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Washington Alert – CBO says FY 2015 Budget smaller; IRS sending letters delinquent taxpayers claiming ACA Premium Tax Credit; Tax Policy Center report on low- and moderate-income working families

The fiscal year (FY) 2015 federal budget deficit “will be noticeably smaller” than what it projected in March due, in large measure, to unexpectedly high receipts, the Congressional Budget Office (CBO) said on Aug. 25. (An Update to the Budget and Economic Outlook: 2015-2025) The current FY will end with a budget deficit of $426 billion, which is $60 billion less than the March projection and $59 billion below the FY 2014 deficit. “The expected shortfall for 2015 would constitute the smallest since 2007, and at 2.4% of gross domestic product (GDP), it would be below the average deficit (relative to the size of the economy) over the past 50 years,” CBO said. Federal revenues are expected to increase by 8% to $3.3 trillion (or 18.2% of GDP). Revenues from all major sources will rise, including individual income taxes (by 10%), corporate income taxes (by 8%), and payroll taxes (by 4%). “Revenues from other sources are estimated to increase, on net, by 5%,” CBO said, adding that “the largest increase in that category derives from fees and fines, mostly as a result of provisions of the Affordable Care Act.” The report is available at cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50724-BudEconOutlook-2.pdf

IRS is now in the process of sending letters to taxpayers who received advance payment of the premium tax credit in 2014, but who have not yet filed their tax return, the agency said on Aug. 25. (HCTT-2015-52) According to IRS, taxpayers who receive a Letter 5591, 5591A, or 5596, are being reminded to file their 2014 federal tax return along with Form 8962, Premium Tax Credit. “The letter encourages [a taxpayer] to file within 30 days of the date of the letter to substantially increase [the taxpayer’s] chances of avoiding a gap in receiving assistance with paying Marketplace health insurance coverage in 2016,” IRS said. Additional details can be found at irs.gov/Affordable-Care-Act/Individuals-and-Families/File-As-Soon-As-Possible-to-Maintain-Eligibility-for-Advance-Payments-of-the-Premium-Tax-Credit

A recent research report published by the Washington, D.C.-based Tax Policy Center examined key aspects of the federal and state income tax systems that affect low- and moderate-income working families. (Federal and State Income Taxes and Their Role in the Social Safety Net) According to the report, while the primary purpose of the income tax system is to fund government expenditures, for the past 30 years, the federal personal income tax system has played an increasingly important role in providing income support for low-income households by administering refundable tax credits, such as the earned income tax credit (EITC). “State personal income tax systems piggyback on both of these functions – albeit with many idiosyncratic twists,” the report said. It cited recent examples of a move toward exempting people in poverty from owing income taxes and expansions of tax credits. “Of most importance to low-income families are expansions to tax credits like the EITC and the child tax credit (CTC),” the report said. “In some cases, states have also provided larger income tax credits to low-income families than the federal government, most notably in allowing dependent care credits to be available to families even if they do not owe state income taxes,” it added. The report can be found at taxpolicycenter.org/UploadedPDF/2000317-Federal-and-State-Income-Taxes-and-Their-Role-in-the-Social-Safety-Net.pdf

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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