Taxes

This article is by Toby Sterling of The Associated Press.

Workers in the world's oldest profession are about to get a lesson in the harsh reality of Europe's new age of austerity.

The Dutch government has warned prostitutes who advertise their wares in the famed windows of Amsterdam's red light district to expect a business-only visit from the taxman.

Prostitution has flourished in Amsterdam since the 1600s, when the Netherlands was a major naval power and sailors swaggered into the port looking for a good time. The country legalized the practice a decade ago, but authorities are only now getting around to looking to sex workers for taxes.

"We began at the larger places, the brothels, so now we're moving on to the window landlords and the ladies," said Janneke Verheggen, spokeswoman for the country's Tax Service.

Following the passage (finally!) in December of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that continued the current income tax rates for the next two years and extended some popular tax breaks, the IRS announced that it would take a while for the agency to get ready for the filing season.

Specifically, or actually not so specifically, the IRS said that the tax measure's late passage meant taxpayers who claim educators' expenses and tuition expenses directly on their 1040 or 1040A would have to wait until mid- to late-February to file.

That same postponement, noted the IRS, also applies to itemizers filing Schedule A.

Now, however, the agency has expanded its list of forms that it won't be able to process for a while.

This post is from The Wall Street Journal's Tax report.

It's customary to start the year with a roundup of what's new for taxpayers. Given last December's theatrics in Congress, some items on our list may seem familiar unless you were out mapping the tributaries of the Amazon.

But keeping tax details straight is tough -- even for tax reporters. Our mailbox is full of queries from bewildered readers trying to sort out issues such as which Roth IRA conversion rules expired last year, how the new payroll tax cut works, or at what income level the zero rate on long-term capital gains ends.

The most important point to remember is that last year's 11th-hour tax changes, though favorable for most, are temporary. After 2012, many provisions are set to snap back to what they were before 2001, and a few even expire this year.

This article is by Kevin McCormally of Kiplinger.com.

A funny thing happened on the way to the funeral for the federal estate tax. In December, Congress announced its own Christmas miracle: The tax didn’t really expire December 31, 2009, as everyone thought it had. Instead, the lawmakers retroactively revived the tax to cover all deaths in 2010. But get this. The lawmakers also performed a stutter-step move worthy of a great wide receiver: Any 2010 estate that’s better off ignoring the tax can do just that.

A little background is needed to explain this strange turn of events. You’ll recall that part of the 2001 Bush tax cuts was to gradually reduce the bite of the estate tax, kill it all together for 2010, and then allow it to come back with a vengeance in 2011. The plan was to reinstate the estate tax with the $1 million exemption level and 55% tax rate that was in effect in 2000.

But that won’t happen. Under the new law, for 2010 and 2011, up to $5 million can go to heirs tax-free (and that number will be indexed for inflation for 2012). The tax rate for amounts over the tax-free level is a flat 35%.

This post is by William P. Barrettt of the Forbes Informer blog.

The annual Internal Revenue Service seasonal P.R. campaign to scare taxpayers into properly filing their tax returns is kicking off with an example uncomfortably close to home. California newspapers citing official press releases report that IRS agent Albert Bront, 51, of the Los Angeles suburb of Santa Clarita, pleaded guilty to filing false tax returns, not only for himself but for members of his family.

Blont was more creative than many. Sure, he left off income. But according to court documents, he took a $17,000 mortgage interest deduction concerning a house -- a gift from his mother -- that in fact had no mortgage. He claimed a $12,000 deduction for alimony that in fact was not paid.

Other reported ploys included filing phony tax returns in the names of relatives who thought he was just being helpful and pocketing $10,000 in claimed refunds.

This article is by Alison Mutler of The Associated Press.

Everyone curses the tax man, but Romanian witches angry about having to pay taxes for the first time are planning to use cat excrement and dead dogs to cast spells on the president and government.

Also among Romania's newest taxpayers are fortune tellers -- but they probably should have seen it coming.

Superstitions are no laughing matter in Romania -- the land of the medieval ruler who inspired the "Dracula" tale -- and have been part of its culture for centuries. President Traian Basescu and his aides have been known to wear purple on certain days, supposedly to ward off evil.

Romanian witches from the east and west will head to the southern plains and the Danube River on Thursday to threaten the government with spells and spirits because of the tax law, which came into effect Jan. 1.

This article is by Stephen Ohlemacher of The Associated Press.

A government watchdog says the Internal Revenue Service is tormenting struggling taxpayers in the midst of a slumping economy by increasing the number of liens the agency has filed against people who owe back taxes.

The IRS filed nearly 1.1 million liens in the budget year that ended in September, a 14% jump over the previous year. Liens punish taxpayers and often hurt their ability to pay back taxes, National Taxpayer Advocate Nina E. Olson said Wednesday in her annual report to Congress.

"By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job," said Olson, an independent watchdog within the IRS. "Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way."

This article is by Jane Wardell of The Associated Press.

Britons are being slugged with a sales tax hike that is increasing the price of everything from beer to clothing from Tuesday -- a downbeat start to a year that many economists warn could feel rougher than the recent recession.

Prime Minister David Cameron's government said the rise in so-called value added tax is "tough but necessary" to bring down Britain's massive deficit.

But the opposition argues it puts the economic recovery at risk just as the country is struggling to get back on its feet.