Tax Law

With the ink barely dry on last year's Tax Reform Act and thousands of homeowners bewildered about their correct mortgage deductions for next April, Congress stepped into the breach last week. The bottom line: You may get still another major change in the federal tax law governing your home mortgage write-offs. Or - if President Reagan does what he vows he'll do - the 1987 tax bill will be vetoed into oblivion, and you'll be stuck with last year's byzantine mortgage rules. Here's a quick overview of what's happening on Capitol Hill, and how it could directly touch you by Thanksgiving: The House Ways and Means Committee's Democratic majority wrote and passed a $12 billion tax bill last week.

This new tax law is a joke, and anyone who's had to struggle with the new W-4 forms knows what I'm talking about. You practically need a Ph.D. in math to figure your new withholding. And then, once you do figure it out, you realize that all that talk about less taxes was a bunch of lies. I say the new tax law is a nasty piece of business, and I say we vote the bums out of office. Patience Merriman Clifton Heights.

WASHINGTON - The nation's tax law is so thick and complicated that businesses and individuals spend more than six billion hours a year complying with filing requirements. That's the equivalent of three million people working full time year round. As a result, about 90 percent of filers will either pay a tax preparer or use a computer software service to help with their federal tax returns this spring, according to a report Wednesday by an independent government watchdog. "The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns," says the report by Nina E. Olson, the National Taxpayer Advocate.

Thousands of small-scale real estate investors could be hurt by the elimination of certain tax benefits on installment sales of real estate in the 1986 Tax Reform Act. Though the new federal "installment-sales" rules affect a wide range of business and investment activities beyond real estate, the effect of this may well be most jolting to people who invested in small rental homes, duplexes, condominiums and similar properties. Installment sales are among the most popular techniques of transferring real property in the United States.

With President Reagan's signature still fresh on the new tax-overhaul legislation, legal and accounting experts have already identified a major boon to real estate investors. It is an an investment that: Bypasses the deduction restrictions imposed on limited partnerships and other forms of real estate ownership under the new tax law. Offers tax-sheltered annual income in the 9 to 12 percent-per-year range. Requires you or your spouse to get away to a resort at the beach, on the ski slopes or out in the country periodically.

Besides Richard Flaster's hippos - four ceramic jungle beasts, including three that are nearly life-size, guard the entrance to his office and seven more lounge on his office desk - the Cherry Hill lawyer's passion is tax law. "My family doesn't have any problem thinking of a gift to give me for Father's Day, and they know that no hippo will go unappreciated," said Flaster of the more than 1,400 of the mammals residing in the Cherry Hill law...

Louisa D'Orazio McShea, 51, a housewife and mother who went back to school at age 33 and became a lawyer, died Tuesday of cancer at Thomas Jefferson University Hospital. She was a resident of Washington Crossing. Mrs. McShea, who was born in South Philadelphia and raised in Northeast Philadelphia, graduated from St. Hubert's High School in Torresdale in 1958. She got married in 1961, and devoted herself to raising her two daughters. At age 33, when her daughters were in junior high school, Mrs. McShea decided to go back to school.

The April 15 tax return deadline is a comfortable 71 days away, but tax preparers are bracing for lots of questions from clients confused by tax changes that took effect this year. Some preparers also expect clients to get their finances in order earlier this year so they know how much they owe before the deadline. "People are coming in early," said Susan E. Cohen, a tax manager at Schiffman Hughes in Blue Bell. Cohen said she has received a lot more calls than last year at this time.

Philadelphia Electric Co. customers will get no immediate break on their electricity or gas bills from the recently passed changes in the federal tax law, according to a plan proposed by the utility yesterday. But the State Consumer Advocate challenged the company's calculations, predicting "a major controversy" before the Public Utility Commission. Although regulators and consumer advocates have been predicting a drop in utility bills around the nation as a result of the new tax law, PE officials said yesterday that their company's particular financial circumstances offset the effects of the changes.

Joe Mohen used to feel wanted. Now he says he feels like a leper. Mohen is one of one million high-technology specialists whose livelihood is threatened by the new tax law passed last fall, according to the Technology Consultants National Association. The trade group held a meeting last night at the Dunfey City Line Hotel to discuss ways to change the new law. The law eliminates the independent contractor status that has been used by computer specialists, engineers, systems analysts, designers and drafters, all of whom work for themselves.

