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Tax Breaks in the Tax Code
SavannahLion:
--- Quote from: shmokes on September 14, 2012, 01:11:50 am ---In short, a tax break is a benefit Congress intended to give; a tax loophole is a benefit an individual or corporation obtains by exploiting the code in a way that was not intended by Congress.
--- End quote ---
I see.... I've always been under the impression that, in either case, those writers already know about it no matter how it's written. I see that it's the intent of the law. But then again, after being tortured with some of those "intent" docs, one has to wonder what is their intent half the time.... :whap
ChadTower:
It is plausible that a lot of those loopholes are the result of writing laws without understanding their full implications. Tax code is so complex that it takes a dedicated professional to understand. It only takes a bunch of stupid ---uvulas--- in Congress to change tax laws. It isn't surprising that there are unintended loopholes. It is surprising that they aren't larger and more common.
shmokes:
I think the reason they're not more common is that the process of auditing leads to the loopholes being plugged usually within a few years. Clever corporations and individuals exploit ambiguity in the text, but when they get called on it in an audit, the IRS rolls their eyes and the ambiguity is soon clarified in an amendment to the Code.
Samstag:
--- Quote from: shmokes on September 16, 2012, 02:53:46 pm ---I think the reason they're not more common is that the process of auditing leads to the loopholes being plugged usually within a few years. Clever corporations and individuals exploit ambiguity in the text, but when they get called on it in an audit, the IRS rolls their eyes and the ambiguity is soon clarified in an amendment to the Code.
--- End quote ---
Can you name an example of that ever happening?
ChadTower:
--- Quote from: Samstag on September 16, 2012, 05:29:52 pm ---
--- Quote from: shmokes on September 16, 2012, 02:53:46 pm ---I think the reason they're not more common is that the process of auditing leads to the loopholes being plugged usually within a few years. Clever corporations and individuals exploit ambiguity in the text, but when they get called on it in an audit, the IRS rolls their eyes and the ambiguity is soon clarified in an amendment to the Code.
--- End quote ---
Can you name an example of that ever happening?
--- End quote ---
It is state rather than federal taxes but it may have happened in MA this year. People who work in RI but live in MA are forced to pay RI TDI (Total Disability Insurance) as a withholding. The problem is that it was not being credited to MA as a "tax paid to another state" because they considered it a benefit. This year the MA Dept of Revenue "reinterpreted that ruling" and decided that the RI TDI is in fact a tax paid to a different state and should be credited when your MA return is filed. This means that all MA residents who work in RI can file amendements to our MA returns for the years 2008 and up in order to receive a refund of that money.
The stupid part is that they gave us like 4 weeks to file the 2008 amendments because it was about to hit the statute of limitations. So a whole ton of us filed that 2008 amendment right away. My result? "Partially approved but mostly denied. Reason: not given. There is no appeal process for this type of amendment."
So, while they SAID there was a "reinterpretation" of the code, the end result was that once the amendment was filed they had the right to say horseshoes and hand grenades with no reason and no recourse.
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