Christine Haviaris

Everyone’s SEND button should have one of those plastic covers over it.  You know, like the one in the movies over that big red button.  The one that stops the president from accidentally blowing up the whole world?  Yeah, like that one.  The world would be a better place (ie, there’d be a lot less crap out there) if there were a box like that over everyone’s send button.  Written on the box should be a little reminder of the three questions to ask before you speak (or in this case, send):  Is it true?  Is it kind?  Is it necessary?  In this story, we’ll deal mostly with the question ”Is it true?”.

I received the following email from a colleague yesterday:

Subject: FW: More ObamaCare Woes

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?

That’s $3,800 on a $100,000 home etc.

When did this happen? It’s in the health care bill. Just thought you should know.

SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill) REAL ESTATE SALES TAX So, this is “change you can believe in”?

Under the new health care bill – did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don’t kick in until 2013 if you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Does this stuff make your November and 2012 vote more important?

Oh, you weren’t aware this was in the ObamaCare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either.

http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home

Why am I sending you this? The same reason I hope you forward this to every single person in your address book because you can make a difference.

Now, I have no problem risking the wrath of the Gods by failing to forward to 10 friends in 10 minutes some prayer, or dancing angel, or cute kitty.  Hit delete, move on.  Done.  That’s my way.  But, send me something that affects the pocketbooks of my clients (as well as my own) and I will read it.  And more than that: I will investigate it.  I’ll preface the results of my investigation of this particular piece by saying the source of this email is a fellow CPA, and one I admire.  Granted, she doesn’t practice in the area of individual taxation, but the message was originally sent to her by the managing partner in a reputable firm in an email addressed “To All Partners”.  Admittedly, that carried some weight.   But still, it didn’t jive with what I remembered reading during the year, and the tone was more than a little partisan (ain’t that the word of the decade?).  So, I went searching.

In general, I have mixed feelings about almost all things political.  The good thing about my ambivalence is it makes me slow to jump on bandwagons.  My feelings are crystal clear, though, when it comes to how difficult it can be to get definitive answers to questions about what the last few bills actually mean to taxpayers, and can be summed up in one word: FRUSTRATION.  Spending an hour or more researching every little thing is a nuisance, and it shouldn’t have to be that hard.  But it is.  And I have a Masters in Taxation.  Sad.

The currently published Internal Revenue Code is current only through Feb 2010 (ie – before all the 2010 Acts were passed). I followed the link in my friends email back to the gop.gov/blog, which (no surprise) is sufficiently vague as to be misleading without being outright dishonest.  Of course, there are dozens of articles in reliable publications, none of which gives a clear answer.  Then there are thousands more articles in less reliable publications which add nothing but static.

So straight to the source I went, to the certified copy of the bill (full text at http://www.gpo.gov/fdsys/pkg/PLAW-111publ152/pdf/PLAW-111publ152.pdf ).  The answer, found on page 1063, is  1) this is not a “sales tax” imposed on the gross sales price, it’s imposed on “net investment income” which would include only the gain; 2) further, net investment income includes only the portion of the gain which is taxable (ie, not the amount excluded on the sale of a personal residence); and 3) it is imposed on the lesser of “net investment income” or the excess of modified AGI over the threshold ($200k for Singles, $250k for MFJ Filers), so the whole thing is not an issue for taxpayers with income less than those thresholds.

I was relieved at my findings.  Now I can tell you that your poor old Aunt Betty who sells her bungalow for $100,000 in order to move in with her caring daughter in her final years, will not pay $3,800 in tax.  While still an issue, the impact on most of my clients, and on most taxpayers, is either nil, or at least not as drastic as the email would have you believe.  The part I find troubling is that messages like this are circulated as if they were fact.  In this case, by people on whom the public would reasonably rely, alarming them unnecessarily, and worst of all, muddying the waters for anyone out there trying to get an accurate picture of the current tax climate on which to base their decisions. 

If you’re looking for fodder on which to base whining, complaining, or partisan flame throwing, don’t let me stop you, there’s plenty out there.  But if you’re looking for facts, please, exercise appropriate care.  And please, please , please…. think before you hit SEND.