Tax Roundup, 9/10/2012: Walter Anderson fights on, fails on. Also: tax credit scams and tax returns as pornography.

September 10th, 2012 by Joe Kristan

“Biggest Evader” Walter Anderson loses appeal of adverse Tax Court ruling.  The persistence that Walter Anderson showed in building his tech fortune so far hasn’t helped him in his ongoing battle with the IRS.

Mr. Anderson pleaded guilty to evading taxes on investment income earned in overseas corporations for 1998 and 1999; as part of the plea deal, charges for 1995, 1996 and 1997 were dismissed.  The IRS also pursued collection of $184 million of taxes for those hyears, plus $138 million of civil fraud penalties.  Mr. Anderson resisted.  In a tactical maneuver, the IRS conceded the issues for 1995-97.  From the Third Circuit opinion:

In its motion, the IRS explained that nearly 80% of the total deficiency and penalties for the five-year period stemmed from just 1998 and 1999, and that because proving fraud for 1995 through 1997 via trial would needlessly complicate and lengthen the case for a comparatively limited additional monetary recovery, it preferred to abandon its efforts for those years.

The Tax Court didn’t formally dismiss the first three years taxes for some procedural reason, but said its final ruling would reflect the IRS concession.  But Mr. Anderson then said that the IRS concession for those three years also meant the IRS couldn’t pursue collection for the two years for which he pleaded guilty.   The Tax Court thought that was a bit much.

The Third Circuit appeals court upheld the Tax Court:

We hold that Anderson’s conviction for tax evasion in 1998 and 1999 precludes him, by virtue of the doctrine of collateral estoppel, from contesting in subsequent civil fraud proceedings that the income of G & A was taxable to him in those years. We additionally conclude that the IRS’s concession of all deficiency and penalty issues for the years 1995, 1996, and 1997 has no preclusive effect on those issues for 1998 and 1999. For these reasons, we will affirm the Tax Court’s judgment.

Mr. Anderson says his guilty plea was coerced by poor jail conditions while he was awaiting trial.  Unfortunately for him, the law makes it very hard to undo a guilty plea.  Once you plead guilty to evading taxes for a year, the rest is just ugly details.

Cite: Walter C. Anderson v. Commissioner, CA-33, No. 11-1704.  Jack Townsen has more.  Some background here.

 

Paul Neiffer,  Section 179 for 2013:

We have gotten a few emails in the last few weeks asking what the Section 179 deduction will be in 2013.  The current law is a limit of $25,000 for 2013.

However, both the President and Congress have discussed increasing the deduction up to $500,000 with a phase-out starting at $2 million…

My estimate is that Section 179 deduction for 2013 will increase, but who knows by how much and this is always subject to the whims of Congress and the President.

I agree that it will probably not be $25,000, but until the political situation sorts itself out in November, we don’t have much to even guide our guesswork.

 

Joseph Henchman,  Missouri to Look More Closely at Ineffective Tax Credits  (Tax Policy Blog) Iowa has certainly gone in for them whole-hog.  Missouri has reconvened a commission to try to contain tax credits.  David Brunori weighs in:

Governor Jay Nixon has reconvened a commission to study tax credits in the state. That is a good thing, of course. The state spends over $600 million on tax credits alone. Real estate developers receive the bulk of that largesse. There are credits for economic development held sacred by both parties because of the phony claim they create jobs.  There are credits for historic development which turn run down eyesores into commercially viable properties. The people of Missouri actually give developers money to fix up old properties and sell them at a profit. We used to call that welfare. And there are credits for developing low income housing. Liberals love low income housing credits because it makes them feel like they are doing something to help the poor and dispossessed. I think some people love low income housing because it segregates all the poor people in one place away from the “decent” folks. And I know developers love low income housing credits because it allows them to take advantage of a well intentioned but incredibly flawed system.

It’s no coincidence that two of Iowa’s most prominent low-income housing developers are deeply embedded in the state political system.

 

Elevating the level of debate:  Hustler publisher offers $1 million for Mitt Romney’s filing info, tax returns (Kay Bell). It’s a federal offense to leak confidential tax information, so I doubt that the feds would let a snitch keep the million dollars.  Especially if Romney wins.  TaxGrrrl also notes that it’s a crime to accept stolen property.

Christopher Bergin, Where’s the Tax Plan, Man – Uh, Men?

Jim Maule,  Do-It Yourself Lawyering Brings Tax Unhappiness.  Yes, the thrifty ex-husband is still divorced, but he botched the alimony language, meaning he couldn’t deduct the payments.  But look on the bright side: she doesn’t have to pick it up as income!  He may not find that consoling.

Bruce the Missouri Tax Guy looks at Tax Apps for your phone.

Peter Reilly, tax maven, shows his Civil War cred: Next Monday September 17 Remember America’s Bloodiest Day.  And not just because corporate extensions are due.

Dang.  Summer is gone (Daniel Shaviro)

News you can use: Politicians Lie. In Other News, Water is Wet (Anthony Nitti)

Trick question. They’re all Azkaban.  Let’s Compare the Big Four Accounting Firms to the Four Houses in Harry Potter (Going Concern)

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