Mitt Romney, the presumptive Republican presidential nominee, admitted he has been audited by the Internal Revenue Service.
Mitt Romney
David Muir of ABC News asked Romney during an interview Sunday in Israel if he had ever paid less than a 13.9 percent tax rate, the lowest rate in the tax returns he has released so far.
“I haven't calculated that,” Romney replied. “I'm happy to go back and look, but my view is I’ve paid all the taxes required by law. From time to time, I’ve been audited, as happens I think to other citizens as well, and the accounting firm which prepares my taxes has done a very thorough and complete job paying taxes as legally due. I don’t pay more than are legally due, and frankly if I had paid more than are legally due, I don’t think I’d be qualified to become President. I’d think people would want me to follow the law and pay only what the Tax Code requires.”
Romney has come under pressure to release more tax returns, but so far, he has only released his complete tax return for 2010 and an estimate of his taxes for 2011. A complete version of the 2011 return has been promised for release before the election.
21 Comments
A plethora of blowhards commenting, many showing their bias conjecture, on a tax return they know not the details. The one CPA pete and oldtimer 1947 have their heads on straight... KATEHARNER, ON THE OTHER HAND.... BOOOOO.
Posted by: JFKEQUAL | August 21, 2012 7:17 PM
Report this Comment
The comment about income being reported as dividends is misleading. That real issue is "S CORP" income being distributed with a low amount of officer salary subject to income taxes up to 35% plus payroll taxes of another 15% up to $ 106,800, and the balance being distributed as "Qualified Dividends" taxed at 15%.
This "S Corp ploy" has been attacked successfully by the IRS in the past year or two. Actually, I think it was Newt Gingrich who used it most recently. There is no evidence that Mitt Romney used it.
As far as Ann Romney's horse venture, any losses that she has had in the past did not result in any tax deductions. They were either non-deductible hobby losses, or passive losses that they have not been able to use against ordinary taxable income.
The Romneys have been more charitable than many/most other candidates.
P.S. I'm a lifelong Democrat, and proud of it. But the FACTS should be what is reported, not assumptions or accusations.
Posted by: DLZALLESTAXES | August 18, 2012 2:13 PM
Report this Comment
I'd like a complete list of those charities and the exact amount and nature of the donations.
How were his wife's Olympic horse losses used? Did they appear as some form of donation on the Schedule A, or were they used on a Schedule C?
Since the wife does not appear to be a serious producer of show horses for profit, I sure hope it wasn't the Schedule C. Auto Racing and Horses have been favorite audit targets for years.
Is this possibly why he gets audited all the time?
Posted by: KATEHARNER | August 2, 2012 2:08 AM
Report this Comment
Let's do some basic math.
If Romney paper-files his return, then it will take at least six weeks to hit the IRS system as final. Any 4506-T request for a transcript will take another 6 weeks to process.
Romney will file October 15. And the election is November 6.
Hmmmmmmm.......
Posted by: KATEHARNER | August 2, 2012 1:50 AM
Report this Comment
Many here do not know the difference in tax Romney would have paid IF "carried interest" were taxed at 30%. Well, I can say that it is "peanuts". If Romney had $1mil in carried interest, that would only have been $150,000 in additional taxes (at 30% taxed). ($150M is 15% additional tax on $1mil)
You all miss the biggest point--That is Romney paid an effective rate of 15% on his gross income BECAUSE HE GAVE $3.5mil to charities.
That is why his rate was low. Had Romney given zero to charities , his total taxes paid would have been close to $2mil more. F/Y/I Romney has ove $10mil of losses carried over from prior 2010 year. (Passive loss rules and Capital gain losses prior years). How many of you know that he had over $10mil of prior losses he could not decduct?
The media and many of you should get your facts straight.
ANYONE WHO GIVES OVER 10% OF THEIR INCOME TO CHARITY---- "SHOULD PAY A LOWER FEDERAL TAX TO OUR GOVT"
How about this country focusing on the "stupidity" currently running this country's economic problems. Let the tax experts and IRS focus on the RICH.
Peter R, CPA
Posted by: pete8743 | August 1, 2012 2:26 PM
Report this Comment
Why should the release of Romney's tax return even matter? We know Romney is wealthy. If you are voting for or against someone based upon their wealth, you are not using critical thinking skills. President Obama has sealed his records from Columbia, Harvard, Occidental, his selective Service registration, foreign student aid as a college student records, his law practice client list, Illinois State Senate schedule/records, and Medical Records. This is an issue for some citizens and not for others.
Posted by: oldcorps1947 | August 1, 2012 10:53 AM
Report this Comment
BTW - kudos to "sftita" for that synopsis. I am going to copy your comments and print them out for clients to read at my office (with your permission) because you have offered a concise and detailed argument.
