Under Article 20 of the Tax Law, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill signed by Governor Paterson today will prohibit cigarette manufacturers from selling unstamped cigarettes to stamping agents who have not provided them with a certification, under penalty of perjury, that the cigarettes will not be resold in violation of Article 20. Agents must provide the Tax Department with any certification they give to a manufacturer.

“This law has not been adequately applied for far too long giving non-Indians easy access to tax-free cigarettes both on the reservations and over the internet,” said Governor Paterson. “However, the signing of this bill should not be seen as anything other than enforcing the tax laws of New York in a fair and effective manner. My commitment to the sovereign powers of New York’s Indian Nations has not and will not waver and I will continue to seek a comprehensive negotiated solution with all of New York’s Indian Nations.”

Although cigarettes sold by agents to retailers for re-sale to non-Indian purchasers must bear tax stamps, the State has, for many years, adopted a policy of non-enforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.

Governor Paterson added: “Tomorrow, I will present my 2009-2010 budget proposal and while we will continue to aggressively and responsibly address New York’s current budget crisis, this bill is not only about collecting revenue for the State of New York, it is also about protecting the health of our citizens. Smoking has long been a tragic public health crisis in New York and around the world. In recent years, the New York State cigarette tax has been one of our most effective tools in addressing this crisis. To the extent that the tax is undermined, our efforts to fight smoking are also undermined.”

Senator Michael Nozzolio, co-sponsor of the bill, said: “For far too long, retail businesses throughout our region have been harmed by an unfair tax policy, driving jobs out of the region and hurting small business owners. Today’s signing of Senate bill 8146 is a historic day for leveling the playing field for all of New York’s businesses and I thank Governor Paterson for ensuring that this important legislation will now be New York State law.”

Assemblyman Bill Magee, co-sponsor of the bill, said: “I am very pleased that New York will soon begin to collect taxes on cigarettes sold on or through Indian land to non-Indian purchasers. The State has long had the legal authority to collect this important revenue stream. We now have a proper mechanism in place that will assure that especially in these hard economic times, taxes on cigarettes are fairly collected. I thank Governor Paterson for signing this important legislation.”

Under the law, an agent who violates Article 20 of the Tax Law is subject to revocation or cancellation of its license. A false certification could be referred to a district attorney’s office for prosecution for perjury or filing a false instrument.

Additionally, this bill requires the Commissioner of Taxation and Finance to prescribe a form for the certification process and instructions on how to use the form within 60 days of the bill becoming law. The Tax Department must be prepared to receive certification forms in the same time frame.

“With more than a hundred pro-taxpayer credits and deductions, many taxpayers will qualify for new benefits that may not have been available last year,” said Mark Steber, vice president of tax resources at Jackson Hewitt Tax Service. “Taxpayers affected by these changes could see significant savings, and with the current recession, it is even more important that taxpayers get all of the tax benefits they deserve.”

Tax Law Changes

Steber outlines some money-saving tax law changes for 2008, including:

• Economic Stimulus Payment and Recovery Rebate Credit: This initiative is a two-phased program consisting of the economic stimulus payment and the recovery rebate credit. Phase one was the economic stimulus payment which was an advanced payment of the projected amount of recovery rebate credit available on the taxpayer’s 2008 return. Phase two is the 2008 component of the program, so taxpayers who did not receive their full economic stimulus payment in 2008 may qualify for the remainder as a Recovery Rebate Credit on their 2008 tax returns. For example, Jane, a single taxpayer, filed her 2007 tax return in February 2008. She filed single, without children, and received a $600 economic stimulus payment. In November, Jane gave birth to a baby girl. Because she had a child in 2008, Jane may be eligible for an additional $300 credit when she files her 2008 tax return and claims her child as a dependent.

• Mortgage Debt Forgiveness Relief Act: Homeowners who experienced foreclosure on their primary home can exclude the cancelled debt amount from their taxable income. For example, a married couple filing jointly with an adjusted gross income (AGI) of $35,000, and a home foreclosure that includes $10,000 in cancelled debt, could decrease their tax liability by $1,500 under this act. In the past, the $10,000 of cancelled debt would have been considered taxable income to the individual that owed the debt. The home must meet the following criteria:
  • It must be the taxpayer’s main residence
  • The amount of debt forgiven cannot exceed $2,000,000
  • The loan must have been used to buy, build or substantially improve the home.

