Check, please - income tax $1 campaign checkoff

This year, for the first time, the Federal Election Commission (FEC) is launching an effort to educate taxpayers -- and tax prepayers -- about the $1 checkoff on federal tax forms, which directs money to a presidential election campaign fund.

The fund provides campaign money to major presidential candidates who agree to abide by spending limits. In the 1988 general election George Bush and Michael Dukakis each received $46.1 million for their campaigns. Political parties also receive funds to cover national convention expenses.

But a lack of public knowledge about the checkoff and the presidential campaign fund has contributed to a decline in the number of people who check "yes," which directs a dollar of the taxes already owed to the fund. What's more, the checkoff amount has never been adjusted for inflation, even though a dollar in 1972, when the checkoff was created, is now worth 36 cents. These two factors are expected to trigger a substantial shortfall for the 1996 election and have led to proposals to increase the checkoff amount.

Working with six professional organizations, the FEC has targeted tax professionals, who prepare nearly half of all individual tax returns. In a random sampling the Internal Revenue Service found that 18.8 percent of professionally prepared tax returns in 1989 failed to check either "yes" or "no," compared to 11.2 percent of returns completed without a professional. Failure to check a box is the equivalent of "no."

Realizing that tax preparers are "on the front lines of the tax checkoff question," the National Society of Public Accountants (NSPA) has urged its members to "recognize [their] obligation to help taxpayers make an informed choice."

Some tax preparers are prejudiced against the dollar checkoff. "The tax preparer's bias is going to have an overwhelming sway on the taxpayer's decision," says Peter Berkery, director of federal affairs/tax counsel for the NSPA. Berkery estimtes that more than half of his group's 23,000 members have negative feelings about publicly funded campaigns. There's also a "screw the system" mentality among some clients, he says.

Some tax preparers would rather skip the question altogether. "If you figure 10 minutes to interview a client and five more minutes to explain that the checkoff doesn't affect your tax rate, most preparers, us included, just don't ask. Normally we leave it blank," says James J. Fromi, a tax preparer and president of Taxbyte, a tax software development firm.

Other preparers take a different view, arguing that public financing increases the average taxpayer's political power. Jeffrey Lane, a certified public accountant in Jessup, Md., says, "If a taxpayer is especially disgruntled with the politicians and the system, check 'yes' to change it."

COPYRIGHT 1991 Common Cause Magazine
COPYRIGHT 2004 Gale Group