Congressional Brinksmanship Makes Life More Complicated for Nevadans

As a result of last-minute bargaining by Congressional tax writers, Nevadans who itemize their federal income taxes will get another chance to write off their sales taxes this year. A temporary deduction, which originally was in effect only for 2004 and 2005, now will apply to 2006 tax year as well. This tax break is designed for states, like Nevada, that don't levy a personal income tax.

But the difficulty is that Congress took a bit too long to agree on this special tax break. Turns out the IRS has (sensibly) already finalized its tax forms for year, and now needs to revamp its online forms to make it easier for Nevadans to claim the tax break. So IRS officials are encouraging those seeking to claim the credit to wait until February 3 to file.

We've written elsewhere about how silly it is for Congress to keep extending these "temporary" tax breaks, year after year, at the last minute in a way that makes it hard for taxpayers to know what's happening. But it's worth reiterating that even as Congress continues to underfund the IRS' enforcement capabilities, it's throwing a late-breaking curve ball to tax administrators just as the ink is drying on this year's tax forms. Political brinkmanship has costs-- and in the tax world, those costs manifest themselves in more-complicated tax forms and higher costs of administration.