Tax Docket

On Wednesday, the Senate approved legislation which allows home buyers (first-time home buyers and home buyers purchasing home for primary residence) that signed contracts by April 30 to close by September 30 in order to still be eligible for the tax credit. The tax credit is $8,000 for first time home buyers and $6,500 for home buyers purchasing a home as their new primary residence. Congress has sent the bill to President Obama.

Reuters, Senate Agrees to Extend Home Tax Credit

New York Times, Home Buyers’ Tax Credit Extended

ABC News,Congress Approves Home Tax Credit Extension

According to the New York Times, Gov. David A. Paterson has reached a tentative deal with leglislative leaders that would raise New York’s cigarette tax by $1.60 per pack making it the highest cigarette tax in the nation:

The proposal, which officials said Mr. Paterson would include in an emergency budget bill due for a vote on Monday, would also raise wholesale taxes on other tobacco products like chewing tobacco, bringing the tax on those products closer in line with those of cigarettes.

In New York City, which levies steep taxes of its own on tobacco products, a pack of cigarettes would come with a tax of $5.85, making it the nation’s first city to break $5, antismoking advocates said. That would bring the overall cost of a pack of premium cigarettes above $10 in many stores in the city.

The legislation will also include a plan to begin collecting taxes on cigarettes sold off the reservation by Indian tribes in New York, an issue that has provoked confrontations between State Police officers and protesting tribe members in years past.

Here is a map from Tax Foundation, which shows the state excise tax rates on cigarettes per 20-pack of cigarettes as of January 1, 2009. Click the map to enlarge.

In his New York Times article, Paul Sullivan examines what the federal income tax increases mean for wealthy individuals by setting forth the tax rates and certain applicable laws coming into effect in the next few years and applying those numbers in a few examples. Here is an excerpt:

The federal income tax increases over the next three years have led to lots of grumbling. But for all the back and forth about the percentages, something has been overlooked: what do these increases mean in real numbers? In other words, how much will wealthy people have left after they pay the higher taxes in the coming years?

Here is an excerpt editorial from the New York Times regarding Amazon’s legal battle with the noncollection of sales taxes:

A 1992 Supreme Court ruling holds that a retailer must collect sales tax only if it has a physical presence in the customer’s state. So a bricks-and-mortar retailer that also operates online, like Target or Macy’s, will collect sales taxes. Similarly, if you go through Amazon.com to buy something from, say, Target, Amazon will collect taxes from you on Target’s behalf. But Amazon and some other purely online retailers do not generally collect taxes on their own sales.

That tax is legally due, but if online retailers don’t collect it, it’s up to the individual buyer to voluntarily pay the tax, which rarely happens and is very difficult for states to enforce.

Enter North Carolina. Unable to get Amazon.com to collect the taxes, the state recently began an audit of online businesses, trying to track down what it assumes are millions of dollars in uncollected taxes. The state has told Amazon that it wants buyers’ names and the amounts they spent. That state also needs to know the general categories of spending, like books or movies or food, because some items are tax exempt. Amazon has refused to comply, claiming in federal court that North Carolina may be able to learn the titles of books and movies that its customers have bought, imperiling privacy and free speech. North Carolina officials have said they are not seeking those details. Now it is up to the court to decide whether Amazon will have to reveal the names of customers, without titles.