Democrats ask watchdog to review new IRS tax guidelines

12 January, 2018, 12:28 | Author: Charlene Valdez
  • The IRS ‘Absolutely Needs More Funding’ to Deal with New Tax Law Report Says                 

     

     REUTERS  Lucas Jackson

However, the IRS says it doesn't expect that tool to be online until "the end of February". "It's taxes simply being called by another name", he said.

"We estimate that 90 percent of wage earners will experience an increase in their take home pay", said U.S. Treasury Secretary Steven T. Mnuchin.

Senator Ron Wyden of OR and Representative Richard E. Neal of MA, the top Democrats on the Senate and House tax writing committees, sent a letter to the Government Accountability Office asking it to analyze the 2018 withholding tables and determine whether they will result in "systematic under-withholding". President Donald Trump and the Republican architects of the tax plan have deflected criticism of the unpopular legislation, insisting at every turn that Americans will come to love the new law when they see their heftier paychecks next month - with less money withheld in anticipation of lower income taxes.

Companies have been awaiting details from the IRS since late last month, when lawmakers passed a sweeping tax overhaul that changes tax rates and brackets, increases the standard deduction and repeals personal exemptions.

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Earlier this week, Wyden and Rep. Richard Neal, the top Democrat on the House tax-writing committee, asked the Government Accountability Office to analyze the new IRS tables to see if they might lead to systematic underwithholding of federal taxes from paychecks.

That's when new withholding guidelines under the tax cut provisions of the new tax law - the Tax Cuts and Jobs Act - go into effect.

Nonpartisan tax experts project that the law will bring lower taxes for the great majority of Americans, though not all.

For example, there is a new $10,000 limit on the amount of state and local taxes a household can deduct from federal income. Employers will have until February 15 to incorporate the changes in their payroll systems.

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In the meantime, he urged filers who have complicated tax situations - i.e., anyone who is not single, childless and holding down just one job - to review the number of allowances they now take on their W4s once the IRS puts out its new withholding calculator by the end of February. If they determine they are paying too much or too little in taxes, based on the size of their family or other variables, they can direct their employer to make changes.

But that will be partially offset by new curbs on numerous tax breaks, including the elimination of personal exemptions and the new cap on state and local taxes.

"I think it's one of the more ridiculous comments to think you can take a real estate tax that you're required to make and dress that up as a charitable contribution", Mr. Mnuchin said.

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