The following 10% Flat Tax proposal was introduced in the 22nd Congressional District, Florida, during the 2010 Primary Election. It was received by numerous Democratic Clubs, T.E.A. Party local Chapter meetings, Chambers of Commerce events, and other Fraternal organizations representing small businesses.
10% FLAT TAX OPTION FOR FEDERAL TAXPAYERS
This summary of the 10% Flat Tax Option is as proposed by:
PAUL FRANCIS RENNEISEN (D)
Candidate, US House of Representatives Florida 22nd District.
The taxpayer has the option of filing under the present tax code or opting to pay 10% on all income received. Income includes all cash and cash benefits received. There are no exclusions of income. It is a true flat tax. One rate on all income and cash benefits.
The 10% flat tax option must be selected by the taxpayer each year. The present code remains mandatory if the flat tax option is not selected between January 1 and April 15 for the prior year. The 10% flat tax is a voluntary option selected by the taxpayer.
The Internal Revenue Service(IRS) is solely responsible for correctly computing the flat tax. The tax is computed using W-2, 1099 records and other records that are filed with the IRS by employers and other payers. Any errors require the IRS to investigate the employer or payer not the taxpayer. The taxpayer cannot be audited, threatened, sent correction notices or subject to worry media advertisements. The correct computation of the 10% tax is the responsibility of the IRS. Deficiencies are collected from payers for any errors that occur. All taxpayers are entitled to have their W-2ís and 1099ís in their possession before registering to opt for the 10% flat tax option.
The taxpayer must have a tax identification number(TIN). This is usually your SSN.
If the taxpayer did not file 1099-Estimated Tax withholding amounts or has inadequate withholding for the 10% flat tax due, the IRS will issue a bill for the taxes due. Interest will accrue after April 15th on amounts due.
No other taxes are due from the taxpayer. The first 7.65% of the 10% flat tax is deposited into social security and Medicare taxes for the taxpayer. The remaining difference is deposited in the treasury of the United States. Once adequate tax has been collected to meet the Social Security Wage Base tax, the remaining flat tax collected is distributed 1.45% to medicare and 8.55% to the US Treasury.
How does a taxpayer opt for the 10% flat tax? You are eligible to apply for the 10% flat tax option between January 1 to April 15th on the internet. The IRS will send you a confirmation by US mail for you to sign that you applied for the 10% flat tax option. Your local IRS authorized tax preparer or TCE/VITA volunteer is also authorized to confirm your application for the flat tax option.
Small and large corporations are eligible for the flat tax option. No deductions or credits are allowed including employer FICA costs. The tax is 10% of all revenue collected. All of the tax in this case goes to the treasury of the United States.
Self-employed are eligible for the flat tax option. The tax is 10% of revenue collected. The first 7.65% of the 10% flat tax is deposited into social security and medicare taxes for the taxpayer until employee and employer tax obligations are met. Thereafter, the remaining flat tax collected is distributed 1.45% to medicare and 8.55% to the US Treasury. Social Security wages are adjusted to match FICA deposits at the social security tax rate, 15.3%.
Taxpayers are eligible to elect the 10% flat tax option after all tax delinquencies are paid for tax periods prior to the period for which the 10% flat tax option is requested. The IRS shall notify the taxpayer immediately of delinquent taxes owed so the taxpayer can pay them to qualify for the 10% flat tax option.
The taxpayer may revoke the flat tax option at any time prior to midnight, April 15 of the year following the year for which taxes are due. If the taxpayer revokes the 10% flat tax option, he or she is obligated to file tax return under the current tax code.
The filing status for the flat tax option is single even if the taxpayer is married. The spouse must file separate if he or she elects not to also file the 10% flat tax option or does not qualify for the 10% flat tax option.
Benefits of the 10% Flat Tax Option
Eliminates anxiety and stress suffered by Americans annually in anticipation of filing income tax returns.
Eliminates fear that the IRS will send a notice of correction to collect more taxes.
Eliminates worry that a taxpayer may have made an error in computing their income tax.
Eliminates costly tax preparation fees for those that can least afford it, working wage earners.
Encourages IRS approved tax preparation firms to market the flat tax registration by assisting the taxpayer in qualifying for the 10% flat tax option.
Allows large corporations to pay their Federal income tax liability saving overhead costs associated with production of complicated tax returns.
Uses current IRS technology to compute the tax on electronic filings by employers and other payers reducing government administrative costs of paper filings by taxpayers using traditional tax forms.
Simplifies the tax code by taxpayer option.
Participation by cash basis taxpayers increases revenue collection and secures increased participation in the social security system.
Reverses the decline in filing Federal Income tax returns due to complexity.
Provides a record of business activity by the self-employed for use in claims for lost income, for example, the Gulf of Mexico oil spill disaster where claims of income are not documented in income tax filings.
Simplifies the verification of small business tax computations using sales tax revenue declarations by small and large businesses. 10% flat tax computations are based on revenue or gross sales.
Secures social security account for the taxpayer through deposits to the trust fund by taxpayer.
Secures Medicare with deposits from taxpayers not participating in the current income tax.
Encourages tax amnesty. Only taxpayers that are not delinquent on their taxes may elect the 10% flat tax. Paying delinquent taxes opens the opportunity for taxpayer to participate in simplified 10% flat tax option.
Does not discriminate. All 10% flat tax filers are treated as single.