“Someone’s knockin’ at the door…”

Taxes

Somebody’s ringin’ the bell.” It’s the IRS! The IRS announced yesterday that revenue agents will make up to 800 surprise face-to-face visits to people with incomes in excess of $100,000 who failed to file tax returns in 2018 or earlier. While estimates vary, there are millions of non-filers each year so this effort is largely symbolic. “We want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”

“Do me a favor.” Boost wage growth with corporate tax cuts? TPC’s Steve Rosenthal finds little evidence that the Tax Cuts and Jobs Act accomplished that promised goal. For corporate rate cuts to translate into higher wages, corporations have to attract and retain additional funds and  invest in new plants, equipment, and processes that increase worker productivity. Finally, workers must negotiate higher wages. Rosenthal sees no signs that even the first steps have occurred. Thus, so far the TCJA has offered corporate “tax cuts for shareholders—who tend to be rich, including a sizable block of foreigners—and, eventually, tax increases or spending cuts for the rest of us.” 

Is the White House taking heed? The Washington Post reports that President Trump’s economic advisers have floated a new minimum tax on corporations to address criticism that the TCJA allowed corporations to eliminate their tax burden.

“Open the door…” How can we get more people to take the Earned Income Tax Credit? TPC’s Elaine Maag likes a proposal by US senators Sherrod Brown and Catherine Cortez Masto for the IRS to deliver automatic refunds to certain eligible EITC filers without requiring the filers to first claim the payment. Non-participants are hard to reach. For example, they may live in rural areas, be self-employed, may not be proficient in English, or may recently  have experienced a change in marital, financial or parental status. While increasing participation among these populations won’t be easy, Elaine thinks Brown and Cortez Masto have proposed a reasonable first step: The IRS should send automatic EITC refunds to workers without qualifying children.

“And let ‘em in.” The IRS Free File program was blasted by Members of Congress and others after ProPublica reported that tax prep companies made it difficult for users to find IRS Free File options though online searches. Now, the news service reports another source of confusion for customers: Advertising. Google searches for “free tax filing,” for example, turn up advertisements for products like TurboTax’s “Free Edition,” but those ads still sometimes lead customers to paid software. ProPublica  also found that TurboTax’s version of Free File doesn’t generally appear until the second page of search results.But it turns out that if you search  “free file” instead of “free tax filing” the results appear on the first page and send you to the free service. 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at dailydeduction@taxpolicycenter.org.

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