THE NEWS

One of the Internal Revenue Service’s fangs has quietly grown much sharper, as the interest rate charged on the underpayment of federal income taxes has soared from 3% to 8% in less than two years. If you’re not sure if you’re hitting the right pace, it’s time to double-check your situation to make sure you don’t throw any more money into Uncle Sam’s rathole than you must. 

While many taxpayers focus on the annual April deadline, the federal income tax actually works on a “pay as you go” basis, in which the government demands recurring bites out of your income, with those bites rising and and falling in proportion to what you’re earning over the course of the tax year. If the math comes out wrong enough when you file, the IRS will penalize you by demanding you pay interest on money you were supposed to have forked out earlier.   

In August, the IRS announced that the interest penalty charged against underpayments was rising to 8% for the calendar quarter that started Oct. 1. The rate isn’t set on a bureaucrat’s whim — per the Internal Revenue Code, it’s calculated each quarter by adding 3% to the “federal short-term rate.” Thus, the higher rate is a reflection of the surge in interest rates. As recently as the first quarter of 2022 — when the Fed’s zero interest rate policy was still in place — the rate was just 3%.  For the first three quarters of 2023, it was 7%.  

Most people whose income is almost entirely derived from regular employment satisfy the pay-as-you-go system through the income tax that employers withhold from each paycheck. Assuming they’ve filled out their IRS W-4 forms correctly, those workers typically don’t run afoul of underpayment penalties. However, regular employees who receive big bonuses or equity compensation might find the regular withholding formula doesn’t cough up enough money to please the IRS. If you want to play with the numbers on your own, you might check out the IRS’s online Tax Withholding Estimator — though ZeroHedge sure isn’t guaranteeing its accuracy. 

For many people, avoiding underpayment penalties requires making quarterly estimated tax payments directly to the IRS, or significantly adjusting their employee withholding. That’s true of anyone with significant income from anything other than regular employment, including the self-employed, gig economy workers, and people with substantial investment income from things like interest, dividends and capital gains. Note: The 2023 surge in yields on money market funds and some bank accounts may cause a surprise underpayment penalty for those who’d grown accustomed to earning near-zero on their cash. 

Federal tax rules provide for a “safe harbor” that generally guarantees you from facing underpayment penalties on personal tax returns. You won’t have to pay the penalty if your withholding and/or timely estimated taxes add up to at least 90% of your 2023 tax bill or 100% of what you owed in 2022. However, if your adjusted gross income is more than $150,000 (or $75,000 for married couples filing separately), the safe harbor linked with your 2022 tax bill rises from 100% to 110%.  

The IRS is notorious for complicating taxes at every turn, and estimated tax is no exception. Here, the IRS assigns four due dates that don’t come every three months. Instead, payments are due April 15, June 15, September 15 and January 15. (This year, the payment for the fourth quarter instead is due Jan. 16, 2024.) There are several methods for making payments, including mail or through on online portal. 

In fiscal 2022, the IRS hit individual taxpayers for more than $1.8 billion in underpayment penalties — a number that’s likely to soar alongside the rising penalty interest rate. Here’s hoping ZeroHedge readers aren’t victims of the Feds’ upcoming feeding frenzy. 

Authored by Brad Jones via The Epoch Times (emphasis ours),

A coalition of parental rights and child advocacy groups have accused California Attorney General Rob Bonta of attempting to mislead voters over a ballot initiative title and summary they say is skewed in favor of his political stance on “gender affirmation.”

The ballot initiative would require schools to notify parents if their child changes his or her gender identity, protect the integrity of girls’ sports by prohibiting boys who claim to be girls from competing in them, and ban the use of puberty blockers, cross-sex hormones, and surgery on minors.

However, the state attorney general wrote the ballot initiative title as “Restricts Rights of Transgender Youth,” and the summary is “overtly biased,” “completely absurd,” and “wrong,” said Jonathan Zachreson, spokesman of Protect Kids California, the coalition of parental rights groups that launched the initiative.

“It’s so bad it’s laughable,” he said. “Our initiative protects kids. It doesn’t restrict rights.”

The coalition opposes any kind of medical intervention, including “chemical sterilization” and “genital mutilation” to treat gender dysphoria that could affect the future reproductive health of children, he said.

In late August, the coalition launched three separate initiatives, which have since been consolidated into a single initiative known as the “Protect Kids of California Act of 2024.”

The coalition received the ballot title and summary on Nov. 29 and now has less than 180 days to collect the 546,651 qualified signatures needed for the statewide initiative to be placed on the Nov. 5, 2024, general election ballot.

Erin Friday, an attorney and western U.S. regional leader for Our Duty, a group that opposes social, medical, and surgical interventions on minors, told The Epoch Times the ballot title and summary were predictable.

The attorney general, she said, has already shown his “disdain for parental rights,” most recently with his lawsuit against Chino Valley Unified School District’s parental notification policy regarding gender transitions at school.

“We knew that Bonta would do everything in his power to undermine the initiative to mislead the voters,” she said. “We are disgusted, but not surprised.”

The lawsuit against Chino Valley “is designed to permit schools to continue the unconstitutional practice of deceiving parents when their students are experiencing gender dysphoria,” she said.

Both California Gov. Gavin Newsom and Mr. Bonta have pushed for too much state control over parental authority, Ms. Friday said.