• Housing Assistance Tax Act: Taxpayers who pay real estate taxes and are not otherwise eligible to itemize deductions can increase their standard deduction amount by the lesser of:
  • Real estate taxes paid in 2008 OR
  • $500 ($1,000 if married filing jointly)

For example, a married couple filing jointly with an income of $28,000 that did not itemize their tax return but paid $1,200 in real estate taxes in 2008 could increase their standard deduction amount by $1,000. This additional standard deduction would decrease their tax liability by $100.

• Additional Child Tax Credit: The Additional Child Tax Credit is a refundable credit. This year, the income threshold has been decreased to $8,500 from $12,050, allowing certain taxpayers to qualify for up to $533 more per child in a potential refund. For example, a single parent with two children and an income of $15,000 would receive a refund of $5,799. Before the change, the potential refund amount would have been $5,266.

• First Time Homebuyers Credit: Taxpayers who purchased a new home for the first time after April 8, 2008, may qualify for a refundable credit up to $7,500. Part of the American Housing Rescue and Foreclosure Prevention Act, this refundable tax credit works like an interest-free loan for all qualified taxpayers. The credit must be paid back in equal parts over a period of 15 years beginning in 2010.

Extending expired tax benefits

Lawmakers also extended several expired tax benefits, including:

• Tax-free charitable donations for taxpayers 70.5 or older who choose to direct up to a $100,000 donation from a traditional or Roth IRA directly to a charitable organization.
• A two-year extension of the Educator Expense Deduction which allows teachers an above-the-line tax deduction of up to $250 for out-of-pocket classroom expenses.
• A two-year extension of the Qualified Tuition Deduction which allows students to directly deduct up to $4,000 of qualified tuition and fees paid to a college or trade school.
• A two-year extension to the sales tax deduction. Taxpayers can claim the greater of their state and local income taxes paid or their state and local sales taxes paid when itemizing deductions. This is of particular interest to taxpayers that live in states with little or no income tax and those that purchased high-ticket items during the year.

“These are just some of the changes in the tax laws this year,” added Steber. “Taxpayers should consult a trained tax preparer this year in particular, to ensure they don’t miss out on the benefits available as a result of these new credits and deductions or any other commonly overlooked deductions. Clearly it is even more important this year that taxpayers ensure they get back the money they deserve or keep more money in their pockets.”

Unemployed in 2008

For those taxpayers who were unemployed in 2008, it is important to remember that unemployment compensation is taxable on federal and most state tax returns. Income tax is not automatically withheld from unemployment compensation, however, individuals can elect to have taxes deducted. If you did not have taxes withheld throughout the year, you may have a potential balance due when you file your 2008 income taxes.

For those taxpayers looking for a job during 2008, there are deductible costs they can claim if they itemize deductions, including:

• Mileage costs accrued on a personal vehicle while job hunting including trips to job interviews and to the unemployment office. Between January 1, 2008, and June 30, 2008, taxpayers can claim 50.5 cents per mile. Between July 1, 2008 and December 31, 2008, taxpayers can claim 58.5 cents per mile.
• Costs for creating, printing and mailing a resume
• Costs for a headhunter or job placement agency
• Transportation costs such as a bus, taxi, train or plane to an interview
• Meals and lodging if out of town for an interview
• Parking and tolls when driving to an interview
• Long distance or mobile phone call charges directly associated with a job search
• Business research services
• Physical exam expenses if required by a potential employer

If a taxpayer accepted a new job which required relocation, he or she may be able to deduct qualified moving expenses not reimbursed by the new employer. Taxpayers should keep receipts related to all moving expenses in order to substantiate these expenses.

As a result of the 33-to-18 vote, annual tax bills will increase by hundreds or in some cases thousands of dollars, effective Jan 1.

“Even though it won’t be popular, New Yorkers will understand,” Councilman Miguel Martinez of Manhattan said in explaining his support for the tax hike. “Times are hard, and we’re asking everyone to pitch in.”

Opponents warned that residents were already overtaxed. Since Mr. Bloomberg took office, property taxes have increased by 18.5 percent.

