Posts Tagged ‘Alan Cole’

Tax Roundup, 9/11/14 – Link and run edition.

Thursday, September 11th, 2014 by Joe Kristan

20120531-2Just links today.

Accounting Today visitors: Go here for the dog/email discussion.

 

TaxGrrrl, Back To School 2014: Commuting Tax Benefits

Peter Reilly, Did Florida County Tax Man For Being Happily Married?

Jason Dinesen, When Does the “1099s to Veterinarians” Rule Start?

Kay Bell, IRS Direct Pay one of many ways to pay estimated taxes.  Remember, third quarter payments are due Monday.

William Perez, Have a Home Office? Here’s How to Deduct It On Your Taxes

 

Cara Griffith, A Win for Transparency (Tax Analysts Blog) ” A Kentucky court has ordered the release of redacted copies of the Department of Revenue’s final letter rulings in a suit Tax Analysts joined seeking release of the documents under the Open Records Act”

Alan Cole, The Estate Tax is a Poor Source for Federal Revenue (Tax Policy Blog)

Howard Gleckman, Don’t Count on Much Economic Growth From Individual Tax Reform…Or From Tax Rate Cuts (TaxVox)

 

Russ Fox, Let’s Give Lois Lerner Credit Where Credit Is Due. “It turns out that Ms. Lerner was upset with an unnamed IRS employee who was paid $138,136 a year and was doing ‘nothing.'”

TaxProf, The IRS Scandal, Day 490

 

The IRS standard.  “Wherever we can, we follow the law.” — IRS Commissioner Koskinen.

Career Corner.  Congratulations, Your Job Has Been Arbritrarily Chosen as One of the Most Underrated of 2014 (Adrienne Gonzalez, Going Concern)

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Tax Roundup, 8/19/14: Will people just quit paying taxes? And how far does your $100 go in Iowa?

Tuesday, August 19th, 2014 by Joe Kristan
The income tax, the Ultimate Swiss Army Knife of public policy.  Flickr Image courtesy redjar under Creative Commons license.

The income tax, the Ultimate Swiss Army Knife of public policy. Flickr Image courtesy redjar under Creative Commons license.

Some folks are worried that we’ll all suddenly stop paying taxes, according to a Tax Analysts story today (subscriber link only):

Richard Lavoie of the University of Akron School of Law, who studies tax ethics, says voluntary compliance rates have remained relatively high because paying taxes is an accepted social norm. Withholding plays a large role in compliance, but it does not explain everything, according to Lavoie.

Lavoie said the recent controversies surrounding the IRS, such as accusations that the agency targeted conservative groups for political reasons, and other factors such as worsening income inequality have all eroded the public’s trust in a fair tax system. If those pressures continue, it could cause taxpayer attitudes to change virtually overnight, he said. “At some point that all adds up, and what was a stable norm that we collect 83 or so percent of taxes voluntarily could flip,” he said.

I think Mr. Lavoie is identifying things he doesn’t like, such as “income inequality” and the Tea Parties, and dreaming up dreadful consequences.  For example, “Lavoie argued in his 2012 paper that antitax rhetoric such as that espoused by the Tea Party also has the potential to unbalance the tax system.”

Mr Lavoie talks about “accusations” of IRS malfeasance and “anti-tax rhetoric” as the dangers — not the well-documented abuses themselves, or the IRS stonewalling of investigations into the abuses, or the former Commissioner’s dishonest response to the scandal, or the current Commissioner’s intransigence, or the President’s “joke” about auditing his opponents.  These damage faith in the IRS much more than anything the Tea Party could come up with.

The article finds some people who get closer to identifying the real problem:

National Taxpayer Advocate Nina Olson in recent remarks also warned that the habit of voluntary compliance may be at risk. Like Koskinen, she cited the IRS’s budget situation, saying that if Congress continues to restrict the agency’s budget, it may lead to a downward spiral in voluntary compliance rates.

While the poor customer service and declining enforcement are related to funding, funding still isn’t the real problem.  The IRS budget would be just fine if the IRS were treated as just a revenue agency.  Instead Congress has made the tax system into the Swiss Army Knife of public policy.  The IRS has a portfolio that ranges from industrial policy to education to retirement security to, famously, health care.  The IRS policy roles can dwarf those of agencies with nominal responsibility for policy areas.  Giving so many jobs to the IRS necessarily makes it less capable of doing its real job, tax collection.

Unfortunately, there’s no sign that anybody is going to take away the agency’s many non-revenue tasks.  And a GOP Congress isn’t about to increase funding for the IRS as long as it seems unapologetic about going after groups opposed to the administration.  To the extent IRS intransigence causes a compliance crash, the agency has only itself to blame.

 

Alan Cole, Lyman Stone, Richard Borean, The Real Value of $100 in Each State (Tax Policy Blog):

 

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This map makes Iowa look pretty good.  When you consider average incomes compared to the cost of living, Iowa looks even better.

 

Robert D. Flach’s Tuesday Buzz covers inheritance taxes, tax robots, and the large number of people who seem to rely on lottery winnings for retirement funding.

 

20140728-1TaxGrrrl, Investment Opportunity: Possibly Booby-Trapped Property Remains Unsold.  Ed and Elaine Brown forfeited their property after their armed stand-off with the IRS, but the agency can’t find anybody willing to buy it.  There is some fear of booby traps, but I suspect potential buyers would also be a bit concerned about the reaction of Brown supporters.

Peter Reilly, The OID Fraud And Criminal Gullibility:

I have to say that I have some sympathy with the perspective that a reasonable person seeing the refund checks might want to take another look at the scheme.  If they were incapable of understanding the reasoning behind the scheme and what OID actually is, it could be hard to resist.

The OID scheme is absurd.  I realize some people really are gullible enough to believe in it — but only with a leap of faith that is, literally, criminally stupid.

 

Kay Bell, Pot tourism’s potential tax payoff for states with legal weed.  Iowa’s Governor just says no.

Richard Auxler, Do Sales Tax Holidays Ever Make Sense? (TaxVox).  “In some situations, sales tax holidays can make sense. But generally, they’re bad tax policy unless the alternative is large tax cuts with dubious growth assumptions, and not just for a weekend but for the whole year.”

Erica Brady, Final Whistleblower Regulations Create Administrative Review of Rejected and Denied Claims (Procedurally Taxing)

TaxProf, The IRS Scandal, Day 467

 

News from the Profession: TIL: Ancient Greeks Used Slaves as Auditors So They Could Be Beaten When They Screwed Up (Adrienne Gonzalez, Going Concern).

 

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Tax Roundup, 8/14/14: Department of Revenue says: no SE Tax, no Iowa gain exclusion on CRP ground. Cash rents also fail.

Thursday, August 14th, 2014 by Joe Kristan

20140814-1Cash Rent, failure to pay self-employment tax ruled fatal to Iowa capital gain exclusion.  Iowa has an unusual capital gain exemption on sales of farm and business property for taxpayers meeting both a 10-year holding-period requirement and a ten year “material participation” test.  The Iowa Department of Revenue yesterday released three rulings holding that taxpayers failed to meet the second requirement on sales of farm ground.  The material participation rules are for the most part the same as in the federal “passive loss” rules.

Cash rent.  Document 14201019  holds that you don’t “materially participate” if all you do is rent farm ground:

The issue raised in the protest involves whether a capital gain deduction from the sale of farmland was properly disallowed on the Iowa individual income tax return for the 2009 tax year.  The farmland, which was held in the name of two partnerships, West Side Acres and East Side Acres, was involved in a cash rent arrangement.  There is no dispute that the farmland was held for more than ten years, but the Department contended that the ten year material participation test was not met.

The taxpayers claimed they spent more than 100 hours managing their farm rentals, but the Department said that activity didn’t count (my emphasis):

The Department notes that most of the hours spend by protester in the farming operation that was provided in the January 29, 2014 letter related to maintenance of business financial records, including review of property tax estimates and assessments and payment of expenses.  The Stoos decision stated that actions of paying the mortgage, preparing taxes and other financial work is not materially related to the farming operation, and these hours were considered “investor-type” activities which were not part of the day-to-day operation of the farm.  Therefore, those hours do not count toward material participation, and the 100 hour test has not been met by protester.  

This is the result I would have predicted.  Cash rent of farm land is not normally considered  “farming” under the passive loss rules.

binConservation Reserve and Self-employment Tax.  Documents 14201020 and 14201017 deny the capital gain exclusion to two taxpayers because they failed to pay self-employment tax on CRP payments.  The liability of CRP recipients for self-employment tax is controversial; a pending Eighth Circuit case seems likely to hold that the tax doesn’t apply to CRP recipients who do not otherwise farm.

