Tax Roundup, 7/23/2012: Chasing smokestacks, catching smoke. Also: final film credit trial starts; 1040s and summer homes.

July 23rd, 2012 by Joe Kristan

So the guy who swindled customers in his commodity brokerage in Cedar Falls also swindled Iowa “economic development” smokestack chasers.  From QCTimes.com and AP (via State 29):

Even before its dramatic collapse last week, an Iowa-based brokerage implicated in a $200 million fraud scandal had defaulted on the terms of a $1.24 million state incentives package that helped the firm build a state-of-the-art headquarters, newly released records show.

The Iowa Economic Development Authority warned Peregrine Financial Group, Inc. in March that it had violated its contract by paying employees lower salaries than promised and must pay back some of its aid immediately, according to a letter released in response to a request from The Associated Press.

It’s yet more evidence for what I’ve long said about “economic development incentives”:

When Iowa tries to pay other businesses to come here, it’s like a guy who brings his wife’s purse into a bar to buy drinks for the girls. The girls aren’t impressed, and any he does pick up aren’t worth much.

That’s something Iowa should ponder before it signs the check to bribe a fertilizer plant to locate in Iowa with tax money paid in part by competing fertilizer plants that are already here.

Who pays the bills? The Tax Foundation has a map showing the Percentage of Federal Income Tax Revenue from Filers Making Over $200,000:

Airball. The former owner of a Kansas City minor league basketball team will go away for 51 months for crimes that included not remitting payroll tax withholidngs, reports CJOnline.com:

James Clark, 53, of Overland Park, a former owner of the Kansas City Knights basketball team, pleaded guilty to one count of tax fraud and one count of bank fraud. Clark admitted that he withheld payroll taxes from employees of his company, SWISH Holding Corp., while failing to pay more than $502,000 to the Internal Revenue Service. He diverted the funds and used them for his own purposes, including the operation of the basketball franchise.

Many people think that they are just “borrowing” money when they fail to remit withheld taxes.  It can be tempting when suppliers are howling for cash.  This case shows that failure to remit withholdings can have consequences much more serious than cash late penalties and interest.

 The last scheduled trial of an Iowa film tax credit fiasco figure is slated  to start today.  Chad Witter, an accountant who worked as a middleman in obtaining and marketing film credits, will go on trial in Polk County District Court on charges of theft, fraudulent practice and ongoing criminal conduct.  Dennis Brouse, a producer who worked with Mr. Witter, was sentened to ten years in prison earlier this year on charges arising out of the disastrous program to bribe filmmakers to come to Iowa with transferable tax credits.

How Government Limits Upward Mobility (Howard Gleckman, TaxVox):

True, social welfare programs provide a valuable safety net for the very poor. For instance, the Earned Income Tax Credit and the Child Tax Credit are important income supports for low-income families.

But because these safety net programs phase out as incomes rise, some people face marginal tax rates as high as 80 percent for getting a better job or even a raise.  A new Urban Institute calculator shows how this works.

Related:  Taxing the heck out of the top 400 taxpayers won’t help the bottom 20 million

Will your 1040 help pay for your vacation home? My latest post at Iowabiz.com, the Des Moines Business Record group blog for entrepreneurs.

WSJ: IRS Audit of Romney Donor Raises Questions About Presidential Enemies List (TaxProf Blog)

Jana Luttenegger, Summer Camp Tax Credits (DavisBrown Law Firm Tax Blog)

Or somewhere darker: The IRS Art Advisory Panel Has Its Head In The Clouds (Janet Novack)

Kay Bell, Bicycling commuters, you might qualify for a tax-free workplace benefit

Russ Fox, Two Sets of Books Aren’t Better than One.  At least when  one set doesn’t include the skimmed receipts.

Jason Dinesen, Medicare Part B and Same-Sex Married Couples

Jack Townsend, Form 8938 Resource

Peter Reilly wades into the swamp of the tax treatment of Scientology.

TaxGrrrl, Saban Suggests Penn State Tickets Should Be Taxed To Pay For Scandal.  I read that as “Satan” at first.

News you can use: The General Crapiness of Your Life Does Not Relieve You of Your Tax Obligations (Anthony Nitti)

Robert D. Flach will save $11,000 in taxes annually by fleeing New JerseyHe’s getting paid to do something most of us would be happy to do for free.

Help Wanted: The Hunt for a New Going Concern Freelancer Goes OnIf you have a Big 4 bad attitude, what are you waiting for?

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