Saturday, September 6, 2014

People Who Criticize Romney's Extension Are Ignorant Or Hypocritical - The Proportions Vary

Originally Published on on April 19th,2012
Looking at my twitter feed, I see a lot of people are making a big deal out of Romney extending his tax return.  Now if you think being a rich guy who is involved in venture capital partnerships disqualifies him from being President, you’re entitled to that opinion.  Go ahead and knock him for that. But if you knock him for extending his tax return, like it is part of some nefarious plot, you are just showing your ignorance.  He released a draft copy of his 2011 return which shows adjusted gross income of around 21 million which is similar to his 2010 return.  The roughly 3 million in tax (about 20 times what the President paid) was covered by overpayment from the previous year.  His income is weighted heavily towards capital gains so his percentage is lower than most people.
I’m just a tax blogger, not a political analyst, but I doubt that it is doing him much good to release a draft return which reinforces the story about him being a rich guy who pays a low rate now and then having to release the final return which will reinforce the same story sometime in September or October.  There will probably be some blogger who will have the patience to pick apart the differences between the draft return and the final return.  Since I am hoping to hang on to my day job, that blogger will probably not be me, because I will be too busy wrapping up returns from other people who simply had to extend including my own. 
Romney is a partner in partnerships.  In order to do his return you need a K-1 from the partnership just like  the President’s accountant needed a W-2.  W-2s are supposed to be distributed by January 31 and I don’t know whether there is any provision for extending that.  K-1s are due April 15 (adjusted for weekends and holidays) just like individuals.  Partnerships can get an automatic 5 month extension.  I think it likely that some of Romney’s partnerships are partners in other partnerships, some of which may be partners in other partnerships.  You only need one of them to be late to force him to extend.  If he did not extend, he would be forced to amend when the real numbers came in. 
If he wanted to avoid extending and then having to amend the only way to do it would be to estimate high, pay more than he would ultimately owe and then not bother to file for a refund.  There is a clever idea for his campaign.  Why didn’t somebody at PWC think of that ?  There is probably a flaw in there somewhere.
I’m not a big fan of Romney just like I’m not a Newt Gingrich fan.  Still when Newt was being unfairly knocked about the S corporation thing, I stood up for him, so I figure I owe Romney the same courtesy.  Since the extensioncriticism is so unfair, I’m not even going to mention the dog thing.
You can follow me on twitter @peterreillycpa.

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