Effective Monday, February 21, Joshua Dwyer will join the Las Cruces law firm Holt Babington Mynatt Martinez PC. He can be reached at (575) 524-8812 or jmd@hbm-law.com.

Lee Stringham will continue this firm under the new name, the Stringham Law Firm, LLC, and will be available at (575) 993-5590 or Lee.Stringham@lctaxlaw.com.

Additionally, despite the entertainment and enlightenment that have resulted from the semi-regular postings here on the blog, this will be the final post. It has been a tremendous experience to share interesting tax news and to highlight important issues, but, as they say, all good things must come to an end. Thank you for all of the comments and SDG!

The 11th-hour changes to the tax laws in 2010 require the Internal Revenue Service (IRS) to revise some of the tax return forms and to reprogram computers to process the returns.

According to a report in the Washington Post, as many as 50 million taxpayers who itemize deductions on their returns will have to wait to file until mid-February for the IRS to complete the changes required by the new laws.

Additionally, some “above-the-line” deductions that had expired in 2009 were reinstated, which means some taxpayers who claim the standard deduction may have to wait to file as well.

But don’t wait too long to file: the deadline is Monday, April 18.

For more info about the delays and which taxpayers are affected, visit IRS Kicks Off 2011 Tax Season.

Traditionally, this was done by increasing revenues or decreasing expenses.

The Federal Reserve System (the “Fed”) has chosen a different method: changing it’s accounting rules.

Perhaps it’s just a perk of being able to write your own rules as the Fed does, but in its January 6 weekly report the Fed announced that it would report future losses as “negative liabilities” rather than reductions in capital.

In other words, if the Fed loses too much money, it just sends the Treasury Department an IOU.

Or a lot of them. By June, the Fed will have purchased $2.3 trillion worth of securities.

But don’t worry: according to Fed Chairman Ben Bernanke, the worst-case scenario is that the Fed wouldn’t be able to pay any money to the Treasury Department for “a couple of years.”

While “creative accounting” may sound like a tempting idea to avoid insolvency or bankruptcy, if such techniques were implemented by other private corporations, partnerships, or limited liability companies, they might find it raises serious issues with investors, the Securities and Exchange Commission, and the Internal Revenue Service. See the links below.

The lesson sounds familiar: “Do as I say, not as I do.”

Links of potential interest:

• Reuters article: “Accounting tweak could save Fed from losses”
• CNBC.com article: “Could the Federal Reserve Become Insolvent?”
• BBC News article:  “Accounting tricks investigated by SEC”
• Bloomberg article: AIG investors’ lawsuit in front of Delaware Supreme Court
• Wall Street Journal article: “Tax Report: The IRS Targets Income Tricks”
• The Fed is made up of 12 regional Federal Reserve Banks, which “are independent, privately owned and locally controlled corporations.” Lewis v. United States, 680 F.2d 1239, ¶5, (9th Cir. Ct. App. 1982).

While it may not be rocket science, complying with tax rules and Uncle Sam’s friends over at the Internal Revenue Service takes a lot of time and money. But how much is a lot?

TIME

According to the report, taxpayers spend about 6.1 billion hours each year complying with tax requirements. That’s the equivalent of 3 million full time workers!

MONEY

The financial cost of compliance is expensive as well. For 2008, the Taxpayer Advocate Service estimates that individuals and businesses spent $163 billion to stay on the IRS’s good side. Not only is that an overwhelming sum, it amounts to 11% of the total amount of money the IRS collected.

As the tax code gets more complex, compliance gets more expensive.

Click on the following links for more information:

• The 72-page Executive Summary of the NTA’s Annual Report
• Most Serious Problems #2-5
• Most Serious Problems #6-15: Taxpayers’ Rights (e.g., creating installment agreements that taxpayers’ couldn’t afford)
• Most Serious Problems #16-21: Tax Administration (e.g., almost 10% of mail sent by IRS is returned)
• Tax Liens: Increased to 1 Million in 2010, but effective?