While the summary states the initiative would “prohibit transgender female students” from participating in female sports, it doesn’t define what ‘transgender female’ means, deliberately misleading voters unfamiliar with the nomenclature of gender ideology to think it means “girls who believe they are boys” when actually it means physical males, she said.

In addition, the language of “gender-affirming health care” refers to a model that means any child, of any age, regardless of mental health issues, ability to consent, or “absurdity of gender identity” must be affirmed and be given any intervention they request, she said. However, not all professionals agree with this model.

The summary also underestimates the potential cost-savings to taxpayers by “tens of millions” of dollars, because children who undergo sex-change interventions face the “grim and predictable future” of becoming life-long medical patients with a host of side effects, including increased occurrences of cancer, osteoporosis, atrophy of sex organs, heart issues, and other life-altering, perpetual ailments, she said.

Detransitioners, including Layla Jane and Chloe Cole who had double mastectomies as minors—at 13 and 15 respectively—have talked about their ongoing discomfort from the surgeries, she said.

The Attorney General’s press office stated via email in response to a request for comment that the Attorney General’s Office is responsible for issuing official titles and summaries “describing the chief purpose and points of every proposed initiative submitted in compliance with procedural requirements,” but did not respond to questions about the alleged bias and ambiguity in the title and summary including, “What defines a ‘transgender female?’”

“We take this responsibility seriously,” the press office stated. “However, we cannot comment on any particular initiative,” the press office stated.

Lawsuits over allegedly twisted ballot titles and summaries are nothing new to California, and the controversy is well-documented in news reports by several media outlets.

Former Assemblyman Kevin Kiley (R-Rocklin), now a congressman, and former state Sen. Melissa Melendez (R-Lake Elsinore) told The Epoch Times preceding the 2020 election that state ballot measure texts and summaries are so skewed, many voters have no idea what they are truly voting for or against come election time.

The problem, they said, is that in California, the authority and responsibility to write fair and impartial ballot titles and summaries rests with the attorney general—a partisan political office—who crafts the wording in a way that leads voters in his or her desired direction.

Mr. Kiley called the practice “terrible” and said it amounts to “election fraud,” because it manipulates the language “in a way that likely changes the whole outcome of the vote.”

“It’s time we finally protect the integrity of our elections by putting a neutral nonpartisan official in charge of writing the ballot language,” Mr. Kiley said in August 2020.

Mr. Kiley and Ms. Melendez said at the time they wanted to avoid further lawsuits and hand over the authority for wording ballot measure titles and summaries to the nonpartisan Legislative Analyst’s Office (LAO), and they even proposed legislation, Assembly Constitutional Amendment 7, or ACA 7, to do just that. However, the proposed amendment was killed in committee and never put to a vote.

In 2020, several lawsuits were filed against then Attorney General Xavier Becerra or his wording of ballot titles and summaries, but his office denied they were biased.

“The elections code is very clear. … It says you have to give a true and impartial statement on the purpose of the measure, and it’s not supposed to be used as an argument or to create prejudice for or against a measure,” Ms. Melendez said.

On Nov. 4, 2014, California voters passed Proposition 47, a referendum that proponents touted as the Safe Neighborhoods and Schools Act, and opponents such as the California Police Chiefs Association called the ballot title and summary misleading.

At the time, voters were told Prop. 47 was intended to keep nonviolent criminals out of state prison by downgrading some crimes from felonies to misdemeanors, thus saving money on housing inmates. The saved money would then go into a fund to support schools as well as rehabilitation programs, including providing offenders with counseling, therapy, housing, and job opportunities.

If there is a court battle, it will come after the state prints the ballot title and summary in its official voter guide, he said.

Meanwhile, the “biased” language could backfire on Mr. Bonta, he said.

“It’s so wrong and absurd that in some ways, I don’t know if it even does the other side a favor, because it’s going get more people to turn their heads and look at what we’re actually trying to accomplish,” Mr. Zachreson said.

The state law that puts the attorney general in charge of ballot titles and summaries is a “direct conflict of interest,” he said. “It should be nonpartisan, impartial, and I think the Legislative Analyst’s Office is a good starting point.”

Another Rasmussen survey in December 2021 showed 68 percent of Americans don’t believe schools and teachers should be allowed to counsel students on their sexual and gender identities without parental knowledge or consent, and that only 19 percent believe schools should be allowed to engage in such counseling without parental consent.

“Voters are in such strong support, we know that we can win, so the hardest part is just to get on the ballot,” Mr. Zachreson said. “That’s where we’re at now and we feel we can do it.”

But because most Democratic politicians in California are “vehemently against” the tenets of the ballot initiative, and Democrats hold a super majority in the state, “there is no way that we’re going to be able to persuade the legislature,” he said.

And, although litigation has worked to some extent to fight against gender ideology in schools, he said the ballot initiative is a more direct route to democracy.

The 546,651 qualified signatures needed are based on five percent of the number of voters in the last gubernatorial election.

“We’ll also do our own signature verification to minimize any issues there,” he said.

Mr. Zachreson said petition forms for the ballot initiative will soon be available for download from the Protect Kids California website.

Former collegiate swimmer Riley Gaines, a National Collegiate Athletic Association record setter who testified before Congress in support of Title IX on Dec. 5, urged more than 300 people at a California Family Council event in Costa Mesa, Calif., on Nov. 30 to support all aspects of the ballot initiative.