NASE News

Anamosa, Iowa

Senator Chuck Grassley
An Early Morning in Anamosa

It was both an early and snow-filled morning for me in Anamosa, Iowa as I headed to a town hall hosted by Senator Chuck Grassley at 7:30 a.m. in McOtto’s Family Restaurant. Senator Grassley plays a large role in affecting policy and legislation with his leadership position on the Senate Committee on Finance. This committee is responsible for any tax-related matters, which as you know are plentiful.

Despite the early morning there were over 20 attendees at the town hall. Unfortunately, none of our NASE members were able to participate due to scheduling difficulties however I did my best to represent our 2,500 Iowa members.

Discussing the Issues
A whole host of issues were discussed at this town hall: from the Alternative Minimum Tax (AMT) to children’s health care; earmarks to foreign assistance; the national debt as well as social security; and with Iowa being a big producer of corn (i.e. ethanol), alternative energy efforts was a popular topic. Even one the youngest constituents in attendance, a young girl with her mother and brothers, got involved by asking what the government was doing to make sure physical fitness programs (gym class) remain in schools. Of course, I couldn’t let this opportunity to ask a question of Sen. Grassley go by so I asked him about the tax gap.

The nation’s tax gap is the difference between what taxpayers should pay and what they actually pay on a timely basis. The underreporting of income, underpayment of taxes and non-filing of returns are the three key contributors to the tax gap. According to IRS data, the current tax gap is approximately $353 billion. Now, we have always had a tax gap because it is tough to have every person comply properly with the tax code. While there are unfortunately those that willfully disregard the tax laws, most people simply make mistakes on their tax returns due to math errors or a lack of understanding of complex tax rules.

With our nation facing a serious money crunch, that $353 billion of the tax gap looks pretty attractive right now. Both Congress and the Administration have put forth proposals to increase tax compliance and close the tax gap. Regrettably, instead of clarifying and simplifying the tax code to make it easier for Americans to comply, these proposals create new regulations and place increased burden on taxpayers, especially the self-employed and micro-business taxpayer.

I asked the Senator how he was going to balance increasing compliance and minimizing the tax gap while also safeguarding micro-businesses and ensuring that they would not have to close their doors due to overly burdensome and costly regulations. Senator Grassley admitted that this issue was quite a dilemma and that his committee would have to walk a fine line in trying to address the issue of the tax gap. He was open to suggestions from the NASE on less harmful ways to address the tax gap.

Looking Out for Small Businesses
I appreciated the Senator’s candor, though I was hoping for a more detailed response since this issue is becoming more important as money for programs and new legislation gets less and less on Capital Hill. In fact, the Senator and his counterpart on the Finance Committee are currently working on one of the tax proposals introduced by the Department of Treasury which would require debit and credit card companies to provide the transaction statements of merchants/businesses to the IRS.

The goal of this provision is to allow the IRS to cross reference the information put on a merchant’s tax return with the information the credit card company has supplied. The IRS has indicated that this information could also be utilized to create industry profiles, taking the total credit card receipts reported for a particular business and then extrapolating total income based on industry averages. We are concerned that if these profiles stemming from credit card receipts are then used to make judgments regarding other items on the tax return such as estimations on cash payments, problems will arise.

The Senator hosts a regular radio program that you can access via his website in which he addresses what is going on in Congress and in Iowa. I encourage our members to listen in and hear what this important legislator has to say on top issues facing our nation.

For more information on the tax gap, please visit NASE’s advocacy website. Stay tuned for our next stop on the trail!