Friday, April 15, 2005

THE TAXMAN COMETH - a guest post by B. Lewberry

In my last guest posting, I had indicated my intention to create a theme to my postings - sort of a "fitness friday." However, since today is tax day, and since I am Article 19's official tax jockey, I've been tapped to talk a little bit about taxes. Don - thanks once again for letting me ramble on.

This day in history

Couldn't we have picked a better day than April 15 as the last day of the year to file taxes? Its the day the Titanic sank (and even worse, the day the Molly Brown survived the sinking of the Titanic, giving rise to the terribly crappy broadway musical The Unsinkable Molly Brown. Its the day Lincoln died. The day Castro visited the U.S. The day the 1st Infantry withdrew from Vietnam. The day Leona Helmsley began to serve her 4 year prison term. Talk about bad cosmic vibes! If days could have karma - you'd want to stay at least 50 yards away from the train wreck that is April 15 at all times. We should have probably declared April 15 to be a federal holiday rather than the day we file our taxes.

How then did April 15 come to be known as tax day? Until 1955 taxes were due on March 15. Congress chose the new date to give IRS employees a break.

Mo Money: Wacky Taxes in Tennessee.

So all of us, presumably, have filed our taxes (or at least we've filed for an extention). And we're feeling bad when we finally see exactly how much of our hard earned money has been turned over to the Feds. But wait...there's more. Like most states, Tennessee has tried to figure out all sorts of ways to raise revenue. As a result, there are all types of taxes that most folks have never heard of. Tennessee taxes just about everything. There are taxes on soft drinks (both on the bottlers and for those who sell set-ups for mixed drinks). There are taxes on gifts, inheritance, tires, all kinds of professions and businesses, tobacco, liquor, beer, coin-operated amusements, etc. etc. OUCH. Tennessee also has an income tax, albeit on unearned income from receiving interest income from stocks, bonds etc... by the way....this tax is due April 15!

My favorite of these strange taxes is the unauthorized subatances tax , a.k.a, the "crack tax." The unauthorized substances tax is a state excise tax levied on controlled substances (marijuana, cocaine, crack, methamphetamine, etc.) and certain illicit alcoholic beverages (untaxed liquors and spirits). It took effect July of 2004. All you drug dealers can rest easy...if you choose to purchase the tax stamp, the process is completely anonymous. Just remember to affix the stamps to your drugs before you sell them. Once the tax due has been paid and the stamps affixed, no additional tax is due even though the unauthorized substance may be handled or possessed by other individuals in the future. Well that's some good news!

IRS Policy on Weight Loss (welcome back to fitness friday)

I'm returning to the topic we discussed in my last guest posting. After doing my 1040 and practically itemizing myself to death, I have come to the conclusion that what we, as Americans, should be allowed to deduct what we spend on our attempts to lose weight and stay physically fit. After all, we're an obese nation, right? So I looked into it a bit. Shouldn't we reward healthy behavior?

Well, no. In Rev. Rul. 79-151, the IRS held that an individual’s “cost for participating in a program designed to help (individual) lose weight is not deductible as a medical expense under section 213 of the Code, but it is an expense the deduction of which is prohibited by section 262. Section 262 provides that no deduction shall be allowed for personal, living, or family expenses. Rev. Rul 55-261, 1955-1 C.B. 307, question 9 at page 310 holds that “ordinarily, fees paid to a health institute where the taxpayer takes exercise, rubdown, etc. are personal expenses.”

“Such fees,” continues the text of Rev. Rul. 79-151, “may be deductible as medical expense only when the treatments by the institute are prescribed by a physician and are substantiated by a statement by the physician to be necessary for the alleviation of physical or mental defect or illness of the individual receiving the treatment. Furthermore, Rev. Rul. 55-261, question 16 at page 312, holds that amounts expended for the preservation of general health or for the alleviation of a physical or mental discomfort that is unrelated to some particular disease or defect are not expenses for medical care.” Don't forget that note from your doctor.

So I'll leave you these questions. We give tax breaks for all kinds of things, like owning a NASCAR track or producing bows & arrows. In fact, last year Congress passed tax breaks that will give businesses $143 billion back over 10 years. If someone gets a tax break for importing Chinese ceiling fans.....then shouldn't we be allowed a deduction for the money we pay in pursuit of physical fitness? Doesn't that save everyone money in the long run? And now that you’ve filed that 1040, what other expenses do you wish the IRS allowed as a deduction? Why?

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