Let’s play “stump the tax man”
IRS Commissioner Douglas Shulman doesn’t file his own taxes because he believes the tax code is too complex. (See: http://thehill.com/blogs/blog-briefing-room/news/75119-irs-commissioner-doesnt-file-his-own-taxes )
However the complexity has now reached the point where even accountants and the tax authorities don’t understand the rules.
From New York’s new Form IT-204-LL-I:
“A partnership, LLC, or LLP with no income, gain, loss, or deduction from New York sources who is filing a partnership return solely because it has a New York resident partner, is formed under the laws of New York State, or is dormant, is not subject to the filing fee.”
That seems pretty straightforward. Except the next paragraph reads:
“The amount of the filing fee will be based on the New York source gross income for the tax year immediately preceding the tax year for which the fee is due. If the LLC or LLP did not have any New York source gross income for the preceding tax year, the filing fee is $25.”
These two paragraphs are 100% contradictory. The first paragraph says if you have no NY-sourced income, you don’t pay any fee. The second paragraph says if you have no NY-sourced income, you pay a $25 fee.
Rocky’s corporate accountant called the New York State Tax Department professional assistance desk for an official interpretation of these paragraphs. After thoroughly researching the issue, The Tax Man’s answer: “We don’t know.”
The Tax Man’s honesty is refreshing. This lastest example of tax code lunacy is not.