The rulings say that the Department goes by the treatment of the payments reported on the taxpayers returns: if they taxpayer paid SE tax on CRP payments, they are considered to have materially-participated in those years, but not otherwise.  From Document 14201017 (my emphasis)

The Department first notes that the Federal Court of Appeals for the Sixth Circuit in Weubker v. Commissioner, 205 F.3d 897 (2000) held that CRP payments were net income from self-employment because they were received in exchange for performing tasks “that are intrinsic to the farming trade or business” such as tilling, seeding, fertilizing and weed control. Subsequently, the Internal Revenue Service issued Notice 2006-108 which states that CRP payments either to a farmer who either personally fulfills the CRP obligations or who isn’t an active farmer and fulfills this obligation through a third party are both includible in self-employment income and are not excludible as rentals from real estate.

Therefore, the Department contends that self-employment tax was clearly due on these CRP payments.

Since protester did not pay self-employment tax on this CRP income, the Department contends that the material participation test was not met. In addition, protester does not meet the retired farmer exception regarding material participation for 5 of the 8 years prior to retirement since self-employment tax was not paid on the CRP acres prior to you receiving social security benefits in 2003. Therefore, the Department contends that you do not meet the qualifications for the capital gain exclusion since you did not materially participate in the CRP activity for ten years.

The liability for SE tax on CRP payments was never as open-and-shut as the Department says. Some commentators have argued that Weubker is wrong, and that CRP, by itself, doesn’t constitute farming (see here and here).  Even so, it is also a stretch to say that the minimal maintenance required on CRP ground rises to the level of “material participation.”

The Department here is saying in effect that they will take your word for it — as shown on your tax filings.  If you paid SE tax on your CRP income, you’re a farmer as far as they are concerned, and you qualify for the exclusion.  Given the stratospheric cost of farm ground nowadays, taxpayers may find it worth paying a little SE tax to qualify for the Iowa gain exclusion.

Related:

Material Participation Basics.

Iowa Capital Gain Deduction: an illustration

 

Canadians born in U.S. sue Ottawa over tax fraud law (TheStar.com):

Canada has violated the charter rights of nearly a million Canadians by agreeing to share their financial details with authorities in the United States, two Ontario women allege in a new lawsuit.

FATCA sponsor Charlie Rangel, D-NY

FATCA sponsor Charlie Rangel, D-NY

They are talking about “FATCA,” the outrageous Congressional overreach into the operations of banks around the world.

Gwen Deegan of Toronto and Ginny Hillis of Windsor, Ont., have launched a claim against the Attorney General of Canada.

In it, they accuse Ottawa of breaching the Constitution by complying with a sweeping new American tax fraud law, known as the Foreign Account Tax Compliance Act.

Under the terms of the legislation that took effect last month, banks must share all personal and joint account details of anyone deemed to be a “U.S. person.” This includes American citizens and people born in the U.S., even those with no existing ties to the country.

I wonder what the reaction in the U.S. would be if, say, Russia demanded the bank account information of every American it said was a “Russian person.”  I don’t think it would be popular. Yet our Congress thinks it is entitled to demand that non-U.S. banks cough up whatever information it feels like asking for.

The response has been to make financial life difficult for Americans overseas, as dealing with U.S. persons becomes more of a hassle than their business is worth.  It also restricts employment opportunities abroad for Americans by making their employment inconvenient.

Charlie Rangel was one of the main sponsors of FATCA.  He would know a little about not paying taxes.

 

20140814-2Paul Neiffer, Sale of Gifted Grain Can Be Tax Free:

When the donee sells this grain, it will be reported as a capital gain.  If time after harvest of the grain and the time of sale is less than a year, it is short-term.  If this time is greater than a year, then it is long-term. 

If the donee is in a low-enough bracket, long-term capital gains are taxed at zero.  But watch out for the “Kiddie Tax.”

 

Jason Dinesen, Proper Documentation of Business Expenses:

In most circumstances, you can prove your expenses even if you don’t have a receipt. But again, I feel that receipts AND other documents are the safest way to go.

Absolutely.  Jason has some tips for keeping track of them.

 

Kay Bell, School’s back. So are some, but not all, education tax breaks

 

Andrew Lundeen, Alan Cole, The Inequality Debate Ignores How Incomes Change Over the Life Cycle (Tax Policy Blog):  “Income data from the IRS and the Census Bureau have their uses, but measuring equality isn’t one of them.”

 

Joseph Thorndike, How ISIS Is Using Taxes to Build a Terrorist State (Tax Analysts Blog)

TaxGrrrl, Tax Revenues Still On Pace To Break Records In 2014   

 

TaxProf, The IRS Scandal, Day 462

Career Corner.  Study: Working in a Windowless Cube is Ruining Your Life (Adrienne Gonzalez, Going Concern)

 

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Tax Roundup, 6/11/14: IRS Bill of Rights: just words? And: when your state got its income tax.

Wednesday, June 11th, 2014 by Joe Kristan

billofrightsTalk is cheap.  The North Korean constitution has a whole bunch of rights,  per Wikisource.  For example:

Article 70. Citizens have the right to work. All able-bodied citizens choose occupations in accordance with their wishes and skills and are provided with stable jobs and working conditions. Citizens work according to their abilities and are paid in accordance with the quantity and quality of their work.

Article 75. Citizens have freedom of residence and travel.

Article 78. Marriage and the family shall be protected by the State. The State pays great attention to consolidating the family, the basic unit of social life.

 

So written declaration of rights are just empty words when there is nothing behind them. That’s why I can’t get too excited about the big Taxpayer Bill of Rights announced by IRS Commissioner Koskinen and Taxpayer Advocate Olson yesterday.

Nothing to disagree with on the list, but what will the IRS do to make it more than empty words?  Going down the list:

The Right to Be Informed.  The IRS is infamously secretive.  Will they no longer require Tax Analysts to sue them to make public their positions and procedures?  Will the required compensation for S corproation employee- shareholders be only known to the whim of the examining agent?

The Right to Quality Service.  The IRS continues to get worse at answering taxpayer questions.  It seems like they are worse than ever at dealing with correspondence.  It has become nearly impossible to reach IRS personnel in D.C. by phone to ask technical questions. Is the Commissioner going to change any of this?

The Right to Pay No More than the Correct Amount of Tax.  The nearly-automatic assertion of penalties for every asserted deficiency will have to end for this to mean anything.

The Right to Challenge the IRS’s Position and Be Heard.  The consolidation of appeals offices and their seeming loss of independence will have to be reversed for this to mean something.

The Right to Appeal an IRS Decision in an Independent Forum.  See you in Tax Court…

The Right to Finality.  Does this mean IRS will enable offshore FBAR foot-faulters to come into compliance without facing financial ruin?

The Right to Privacy and The Right to Confidentiality. These are a big ones, and the IRS hasn’t been doing so well at them lately.

The Right to Retain Representation.  Yet the IRS wants to choose who gets to do this for you. When the IRS can shut down your representative, he may not be a really zealous advocate.

The Right to a Fair and Just Tax System.  This is something that the IRS can’t ultimately reach on its own — Congress designs the system — but it could sure do a lot better.  When the IRS routinely assesses $10,000 penalties for filing Form 5271 one day late, when they effectively loot foreign pension accounts of expats for inconsequential paperwork violations, it’s hard to see the fairness and justice.

Taxpayer Advocate Nina Olsen

Taxpayer Advocate Nina Olsen

Other coverage:

TaxProf has a roundup.

Kay Bell, Would the newly adopted Taxpayer Bill of Rights have prevented the IRS Tea Party scandal?

Robert W. Wood, IRS Reveals Taxpayer Bill Of Rights

Joseph Henchman, IRS Approves List of Taxpayer Rights (Tax Policy Blog).  “My own addition is that much as requiring police to know and inform arrestees of “Miranda” warnings has increased awareness of those rights, so too will this.”

TaxGrrrl,  IRS Releases Much Anticipated ‘Taxpayer Bill Of Rights’  “With the wrap up of filing season, the IRS is now in its peak correspondence mailing season. This was, according to Koskinen and Olson, the perfect time to introduce the rights since they will be mailed out together with those correspondences.”

Russ Fox, IRS Adopts “Taxpayer Bill of Rights;” Will Anything Change?  “Until the IRS comes clean on the IRS scandal, what was released today makes a great sound bite but is otherwise nothing new. The IRS appears to have violated six of the ten rights, and is still stonewalling Congress on the scandal. The IRS’s budget won’t be increased because of today’s press release.”

 

Scott Drenkard, Richard Borean, When Did Your State Adopt Its Income Tax? (Tax Policy Blog):

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No, they haven’t been around forever, it just feels that way.  Wisconsin was first.

 

Jason Dinesen, Same-Sex Marriage and Amending Prior-Year Returns.  “A broader way of asking the question is: if someone who’s in a same-sex marriage amends a prior-year return that they had previously filed as a single person due to the Defense of Marriage Act, must that amended return show a filing status of married?”

