For a couple weeks now, I've been telling clients a harsh truth: over the next few years, in almost every case, their taxes will go up. Not only those who make over $ 200,000 or $ 250,000 a year, which was President Obama's campaign pledge, but those who make something like $ 75,000 a year (if single) or $ 150,000 a year (married filing joint). Ok, so this may not be news, as many people predicted the original higher levels could not generate enough money to pay for "change". And that was BEFORE the government stimulus programs of early this year and cash-for-clunkers, estimated health-care reform costs and expanded homebuyer and other tax credits.

Now the effects of all this deficit spending and ever-increasing government debt has at least some bureaucrats and politicians talking of...new taxes to pay for it all. Some of the suggestions are clearly political and probably won't go anywhere, but something will have to be done: as other countries come out of recession, they will raise their interest rates and pressure will increase for the U.S. to do the same (it's already begun). Higher interest rates mean higher debt service costs (in that way at least, the government is no different than the individual). Therefore, part of the pressure is beyond the control of the U.S. Government.

If Congress cannot raise enough revenue to pay the bills by increasing taxes on 'the rich' (the $ 200,000 to $ 250,000 a year crowd, as they define it), they have to lower the threshhold.

The pressure from Congress and the White House on the IRS to 'close the gap' is tremendous. In addition to tax changes, the government has increased most of its fees and many of its penalties, with more to increase for the 2009 tax year (what we'll file in 2010). For example, the minimum late-filing fee for a personal income tax return is now $ 125 (and IRS DOES assess it, even on very small tax levels). For business returns filed late in 2010, penalties will be based on time late and, where K-1s are involved, the number of K-1s; the penalty amounts are doubled. And interest is charged.

Ever-increasing fees...that sounds like what the airlines do, to the frustration of many fliers.

The significant changes will more likely come in 2011 than 2010 (after the elections next year), but it's coming.

So what do we do, to plan for this and minimize the impact? Until the changes are known, it's hard to tax-plan more than a year or two out. At this time, we're planning end year 2009 and 2010, because those are known (we hope). Anything else is conjecture.

And no, none of my clients have been happy to hear this.