“Today, the Council votes to take the bucket to the same old well and ask homeowners to bear the brunt of a swelling budget among dwindling revenues,” Councilman Simcha Felder of Brooklyn said. He added, “I believe that is unacceptable and that will hurt all New Yorkers in this difficult time.”

The property tax increase comes as Gov. David A. Paterson is pushing more than 100 new taxes and fees on items from downloaded music to nondiet sodas, and the Metropolitan Transportation Authority is moving to impose fare and toll increases.

Manhattan homeowners who live in the most expensive co-ops will see their taxes go up by anywhere from $854 to $1,307, according to the city’s Independent Budget Office. People who own single-family homes valued between $1 million and $1.5 million, outside of Manhattan, can expect to pay an extra $464 per year. Taxes on more modest homes, such as a condominium in Queens in the $300,000 to $400,000 range, would rise by $111.

To help ease the pain, Council Speaker Christine C. Quinn announced that Mr. Bloomberg had agreed to send homeowners the much-prized $400 rebate checks by the end of the calendar year.

The mayor had tried to eliminate the checks this year, then delay their distribution, but council members animatedly objected.

In addition, the Council approved an increase in the hotel tax from 5 percent to 5.875 percent per room, or about $3 a night. That change is expected to generate perhaps $80 million between March and the end of the next fiscal year, in June 2010.

Still, no one was under any illusions that the increased taxes would be the last financially difficult decision in the foreseeable future.

Mr. Bloomberg, who in September ordered all city agencies to cut spending by 5 percent, asked that they come up with an additional 7 percent in cuts by Dec. 22. And even with those cuts, and the extra revenue from higher taxes, the city is still facing a budget deficit of more than $1 billion in the next fiscal year.

The vote on Thursday — a close one by City Hall standards — was the latest political victory for Mr. Bloomberg.

He had unveiled his budget proposals just two weeks after the most bruising political battle in recent memory: the Council’s approval of his bid to rewrite the city’s term limits law, allowing him to seek a third term.

And his attempt to withhold the property tax rebate checks met with fierce condemnation from council members who portrayed Mr. Bloomberg, a billionaire many times over, as out of touch with the voters’ financial situation.

In recent days, though, with the help of Ms. Quinn, the Bloomberg administration began changing the minds of council members. It certainly did not hurt that the thrust of Mr. Bloomberg’s arguments was echoed when Governor Paterson presented his own bleak budget, filled with projected budget cuts in city funds. Nor did it hurt that the city comptroller, William C. Thompson Jr., a Democrat who is running for mayor, issued his own economic forecast this week.

Technically, Thursday’s vote repeals a tax cut of 7 percent that had been set to expire in June.

In a statement after Thursday’s vote, Mr. Bloomberg said: “It’s never popular to phase out a tax cut or reduce agency spending, but they are the right choices to avoid far greater and longer-lasting pain. We will not repeat the mistakes of the 1970s, which crippled city finances and nearly destroyed our quality of life.”

Councilman David I. Weprin of Queens said there were no plans, for now, to raise property taxes again in the next fiscal year.

“There is an unofficial agreement with the administration that they will not be coming back to us in June for an additional property tax increase,” he said. “Obviously, things could always change, but that was the general agreement as of now, by taking this tough vote midyear that we will not be asked to take another larger increase.”

The familiar dance between Mr. Bloomberg and the Council over the budget requires him to support some spending sought by the Council to win members’ backing. In this case, Ms. Quinn said that the Council was able to persuade Mr. Bloomberg to refrain from cutting approximately $20 million from a variety of programs, in exchange for adopting the Council’s recommendations for $20 million worth of other cuts.

As a result, Mr. Bloomberg does not plan to cancel the next training class for more than 1,100 police cadets; instead, there will be two smaller classes of 250 cadets apiece in January and June.

In addition, the deal means that the mayor will not cut $2.5 million from City University of New York and community colleges for student services and research. Nor will he slice $3.7 million from the Administration for Children’s Services, which would have eliminated 127 caseworkers. Instead, Ms. Quinn said, the city will save $13 million by relying on in-house staff members and not consultants to do work on capital projects, as well as $3 million through a drop in fuel expenses.

