Now Mikey has a problem. And he doesn’t like it.

Mikey is part of a growing number of children being targeted by the IRS for failure to pay taxes on the toy prizes found in their cereal boxes. According to longstanding IRS regulations, all prizes and awards must be included in a taxpayer’s income at their fair market value.

While the market value of a foam dinosaur that expands under water may not seem like much, IRS agent Henry Kottinger says that cereal toys are more valuable than people think. “Given the eventual collectability of these items, the IRS stance is that they carry a very high market value. The individuals receiving these toys should be responsible for the taxes,” said Kottinger.

Too young to work and too old to plead ignorance of tax laws, Mikey is now struggling to find ways to pay off his tax debt – which after penalties and interest amounts to $1,857.32. “Daddy says I’m too young to mow grass,” Mikey explained as he played with a white plastic helicopter he recently found in a box of Cap’n Crunch, “but Mommy said she would help me make a Lemonade Stand.”

Mikey enjoys his cereal prizes, but at what cost?

Despite criticism from parents and taxpayer advocacy groups, the IRS remains contrite. “The cereal boxes plainly read ‘prize inside,’” Kottinger said, “Until the cereal manufacturers change their marketing practices, the IRS must continue to enforce the tax law.”

The recent IRS cereal prize crackdown comes on the heels of an FDA announcement that Cheerios is actually a drug masquerading as a breakfast foodstuff. But unlike the FDA crackdown, which is mainly a General Mills problem, the IRS attack is hitting home for thousands of first-time taxpayers.

“I remember the first time Mommy brought home cereal in a box,” Mikey recalls, referencing the fact that his mother used to purchase generic cereal that came in bags and did not contain toys, “it was awesome.”

“Now I wish I never even heard of Cookie Crisp.”

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Uncle Sam, the Statue of Liberty, and You: What Could be More Exciting than A Tax Ménage à Trois?

Now it’s come back to haunt you.  You’ve only got 48 hours to finish your tax return. But, there’s no need to panic. Completing your 1040 can be fun, assuming you follow these

Top 10 Ways to Make Your Taxes More Exciting

10). Start by penciling in your desired refund then work your way backwards

9). New IRS singles line allows you to date the agent who will audit your return

8). Depreciate your spouse

7).  New W-2 forms report the amount of hours you’ve wasted at work checking your Facebook page

6). Demand that the IRS allow you to use Viagra in lieu of extensions

5). Set up a carnival booth at post office on April 15th: offer to guess the age, weight, and gross income of all last minute filers

4). Round all numbers to the nearest million

3). Mail your tax forms to Iraq, challenge George Bush to go find them

2). Complete multiple returns, hope for multiple refunds

1). Offer to show the IRS your stimulus package

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At least that’s a possibility by the year 2020, according to a bipartisan Congressional commission researching potential ways to fund the upkeep of America’s roads. Among their ideas – installing an Orwellian tracking device in every vehicle and then assessing motorists a 2.3 cent tax for every mile driven.

The National Surface Transportation Infrastructure Financing Commission’s (or NSTIFC for short) report, “Paying the Way,” can be found here.

Flying Cars...Conspicuously Absent from the Commission's Plan

For those who do not have the time to drudge through 250 pages of chart-filled Government minutia, the Wall Street Journal has a more succinct summary.

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Among the most vocal detractors are Republicans and other pesky “rich” people who now face the unpleasant prospect of parting with a larger percentage of their hard-earned income (or ill-gotten gains, depending on your political leanings) through higher taxes.   

It’s not that these fine Americans don’t want to pay their “fair share” as so many liberals claim. It’s just that they do not like to pay for something without knowing exactly what they are getting in return. In that regard, they’re a lot like us regular folks. 

You wouldn’t go into a restaurant and tell the waiter “just bring me what ever you got leftover in the kitchen.” You wouldn’t go into a department store and tell a clerk to “just grab me a handful of clothes off the rack.” Yet, every year we allow our government to take our tax dollars and spend them however they want. What fun is that? If we are going to be paying, we should be doing the shopping.   

That’s why I am introducing IRS Form 1040 Schedule $. As far as IRS Forms go, Schedule $ is pretty straightforward. After figuring up your total tax liability (line 61 on IRS Form 1040), you prepare Schedule $ by allocating each dollar of your tax bill to a federal budget category. You essentially tell the Feds how you want your tax money to be spent. Government spending would then be limited to the amount that the taxpaying public allocated to any given category. If no one allocates money for bailing out the automobile industry…then the carmakers get nada. 

Finally. A tax form I look forward to completing.

Get your copy of 1040 Schedule $. (Disclaimer: Not an actual tax form).

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