You don't tug on Superman's cape. You don't spit into the wind.
And, if you are a politician in an election year, you avoid anything other than sugarcoated tax discussions.
For months, Congress has punted any real discussion of taxes down the road, likely until after November's elections. A wide range of political stalemates and temporary compromises means a whole lot of uncertainty for taxpayers in the year ahead.
"One common theme during 2011 for practitioners and taxpayers was the lack of certainty in tax planning for future years," CCH principal tax analyst Mark Luscombe says. "And that uncertainty was magnified by the scheduled expiration of many tax incentives after Dec. 31, 2011, and the end of the Bush-era tax cuts after 2012, due to extension by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010."
What's the fate of the Bush-era tax cuts (extended through 2012) and a variety of tax extenders? Will the maximum tax rate for capital gains increase to 20% from 15% or more if the Bush-era tax cuts expire?
Should the "rich" be taxed at a higher rate, a position taken by President Barack Obama and derided by conservatives?
Will there be changes to the personal exemption phase-out, something that would be a boon to wealthier Americans?
Are changes afoot for future implementations of the estate tax? CCH cites expert speculation that the current $5.1 million exclusion will be lowered to $3.5 million and the top rate will rise to 45%.
Will deficit reduction talks -- including the stalled response to the budget-cutting supercommittee -- lead to increased revenue plays, a major point of division among Democrats and Republicans?
No one really knows, and we'll all have to wait until November's elections are in the history books to get a clear read.
An impact of all that uncertainty is that numerous tax strategies will be difficult to commit to in 2012. Income shifting in its many forms (deferred compensation, delaying year-end billings, maximizing retirement contributions, etc.) will be a gamble, given that no one knows -- or will know until late in the year -- how taxes will rise or fall.
Big Brother is watching
Businesses and individuals alike should be prepared for increased scrutiny by the IRS in 2012 as the federal government, as well as states, look to increase collections.
A survey of 890 corporate tax executives released in November by KPMG, an audit, tax and advisory firm, found that nearly two-thirds (61%) of respondents said federal-tax-dispute activity had increased in the past 12 months, while more than one-third (37%) said the total number of state tax audits in jurisdictions in which they do business increased.
The majority of respondents expect this to continue. Over the next 12 months, 67% of the respondents said they expect federal-tax-dispute activity to increase; 53% expect the same on the state level.
"Federal, state and local governments are all taking extra measures to ensure that they are not leaving any corporate tax revenue on the table, as many are facing budget shortfalls," Frank Lavadera, the principal in charge of KPMG's Tax Dispute Resolution Services Network, said in a statement. "Tax directors, CFOs and corporate boards should keep the increased likelihood of an audit by taxing authorities high on their priority lists, as it presents a significant tax risk. It is clear that taxing authorities are demanding greater transparency and imposing more complex reporting requirements, while the IRS and various states are adding tax audit personnel to increase the number of exams they can conduct."
According to government statistics, IRS enforcement revenue increased by 18%, to $57.6 billion, and corporate examinations increased by 5% in fiscal year 2010.
This year will also see a continued focus by federal officials on overseas accounts through new requirements for reporting foreign assets.
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