H/T to TaxProf Blog.

Some of the highlights of the Senate’s tax relief/tax hike prevention act include:

• Maintaining the current tax rates for two years
• Estate tax revisions: higher exemption ($5 million) with a lower top rate (35%)
• 100% first-year writeoffs of certain property
• Reducing payroll/self-employment tax by 2 percentage points for 2011
• Extending unemployment benefits application deadline for 13 months

For a breakdown of the provisions of the tax relief passed by the Senate, check out CNNMoney.com’s coverage: Tax cut package: What’s in the bill and what it costs.

Some of the issues discussed include maintaining the current tax rates, what to do about the estate tax that is scheduled to rear it’s ugly head on 1/1/11, and what, if anything, to do about unemployment benefits and economic stimulus.

For a rundown on the respective vantage points, some informative links, and videos from a variety of sources (e.g., the White House, Rush Limbaugh, and Keith Olbermann, etc.) check out the TaxProf Blog‘s coverage: More on the Obaman-GOP Tax Compromise.

So much for a “lame duck” session.

Today’s presentation covers NM employment law and workers’ compensation law. As always, the price of attending covers your presentation materials, a tasty lunch, and the opportunity to meet some of the fine members of the BIA. After covering some of the basics regarding workers’ compensation and employment law, the attorneys of Dwyer & Stringham will be available to answer specific questions.

Visit the BIA Events page or call the BIA at (575) 526-6126 to register.

If you are an eligible citizen, your vote is many things: a right; the chance to change America; your $0.02; a privilege; an honor; a blood-bought gift from veterans; a duty; a responsibility; a choice; 20 minutes (or 2 hours) you’ll never get back; a trust. A trust?

Yes, each generation is entrusted by previous generations with choosing public servants and making decisions that will not ruin the country for future generations.

Samuel Adams knew the importance of voting. Not just the importance of going through the motions, but the significance and consequence of the act and the decisions it embodies.

As he wrote in 1781, “Let each citizen remember at the moment he is offering his vote that he is not making a present or a compliment to please an individual – or at least that he ought not so to do; but that he is executing one of the most solemn trusts in human society for which he is accountable to God and his country.”

As Russell Kirk endeavored to remind us 60 years ago, Edmund Burke insisted that our society is “a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”

In America, the dreams of one generation can be the reality of the next. Similarly, impatience and selfishness today can create the chains of tomorrow.

When you vote today, remember that it is not just your future you are influencing.

Then you may be interested in attending the Building Industry Association’s October Lunch ‘n’ Learn on Wednesday, October 13, from 11:00 am to 1:00pm.

The attorneys from Dwyer & Stringham will discuss and explain New Mexico lien law, especially as it relates to residential and commercial builders, how liens are created, how to claim liens, and how to enforce liens.

In addition to the opportunity to meet local business owners and decision makers, BIA always provides delicious food, great facilities, and a helpful staff. BIA members can attend for $25 and non-members can attend for $50.

Visit BIA’s Events webpage for more information or call (575) 526-6126.

But what do you get for your hard-earned dollars? Most taxpayers probably have some idea of where they spent 25% of their income last year, but do you know where it goes once Uncle Sam gets it?

According to page 101 of the 175 page PDF version of the instructions for the IRS Form 1040, the major federal income and outlays for 2008 are summarized in the following chart (click image for full size version):

Once you get over the fact that the IRS has a 175 pages of instructions for a single IRS form, it’s worth noting that the pie charts do indicate some interesting information. For instance, you can see how much more the federal government spends on Social Security, Medicare and other entitlement programs compared to how much is coming in to fund those programs.

According to the text below the charts in the instructions, the deficit for fiscal year 2008 was $459,000,000,000 ($459 billion). With the deficit exponentially increasing recently to well over $1,000,000,000,000 ($1 trillion), the pie charts for fiscal year 2009 won’t look any better.