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Congress creates tax cheats

September 15, 2010

I'm not talking this time about actual Representatives and Senators and White House administration staff who fudge their taxes or misfile or don't file their 1040s or other tax forms.

Rather, I'm pointing a finger at the actions or inactions on Capitol Hill that subvert our voluntary tax payment system.

That word "payment" is usually omitted by the loopy tax protesters who latch onto "voluntary."

In reality, we don't have the choice to not file or not pay what the tax laws say we owe. That's why the IRS audits returns and has all sorts of mechanisms (liens, refund offsets) to encourage us to file by each April 15, and to do so correctly.

But we do, for the most part, send in our paperwork and make any payments voluntarily; that is, even when we have payroll taxes taken out of our paychecks, we U.S. taxpayers are trusted to fill out the forms and make sure the correct amount was withheld and let the IRS know what our true final bill was.

Most of us get refunds. But our filing can determine how large or small they are.

And when we find we owe the U.S. Treasury, then our tax system relies on us to acknowledge that on our 1040 and send in the balance due.

But Congress apparently thinks it's more fun to encourage tax cheating.

Washington, D.C., lawmakers do this, albeit probably unintentionally, by tinkering with our tax laws. They change them, sometimes slightly, sometimes quite a bit, and they do so constantly.

Adding insult to tax injury, the House and Senate also procrastinate. All the time. As a regular course of business.

And these delays in tax changes — or the decision to make some laws retroactive months later (extenders, estate tax, etc.) — totally screw up our tax planning, sometimes negating options that we could have used to legally lower a tax bill.

So some of us cheat.

We figure if our lawmakers can screw around with our tax lives with their haphazard way of writing and rewriting the tax code, we'll simply get back what they took by padding a deduction here or adding an expense there.

This is not a surprise. But last week a reader of my Bankrate Taxes Blog came out and admitted to a tax filing strategy that includes cheating.

That person was talking specifically about the first-time homebuyer tax credit and the many ways Congress fiddled with it after its creation in 2008. But there are plenty other tax laws with similar histories that tick off filers enough so that they look for ways of getting payback when they fill out their 1040s.

Now I'm not condoning this taxpayer's or anyone else's decision to "even up" the tax code where a person might find it unfair. Life is unfair and taxes are a huge part of life.

But Congress can do a lot to prevent such "they screwed me so I'll screw the tax system right back" attitudes by doing its tax-writing job in a more rationale and professional manner.

Until it does, then Capitol Hill is going to keep creating tax cheats.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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