WASHINGTON - The Internal Revenue Service apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status. IRS agents singled out dozens of organizations for additional reviews because they included the words "tea party" or "patriot" in their exemption applications, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups. In some cases, groups were asked for lists of donors, which violates IRS policy in most cases, she said.

The neighbors did what they could to dress up the gaping wound on their block. They painted the steps black and the porch a bold bluish-green. In the fall, they put a pot of mums out front. But cosmetic touches do only so much for an abandoned shell of a house with sheet metal for windows and a slab of plywood for a door. This wreck in the working-class 4400 block of North Orianna Street in the city's Feltonville section is just one of about 100,000 tax-delinquent properties in Philadelphia, a $5,780 drop in a half-billion-dollar bucket of defaulted payments to the city and School District.

Ilene Raymond Rush writes and blogs from Elkins Park A few years back, when I was teaching fiction writing at Penn State's main campus, I'd ask my student advisees a single question: "Can you think about doing anything else?" It was a question that had been posed to me early in my undergraduate English education by an earnest female professor when I eagerly confessed that I wanted to be a writer of short fiction. While it brought me up short, I have to admit that the question was an honest response to the lousy state of the economy in the mid-1970s.

After more than three years of failing to file required IRS forms, two Camden charter schools have lost their tax-exempt status, a requirement to be granted a New Jersey charter. LEAP Academy University Charter School and Camden Pride Elementary Charter School were listed Wednesday by the IRS as having their 501(c)(3) status revoked. The IRS automatically revokes an organization's tax-exempt status if it fails to file Form 990 for three consecutive years. Both schools officially lost their status in 2010.

WASHINGTON - Charities and nonprofit organizations are worried that new limits on tax deductions for high earners will hurt donations just as charitable giving is starting to rebound from the depths of the recession. Experts doubt the new limits on deductions will have much impact on giving, but some major nonprofits fear they are a sign that the charitable deduction is no longer sacrosanct on Capitol Hill, just as Congress is promising a broader effort later this year to overhaul the tax code.

WASHINGTON - The nation's tax law is so thick and complicated that businesses and individuals spend more than six billion hours a year complying with filing requirements. That's the equivalent of three million people working full time year round. As a result, about 90 percent of filers will either pay a tax preparer or use a computer software service to help with their federal tax returns this spring, according to a report Wednesday by an independent government watchdog. "The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns," says the report by Nina E. Olson, the National Taxpayer Advocate.

PARIS - France's Constitutional Council, in a stinging political rebuke to the Socialist government, ruled Saturday that an emblematic new law that imposes a 75 percent tax rate on earnings above $1.3 million is unconstitutional. The ruling was based on technical grounds, and President Francois Hollande's government pledged to make the necessary adjustments. But Hollande had made the 75 percent rate an anti-rich symbol during his presidential campaign, and, as a result, the council's judgment was seen as an embarrassing political setback.

Applaud a group of retired state and federal judges from Pennsylvania who want Congress to open the curtain on secret campaign donors. Judges, even when they're retired, rarely comment on public issues. But after watching the 2012 elections play out with hundreds of millions of dollars spent to secretly finance political ads, the judges decided to speak out. They rightly argue that knowing who is behind a campaign ad gives voters more of a chance to evaluate that ad's credibility.

Don't complain about tax hikes Anyone against a tax increase for the wealthiest Americans is either one of the wealthiest Americans or probably doesn't understand our tax system ("Obama, Boehner trade new offers," Wednesday). Federal tax rates have always been graduated. Presently, they start at 10 percent and increases rapidly to 25 percent for "single" taxpayers who have a net income of more than $34,500. They increase to 28 percent for incomes above $83,600. After that, the progression slows considerably.

General Electric has been slowly moving manufacturing jobs from China and Mexico to the United States, and Apple says it will spend $100 million to manufacture Mac computers in this country. That sounds like the beginning of a good trend, but it needs a shove. Democrats in the last election made campaign promises to pass legislation to eliminate the destructive practice of rewarding businesses for putting Americans on the unemployment line by allowing companies to take a tax deduction for the cost of exporting jobs overseas.