This has been a pet peeve of mine for years as well, and I have insisted that business owners report a decent salary for years to avoid audits. Several of my newer clients have already been through the audit wringer because they listened to a CPA in a neighboring town and declared no income, all "dividends & interest."
Posted by: KATEHARNER | August 1, 2012 2:22 AM
Report this Comment
John McCain saw all of Romney's tax returns during the VP vetting process, and you'll notice who did NOT get the VP nod. Coincidence?
I know this is a little off-topic, but it seems every thread that starts out about some Republican's refusal to release data ends up with someone blathering on about Obama's birth certificate.
I would like to make the following point. I was born at Clark Air Base in the Philippines to an American serviceman father and an American mother. Would someone like to tell me that I am not an American citizen? Babies are born in Boeing 747s and on ships in the Atlantic to American mothers, and no one questions their citizenship. As long as Obama's mother did not relinquish her American citizenship before his birth, he could have been born on the moon and still be a citizen.
As tax practitioners, we are theoretically capable of reading and understanding tax law. Would some of you "birthers" like to take a stab at reading citizenship law?
Posted by: KATEHARNER | August 1, 2012 2:17 AM
Report this Comment
Why don't those non-biased reporters ask Mr. Romney how much he gave to charity, and how much he paid in taxes? What about all the people including the reporters who have benefited from his charity and taxes?
submitted by phellian
Posted by: fredonia | July 31, 2012 4:09 PM
Report this Comment
Re comment by pusherhombre, Barack Obama's tax returns along with former and current US presidents and candidates are available at http://www.taxhistory.org/www/website.nsf/web/presidentialtaxreturns
The only one who did not release his actual tax return was Cheney in 2000, when he reported AGI of $36 million and income tax due of $14 million.
I agree that it is no big deal that Mitt Romney was audited. However, it is criminal to allow hedge fund managers to claim these as capital gains at a lower tax rate, since it is undeniable that they are in the business of these transactions. Therefore, it should be treated as compensation and should be subject to SS, Medi, and ordinary income tax rates, just as it would be in any other industry. It is obvious that those benefitting and those makeing the rules are one in the same.
Posted by: mlwaters | July 31, 2012 1:21 PM
Report this Comment
Romney used a ("capital interest") TAX LOOPHOLE utilized by a lot of venture capital managers and investors.
http://melissafinelli.blogspot.com/
"...Second, GOP opposition to closing tax loopholes is damaging to the country. For example, Obama wants to tax "carried interests" held by hedge fund managers at the same rate that employees' salaries are taxed...
In any case, there is no principled reason to tax hedge fund managers' so-called "carried interests" more favorably than the salaries that constitute the incomes of the vast majority of Americans. A "carried interest" is a simply a performance bonus for a hedge fund manager's work. If you receive a bonus, you will have to pay tax on it at a marginal rate as high as 35%. Yet a hedge fund manager's bonus is currently taxed at a maximum of only 15%.
Not only are hedge fund managers' bonuses taxed more favorably than bonuses received by other workers, but their "work" doesn't even produce anything....
Bully for him: he now joins the ranks of superrich Wall Street all-stars. That doesn't mean that government should give him that added perquisite of favorable tax rates.
Republicans nevertheless want to subsidize the hedge fund industry because they conflate any increase in the integrity of the tax system with an increase in tax rates. But it is crucial to distinguish the two. Someone truly committed to limited government would actually favor a low-tax but high-integrity system.
By "high integrity," I mean a system characterized by faithful compliance, few loopholes, and effective enforcement. A low-integrity system, by contrasts, suffers from low compliance, many loopholes, and ineffective enforcement.
Put it this way: Either you can have a (I) a high-tax, high-integrity system, (II) a high tax, low-integrity system, (III) a low-tax, high-integrity system, or (IV) a low tax, low-integrity system. The following table summarizes the options:
These day, Republicans favor tax system IV, which has both low rates and low integrity. The low integrity that Republicans favor punishes honesty, rewards scofflaws, and diverts work and investment into unproductive activities. It is not the lowest tax system at all. On the contrary, its low integrity represents an indirect tax on the public.
A truly low tax system would be tax system III, which has both low rates and high integrity. This was the system that was achieved by Ronald Reagan in the Tax Reform Act of 1986. It is the system that Republicans should be calling for today, even if it does mean agreeing with President Obama."
As a tax professional, this loophole has been a long standing pet peeve of mine.
