Written by Jessica Ashby,Vice President Wealth Management at The Fauquier Bank
As Benjamin Franklin once said, “Nothing in this world can be certain, except death and taxes.” To celebrate, and I use that word sarcastically, this year’s tax day, I thought I’d share some interesting facts regarding taxes in this country. Feel free to dazzle, or bore, your friends at your next dinner party.
Were tax returns always due in April?
Until 1955, tax returns were due March 15th. From 1913 to 1918, they were due even earlier. Those pesky returns had to be in by March 1st. In 1954, Congress decided to give employees a break and extended the deadline. The idea was, a later deadline would encourage taxpayers to file earlier. Well, people still wait until the last minute, myself included. About 20% of returns are filed in the last week of the filing season. 1
Why is the filing date this year April 18th?
When the 15th falls on a weekend, the filing deadline is typically the following Monday, unless that happens to be a holiday. What holiday is April 17th this year? It’s Emancipation Day in Washington D.C. The day celebrates the day President Lincoln signed the Compensated Emancipation Act of 1862, which freed over 3,000 slaves in the District. 2
Just how many words are in the Federal Tax Code?
7 million. To compare that, the Bible has about 700,000. No wonder people feel the tax system is complicated! 3 Even Albert Einstein famously said, “The hardest thing in the world to understand is the income tax.”
How much does it cost the IRS to collect tax revenue and how many employees does it take to do it?
For every $100 in revenue the IRS collects, it has to spend just $0.38. This is down from $0.41 from the previous tax year. The IRS has over 70,000 employees, as of 2014. This was also down from the 6.6% from 2013. 5
How big of a problem is tax fraud?
In 2016, the IRS identified over 42,148 returns that contained over a whopping $227 million claimed in fraudulent refunds. The IRS prevented the issuance of over $180 million in fraudulent refunds that same year. Unfortunately, not all tax fraud comes from outside the IRS. There was a recent case involving an IRS employee who stole personal information of hundreds of taxpayers. He then used that information to obtain between $550,000 and $1.5 million in fraudulent returns. 6
What are some illegal tax deductions the IRS consistently has to reject?
Your pets are not dependents. I know, my cat has rule of the roost at our house and she is indeed, a princess. My son would easily say she’s a member of the family. But, I can’t write off any of my expenses related to her care. Like new fresh ink and body piercings? You can’t write those off as medical expenses either. The same goes for elective plastic surgery. Body modification is considered by the IRS to be a form of self-expression, no matter how medically or personally necessary you might feel it is. That really expensive wedding you are paying for your daughter? It might seem like if you invite business contacts and clients you could write it off as a business entertainment expense. The IRS again says no dice. 5
As we move past today with our timely filed returns, let’s enjoy the beautiful Virginia spring weather and await the next tax day milestone this year. What day is that? It’s Tax Freedom Day. That day falls on April 24th this year. It’s the day when the nation as a whole has earned enough money to pay its total tax bill for the year. 7 So, take the day off. You’ve earned it!