Tony Nitti, District Court: Lone Sale Of Undeveloped Land Generates Ordinary Income, Jeopardizing Land Banking Transactions   

William Perez, Home Office Deduction

Keith Fogg, Government Drops Appeal in Rand Case (Procedurally Taxing).  This is the case where the Tax Court ruled that a recovery of refundable credits in excess of income tax was not a “deficiency” for computing penalties.

Jack Townsend, Reminder: Category 2 Banks Will Serve Up Their U.S. Depositors .  Consider banking secrecy dead.

Brian Strahle provides a list of state and local tax blog resources. 

 

20140611-2Alan Cole, Japan’s Tax Reforms and its Blockbuster GDP Growth (Tax Policy Blog):

Paired together, theory would predict that these two tax changes create a structural shift in the Japanese economy; the more favorable corporate tax climate would encourage investment, and some income would be spent on that new investment instead of immediate consumption. Over the long term, this will boost Japanese wealth and productivity, and eventually allow for a higher standard of living than before.

The data fit this theory so far; private nonresidential investment grew at a “blockbuster” rate of 7.6% in the first quarter of 2014. 

 

David Brunori, A Coke and a Smile and a Tax (Tax Analysts Blog). ” It would tax a can of Coke, but if you went to Starbucks and dumped five teaspoons of sugar into your latte, there would be no additional tax.”

TaxProf, The IRS Scandal, Day 398

Going Concern, Ex-BDO Vice Chairman Given 16 Months to Think About His Choices. He will retire to a Bureau of Prisons meditation facility.

He was ashen after the sentence was announced.  Gray man sentenced to 18 months for tax evasion

 

 

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Tax Roundup, 5/30/15: Antidumping edition. And: permanent bonus depreciation advances.

Friday, May 30th, 2014 by Joe Kristan

20121120-2Iowa Public Radio, Can Employers Dump Workers On Health Exchanges? Yes, For A Price:

The latest tweak from the Internal Revenue Service essentially prohibits employers from giving workers tax-free subsidies to buy policies in the online public marketplaces created by the health law. The New York Times first reported the rule.

But the headline on the story, “I.R.S. Bars Employers From Dumping Workers Into Health Exchanges,” overstates the case. Nothing stops employers from canceling company plans and leaving workers to buy individual policies sold through the exchanges — as long as the companies pay the relevant taxes and penalties, said Christopher Condeluci, a Venable lawyer specializing in benefits and taxes. Those would vary according to a company’s size and circumstances.

The ACA requires employers with more than 50 “full-time equivalent” employees to provide “adequate” coverage.  The IRS says that subsidizing employees to use the ACA exchanges doesn’t work.  This, of course, is the same IRS that arbitrarily and unlawfully just waived the requirement in the first place through 2014, and for those with under 100 employees through 2015.  Some laws are more equal than others.

It’s fascinating that the Administration refers to the practice of sending employees to buy policies on the exchanges as “dumping.”  The exchanges are a centerpiece of Obamacare, touted as an important step in making affordable coverage available for everyone.  Suddenly they are a “dump.”  Obamacare fines individuals for not patronizing that very dump.

 

20130422-2Permanent bonus depreciation advances in House.  Tax Analysts reports  ($link, my emphasis)):

Camp said the extenders the committee considered had been renewed enough times that most of them have been or soon will have been extended for at least 10 years, the budget window period. “If we’ve extended something for 10 years, let’s call it what it is, [and] that’s permanent policy,” he said. “We shouldn’t have to raise taxes other places in the economy to keep current tax law.”

The costliest bill the committee approved was H.R. 4718, introduced by Ways and Means Committee member Patrick J. Tiberi, R-Ohio. That bill would permanently extend bonus depreciation, allowing businesses to immediately deduct 50 percent of qualified purchased property. The bill, passed on a 23-11 vote, would expand the definition of qualified property to include owner-occupied retail stores. It would lift restrictions to allow for more unused corporate alternative minimum tax credits, which businesses can claim in lieu of bonus depreciation, to be used for capital investment.

Expiring provisions are a lie.  Any extension of an “expiring” provision should be counted as permenent under budget rules, as they pretty much are.

Related: Dave Camp’s Great Bonus Depreciation Flip-Flop (Howard Gleckman, TaxVox);  Negative GDP Growth Illustrates the Need for Bonus Depreciation (Alan Cole, Tax Policy Blog)

 

Wind turbineOne of these is not like the other.  The Des Moines Register coverage of last night’s Iowa GOP Senate Primary debate has something I never expected to see in a story about a candidate for statewide office:

Whitaker stands out because he doesn’t support the Renewable Fuel Standard, or any tax breaks for any energy source. “If we don’t believe in mandates for health care, we shouldn’t believe in mandates as it relates to energy,” he said.

All other candidates in both parties genuflect to the Renewables Subsidy idol.  In Iowa, ethanol apostasy is rare; more typical is the GOP governor who is all about picking winners and losers, when the winners are an influential local constituency.

Related: Governor’s press conference praises construction of newest great pyramids.

 

The IRS needs to regulate these people to stamp out fraud.  “Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that six former employees of the Internal Revenue Service have pleaded guilty to receiving unemployment benefits while they worked at the agency.” (Department of Justice press release)

Robert D. Flach serves up your Friday Buzz.  “Who would have guessed that I would agree with a group of CPAs?”

TaxProf, The IRS Scandal, Day 386

 

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And now they’ve proved it.  A Minneapolis husband and wife who ran a website called imarriedanidiot.com were convicted last week on federal tax charges.” (TwinCities.com)

Across the road, of course.  Where are all the Chickens?  (Paul Neiffer)

News from the Profession.  This Big 4 Firm Just Ruined Selfies for Everyone (Going Concern)

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Tax Roundup, 5/20/14: Credit Suisse, felon. And: yes, tax credits are subsidies.

Tuesday, May 20th, 2014 by Joe Kristan

 

credit suisse logoThe big news in the tax world today is the Credit Suisse guilty plea.  From the Wall Street Journal:

Credit Suisse Group became the first financial institution in more than a decade to plead guilty to a crime Monday when the Swiss bank admitted it conspired to aid tax evasion and agreed to pay $2.6 billion to settle a long-running probe by the U.S. Justice Department. The criminal charge filed Monday in federal court outlined a decades-long, concerted attempt by Credit Suisse to “knowingly and willfully” help thousands of U.S. clients open accounts and conceal their “assets and income from the IRS.”

This has to make some folks nervous:

While Credit Suisse isn’t turning over names of account holders as part of the agreement, they are handing over information that Deputy Attorney General James Cole said would lead to specific account holders.

Swiss bank secrecy is dead, and bank secrecy anywhere is pining for the fjords.  Proceed accordingly.

The TaxProf rounds up coverage.

Jack Townsend, Credit Suisse Pleads to One Count of Conspiracy to Aiding and Assisting 

 

Wind turbineI hate it when I have to disagree with somebody I respectbut I have to disagree with this from A. Barton Hinkle, writing about wind energy credits:

A tax credit is just that: a credit against the amount a taxpayer owes. As the IRS explains, a tax credit “reduces the amount of tax for which you are liable.” That is vastly different from a direct grant, in which the government takes money from Jones and gives it to Smith. In the case of a tax credit, none of Jones’ money goes into Smith’s pocket. Rather, Smith gets to keep more of his own money. Smith’s tax credit doesn’t cost Jones a cent.

Let’s assume that Jones and Smith are competitors.  Because of the tax credit, Smith can charge less than he otherwise would and still makes more than Jones.  Jones finds his margins are squeezed.  This tax credit absolutely costs Jones money.  A big enough credit to Smith can put Jones out of business.  And in a free market, there’s a Jones for every Smith.

Yes, some tax credits are more egregious than others.  Refundable credits, like the Iowa research credit, and transferable credits, like the defunct Iowa film credit, are the worst.  They are little more than government scrip generated by filing tax returns.

Non-refundable credits are slightly less bad, because they are only available to people who actually pay taxes.  Still, they are economically equivalent to special-purpose vouchers issued by governments that can be applied to pay taxes — limited purpose subsidies.  If the government issued vouchers that could only be used to, say, buy housing or cell phones, nobody would dispute they are subsidies.

Special purpose deductions are less distortive still.  But all special tax favors have a common flaw — they all involve the government allocating investment capital.  The 20th Century proved that to be a poor idea.  And running the subsidies through a tax return doesn’t make them any less subsidies; they only become easier to hide.

Related: Governor’s press conference praises construction of newest great pyramids

 

20140520-2Jason Dinesen, If You’re a Sole Proprietor, There’s No Such Thing as a “Salary” for Tax Purposes:

When a sole proprietorship accounts for its net income, it does so by taking gross income minus expenses. Those expenses DO NOT include draws. So, the proprietor is taxed on the net income of the business and gets no deduction for the draws.

