Another One Bites the Dust (Hendrickson)

[wserra]

Hendrickson Zero James Lambert had a brilliant idea. "Federal privilege / excise-taxable activity has lost every time it's considered in the federal courts", he reasons. "So why don't I try it up here in Vermont state courts? You know, where we're all rugged individualists and despise the revenoors." So he does.

And, of course, loses.

[notorial dissent]

Another Zero, and counting, for the Hendrickson Leader Board.

[Pottapaug1938]

But, it's a VICTORY!!!!!!!, because... well, just because.

[Gregg]

Somebody tell me that when they start sending checks to everyone that all the back taxes and penalties these knutsacs owe will keep them from getting anything.

[The Observer]

Somebody tell me that when they start sending checks to everyone that all the back taxes and penalties these knutsacs owe will keep them from getting anything.

The stimulus check amounts will be based on the latest returns recipients have filed (either 2018 or 2019). So if your scenario includes paytriots who believe that they are not required to file, they won't show up in the database as having any income and not get a check:

In fact, some individuals may need to file a return in order to get a stimulus check, according to Jack Smalligan, senior policy fellow at the Urban Institute, a non-partisan think tank.

That goes particularly for low-wage workers or individuals with no income who haven’t filed returns, he said. The Treasury Department may ask those individuals to fill out a 1040-EZ form, even though they have no obligation to do so, in order to process their information.

If they have filed returns, owing back taxes appears not to be an issue:

Owing back taxes or other debt to the government is not a problem, according to Sen. Chuck Grassley, R-Iowa, the chairman of the Finance Committee and a key author of the bill.

The legislation "turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments," Grassley wrote in a medium.com post.

[noblepa]

Somebody tell me that when they start sending checks to everyone that all the back taxes and penalties these knutsacs owe will keep them from getting anything.

I don't know, but I've read that they are going to send checks to everyone who filed a 2019 return, or, if you haven't filed yet, a 2018 return. The amount of the check will depend on filing status and income.

So, at least some of those guys will miss out because there is no return on file.

In any event, like you, I hope that they get nothing. I'm anxiously awaiting our $2,400.

Will that $2,400 be taxable on my 2020 return? That could cause a hardship for a lot of low to middle income people, especially if the IRS doesn't withhold anything from the disbursement. Even in the lowest tax bracket, that $2,400 in extra income would result in $200-300 in extra tax. Some people don't have that much handy.

[Cpt Banjo]

The payment isn't taxable because it's structured as a tax credit. In other words, an eligible recipient is treated as having made a payment of tax equal to the rebate anount for which he will receive a refund.

[Dark Optimist]

That's what I'm not clear on - is this an advance against your potential 2020 tax refund, which would hurt a lot of people? Or is this a refundable credit that is separate and should not affect 2020 tax refunds to be issued by April 2021?

[Cpt Banjo]

If you read the statute, it starts out saying that it's a credit against your 2020 taxes. But it then goes on to provide for an advance refund of the credit for individuals whose adjusted gross income for 2019 would have made them eligible for the credit if it had applied in 2019. Such persons are treated as having made a payment on their 2019 taxes equal to the amount of the rebate. If someone hasn't filed his 2019 return yet, the information from his 2018 return may be used instead.

So the net result is that if you would have qualified in 2019 if the law hade been in effect then, you'll get the refund as soon as Treasury can get out, but you won't be able to claim it on your 2020 return because it will have already been refunded to you.

The refunds aren't subject to offset for those who owe back taxes or other debts to the government.

For those with insomnia, the law is Section 2201 of the CARES Act and can be read here: https://assets.documentcloud.org/docume ... es-act.pdf

[Dark Optimist]

Thanks for the follow up. And, not quite an insomniac, I do like to read the statutes for personal enjoyment. Hey, its the apocalypse and overcast where I live, so its not like I can go outside...