There were also a few examples of city officials trying to make the additional taxes a little less onerous. Under a Bloomberg proposal, people who own properties valued at $250,000 or less can pay quarterly rather than semi-annually. Those people will also be given a 15-day grace period for payments due in January.

Source: The New York Times

Consumption tax on naphtha, solvents and lubricant oil would be raised from 0.2 yuan (almost three U.S. cents) to one yuan per liter, and tax on jet kerosene and fuel oil would rise from 0.1 yuan to 0.8 yuan per liter, the Ministry of Finance (MOF) and Ministry of Taxation said in a joint statement Friday, offering more details of the day-earlier announcement.

The National Development and Reform Commission said late Thursday that the country will raise the gasoline consumption tax from the current 0.2 yuan to one yuan per liter and diesel consumption tax from 0.1 yuan to 0.8 yuan per liter.

The two ministries also said consumption tax on imported naphtha would be reinstalled, while tax on jet kerosene would be temporarily postponed.

In addition, consumption tax on naphtha produced domestically and used for production of ethylene and aromatic hydrocarbon products would be exempt by the end of 2010, according to the statement. Tax already paid on imported naphtha for the same usages would be returned, it added.

The ministries said the country would exempt consumption tax onethanol gasoline produced with imported and already-taxed domestic oil, and ethanol gasoline produced with domestic gasoline would be taxed for gasoline used in the production only.

Taxes on gasoline and diesel products used in producing methanol and biodiesel products could be deducted from the total tax for the finished products, the two ministries said.

Ethanol gasoline, methanol gasoline and biodiesel products are all mixture of gasoline or diesel with ethanol, methanol or biodiesel.

An unidentified MOF official said such adjustments of consumption taxes on fuel products are aimed to play a role in promoting energy conserving and economic restructuring, and ensuring equal share of tax burdens among users.

“Let’s address the root problem rather than going out and addressing taxes, and especially not addressing taxes in a period of economic uncertainty,” Howell told reporters during a telephone news conference held with Congressman Eric Cantor.

Cantor, also a Republican, said raising cigarette taxes was an “all-out attack … and an assault on jobs here in Virginia and the greater Richmond area.”

Tobacco giant Philip Morris (PM.N: Quote, Profile, Research, Stock Buzz) is based in Richmond, after relocating there from New York earlier this year.

Gov. Timothy Kaine will propose raising the tax on a pack of cigarettes to 60 cents from 30 cents as part of a broader plan to close the state budget shortfall, the Richmond Times reported on Tuesday.

The governor is also planning to ask for $400 million in cuts from education and healthcare and to seek 1,500 layoffs of state employees and a $500 million withdrawal from the state’s rainy-day fund, the report said.

Kaine is due to outline his proposals to the General Assembly on Wednesday and is expected to estimate the budget deficit at $2.9 billion.

Howell and Cantor argued that a cigarette tax hike would send the wrong signal to other states, which might be more inclined to raise their cigarette taxes. That could lead to job losses in the tobacco industry, especially in Virginia.

A spokesman for the governor said he could neither confirm or deny the report ahead of Kaine’s speech on Wednesday.

Paterson’s executive budget included 88 fees, 10 fines and 39 tax changes that would bring in over $5 billion next year.

“The governor feels these fees are fair, reasonable and necessary to balance this budget,” said spokesman Errol Cockfield. He said the administration looked at areas where fees had remained the same for many years, where costs of services had gone up, and where revenue could be brought in quickly, “without unduly burdening our citizens, especially the most vulnerable.”

If the Legislature approves, the state would begin taxing hair salons, credit rating services, cable and satellite television and radio, movies and sporting events. Sales tax would be charged when downloading music, movies, photographs and games. Taxes would increase for cigars and malt beverages, as well as car rentals and limousines. The cost of vehicle registration and licensing would go up 25 percent.

The plan would eliminate the sales tax exemption on clothing and footwear under $110, and creates a luxury goods tax for expensive cars, yachts, jewelry and noncommercial aircraft.

State parks fees for camping, rentals, golf and marina use also would go up.

Senate Majority Leader Dean Skelos (R- Rockville Centre) opposed the increases and said, “It’s my hope we will be able to eliminate a number of these fees and taxes, especially those that impact the everyday working family person who just can’t make ends meet right now.”

