IRS Offers New Cash Payment Option

The Internal Revenue Service announced today a new payment option for individual taxpayers who need to pay their taxes with cash. In partnership with ACI Worldwide’s OfficialPayments.com and the PayNearMe Company, individuals can now make a payment without the need of a bank account or credit card at over 7,000 7-Eleven stores nationwide.

Why not post offices?

IRS Offers New Cash Payment Option
IR-2016-56, April 6, 2016

Spending up YUGE! Starting to really accelerate. Here we go go go!!!

After that late, Jan-early Feb hiccup (IRS glitch, paperwork, whatever), Federal Gov't spending is now really starting to take off. Check it out:

We are nearly $40 billion over last year already and it's accelerating. This month alone, tax refunds have now caught up and surpassed last Feb. (Thanks to our tax accountant, MNE reader, John, for keeping me patient.)

Forecasts:

No recession
Stocks to rally sharply
Economy to show increasing strength
Fed will raise rates at least two more times
Bonds down
Dollar DOWN as foreign exporters regain some pricing power
Gold up.

If you're looking at the deficit (i.e. how "small" it has become) then, bye, bye. You are going to be left in the dust!

Much more detailed updates, analysis and forecasts in my Fiscal Trend Trader Report. Subscribe here.

Recession a done deal though probably (hopefully) shallow

What the hell happened????

Stocks and the economy were starting to recover from their late Q4-2015, early Jan induced swoon, but then around mid January something happened.

The IRS compute glitch, Obamacare and further tax refund problems, Russian IRS hacking and fraud concerns, whatever, and flows have gotten knocked for a wallop.

We went from being $31 billion y-o-y in Federal spending on Jan 20 to now being -$5.2 billion under: a loss of over $36 billion in flows in a few weeks. People, businesses are going to feel that.

If the economy were growing at 4.0%, I'd say no big deal, but with growth at a meager 0.7% and sentiment as bad as it is, stocks crashing, that's about all she can take.

GDP is going negative for a quarter (hopefully), but possibly more.

We have lost all spending gains this fiscal year thanks to the slow pace of tax refunds. Pretty sure this tips economy into recession now.

We have lost all spending gains versus last year because of the slow pace of tax refunds. A reader by the name of John, kindly schooled me on the reason. John is a tax accountant. He said it's not due to the IRS computer glitch that I have been citing. Rather, it's due to increased filing requirements related to Obamacare.

The economy was barely growing with y-o-y spending gains of $25 billion. (Only up 0.7% annualized in Q4.)

We have lost $25 billion in a instant because of the tax refund situation. Another reader anecdotally told me how much his business relies on people spending those refunds.

Given the stock market setback and generally terrible state of sentiment and now this, I am calling recession.

John the accountant told me that refunds will get to where they need be by April, but that's going to be too late. The damage will have already be done. The best we can hope for is a very shallow recession.

IRS tax refunds recovering only very slowly, threatening recession now.

I was bullish until January 29. On or around that date a computer glitch at the IRS caused electronic filing, payments and refund activity to be shut down.

This had a huge effect on overall Federal spending levels. January ended horribly--$266 billion for the month when a "normal" January should have been about $80 billion to $100 billion higher.

The flow of tax refund payments is huge in February. Biggest month of year. Well over $100 billion for the month and closer to $120 billion or, $130 billion. It pushes the overall month of February up to $460 billion or more. That's more than 10% of all government spending happens in February.

Supposedly the IRS computer glitch has been fixed, but those tax refunds are still lagging way behind.

Here's the problem: sentiment now is horrible and the economy is barely growing. One small cutback in government spending now, like the loss of a portion of those tax refunds, combined with the chilling effect of the stock market selloff, will throw the economy into recession.

We are at great risk for this now and also great risk for a further market selloff is those refunds don't get back up to where they need to be.

IRS computer glitch a problem.Throws economy into peril. Stock market could be looking at fresh lows

The IRS computer glitch that occurred 10 days ago is a problem. Tax refunds are not going out. Spending has dropped down sharply versus last year. It had been up, modestly, but now it's fallen off and it's not obvious that the economy can handle any gov't spending pullback now when people are really on the defensive. Data from the Daily Treasury Statement does not show tax refunds picking up very much. Stock market could be looking at fresh lows.

Michael McAuliff — Republican Outrage At IRS Is All About Protecting Karl Rove, Dark Money, Dems Say

The GOP hidden agenda is beginning to surface about the IRS scandal. Again, follow the money. It leads to Karl Rove and Crossroads GPS.

The Huffington Post
Republican Outrage At IRS Is All About Protecting Karl Rove, Dark Money, Dems Say
Michael McAuliff

Department of Stupid: Uncle Sam abusing taxpayers to claw back fiat

Don't take my fiat- please! Via the Washington Post:

Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters like the one Grice got, informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check. The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years, said Jeffrey Schramek, assistant commissioner of the department’s debt management service. The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.

Since the drive to collect on very old debts began in 2011, the Treasury Department has collected $424 million in debts that were more than 10 years old. Those debts were owed to many federal agencies, but the one that has many Americans howling this tax season is the Social Security Administration, which has found 400,000 taxpayers who collectively owe $714 million on debts more than 10 years old. The agency expects to have begun proceedings against all of those people by this summer. 

This is about as cruel and pointless as government policy can get. Here we have federal agencies spending valuable time and resources to go after old grandmas and widows, for the useless purpose of clawing back fiat money!  The IRS is literally going back decades to find overpayments and mistakes, and automatically garnishing benefits/refunds from people who really need the spending power. 

Some of the IRS/Social Security admin tactics described in the article seem like what a private debt collector would do. Can the IRS be sued for a UDAP violation? This is a lose politically AND economically. I guess this is what happens when you try to "run government like a business."

Bloomberg — Bitcoin Is Property, Not Currency, in Tax System: IRS

The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue.

Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

Bloomberg
Bitcoin Is Property, Not Currency, in Tax System: IRS
Richard Rubin and Carter Dougherty

Eric W. Dolan — IRS faces lawsuit for failing to enforce church electioneering ban

IRS faces lawsuit for failing to enforce church electioneering ban (via Raw Story )

The Internal Revenue Service was unable to suppress a lawsuit over its failure to audit thousand of churches that allegedly violated federal tax law by engaging in partisan advocacy. U.S. District Judge Lynn Adelman of the Western District of Wisconsin…

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Gaius Publius: IRS is Using NSA Data Too. Who in Town Isn’t?

Summary of the sorry state that has come to pass in the US by trading faux security for liberty and constitutional rights.

Naked Capitalism

Gaius Publius: IRS is Using NSA Data Too. Who in Town Isn’t?

David Edwards — Steve King: Secret income is ‘part of freedom’

Steve King: Secret income is ‘part of freedom’ (via Raw Story )

Rep. Steve King (R-IA) on Wednesday told a tea party rally that the Internal Revenue Service should be abolished because keeping income secret from the federal government was “part of freedom.” “You know, the IRS audited me one too many years in a row,” King explained at a Tea Party Patriots…

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Andrew Leonard — Bitcoin tax time?

A U.S. government report explores how the IRS should deal with the libertarian-beloved cryptocurrency
Salon

Bitcoin tax time?
Andrew Leonard