’s credit card purchases to the IRS.
Very few people know about this. It’s a stepping stone to the cashless society.
http://www.freerepublic.com/focus/f-news/2470979/posts
Not sure how to post the form here, but here is the link to the draft IRS document: http://www.irs.gov/pub/irs-dft/f1099k—dft.pdf
Maybe I'm thick, but why would tips to servers on credit card transactions suffer because of this? Merchants have paid merchant charges which are written off as an expense all along.
..and that doesn’t include the shipping and handling which is also taxed. A can of soup made in New Jersey, (where the Campbells plant is) and is shipped to another state has the value of placement which is also a value added!
You forgot:
Now your Campbell’s Soup costs $6.00
I have had my business for 36 years... very successful... even under catah... but hussein is killing me... by July I will know if we are going to shutdown.
LLS
Maybe I’m thick, but why would tips to servers on credit card transactions suffer because of this?
Because tip employees are assessed taxable tips based upon a percentage of gross sales. IRS rules.. at least 8% of sales must be tips..
Thanks! (OK, so I am thick.)
No. The 1099 comes in many editions.
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