The budget presentation said many states already collect taxes on entertainment, and New York City collects sales tax on personal services.

John Vargas, who owns Atlantic Massage Therapy in Merrick, said a sales tax on massage therapy is tantamount to exacting a tribute for self-care. “People are going to feel like the government is taking the money that’s for their wellness,” he said. “Are they going to start taxing doctors’ co-pays, too?”

Staff writer Laura Rivera, on Long Island, also contributed to this story.

The following are among the taxes and fees that Gov. David A. Paterson is proposing in his 2009-2010 budget.

Makes personal services (such as beauty, barbering, manicure, pedicure, massage, health salon or gymnasium services) and credit rating and reporting services subject to sales tax statewide. Currently, only New York City sales tax applies to these services.

Imposes a sales tax on entertainment-related consumer spending, including, but not limited to, movie theaters and sporting events.

Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services.

Imposes a sales tax on transportation-related consumer spending, including, but not limited to, taxis, limousines and buses.

Imposes sales tax on television and radio services provided by cable, satellite or other similar means.

Imposes an additional 18 percent rate of sales and compensating use taxes on fruit drinks that contain less than 70 percent of natural fruit juice and nondietetic soft drinks, sodas and beverages.

Modifies the taxation of cigars to impose a tax of $0.50 per cigar to simplify the administration of the tax. The current tax is equal to 37 percent of the wholesale price or approximately 34 cents per cigar.

Increases the excise tax on wine and beer to approximately the average of surrounding states. The tax on wine would increase from 18.9 cents per gallon to 51 cents per gallon, and the beer tax would increase from 11 cents per gallon to 24 cents per gallon.

Increases registration fees for most vehicles and fees for distinctive plates by 25 percent. The average vehicle registration fee will increase from $44 to $55.

Increases original and renewal driver’s license fees by 25 percent. A standard eight-year renewal will now cost $62.50, up from $50.

Creates a new fee of $10 for filing a paper personal income tax return, which will encourage individuals to file via the Internet.

Establishes a new marine fishing license at a cost of $19 for state residents and $40 for out-of-state individuals.

Raises administrative fees for various park activities, such as camping, cabin rentals, golf, and marina usage, as well as for Empire Passports, passes and permits.

Increases the cigarette and tobacco retailer fee from $100 to $1,000 for retailers with gross sales of less than $1 million, to $2,500 for retailers with gross sales of $1 million but less than $10 million, and to $5,000 for retailers with gross sales of $10 million or more.

Imposes an additional sales tax on luxury goods. This proposal would impose a 5 percent tax on the price of the following items in excess of the following thresholds: $60,000 for cars, $200,000 for vessels (including but not limited to yachts); $20,000 for jewelry and furs; and $500,000 for noncommercial aircrafts.

Increases the biannual physician registration fee from $600 to $1,000.

Norfolk Southern claimed the state’s 4 percent sales and use tax on diesel fuel used by railroads is discriminatory because the railroads’ competition, the trucking industry, doesn’t pay the same tax.

But in a 3-0 decision Thursday, the 11th U.S. Circuit Court of Appeals in Atlanta said the sales and use tax is not discriminatory because it does not single out railroads. The court also noted that trucking companies pay other taxes on fuel that railroads don’t pay.

Margaret Johnson McNeill, attorney for the Alabama Department of Revenue, said the appeals court’s ruling was significant because similar suits had been filed by the other two big railroads operating in Alabama: CSX Corp. of Jacksonville, Fla., and BNSF Railway Co. of Fort Worth, Texas. Those cases had been put on hold pending a ruling from the 11th Circuit in the Norfolk Southern case.

According to court records, Norfolk Southern has about one-third of the railroad market in Alabama and pays the state about $4.5 million annually in sales and use taxes on fuel. The tax revenue is set aside for public schools and colleges, which are already dealing with budget cuts due to declining state tax collections.

“It’s a pretty big deal that we won,” McNeill said.

At Norfolk Southern’s headquarters in Norfolk, Va., spokeswoman Susan Terpay said the railroad had no comment.