You may think that’s obvious, but I’ve had to explain this to clients.

 

Russ Fox, One Good Crime Deserves Another.  “Oft evil will shall evil mar.”

Kay Bell, I’ll take tax code section 179 for $500, Alex

Peter Reilly, TIGTA Alimony Report May Cause Crisis Of Conscience Among Tax Professionals .  “I have to tell Terry that the IRS will notice the discrepancy, but the odds are 25 to 1 that they won’t do anything about it.”

Robert D. Flach is right on time with his Tuesday Buzz.  He notes the AICPA oppostion to the proposed “voluntary” preparer regulation system:

Clearly the AICPA is afraid, and rightfully so, that a voluntary RTRP certification would take 1040 business away from its members – because the designation would identify individuals who have proven competence specifically in 1040 preparation.  Currently the taxpayer public erroneously thinks that the initials CPA are an indication of a person’s competence in 1040 preparation, which is simply not true. 

I can’t speak for the AICPA, but I think they are right to oppose it.  In addition to destroying whatever is left of the Enrolled Agent brand, I think the “voluntary” program will be voluntary in the same way that donations to United Way were voluntary at a prior employer.  “It’s voluntary, and we always have 100% participation.”  And considering how bad the IRS is at what it is supposed to be doing, it really doesn’t need to take on new tasks.

 

Keith Fogg, Private Debt Collection – An Idea Whose Time Will Never Come (Procedurally Taxing).  “My concerns about the proposal fall into four broad categories mentioned above: training, accountability, system impact and proper incentives.”

I would permit private collection in limited circumstances —  for undisputed debts that the IRS isn’t bothering to collect.  With proper controls, I think it could work.  There is nothing magical about having official government employees do it.   But the Treasury Employees Union will make sure it never happens.

 

taxanalystslogoJeremy Scott, The Medical Device Excise Tax Derails Extenders (Tax Analysts Bl0g).  “Political games involving the medical device excise tax threaten to completely derail the passing of an extenders package in the near future.” Come on, the extenders are just a political game to begin with, using Calvinball rules.

Renu Zaretsky, A Pleading Bank, a Rejected Offer, and Taxing Gas and Pot.  The TaxVox headline roundup covers Uruguay’s nurturing a surprising local industry.

TaxProf, The IRS Scandal, Day 376

Alan Cole, When Broad Bases Are Actually Narrow Bases (Tax Policy Blog):

If I rent out my property to you, I pay taxes income used to buy the property, and I pay taxes on the rental income derived from it. In contrast, if I lived in the property myself, I would not have to pay the additional layer of taxes. It’s the same house either way, but because people are eager to “broaden” the base, they end up taxing it twice in some circumstances, and only once in others. A true “broad” base is a tax on personal expenditures – one that ultimately falls on the people who actually consume.

That’s precisely why “preferential” capital gain rates are really just piling on, and why the proper rate for them is probably zero.

Going Concern, The AICPA Has Nuked The CPA2Biz Brand in Favor of CPA.com.  Now if they can just do something about that disturbing mascot.

 

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Tax Roundup, 5/14/14: Earned income credits, still busted. And: extenders advance.

Wednesday, May 14th, 2014 by Joe Kristan
The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

Nope.  Still busted.  From WashingtonExaminer.com comes an update on what some call America’s most successful anti-poverty program:

The Treasury Department has released its latest report  on the fight against widespread fraud in the Earned Income Tax Credit program. The problem is, fraud is still winning. And there’s not even much of a fight.

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

Wait.  Didn’t the President sign a bill in 2010 to fix all this?

The new report found that the IRS is simply ignoring the requirements of a law called the Improper Payments Elimination and Recovery Act, signed by President Obama in 2010, which requires the IRS to set fraud-control targets and keep improper payments below ten percent of all Earned Income Tax Credit payouts.

Whatever the EITC does to help the working poor, it is a boon to the Grifter-American community.  Fraudulent EITC claims are a staple of ID theft fraud and low-tech tax cheating in general.

It’s worth noting that the high rate of improper EITC payouts has not gone down in spite of the ever-increasing IRS requirements for preparers who issue returns claiming the credits.  This should give pause to folks who think IRS preparer regulations will stop fraud, though it won’t.

It’s also notable that Iowa recently increased its piggyback EITC to 15% of the federal credit — increasing the annual cost of the credit by an estimated $35 million.  Assuming Iowans are just as honest as other Americans, that means about $8 million of additional stimulus to the Iowa grifter economy.

Finally, the phase-out of the EITC functions as a hidden high marginal tax rate on the program’s intended beneficiaries, the working poor.  The effective marginal rate in Iowa exceeds 50% at some income levels.  Combined with other income-based phase-outs, the EITC becomes a poverty trap.

 

Related: Arnold Kling,  SNEP and the EITC. “My priors, which I think are supported by the research cited by Salam, is that trying to use a program like the EITC for social engineering is a mug’s game.”

 

 

Extenders advance in Senate.  Tax Analysts reports ($link)

Legislation that would extend for two years nearly all the tax provisions that expired at the end of 2013 cleared a procedural hurdle in the Senate May 13.

Senators voted 96 to 3 to invoke cloture on the motion to proceed to H.R. 3474, a bill to exempt from the Affordable Care Act’s employer mandate employees with healthcare coverage through the Veterans Benefits Administration or through the military healthcare program TRICARE.

The bill is the legislative vehicle for the tax extenders. It will be amended to include the text of the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 (S. 2260) and likely that of the Tax Technical Corrections Act of 2014 (S. 2261), both of which the Senate Finance Committee passed April 3 via voice vote.

The bill that passes will probably look much like the Senate bill.  The House has advanced bills to make some of the perpetually-expiring provisions permanent, but the President, pretending that they won’t get passed every year anyway, says permanent extension is fiscally irresponsible.

Among the provisions to be extended yet again, mostly through 2015, are the research credit, new markets credits, wind and biofuel credits, bonus depreciation, and increased Sec. 179 deductions.  The five-year built-in gain tax recognition period is also extended through 2015.

Related: TaxGrrrl, Senate Moves Forward To Extend Tax Breaks For 2014

 

20120906-1O. Kay HendersonKnoxville Raceway ceremony for state tax break of up to $2 million:

Governor Terry Branstad went to Knoxville today to sign a bill into law that gives the Knoxville Raceway a state tax break to help finance improvements at the track.

“This is a great facility,” Branstad told Radio Iowa during a telephone interview right after the event. “Last year, in 2013, they attracted 211,000 visitors, so it’s a big tourism attraction and it’s a good investment and it’s great for the state to partner with the community for a project of this magnitude.”

Here’s how that partnership works: the racetrack will charge sales tax to its customers, and keep the money.  Only two other businesses are special enough to get this sweet deal.  Tough luck for the rest of us who don’t have the good connections and lobbyists.

 

Walnut st flowersJana Luttenegger, Updated E-Filing Requirements for Tax Preparers (Davis Brown Tax Law Blog).  “The handbook is not exactly clear.

Jason Dinesen, Things Tax Preparers Say: S-Corporation Compensation.  “But too many business owners — and their accountants — treat S-corps like a magic wand that can just make taxes disappear completely.”

Kay Bell, IRS fight to regulate tax preparers officially over…for now

Peter Reilly, Can Somebody Explain Tax Shelters To Thomas Piketty?  In the unlikely event that the Piketty recommendations are ever enacted, Peter notes that “there will be a renaissance of shelter activity.”  Peter provides a “Cliff Notes” summary of this year’s big forgettable book I’ll never read, which I appreciate.  Also: Peter uses the tax-law-as-Swiss Army Knife analogy that I am so fond of.

Robert D. Flach, STILL MORE CLIENTS SCREWED BY THE TAX CODE.  “The list of taxpayers screwed by our current Tax Code is not a short one.  Today I add taxpayers with gambling winnings.”

 

20130110-2Howard Gleckman, How “Dead Men” Fiscal Policy Is Paralyzing Government (TaxVox).  He reviews a new book, Dead Men Ruling, by Gene Steurle:

“We are left with a budget for a declining nation,” Gene writes, “that invests ever-less in our future…and a broken government that presides over archaic, inefficient, and inequitable spending and tax programs.”

All this has happened due to a confluence of two unhappy trends: The first is what the late conservative writer Jude Wanniski memorably described almost four decades ago as the “Two-Santa Theory.”

The Santas are the two parties, each of whom pick our pockets to fill our stockings.

 

Alan Cole, The Simple Case for Tax Neutrality (Tax Policy Blog).  “When states give preferential rates of sales tax to certain goods, the most visible result is the legal bonanza that follows from trying to re-categorize goods into the preferred groupings. ”

David Brunori, Repealing the Property Tax Is an Asinine Idea (Tax Analysts Blog). “Public finance experts are almost unanimous in their belief that the property tax is the ideal way to fund local government services… Most importantly, the property tax ensures local political control.”

