The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

Recent Ways and Means Committee Meeting

By Children’s Home Society of Florida Foundation

At an April 13^th 2011 hearing on the tax code before the Ways and Means Committee, witnesses noted that there is a general consensus on the complexity of the tax code.

Enter Albert Einstein

One witness quoted Albert Einstein, recipient of 1921 Nobel Prize in Physics. While he was the world expert on the Theory of Relativity, Dr. Einstein also commented that “the hardest thing in the world is to understand the income tax.”

At the hearing, Chairman Dave Camp (R-MI) noted there are “nearly 4,500 changes in the last decade – 579 of them in 2010 alone – the code is too complex.” Other representatives and witnesses agreed that the sheer size and complexity of the Internal Revenue Code make compliance very challenging.

Enter the AICPA

Annette Nellen represented the American Institute of Certified Public Accountants in the hearing. She indicated that there are five specific steps that could be taken to substantially reduce the complexity and cost of complying with the code. These include the following actions.

1. Higher Education Deductions and Credits – Reduce the Hope Credit, American Opportunity Credit, Lifetime Learning Credit, the tuition and fees deduction and other benefits into one simple credit.

2. Education Phase Out – Create one definition for qualified education expenses and eliminate the multiple phase outs under the current system.

3. Kiddie Tax – For children with unearned income under age 18 or students under age 24, simplify the current method where they pay tax at their parents’ rate.

4. Mileage Rates – Create the same mileage rate for business purposes, medical purposes and qualified charitable travel.

5. Alternative Minimum Tax – Repeal the tax because it is too complicated to modify.

Enter the Financial Planner

Financial Planner Mark Johannessen is a CFP™ and Managing Director of a McLean, Virginia financial firm. He was President of the Financial Planning Association in 2008 and suggested that there are a number of Internal Revenue Code issues that make financial planning difficult.

First, there are temporary provisions. For example, the 2011 tax rate on dividends is 15%, but the scheduled tax rate on dividends in 2013 is 43.4%. While it’s possible that Congress could change the law between now and 2013, it makes investment planning very difficult.

Second, many changes are temporary and Congress tends to act very late in the year. Congress passed the IRA Charitable Rollover for 2010 on December 17. By that date, most individuals had already taken their required minimum distribution. Johannessen indicated that the late date “negatively impacted both the individuals’ planned charitable giving” and also the charities who received fewer gifts.

Third, the uncertainty in estate tax law continues to make planning quite difficult. While the current exemption is $5 million and there now is portability for couples, the current law only applies for 2011 and 2012. To do good planning, it is essential to know what the law will be in future years.

Assessment

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.

Link: https://healthcarefinancials.wordpress.com/2007/11/11/advertise

Filed under: Taxation | Tagged: AICPA, American Institute of Certified Public Accountants in, Children's Home Society of Florida Foundation, Dave Camp, IRS, Mark Johannessen, tax code, Ways and Means Committee |