[AndyK]

If you read the statute, it starts out saying that it's a credit against your 2020 taxes. But it then goes on to provide for an advance refund of the credit for individuals whose adjusted gross income for 2019 would have made them eligible for the credit if it had applied in 2019. Such persons are treated as having made a payment on their 2019 taxes equal to the amount of the rebate. If someone hasn't filed his 2019 return yet, the information from his 2018 return may be used instead.

So the net result is that if you would have qualified in 2019 if the law had been in effect then, you'll get the refund as soon as Treasury can get out, but you won't be able to claim it on your 2020 return because it will have already been refunded to you.

The refunds aren't subject to offset for those who owe back taxes or other debts to the government.

For those with insomnia, the law is Section 2201 of the CARES Act and can be read here: https://assets.documentcloud.org/docume ... es-act.pdf

W T F ????

I worked for the IRS for just shy of 25 years. I'm beginning to believe that Einstein was correct in his comparison of physics to taxes.

[noblepa]

If you read the statute, it starts out saying that it's a credit against your 2020 taxes. But it then goes on to provide for an advance refund of the credit for individuals whose adjusted gross income for 2019 would have made them eligible for the credit if it had applied in 2019. Such persons are treated as having made a payment on their 2019 taxes equal to the amount of the rebate. If someone hasn't filed his 2019 return yet, the information from his 2018 return may be used instead.

So the net result is that if you would have qualified in 2019 if the law hade been in effect then, you'll get the refund as soon as Treasury can get out, but you won't be able to claim it on your 2020 return because it will have already been refunded to you.

The refunds aren't subject to offset for those who owe back taxes or other debts to the government.

For those with insomnia, the law is Section 2201 of the CARES Act and can be read here: https://assets.documentcloud.org/docume ... es-act.pdf

I'm sorry. Perhaps I'm just dense, but I didn't understand a word of that. And I have an undergraduate minor in accounting and business law and I have always done my own taxes.

Bottom line question: if my wife and I, who file jointly, receive $2,400, will that increase/decrease my tax bill next year or will it have no effect. BTW, I haven't filed for 2019 yet, so our payment will be based on our 2018 return.

If it increases our tax bill, will it be for the entire $2,400 or will the $2,400 merely be added to our 2020 income, and result in a percentage of that amount being added to our bill, depending on our tax bracket?

[Cpt Banjo]

I'll be the first to admit that the statute isn't a model of good drafting*, but that might be due to the fact that it was proposed, drafted, amended, redrafted, and passed in a relatively short time.

I don't think the rebate will have any effect on most people's 2020 return. The statute grants a tax credit to so-called eligible individuals ("EI's") for their 2020 returns. But this credit is also available and can be refunded early to people who qualified as EI's in 2019 (or 2018 for those who haven't yet filed for 2019). People who receive the early rebate won't be able to use the credit on their 2020 returns, because the credit is reduced by the amount of the early rebate.

The people whose 2020 returns will be affected are those who didn't qualify as an EI for 2019 (or 2018) because their AGI was too high but whose AGI will meet the test for 2020. These folks won't get an early refund, but they'll be able to use the credit on their 2020 returns.

But what if someone met the AGI requirement in 2019 (or 2018) and got a rebate but whose AGI for 2020 ends up exceeding the AGI requirement? I don't see anything in the statute that would require him to repay the rebate, even though he wasn't an EI for 2020. In other words, the rebate is available for someone who qualified as an EI in either 2019 or 2020, but only one rebate will be payable.

* As one example, the definition of "eligible individual" states that it means an individual other than (a) a nonresident alien individual, (b) an individual with respect to whom a dependent deduction is allowable under Section 151, and (c) estates and trusts. The problem with (c) is that while estates and trusts are treated as "persons" under the Code (§7701(a)(1)), they have never been viewed as being "individuals".

[Arthur Rubin]

After attending two CARES webinars, all I can say is:

I'm confused.

Also, for those who don't need to file 2019 tax returns, TurboTax had an interface Wednesday, and the IRS had access through FreeFile Friday, allowing people to E-file abbreviated 2019 tax returns to qualify for the payments.