William McBride, What is Investment and How Do We Get More of It? (Tax Policy Blog).  “Full expensing for all investment, according to our analysis, would increase the capital stock by 16 percent and grow GDP by more than 5 percent.”

 

TaxProf, The IRS Scandal, Day 370

News from the Profession.  AICPA Tackling the Important Issue of Male CPAs Wanting It All (Going Concern). 

 

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Tax Roundup, 5/8/14: No, Virginian, there is no travel expense Santa Claus. And more!

Thursday, May 8th, 2014 by Joe Kristan

20120801-2News Flash: Tax Court Judges didn’t just fall off the turnip truck.  That insight might have occurred to a Virginian after yesterday’s Tax Court decision denying $64,775 in 2010  “car and truck expenses” for a “mobile advertising business” that grossed $7,200 in revenue.

The Virginian worked full-time for Verizon while traveling up a storm — 129,550 miles in 2010, by his own account.  Special Trial Judge Dean questioned The Virginian’s work ethic (my emphasis):

The number of hours petitioner worked for Verizon and purportedly drove for his mobile advertising business simply strains credulity. Petitioner’s monthly mileage for 2010 ranged from 7,419 miles to 17,864 miles. Petitioner testified that he drove at approximately 60 miles per hour. If it is possible that he could average 60 miles per hour in the month that he drove 17,864 miles, he spent at least 300 hours on the road that month or almost 10 hours a day. All this while working full time for Verizon.

The judge also has doubts about the business model:

Furthermore, petitioner’s extensive driving does not appear to be ordinary and necessary to his mobile advertising business. Petitioner claims that he drove all over the United States to post fliers and to advertise his own mobile advertising business, even though most of his clients were local clients except one online refinancing company. All the while, petitioner had very little income in relation to the excessive costs he incurred driving to put up flyers. Furthermore, the advertising for his own business appeared to be fruitless, as he never made a profit in any of the six years he engaged in the business, despite incurring great costs traveling to advertise mobile advertising business.

20140508-2But ultimately none of that mattered, because The Virginian failed to cross the initial threshold for deducting any sort of travel expenses — Section 274:

Notwithstanding whether petitioner’s excessive driving was ordinary and necessary for his mobile advertising business, he simply did not satisfy the strict substantiation requirements of section 274(d) for claiming car and truck expenses… Petitioner had no backup receipts and no beginning and ending mileage for the automobile he allegedly used. 

Section 274(d) requires taxpayers to document travel expenses “by adequate records or sufficient evidence”

-the amount of expense,

-the time and place of the travel, and

-the business purpose of the trip.

For travel, that means receipts where possible (e.g., hotels), and contemporaneous calendars or logs documenting mileage.  Without that, your work ethic and business model doesn’t even come into play.

Cite: Abelitis, T.C. Summ. Op. 2014-44.

 

20130114-1Roger McEowen, IRS Says Agents Acting Under Power of Attorney Subject to FBAR Reporting.  “The agent (along with the principal) is subject to the FBAR filing requirements if the POA gives the agent signature authority over a foreign account that exceeds the dollar threshold.” 

 

TaxProf, The IRS Scandal, Day 364.  Big day tomorrow.

TaxGrrrl, UPDATED: Timeline Of IRS Tax Exempt Organization Scandal.  It started with a planted question to try to blunt the impact of the impending TIGTA report that pointed out the targeting.

Kay Bell,  Lois Lerner held in contempt of Congress, ramping up next phase of midterm election year political posturing.  Yes, posturing is occurring — that’s what politicians do.  But Sam Ervin’s posturing — and he did his share — didn’t make Watergate less a scandal.

 

Cara Griffith, Transparency Versus Disclosure of Taxpayer Information (Tax Analysts Blog)  “…the disclosure of documents that contain taxpayer information, whether required by state law or the result of litigation, does not encourage transparency in tax administration.”  I agree; unfortunately, the IRS hides behind dubious assertions of confidentiality to cover up its own questionable behavior.

 

Jason Dinesen, Hold the Phone on the IRS E-file Outrage Machine.  No, don’t.  It’s still outrageous.

20140508-1Peter Reilly, Nonrecognition On Divorce Transfers Hurts Receiving Spouse .  It did in this case, when the recipient spouse had to pay tax.   Taxpayers receiving property in divorce receive the other spouse’s basis, and the other spouse doesn’t have a taxable sale.  But it’s still good policy.  Property settlements are contentious enough without hitting somebody giving up property with income tax on that dubious privilege.  Also, if the IRS got a cut, there would be less marital property to split in the first place.

Alan Cole, Failing by its Own Standard: What DC’s Insurance Tax Tells Us About its Obamacare Exchange (Tax Policy Blog)

Tax Justice Blog, What’s the Matter with Kansas (and Missouri, and …). “An anti-tax, Republican super majority in the Missouri Legislature claimed victory yesterday in a year-long battle with Gov. Jay Nixon over taxes by voting to override Nixon’s veto of a $620 million income tax cut.”

Do tell.  California Legislative Analyst’s Office Raises Concerns with Film Tax Credits (Lyman Stone, Tax Policy Blog).

Renu Zaretsky rounds up tax headlines for TaxVox with Contempt, Audits, Health Care, and Highways.

Janet Novack, Mansion Tax Kills Some Million Dollar Home Sales, Study Concludes.  Taxes always matter.

Jack Townsend, Another Foreign Account Sentencing.

 

Quotable:

The practice of regularly renewing the extenders package is unfortunate and should be stopped. It distorts the budget process, encourages legislative rent seeking, and invites highly particularistic legislative provisions that are better characterized as windfalls and wasteful government spending rather than well-targeted tax incentives.

Victor Fleischer,  Tax Legislation in the Contemporary U.S. Congress (Via the Taxprof)

News from the Profession: Grant Thornton Tries to Motivate With the Human Centipede, or Something (Going Concern)

 

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Tax Roundup: April 30, 2014: Force of nature edition. And: Extenders move in U.S. House.

Wednesday, April 30th, 2014 by Joe Kristan

Iowa 1040s are due today!  If you are 90% paid in, they extend automatically with no filing.  If you need more time and need to pay in something, use IA 1040-V.

 

20130113-3House votes to make permanent six “expiring” provisions.  The House Ways and Means Committee voted to permanently extend six of the perpetually-expiring tax breaks that Congress renews every year or two.  They include:

  • A simplified version of the research credit
  • The five-year built-in gain tax recognition period for S corporations
  • The $500,000 Section 179 deduction limit
  • A provision reducing the net basis reduction for S corporation donations of appreciated property to the basis of the property.

The committee also voted for two international extenders.

The votes were mostly along party lines, which means they are unlikely to be passed in this form by the Democratic-controlled Senate. The Senate Finance Committee has already approved its own temporary extender package, and my guess is the final extenders package will look like the Finance Committee bill.

Tax Analysts reports ($link) that the committee isn’t done with extenders, but it isn’t clear when it will look at Bonus Depreciation.

The “no” votes for the House package objected to the lack of offsets to the revenue “lost” by the package.   I’m less upset.  While I oppose the research credit on principle, these provisions are permanent anyway; the whole “extender” process is a sham, conducted only to pretend that the tax breaks aren’t permanent so they “cost” less under Congressional accounting rules.  It’s the sort of thing that would be a felony in the private sector, but just another day for our leaders.  At least the House bill drops the pretense that these things won’t get passed every time they expire.

 

Additional coverage available at Accounting Today.

Related:

Tax Justice Blog, Rep. Dave Camp’s Latest Tax Gambit Is “Fiscally Irresponsible and Fundamentally Hypocritical”

Clint Stretch, Dreams of Tax Reform (Tax Analysts Blog)

 

 

20130117-1No gas tax boost this year.  Sioux City Journal reports that a last-gasp attempt to boost Iowa gasoline taxes died last night as the General Assembly continues its pre-adjournment frenzy.

 

David Brunori, Sad Pragmatism and Tax Incentives (Tax Analysts Blog).  “If tax incentives are an unavoidable reality, we should make them as transparent and accountable as possible.”  True, but that doesn’t excuse the politicians who take your money and give it to their special friends.

 

The Iowa State University Center for Agricultural Law and Taxation has released its 2014 summer seminar schedule.  It includes a slate of webinars on topics from Ethics to ACA mandates.  There will also be two big out-of-town events, in West Baden Springs, Indiana, and West Yellowstone, Montana.  I’m not able to participate this year, but they are a hoot and a great learning experience.

 

TaxGrrl, Widow Loses House Over $6.30 Tax Bill.  “A Pennsylvania woman has lost her home for little more than the cost of a Starbucks Frappuccino.”  The law in all its majesty.

