Tax Roundup, 9/26/2013: Can dead horses carry preparer regulations? Also: rodent sentences.

September 26th, 2013 by Joe Kristan

20130121-2Further reports of the appeals court arguments about the IRS preparer initiative are out, and they bode well for consumers and taxpayers.  The judges seem to have been unimpressed by the arguments that an 1884 law gave the IRS the authority it needs to impose a comprehensive regulatory regime on preparers.  TaxGrrrl explains:

 During arguments, the judges appeared skeptical of the IRS’ reliance on an 1884 statute, the “Enabling Act of 1884,” also referred to as the “Horse Act of 1884″ as sufficient authority to regulate tax preparers. The statute was the result of a post-Civil War concern about the abuse of the claim process for the value of dead horses and lost property during the war. To stem the tide of abuse, Congress granted the Secretary of the Treasury the authority to regulate the admission of agents representing claimants before the Treasury Department (the rise of the modern day Enrolled Agents), and to penalize those who failed to comply with the regulations.

The IRS argues that the law still allows for regulation of tax preparers. The statute predates the modern income Tax Code which was codified in 1913…

The amount of time that passed from the 1884 case and now didn’t go without notice in front of the panel. Consider this brief exchange between Justice Department Tax Division lawyer Gilbert Rothenberg and the panel:

Panel: That’s how many years?
Rothenberg: That’s about a century.
Judge: And then after a century, Treasury suddenly decides these words empower us to do this…?

Whatever the legality of the IRS regulation initiative, it’s bad policy.  TaxGrrrl wisely interviewed a voluble commentator on these issues:

Shortly after the amicus brief in support of the plaintiffs was filed, I called up one of the parties, Joe Kristan, to ask him about his participation. Kristan is a CPA and authors the informative and entertaining Tax Update Blog. He doesn’t have an actual dog in this fight: CPAs are exempt from most of the regulations. So why, I asked, was he involved? He offered a laundry list of reasons: it’s bad law, bad policy and bad for the consumer.

During our call, we both agreed that there are bad tax preparers out there but Kristan used that fact to seize upon one of the main criticisms of the IRS scheme: there are ways of dealing with bad acts and these regulations won’t keep the bad preparers honest. It doesn’t, for example, deal with the issue of fraud in the industry. And, he says, those who can manipulate the system will now have the equivalent of a “seal of approval” from IRS, giving consumers a false sense of security.

But what about those education requirements and the competency exams? Kristan shrugs off the notion that some testing keeps taxpayers safe, saying that the test is a “literacy test, not a competency test.” 

Other coverage:

Russ Fox,  No Loving for Dead Horses in DC Court of Appeals

Chris Stephens, Court of Appeals Not Loving IRS Arguments (Tax Policy Blog)

Kay Bell, IRS’ ‘dead horse’ tax preparer regulation argument doesn’t appear to move federal appeals court: “The consensus of practitioners who heard the arguments, during which the judges were much more critical in their questioning of Rothenberg than Loving attorney Dan Alban, is that the panel will give the tax preparers fighting regulation another victory.”

Link: Audio of oral arguments at the Federal Circuit.

 

“Affordable” Care Act.  So all of the disruption, complexity and higher taxes of Obamacare are worthwhile because it makes health insurance more affordable and available, right?   Andrew Lundeen at the Tax Policy Blog maps out the, um, savings: Obamacare Increases Premiums by As Much As 305 Percent.

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But it’s a better deal as you get older, right?

Some costs are even higher for 40-year-olds. In North Carolina, a 40-year-old man could see an increase of 305 percent and 288 percent in Nebraska. A 40-year-old woman will face increases over 200 percent in both North Carolina and Nebraska as well.

Such a deal.

 

#Tony Nitti, Lost: $67 Million. If Found, Please Return To IRS:

“The IRS has seen its summer from hell extended into autumn, as a report issued today by the Treasury Inspector General for Tax Administration (TIGTA) revealed that the Service cannot account for $67 million that was set aside in a slush fund to help pay for Obamacare.”  

Yup. That’s $67 million of taxpayer dollars that were spent on, well…nobody is quite sure what it was spent on, other than it appears to have used for employee workspaces and technology. In other words…Grand Theft Auto V for everyone!

Remember, we need to increase IRS funding.

 

Cara Griffith, The Rush Is on to Obtain Forgiveness (Tax Analysts Blog). “On Monday, September 23, Louisiana and Connecticut launched tax amnesty programs.”

Jason Dinesen, Glossary of Tax Terms: FICA   

TaxProf, The IRS Scandal, Day 140

Robert D. Flach,  TAX BLOGOSPHERE BUDDIES – JIM BLANKENSHIP

 

Great moments in Economic development.  A story about the wonders of TIF financing from East St Louis, via stltoday.com:

A former Alorton and Fairmont City cop, convicted in state court in April for pulling over a female motorist and compelling her to perform oral sex on him, pleaded guilty in federal court here on Wednesday to wire fraud and tax evasion.

Court documents show that Harry A. “Dink” Halter, 53, admitted to misusing public funds paid to his business, Town & Country Towing of Alorton.

In 2009, Halter got a $24,900 tax increment financing grant to construct a new fence around his business, court records show. Halter admitted in court that he used about $19,000 of the grant for personal expenses.

Halter also failed to report employee wages to the IRS and acted to conceal his income.

I’m sure his neighbors who are paying for the tax break appreciate what the TIF grant did to make Alorton a better place.

 

Pickup lines that never work.   Let’s Have Dinner and Talk About Death (TaxProf)

News from the profession:  PwC Acquired an Interactive Marketing Company Because Why the Hell Not? (Going Concern)

 

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Tax news from the pond:

Beavers Fined, Sentenced To Six Months In Prison For Tax Crimes (Progress Illinois)

Government: Beavers’ sentence too light (WICS.com)

Muskrats ask that sentence not be served during winter.  ”They hibernate then anyway.”

 

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