Norfolk Southern had sought a preliminary injunction to stop the Alabama Department of Revenue from collecting the tax. But the appeals court said such a step was unwarranted because Norfolk Southern had no likelihood of success with its lawsuit. The appeals court’s decision upheld a previous decision in federal district court in Birmingham.

Norfolk Southern had argued that the fuel taxes paid by the trucking industry go to maintain and improve highways, which helps that industry, but railroad’s sales and use taxes go for public education rather than directly helping the railroad industry.

The appeals court said how the state uses the revenue is irrelevant to the discrimination issue. It also said highways are built for the benefit of the general public, not just trucking companies, while train tracks are privately owned.

“Alabama must pay for the creation, maintenance, and repair of its roads, and must, in some fashion, obtain funds for such creation, maintenance, and repair. But Alabama has no constitutional discretion to allocate funds to private property,” the court said.

Source: Chron

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* Repeats objection to provision in the Senate’s $14 billion auto rescue bill that would reinstate tax loophole for banks in transit agency leaseback deals.

* Says he was prevented from offering amendment to Senate auto bailout bill to strike the unrelated tax provision.

* Says measure is ‘an abusive tax shelter’ and would undermine negotiations now underway by the U.S. Internal Revenue Service in related cases.

* Says ‘this provision has no business being in the auto bill.’

Source: Forbes

In an increasingly competitive business for the 42 million U.S. taxpayers who file their own taxes through Internet or home computer programs, the two major software providers are adding features to their desktop software to impress customers.

“It is a very competitive industry and it’s imperative that we make sure our offerings remain competitive and that we acquire and retain as many customers as possible,” said Julie Miller, a spokeswoman for California-based Intuit Inc., the maker of industry leader TurboTax.

Intuit said Thursday it is including free electronic filing with federal returns prepared with its TurboTax Deluxe boxed software available at retailers. TurboTax Deluxe customers also can e-file up to five federal tax returns and prepare and print unlimited returns at a recommended $59.95 price.

The move comes two days after competitor H&R Block Inc. launched an offensive campaign for its premium TaxCut desktop software, an attempt to capture market share from Intuit, an industry analyst said.

Kansas City, Mo.-based H&R Block’s announcement said it now includes free electronic filing of federal tax returns in its software versions, allowing up to five federal e-filed returns at no additional cost to the recommended $49.95 price on its premium product.

The changes are an acknowledgment to consumers of the tough economy and an effort help offer more value.

“We wanted to give back and said we won’t sacrifice quality for price. We’ll include the things we always have and give a little more in value adds,” said spokeswoman Denise Sposato. “We’re looking at long-term relationships rather than just the one year.”

Both companies offer various versions of software, each with different features. They also offer Internet-based versions of their software at different price points.

About 140 million people file their taxes with the Internal Revenue Service each year. Of those, about 14 million use the traditional pencil and paper method and about 84 million go to a professional tax preparer.

The number of people using their computer for online or boxed programs is at about 42 million and growing.

It is the fastest growing segment of the tax preparation business, Miller said.

Intuit, the industry leader sold about 6.5 million copies of its boxed TurboTax software last year, which represented about 80 percent of the market for federal tax return software sold at retailers, Miller said.

H&R Block’s TaxCut programs have about 20 percent of the market.

The company also is widely known for its face-to-face tax preparation service and claims to be the world’s largest tax preparer, completing one out of every seven returns, Sposato said.

Jefferies & Co. Inc. analyst Ross MacMillan said in an investor note Wednesday that H&R Block’s move to be the first to upgrade its boxed software was clearly an effort to grab new customers.

He said the price difference could cause Intuit to lose some customers to H&R block, but since the number of people using online or desk top software is expected to grow, Intuit could see more people shift from desktop to online software “and that relative share loss in desktop could be somewhat offset by share gains in online.”

Shares of Intuit lost $1.28, or 5.4 percent, to close at $22.38. The company’s announcement of its packaging changes came after the stock market closed Thursday.

H&R Block shares added 20 cents to finish at $20.49.

While the software makers battle for customers, a growing number of tax preparers are turning to a free option offered through an IRS Web site.