Kay Bell, File IRS Form 1040X to correct old tax mistakes

Peter Reilly, Graduation Contingency Kills Alimony Deduction.  It’s very easy to screw up an alimony deduction with bells and whistles, as Peter explains.

 

20120531-1Jason Dinesen, Preparer Regulation and Judging Preparers Based on Size of Refund.  “Anyone who’s worked in this business has experienced the irate client who thinks the preparer screwed up because their refund was less than their friend/co-worker/hair dresser, etc.”

 

TaxProf, The IRS Scandal, Day 356

Jack Townsend, U.S. Congressman Indicted for Tax Related Crime

Joseph Thorndike, Airlines Say Ticket Taxes Would Be More Visible if They Were Better Hidden (Tax Analysts Blog)

Alan Cole, What Gift Cards Can Teach Us About Tax Policy (Tax Policy Blog)

Renu Zaretsky, Funding Tax Breaks, the IRS, and Public Pensions, Safety, and Schools.  The TaxVox headline roundup.

 

News from the Profession.  EY Is Tackling the Important Issue of Dudes’ Need for Flexibility (Going Concern)

 

Clear error is a standard used by appellate courts to review some lower court decisions.  A Tax Court case decided by Judge Paris dealing with horse losses yesterday involved purported destruction of records by an old girlfriend.  Here’s where the clear error comes in:

The wrath of a former girlfriend may be a formidable force, but it is not analogous to a hurricane-like natural disaster, and it does not constitute a reasonable cause outside petitioner’s control.

I’ve met Judge Paris, and I strongly suspect she’s never dealt with a bitter former girlfriend. Anyone who has would never have written such a thing.  But as she pointed out that the petitioner provided no evidence that such destruction occurred, so you oughta know that the case probably still is on solid ground.

 

Cite: Roberts, T.C. Memo 2014-74.  Additional coverage from Paul Neiffer, Partial Taxpayer Victory on Horse Farm Case

 

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Tax Roundup, 4/10/14: Still plenty of time for an IRA! And Iowa Tax Freedom Day looms.

Thursday, April 10th, 2014 by Joe Kristan

IRAWhen the tax deadline is looming, taxpayers looking for the Tax Fairy to wish away their tax problems often overlook the old-fashioned IRA.  You can still make 2013 IRA contributions through April 15.  An Individual Retirement Account contribution may be able to score you a 2013 deduction (or even a tax credit) for 2013; even if you don’t qualify for current tax savings, they are a nice and cheap way to build-up tax-sheltered savings.

IRAs come in two flavors: “traditional” and “Roth.”  Traditional IRAs build up their income tax-free, but earnings on them are taxable when they come out.  If you meet certain conditions, your traditional IRAs come with sprinkles: – a tax deduction.  If you don’t get the deduction going in, your principal is tax-free going out.

Roth IRAs never offer a deduction, but they leave a sweeter aftertaste: if you hold them long enough, income on Roth IRA assets is never taxed.  And unlike traditional IRAs, you are never forced to start withdrawing funds from the IRA, so the tax-free build-up can go on indefinitely.

Both traditional and Roth IRAs require you to have wage or self-employment net income.  The limits for contributions are the lesser of your taxable compensation or $5,500 ($6,500 if you were 50 by December 31, 2013).  You can contribute to a traditional IRA at any income level, but deductions phase out at higher income levels if you (or your spouse) are covered by a retirement plan at work.  The availability of Roth IRA contributions phases out at higher income levels regardless of whether you participate in another retirement plan.

One very useful way to use Roth IRAs is for teenagers and young adults.  A parent can fund a Roth IRA for them based on part-time job income — no matter what parent income is.  This starts a tax-free retirement fund for the young earner at a very age, giving the power of compound interest lots of time to do its magic.  And from what I’ve seen, parental Roth funding is much appreciated by the recipients.

While time is short, you can still fund a 2013 IRA if you make your contribution no later than April 15.  You can set one up at your friendly community bank or online with a mutual fund company on you lunch hour.  No, it probably won’t make your 2013 taxes go away, but it can be a nice step towards financial security for you or your kids.

This is the latest of our 2014 Filing Season Tips — a new one every day thorugh April 15!

Russ Fox, Bozo Tax Tip #4: Honey, You Don’t Exist!: “Perhaps it’s something in the water, but this year Aaron and I have seen multiple cases of individuals who have ignored that marriage license and filed as single if married.”

 

Kyle Pomerleau, When is My State’s Tax Freedom Day?  (Tax Policy Bl0g) Iowa’s is this Sunday.

 20140410-1

 

Kristy Maitre, How to Report National Mortgage Settlement Payments

TaxGrrrl, Taxes From A To Z (2014): X Is For XD   

Paul Neiffer, Trusts Can Get You in Trouble

Jason Dinesen, Tax Court Case Involving Radio DJ Strikes Close to Home for Me, Part 2 

 

Hey, preparers: are you ready to trust the IRS to regulate your livelihood?  A Week Before Tax Day, IRS Misses Crucial Windows XP Deadline (Washington Post, via the TaxProf)

Kay Bell, Computer problems for IRS, Canadian tax agency

 

20140401-1Alan Cole, Mainstream Economics Support Low Taxes on Capital Income (Tax Policy Bl0g): “The overwhelming bulk of the evidence is that taxes have a negative effect on economic growth, and that the effect is particularly strong on tax bases that include capital income.”  But, the rich!  Inequality!

Donald Marron, Seven Tax Issues Facing Small Business (TaxVox): “America’s tax system is needlessly complex, economically harmful, and often unfair.”

Cara Griffith, Guidance Today, Gone Tomorrow (Tax Analysts Blog).  “A recent Arkansas court opinion points out what might be a troubling trend in state taxation: the inability of taxpayers to rely on administrative guidance because the state can retract or supersede it on a moment’s notice.”

TaxProf, The IRS Scandal, Day 336.  It was a big day, with evidence that Lois Lerner was working behind the scenes with the ranking Democrat on the Ways and Means Committee to harass the opposition.

Tax Justice Blog, Is the Obama Administration Blocking International Efforts to Address Corporate Tax Avoidance? 

William Perez, Tax Reform Act of 2014, Part 4, Tax Credits

 

Hank Stern, The ObamaTax Domino Effect.  “While we’ve all seen the horrendous rate increases caused by the ObamaTax (including on our 1040’s), thee are other victims.”

“Pro-business” isn’t “pro-market,” a distinction utterly lost on Iowa officials.

David Brunori: I’ll Raise a Glass to Lower Booze Taxes (Tax Analysts Blog) “Jack Daniels is not bourbon, by the way, but Tennessee whiskey. There is apparently a difference, but frankly, after the first glass, I can never tell.”

Next: legislators are terrible at legislating.  GAO Went Undercover to Discover Tax Preparers Are Terrible at Tax Preparing (Going Concern)

 

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Tax Roundup, 4/1/14: Two weeks to go edition. And: neglected spouses!

Tuesday, April 1st, 2014 by Joe Kristan


4868
April 15 is two weeks from today.  You should already be well along the way in getting your taxes done.  If you aren’t,  you need to get to work – and you should be pondering an extension.

Even an extension isn’t a free lunch.  As Trish McIntire explains below, extensions extend the filing deadline, not the payment deadline, so you need to have at least an idea of your current tax situation even to extend.

Start with your 2012 return.  Make sure you have all of the items you reported on that return — W-2s, K-1s, 1099s.  Then think through what might have changed since last year.  New kid?  New spouse?  Lose an old spouse?  Won the lottery?

Then pencil out a return, or hurry down to your preparer.  If your preparer tells you to extend, don’t fight it.  An extended return is not a “red flag” to the IRS.  And when figuring out how much to pay with your Form 4868, round up.  This time of year, it seems most surprises are the bad kind, so assume the worst.

 

20120511-2If you want to know what does work as a red flag for the IRS, the Tax Court yesterday had a good example:

Petitioner’s 2010 Form 1040, U.S. Individual Income Tax Return, was prepared by H and R Block. On Schedule C, Profit or Loss From Business, petitioner reported gross income of $1,274, office expense of $142, and car and truck expenses of $17,978, for a net loss of $16,846.

A schedule C with just a little income and a big loss caused mostly by car and truck expenses probably goes straight to the “audit me” bin, because the IRS knows that many taxpayers are like this one:

Although petitioner provided his 2009-10 mileage log, he nevertheless failed to provide any corroborating receipts or other records that substantiated the statements made in the log. Petitioner’s mileage log did not address the business purpose of each trip. Guessing as to where he may have gone in 2010, petitioner added the places of business travel to his log in 2012. The log was thus not contemporaneous, and the reconstruction was not reliable.