Posted by: teriza.anicete@yahoo.com | July 31, 2012 12:29 PM
Report this Comment
Romney paid a lower rate because he used tax loophole ("carried interest") a lot of capital managers and investors use.
http://melissafinelli.blogspot.com/
"...Second, GOP opposition to closing tax loopholes is damaging to the country. For example, Obama wants to tax "carried interests" held by hedge fund managers at the same rate that employees' salaries are taxed...In any case, there is no principled reason to tax hedge fund managers' so-called "carried interests" more favorably than the salaries that constitute the incomes of the vast majority of Americans. A "carried interest" is a simply a performance bonus for a hedge fund manager's work. If you receive a bonus, you will have to pay tax on it at a marginal rate as high as 35%. Yet a hedge fund manager's bonus is currently taxed at a maximum of only 15%."
There you have it. As a tax professional, this loophole has been a long time pet peeve of mine. It's inequitable. http://melissafinelli.blogspot.com/
Posted by: teriza.anicete@yahoo.com | July 31, 2012 12:18 PM
Report this Comment
After being in practice for 40 years, I finally had a client get audited for a return that I had prepared. The results? A Form 4549-A "Examination No Change Report" reporting no changes, no additional tax.
What were the results of the Romney audit(s)? The most common scam of executives is declaring all of their income to be dividends, exempt from Social Security and Medicare. Having only paid 13.9% effective rate, I would assume that this might be the case here, but I am only speculating.
The IRS has really cracked down the "dividend replaces earnings scam" in recent years. Executives must now report a fair wage by their industry standards.
Posted by: KATEHARNER | July 31, 2012 12:10 PM
Report this Comment
I agree with most of the other posters. Why is this a story? Maybe it would make a better story how a man decended from the first US Slave got and Ivy League education, worked for NON- Profit organizations, and is now a multi millionaire. Those of us who work real jobs, pay our taxes, and try to be honest, could not aspire to that level of education, or that astronomical level of asset growth.
Honestly, I cannot imagine how it is possible. Honestly
Posted by: Unknown | July 31, 2012 12:09 PM
Report this Comment
Anyone who understands the tax code realizes that investment income has a maximum tax cap rate for capital gains and qualified dividends which IS the law right now. He has also given quite a bit to charitable organizations - much more than many high income taxpayers. This is relaly a case of sour grapes for some people. He has money - so what is the big deal? Half the sitting Senators are millionaires - do we worry about how they make their money? Let's move forward onto the issues of running the government.
Posted by: M. Debra R | July 31, 2012 11:30 AM
Report this Comment
When Barack Obama releases his transcripts then Mitt should release more tax returns.
Has anyone ever asked Barack Obama if he was audited by the IRS? It sounds as if Mitt has been audited several times and the IRS has found nothing. I am lower middle class and in the 25% tax bracket, but my effective tax rate is about 14.8%. I think it is outstanding that Mitt's is lower. The tax code encourages investment and other economic activities. I take advantage of the charitable deductions by tithing my income to church and by giving more to other charitable organizations. They can spend that money much better than Barack Obama can.
Posted by: pusherhombre | July 31, 2012 11:26 AM
Report this Comment
The results of the IRS exams would be relevant in light of some of the revelations made over the years by other political personnas.
The real story here is the 13.9% tax rate. How does that stack up to the middle class tax rate?
Posted by: m2cw | July 31, 2012 11:04 AM
Report this Comment
This is a very slanted report.
1. He "admitted" he was audited or did he just respond that he was audited? I would think that a person in his situation with numerous companies owned and making lots of money would be audited. I have never heard of a presidential candidate being asked if he/she was audited. 2. Who is pressuring him to release his other taxes and why is that relevant? Our current President is being pressured to release his birth records and his school transcripts.
Why was this even worth reporting. I agree with rdrespess above this is like reporting his hair color. I would be more concerned if he had never been audited.
Posted by: thegreenspan | July 31, 2012 10:38 AM
Report this Comment
The unanswered question is : What were the results of the audits- was he assessed additional taxes? Did he have any penalties attached to any understated taxes? Tom Daschle was disqualified for underpaying $130,000. Would underpaying $2 million disqualify Romney- would less? I doubt if an adjustment was limited to valuing used household items on a form 8283!
Posted by: lenhoffmancpamba | July 31, 2012 10:13 AM
Report this Comment
Why is this a story? The man has been audited. Big deal. That's like saying the man has brown hair. Did he file his tax returns? Did he pay the taxes that were legally due?
Do we have a tax cheat for Treasury Secretary?
Posted by: rdrespess | July 31, 2012 10:04 AM
Report this Comment
So he has been audited by IRS. The real question is what were the results of the audit?
Posted by: hhoff0440 | July 31, 2012 10:02 AM
Report this Comment
Add Your Comments...
Already Registered?
If you have already registered to Accounting Today, please use the form below to login. When completed you will immeditely be directed to post a comment.
Not Registered?
You must be registered to post a comment.