Thompson & McCarty, P.C. CPA

Folks, I am going to go on the record again as saying this is not what we the people of the United States of America need.  It is very costly to do and the bill that is being discussed now is full of pork barrel spending.  Let's cut through the chase and call it what it really is.  This bill is full of political payoffs and pats on the backs for politicians supporters.

This is not a political issue.  It is a matter of fiscal responsibility and it is time that we the tax payers say enough.  The government at the local, state, and federal levels has to stop expanding government and searching for new ways to tax the people.  At this time we as a nation are insolvent and you can not solve that problem by spending more money.

The IRS is trying to clean up the slew of people that report Head of Household and claim EIC.  That have instituted new due diligence requirements for tax preparers designed to make the client really follow the rules of eligibility for this filing status and refundable tax credit.  What the taxpayer will be hearing from "Qualified" preparers this year is a list of questions designed by the IRS to help determine the eligibility for a the Head of Household filing status and the eligibility to receive EIC.

I personally don't like the questions they are making me ask this year but I applaud them in what they are attempting to do.  The problem, as reported today on Fox 6 News, is that many tax preparers are just not following the rules.  What you should know is that unless a tax preparer has some kind of professional license (Certified Public Accountant, Public Accountant, Enrolled Agent, etc..) then they likely do not answer to any higher authority than the customer.  So pick your preparer with care.  You are responsible for the contents of your return. 

I recently wanted to check and see if I could save enough money to warrant refinancing my home.  I thought that it would be easier to call my current mortgage company than to call a new mortgage company or originator. 

My first attempt to contact my existing mortgage company was on the internet.  After making multiple attempts to log in I realized that they had changed their log in process and my old user name and password were not valid.  So I attempted to change them and the system notified me that my access had been blocked due to invalid input.  I would have to contact customer support to reset the system.  After an hour and 15 minutes of trying I got frustrated and gave up for the evening.

In another attempt to help taxpayers and stimulate the economy the Government has come up with a tax credit for first time home buyers.  This credit is available to first time home buyers only and singles earning up to $75,000 per year and couples earning up to $150,000 qualify for the full credit.

For the 2008 tax year homeowner's will be getting a tax break for property taxes even if they are unable to itemize.  The deduction will be added to the standard deduction and is the lessor of actual property tax or $500 per taxpayer ($1000 for Married filing joint).  I think it is interesting that Congress feels that it is important enough to address this issue then limit the deduction to $500 per taxpayer.  That comes straight from the political handbook of tell them your helping them then take it back.

A second stimulus payment is being discussed heavily among our elected officials these days.  It is said that the Democrats are in a hurry to get something passed.  It makes no difference if it is a (D) or an (R) to me.  I just want to get paid quick, fast, and in a hurry! LOL 

No details have been released to my knowledge so allow me to suggest that they just send every man women and child 1 million dollars.  I suddenly feel like Austin Powers.  I mean if up to $600 per taxpayer and $300 per child is a good idea, then 1 million must be at least 1666 times better, right?  And hey, if 1 million is wise then why not 2 million.  We will all have plenty of cold hard cash to do anything we want.

I have complained about the Sarbanes-Oxley act of 2002 (SOX) since it was proposed.  For details and background of SOX go here.  My opinion of SOX is very simple.  The cases (Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom) that gave rise to SOX all involved misrepresentation of fact and illegal acts at the very highest levels of management.  SOX did very little to change anything that was at the root cause of these cases.

The number one substantive change that came out of SOX was the power grab for regulation of the accounting profession by the government via the SEC.  The SEC appoints the 5 board members of the PCAOB.  Any disputes with PCAOB can be carried to the SEC for review and potential reversal.  The second was the implementation of additional internal controls at all SEC companies.   Internal controls are designed to assure that transactions are fully and properly recorded and that assets are protected. They must by design be overridden by management from time to time.  Since management was at the root of the cases above, it follows that additional internal controls are useless against this type of behavior.  The implementation of SOX is now referred to as the “Golden Age” of accounting due to the fees generated by accounting firms to fully implement SOX at SEC companies. 

Recently a friend asked me about mark to market accounting regulations and what they meant.  I told him that basically it means that companies that have investments in financial instruments must disclose the value of those instruments at market value.  This is a major change in American GAAP and is primarily being driven by the desire to make American Financial Statements comparable to the rest of the worlds.  There is a strong argument that this will also provide more transparency to the Financial Statements but that argument is better left to another discussion.  The bottom line is that it makes it easier to participate in world trade which is highly desirable in today's economy.

Since the first government intervention ($700 Billion) is looking like a complete failure now those that said we had to do it are considering a new strategy.  Yup, more government intervention is just what we need.  NOT!  I posted a new article today about the $700 billion already approved and what I think is next.  Then in my daily reading I ran across this article suggesting that the Fed is going to get even more involved.  Well I did warn you that the $700 billion was the beginning. 

I have had many people ask me what I think on the issue of the $700 Billion U.S. Federal Government bail out.  My answer was and is that this is a bad idea and the “plan” stinks.  As my heading implies I think the $700 billion is just the beginning and we are already hearing that more is needed.   If $700 billion isn't enough perhaps we should should give $200 trillion or whatever other absurd number the politicians can come up with.