If you want to take car deductions, you need to keep track of them as you go, in a log, a calendar, or a smart-phone app.  Otherwise you, like the taxpayer in this case, won’t stand much of a chance against the IRS.

Cite: Houchin, T.C. Summ. Op. 2014-29.

 

20140401-1William Perez, Retroactive Charitable Donations for Typhoon Haiyan Relief:

Taxpayers can take a deduction on their 2013 tax return for cash donations made between March 26, 2014, and April 14, 2014, to charities providing disaster relief to areas impacted by Typhoon Haiyan.

Normally, charitable donations can be deducted only if the donation is made by the end of the year. But the recently enacted Philippines Charitable Giving Assistance Act (HR 3771) gives taxpayers the option of deducting donations for Typhoon Haiyan relief on their 2013 tax returns.

William explains what you need to do to claim the retroactive deduction.

TaxGrrrl, Taxes From A To Z (2014): Q Is For QDRO

Trish McIntireThe Annual Extension Post:

So what if you can’t get your return done in time to file by then? You can file an extension. It can be done electronically or by filing a paper Form 4868 by April 15th. And it does have to be postmarked or electronically filed by April 15th. After that time, the extension won’t help you.

Remember, an extended return does not attract IRS attention; a late or erroneous return does.

 

Kay Bell, America’s pastimes: Baseball, ballpark proposals and taxes

 

Ways and Means Chairman Dave Camp Won’t Seek Reelection (Accounting Today).  That can’t be a good sign for his misconceived tax reform plan.

Jeremy Scott, Fair Shot for Everyone’ Contains Details for No One (Tax Analysts Blog):

Setting a new low for lack of detail and specificity, Senate Democrats unveiled their “Fair Shot for Everyone” agenda last week. Only loosely a set of real proposals, the agenda is merely a series of talking points designed to distract voters from President Obama’s lagging approval numbers and the continuing unpopularity of the Affordable Care Act.

Not a glowing review.

Howard Gleckman, Should Tax Reform Be Sold on Values Instead of Economics?

 

20120906-1Paul Brennan, In Iowa, your taxes help corporations not pay theirs (Iowa Watchdog.org):

Of course, $950,000 isn’t much more than chicken feed to a company like Tyson, which posted $583 million in profits in 2013. It also doesn’t compare with the tens of millions of tax dollars the state paid out to big companies through the Research Activities Credit last year.

But it is probably enough to leave tax payers feel well and truly plucked.

Nobody notices a few missing feathers.

Des Moines Register, Branstad will sign Iowa Speedway tax break in Newton ceremony Wednesday.  Because NASCAR has better lobbyists than you do.

Tax Justice Blog, State News Quick Hits: State Lawmakers Not Getting the Message

 

BitcoinAlan Cole, Bitcoin’s IRS Troubles (Tax Policy Blog:

The price of the virtual currency Bitcoin has fallen to about $461 from a closing price of $586 last Monday. This decline of about 21% came in the wake of an IRS ruling that net gains from Bitcoin transactions will be taxed as capital gains.

Nobody wants a Schedule D item for every purchase.

TaxProf, The IRS Scandal, Day 328.  April Fools edition, unfortunately.

News from the Profession: The Forgotten Spouses of Public Accounting (Going Concern).  I’m sure mine is around here somewhere.

 

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Tax Roundup, 3/17/14: Celebrate the corporation due date responsibly! And more.

Monday, March 17th, 2014 by Joe Kristan


daydrinkers
Corporate 2013 returns are due today! Or at least the extensions.  It looks like massive celebrations are in store this year, for some reason, but be sure to get your filing in before you hit the bars.  A late S corporation return results in a stiff penalty: $195 per K-1.  That penalty will be repeated for each additional month the filing is late.

C corporations have their own late filing penalty, 5% of any deficiency.  If you owe but can’t pay, you should still file or extend; then the penalty is only 1/2% of the deficiency.

How should I file or extend?  Glad you asked.  Electronic filing is the best and safest way, because you can get electronic confirmation.  No trip to the post office, no holding on to a postmarked receipt, no worrying about the mail truck going up in flames.

If you prefer not to e-file, then take the trouble to get proof of filing.  The cheapest is to go to the post office and mail your return or extension Certified Mail, Return Receipt Requested.  Get a stamped postmark for your package and put it in a safe place.  It also helps to write the certified mail receipt number on top of the return or extension before sealing the envelope for additional proof.

If you lose track of time because of all the festive distractions today, and you find the local post office has closed, you still may be able to get your filing in.  The IRS treats shipping on the due date by a designated private delivery service as a timely filing.  That means your local Fed-Ex office or UPS store might be able to take care of you.  If you do go that route, be sure you use one of the specific services approved by the IRS, and make sure the shipping slip uses today’s date.  You also will need the street address for the IRS service center that your filing is going to, as private delivery services can’t use P.O. Box addresses.

Oh, and apparently green is the official color for corporate return day this year.

Russ Fox, The Other March 17th Deadline: Form 1042s. “The form 1042 series (1042, 1042-S, and 1042-T) is used to report annual withholding for US-source income of foreigners.”

 

20120906-1The revival of the sales tax subsidy for the Iowa Speedway advances in the legislaturereports The Des Moines Register:

The Newton track has received a tax break since it opened in 2006 — a 5 percent rebate of state sales tax collected at the track, totaling about $3.5 million so far. But the law authorizing the tax break required that the facility must be owned at least 25 percent by Iowans.

The purchase by NASCAR, stock-car racing’s sanctioning body, means ownership is 100 percent from outside Iowa. A law change is required to keep the tax-rebate money flowing. Supporters of the tax break say it will help bolster Iowa tourism and spur the state’s economy.

Of course, this favors the track over every other entertainment and tourist venue in Iowa, none of whom get to keep the sales taxes they collect.

 

William Perez, Itemizing Deductions. “If the total of all these itemized deductions is higher than the standard deduction, then a person usually obtains the least amount of tax by itemizing.”

TaxGrrrl, Taxes From A To Z (2014): H Is For Holding Period

Kay Bell, Dealing with a 1099-K for tax-free residential rental income

Jason Dinesen, Glossary of Tax Terms: Refundable Credits  “The term “refundable credit” refers to a tax credit that can produce a tax refund even if your tax liability is $0.”

Peter Reilly, Building Repair Deductions – Thirty Per Cent Of What?  “All the toilets together perform a discrete and critical function in the operation of the plumbing system” is the best line that I could find in the ninety odd pages of Regulation 1.263(a)-3 “Amounts paid to improve tangible property”commonly known as the “repair regs”.    Peter makes a good effort at explaining a brutally boring set of rules that is actually also important.

Keith Fogg, Confusing Lien and Levy (Procedurally Taxing).  May you never need to know the difference.

Tony Nitti, Online Sportsbook Founder Held Liable for $36 Million In Tax And Penalties

 

20130121-2Annette Nellen, Brick wall hit by IRS in its efforts to regulate all return preparers.  Too bad, so sad.

TaxProf, The IRS Scandal, Day 312

Alan Cole, Cadillac Tax Confirms: Employers Respond to Tax Changes (Tax Policy Blog). “According to the report, many companies are already making changes in anticipation of the tax, converting to less generous plans.”

Bill Gale, Howard Gleckman, Dave Camp’s Most Valuable Contribution to Tax Reform (TaxVox):

 Still, the 1000-page bill puts his plan out there in all its gory detail. It shows just how tough it is to pull together a reform that cuts rates and trims tax preferences while maintaining today’s revenue and the distribution of burdens.

It will be easier if you worry less about “maintaining today’s distribution of burdens.”  As far as I know, we haven’t achieved some perfect distributional model that should never be messed with.

 

From the Wall Street Journal comes Audit Bait: The Dirty Dozen — Moves That Could Trigger IRS Scrutiny:

  1. Forget to claim reported income.
  2. Take outsize deductions, especially for charitable gifts or travel and entertainment.
  3. Hide offshore accounts.
  4. Claim certain items on small-businesses returns.
  5. Pretend a money-losing pastime is a business.
  6. Use suspiciously round numbers.
  7. File an amended return.
  8. Use a dubious tax preparer.
  9. Be a tax protester.
  10. Provoke a whistleblower.
  11. Fail to claim canceled debt as income.
  12. Fail to file.

Yes, all those things are true.  But if you really want to get examined, you might consider putting your returns claiming refunds on absurd grounds on a website that purports to “crack the code.”  Just a thought, in case you don’t find your life exciting enough. (Hat tip: TaxProf.)

 

News from the Profession. Deloitte Exec Gets Six-Week Vacation Thanks to Wife’s Heavy Foot, Russian Frivolity (Going Concern)

I hear his parents are upset.  32-yr-old Playboy ‘playmate of the year’ in trouble over 90-YEAR-OLD BOYFRIEND (Malaysia Times)

 

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Tax Roundup, 12/20/2013: S corporation built-in gain window closing? And more!

