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FIRMA FORUM Magazine
This the feature article from our Issue #4, 2011 FIRMA FORUM Newsletter. Members can view the entire issue, and past issues, in our archive
Cost Basis Reporting: The Role of Financial Intermediaries in Helping to Cure US Budgetary Woes
Cost Basis Reporting: The Role of Financial Intermediaries in Helping to Cure US Budgetary Woes
By Trace Bronstone and Raymond Hrin
The debt ceiling crisis this summer brought home to Middle America, and to the world, the notion of a US
debt ceiling, the need for or scrutiny over government spending, and the threat of US default. Common
sense dictates that income revenue should exceed, or at least meet, expenditures; reality though sometimes
presents a gap. When the challenge is revenue, the focus is collection. Well before the US Congress passed
the Emergency Economic Stabilization Act of 2008 and discussed the prospects of trillion dollar budget
deficits, the academic community and research think tanks published recommendations to address tax code
inefficiencies that would lead to greater governmental revenue collection.
A great deal has been said about Congress and taxes:
"What is the difference between a taxidermist and a tax collector? The taxidermist takes
only your skin." – Mark Twain, Notebook, 1902
"Income tax returns are the most imaginative fiction being written today." – Herman Wouk
"The United States has a system of taxation by confession." – Hugo Black
Perhaps the most eloquent comment made, was crafted during the Great Depression:
"Taxes, after all, are dues that we pay for the privileges of membership in an organized
society." – Franklin D. Roosevelt
If you put all the quotes and commentary together, there will no doubt be more than 1040 opinions reflecting
the pros and cons of taxation!
Heretofore, the US government has relied on tax filings to generate revenue. The responsibility of accuracy
has always sat squarely with the taxpayer, with the threat of levies, fines, and jail time looming as a
deterrent. With technology, the Internal Revenue Service (IRS) sought new inputs to analyze and enhance
opportunities for revenue.