The government program called Free File allows anyone with an adjusted gross income of $56,000 or less to file their taxes for free through the Web site: http://www.irs.gov/efile/article/0,,id118986,00.html

About five years ago the IRS teamed with the Free File Alliance, a group of 20 private tax preparers, to offer free federal tax filing services for citizens with incomes under a certain threshold. Some of the providers may charge for state returns.

In 2003, its first year of operation, 2.8 million taxpayers logged on and filed their taxes for free.

Last year that number grew to about 5 million, said Free File Alliance Executive Director Tim Hugo.

For the first time this year, the site allows anyone to use online electronic tax forms to electronically file their own taxes for free, Hugo said. The free forms do not offer the expertise of a tax preparer, however, and are simply digital IRS forms that individuals fill out themselves and file.

The IRS site can be accessed now, but it doesn’t go live with new information for the new tax season until Jan. 16.

Both TurboTax and TaxCut offer free online products for simple returns.

The TurboTax site is: http://turbotax.intuit.com

The H&R Block site is: http://www.hrblock.com/taxes/products/product.jsp?productId31

Source: CNN Money

Wisconsin’s beer tax, third lowest in the nation, hasn’t gone up since 1969. The liquor tax, which is among the lowest nationwide, hasn’t increased since 1981 other than when a new tax on hard cider was added in 1997.

To increase prosecutors’ salaries and hire 121 new assistant district attorneys, the combined beer and liquor tax would have to go up 20 percent.

In 2005-2006, the taxes brought in about $50 million a year. The cost of the prosecutors’ proposal is between $10 million and $15 million annually, said Ralph Uttke, the Langlade County District Attorney and president of the association.

He called the increase proposed Monday “moderate.” Wisconsin’s 6.5 cent tax per gallon of beer is two or three times less than what neighboring states charge. The tax is 14.8 cents in Minnesota, 18.5 cents in Illinois, 19 cents in Iowa and 20.3 cents in Michigan.

The Legislature, along with Gov. Jim Doyle, would have to approve any increase.

A proposal introduced in the Wisconsin Assembly in 2007 to raise the beer tax the equivalent of 2.4 cents per bottle ran into opposition from the Tavern League, which represents bars, the beer industry, and Democratic and Republican lawmakers. The bill went nowhere.

It doesn’t make sense to raise the beer tax and earmark that increase for a specific budget item, Tavern League lobbyist Scott Stenger said Monday.

“That’s not the way state government works,” he said. “We think it’s a bad precedent, and if there’s going to be a discussion on taxes, it needs to be much more global.”

Uttke acknowledged that raising alcohol taxes will not be easy, as shown by Wisconsin’s legislative history.

“We understand it’s going to be a difficult battle,” Uttke said.

However, the association decided to go after the alcohol taxes as a source of funding because most of prosecutors’ work is related to offenses involving alcohol, he said.

“It just seemed like a natural choice,” Uttke said.

State leaders, however, likely will be reluctant to raise taxes for new spending when they are facing budget cuts and higher taxes just to deal with a projected $5.4 billion state budget shortfall by mid-2011.

Doyle has already called on state agencies to make cuts, frozen state workers’ bonuses, and ordered that 500 cars be sold and 3,500 jobs be left vacant. He’s in the process of putting together his two-year budget proposal that will be introduced in February.

More than three-quarters of the state’s district attorneys sent letters to Doyle and Department of Administration Secretary Michael Morgan last month asking for their support for more prosecutors. Morgan’s department oversees the State Prosecutors Office.

The resolution released Monday provides a way to pay for the new positions and higher salaries.

Doyle hasn’t been opposed to targeted tax increases in the past. He previously supported, and plans to back again, tax increases on the oil industry and hospitals. Under the hospital tax proposal, hospitals would be reimbursed with federal matching money.

Doyle’s spokesman Lee Sensenbrenner had no comment on the prosecutors’ idea, saying the proposal wasn’t specific enough. But he said Doyle remains opposed to raising taxes and everyone in state government should expect cuts considering the budget shortfall.

Prosecutors have been pressing for higher pay and more assistant district attorneys to deal with a staffing squeeze that dates back to 2001. Their arguments were bolstered last year after a state Audit Bureau report found a shortage of prosecutors statewide.

Wisconsin pays starting prosecutors less than $23 an hour, the association said.
Source: Chicago Tribune

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