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Tuesday April 24, 2018

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April 23 is Tax Freedom Day

Each year the nonpartisan Tax Foundation publishes Tax Freedom Day. The day reflects the total tax burden of government for the year. For 2017, Tax Freedom Day falls on April 23. This is 113 days into the 365 day year.

Tax Freedom Day is a simple division of all taxes divided by average earnings per day. The government revenue is from individual, corporate, property, sales and excise taxes. Federal, state and local taxes are all included.

The total federal tax this year is $3.5 trillion. State taxes equal $1.6 trillion. The combined total is $5.1 trillion, which is 31% of our national income.

The total taxes of $5.1 trillion are greater than amounts Americans pay for food, shelter and clothing. The estimates are $1.7 trillion for food, $300 billion for clothing and $2.2 trillion for housing.

If the deficit of $612 billion is included in the calculation, Tax Freedom Day is extended 14 days to May 7. This is 18 days earlier than the latest spending and deficit Tax Freedom Day, which was May 25, 1945. This day reflected the higher spending level during World War II.

Tax Freedom Day may also be calculated for high and low tax states. The high tax states are Connecticut on May 21, New Jersey on May 13 and New York on May 11. Three low tax states are Mississippi on April 5, Tennessee on April 7 and South Dakota on April 8.

Editor's Note: Tax Freedom Day has been calculated each year for several decades. It provides a comparison of government spending for different years. Other Washington organizations have suggested an expanded calculation to determine Tax Freedom Day by taxpayer income levels. If other organizations report Tax Freedom Day by income levels, your editor will publish that data.

Hello – I Am From the IRS

In FS-2017-07, the Service announced policies designed to enable identification of IRS agents. The IRS continues to pursue tax collections, but hopes to help taxpayers avoid tax scammers.

There are several guidelines for IRS contacts with taxpayers.

1. Normal and Routine – Contacts usually will be by mail through the U.S. Postal Service. Most taxpayers will receive multiple mailed tax collection notices.

2. IRS Agents Are Prohibited – IRS agents will not demand immediate payments with a debit card, gift card or wire transfer. They will not require payment with no right to appeal. IRS agents will not threaten you with immediate arrest by the local police, revocation of your drivers license or deportation.

3. Revenue Agent Visits – An IRS Revenue Agent may make a personal visit. You may ask him or her for IRS credentials. The two credentials are called a "Pocket Commission" or an "HSPD-12 Card." The visits may be unannounced, but often the IRS Revenue Agent will call to set up an appointment.

4. Private Debt Collector – After giving a taxpayer and his or her representative written notice, the IRS may assign cases to a private debt collector. The private debt collector will request payment by a check to the U.S Treasury. There will be an official IRS address for the envelope.

5. Audits – An IRS revenue agent must first give notice of the audit by U.S. Mail. Revenue agents may then call for an audit appointment.

6. Criminal Investigation – An IRS criminal investigator is a law enforcement officer. He or she may make an unannounced visit to a home or business. A criminal investigator will not demand payment of taxes. The purpose of the visit is to investigate tax issues.

7. IRS Contacts – You may contact the Treasury Inspector General for Tax Administration if you suspect a tax fraud or tax scammer. The Service makes available an "IRS Impersonator Scam Reporting" page on www.irs.gov. You also may call 800-366-4484. If you suspect an email scam, do not click on any links. Forward the email to phishing@irs.gov.

Published April 21, 2017
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