Calif. State Controller announces delay for tax refunds

there's just a teeny bit of hypocrisy here. like, when an employer doesn't have the "funds" to deposit its employees' withheld taxes, it's considered somehow a criminal act, since the withholding is a trust fund, or it's not really the employer's money, or something like that, but when the state can't come up with *the taxpayer's* money, it's just a cash flow problem, and "we'll give you *your* money when we can find it...." do I recall that it was California that was increasing the state income tax withholding rates to generate better cash flow for itself? amazing, but what's troubling to the goose is also troubling to the gander. cash flow shortfall has to be made up next cycle!!! Duh...!!!

I imagine many employees going to their employer and decreasing their withholding during 2009, meaning ~~less~~ cash to the state.

And more tax delinquencies in 2010.

"Taxmanhog" wrote

And the tax prep mills make it a point to attract those folks who have over withheld to the tune of thousands of dollars, even going so far as to brag about the high-dollar average refund that a majority of their customers get.

Client soliciation is one thing, but, in my rarely humble opinion, it is unethical, immoral, and several other things to have your client over withhold and then get them a rapid refund loan.

The profession took a giant step backwards when the AICPA cowered to the Reagan Federal Trade Commission on commissions and referral fees.

Dick

Dick, I certainly agree, but I think this is more about refundable credits (and it looks like Washington is considering expanding the additional child tax credit) than preparers directing taxpayers to have a W-4 with: withhold at single rate, zero allowances.

An employer has to provide advance EITC to qualifying employees who want it, and that would take care of a lot of the refund loan folks. However, back in the days when I might encounter advance EIC on a W-2, it was usually accompanied by someone who was not happy about breaking even (or owing) at tax time.

We've passed a law saying you can't charge usurious rates to active duty military and their families--why can't we have that protection for everyone?

I was overwithheld despite my wishes for a couple of years. My employer paid me both a salary and shares of stock, and the broker that handled the stock insisted on withholding at least 25% when I sold it, regardless of the fact that my marginal tax rate was 10%.

I put as many allowances on my W-4 as could be justified by filling out the worksheet on the back with itemized deductions, child tax credit, etc. Even had I put 99 allowances, however, I would still have been overwithheld because of the mandatory 25% withholding on the stock.

Did my employer's stockbroker insist on 25% because it was convenient for the broker, because they misunderstood tax law, or are they really required to do so? If so, why, since I believe (correct if wrong) the majority of the population is in the 15% bracket or below?

Lee

They can't do that anymore, the IRS has recently indicated it considers publicizing a statistical average dollar amount to be a violation of taxpayer consent-to-use-information requirements.

Do you have a specific complaint against mills (and the millers who work in them)? Surely some of the EA's and CPA's and the other tens of thousands of experienced tax pros who work in the mills have a clue what they are doing, or at least the IRS thinks so...

-Mark Bole