Friday, December 20th, 2013 by Joe Kristan

S-SidewalkThe S corporation Built-in gain window is closing.  The main benefit of S corporations since 1986 is that their income is only taxed once — when it is earned, on the tax returns of its owners.  After-tax earnings may be distributed to owners without another tax; undistributed earnings increase the basis of the owners’ stock, reducing gains when the stock is sold.

C corporations, in contrast pay a tax on their own income.  C corporation shareholders pay a second tax when the after-tax earnings are distributed; they don’t get a basis step-up for undistributed earnings, so they pay the second tax on undistributed earnings as part of their gain when they sell their shares.

To keep C corporations from becoming S corporations and liquidating the next day, Congress enacted the Built-in Gains Tax in the 1986 tax reforms.  This tax applies to any C corporation that makes an S corporation election.  It hits all “built-in gains” recognized during the “recognition period” following the election at 35%; the after-tax built-in gains are then also taxed on shareholder returns.

“Built-in gains” are any income items accrued as a C corporation as of the day of the S election.  For example, if the corporation owns land with a cost of $10,000 and a value of $15,000 as of the date of the S election, it has a $5,000 built-in gain.  If it sells the land during the “recognition period,” it pays the tax on the lesser of the actual gain or the $5,000 built-in gain.

The recognition period was 10 years when the tax was enacted.  It has been reduced to 5 years by temporary legislation, but absent new legislation it will revert to 10 years starting January 1.  That means S corporations that made elections taking effect in 2004-2007 can sell built-in gain assets before December 31 without the tax, but the same gain will be subject to the tax starting January 1.   That has obvious year-end planning implications.   If you are going to sell soon, it may be best to sell right now, as two weeks from now may be too late.

Yes, it is possible that the five-year period will get extended again, but who wants to count on Congress?

More 2013 year-end tax tips every day through December 31 at the Tax Update!

 

Why the IRS shouldn’t get political.  People who don’t think the IRS Tea Party scandal is serious need to consider how other places use the tax law.  France24 reports: Putin to pardon jailed tycoon Mikhail Khodorkovsky.

Mr. Khordorkovsky was imprisoned for 10 years on tax evasion charges.  His real offense was opposing Vladimir Putin while wealthy.  The message was surely heard by other wealthy Russians with the means to oppose the regime.

As complicated as the tax law is, it would be easy work for a politicized IRS to make trouble for disfavored opponents.  That’s why the Tea Party scandal is so serious, and why the new proposals to regulate 501(c)(4) outfits are so outrageous.  And yes, it could happen here.  It did.

 

Flickr image courtesy Shock264 under Creative Commons license

Flickr image courtesy Shock264 under Creative Commons license

If it needs a subsidy to happen, it probably shouldn’t happen.  Tax break for wind power is up in the air, advocates say (Des Moines Register)

The wind provision is one of about 50 tax credits that are expected to expire at the end of 2013. U.S. Sen. Chuck Grassley, R-Ia., said the tax credits, which are usually dealt with together, failed to get a vote in Congress this year because key lawmakers thought they could include them as part of a major tax-reform bill.

Grassley told reporters that passage of a more sweeping tax overhaul appears unlikely. Senate Finance Chairman Max Baucus, D-Mont., told him last week that Congress expects to deal with wind and the other tax credits in 2014. “He wasn’t specific on when it would happen, but he said we are going to have to do (extensions of the tax credits) next year,” Grassley told reporters.

These things are passed one year at a time to pretend that they are much less expensive than they are under Congressional budget rules.   A felony in the private sector, business as usual in Congress.

 

Alan Cole,  Party in the UK (Tax Policy Blog)

Critically, the UK has improved its tax system substantially. It is moving towards a more competitive, more neutral tax base that treats all sorts of economic activity equally. While they have been willing to increase sales taxes – a neutral, simple tax – they are also reducing the costly corporate tax. Corporate taxes tend to substantially reduce the welfare of everyone – both the owners of corporate stock and the workers who depend on heavy capital investments. They have also abolished crippling financial transaction taxes.

Crippling financial transaction taxes like the one supported by Iowa Senator Harkin and his would-be successor Bruce Braley.

 

Jason Dinesen, Death Master File Changes Coming — Finally!  “All I can say is — thank you Congress (how often do we say that anymore?), and it’s about time.”

William Perez,  Using a Donor-Advised Fund to Donate to Charity at Year End

Howard Gleckman,  A New Look at Who Benefits from Tax Expenditures.  “There is a tax expenditure under the holiday tree for just about everyone.”

Speaking of trees.  O Christmas Tree, O Christmas Tree, Please Congress don’t tax our Christmas Trees (Kay Bell)

TaxGrrrl,  12 Days Of Charitable Giving 2013: Helping Hands Center For Special Needs   

 

TaxProf, The IRS Scandal, Day 225

Tax Justice Blog,  State News Quick Hits in Wisconsin, Illinois, Kentucky and Oklahoma

News from the Profession.  Short Sellers, Moms, Son of God, all Credited with Encouraging PwC’s Vigorous Audit of Herbalife (Going Concern)

Get your Friday Buzz from Robert D. Flach!

 

IrwinIrwinirwin.jpgQuotable me.  From Peter Reilly, Andrew Schiff Does Not Recommend That You Imitate His Father Irwin:

When I asked Joe Kristan for his thoughts on the matter he summed up the realist perspective pretty well:

“Oh, my.

“I don’t care to go down the rabbit hole on the tax protester arguments. However convincing they may seem to adherents, they just don’t work. Given the choice between Irwin Schiff’s theories and all the federal judges that have ruled on these arguments – and they’ve been put before the courts countless times – a wise taxpayer goes with what the judges say. Every time. You can believe there is no income tax, but if the IRS agent, the federal judge, the federal marshals, and the Bureau of Prisons say otherwise, for all practical purposes there is an income tax.”

Yep, I said that.  Thanks, Peter!

 

Mom can’t share everything.  Mothers are famous for sharing all with their kids, but sometimes it doesn’t work out.  From STLtoday.com:

A Creve Coeur venture capitalist was sentenced to five years in federal prison Thursday on a tax evasion charge for dodging millions of dollars in taxes from 2006-2009, the U.S. Attorney’s office said.

Burton Douglas Morriss, 50, should have paid $5.5 million, prosecutors said, but used $18 million in tax losses in 2007 alone to reduce the amount he claimed to owe. The companies that incurred the losses “were established as single member limited liability companies for Morriss’s mother” and she had already claimed those losses in past returns, prosecutors said.

Five years is the maximum sentence for a one-count tax evasion plea.   It’s not nice to steal Momma’s tax losses.

 

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Tax Roundup, 12/5/2013: Branstad floats optional income tax without federal tax deduction. And: is IRS hiding something?

Thursday, December 5th, 2013 by Joe Kristan
If Iowa's income tax were a car, it would look like this.

If Iowa’s income tax were a car, it would look like this.

Iowa Alternative Maximum Tax proposal revived?  Governor Branstad may push an optional income tax with lower rates and no deduction for federal taxes.  This plan looks like an attempt to improve Iowa’s byzantine income tax without provoking the wrath of Iowans for Tax Relief, the Muscatine-based advocacy group that strongly opposes efforts to do away with the deduction.  KJAN.com reports:

Iowa’s income tax rates higher when compared to most other states because Iowa offers a deduction that’s offered in only five other states. That deduction allows Iowans to subtract their federal income tax liability from their income before calculating their state income taxes.  “We don’t want to erode federal deductability,” Branstad says, “and that’s why we’re saying: ‘Give ‘em the option.’” By giving taxpayers the option to file their income taxes under the current system with that major deduction or under a new system with lower and flatter rates, Branstad might avoid the firestorm he faced from his fellow Republicans in the late 1980s when he proposed doing away with that deduction.

The Governor appears to plan to add a new twist to the plan, reports Kathie Obradovich:

Branstad indicated that he wouldn’t allow Iowans to “game the system” by changing their form every year. That means taxpayers who give up the federal deduction would have to stick with the choice even if the other option would result in lower taxes in a given year.

That means the new system would be a one-way street.  It no longer would be an “alternative maximum tax,” where taxpayers would always compute their tax both with and without the federal deduction and choose the lower amount.  That makes it even worse than the version passed by the Iowa House of Representatives last year, which would have allowed taxpayers to make the choice annually.  Unless the new system provides significantly better results in the great majority of circumstances, most taxpayers would want to retain the option to use the federal deduction.  That would stall the (presumably) desired transition to a simpler system.  Both the Branstad plan and the House plan significantly add to the complexity of the tax law.

While Iowa’s high stated tax rates — individual and corporate — don’t help, the ridiculous complexity of Iowa tax law is the real problem.  Iowa has a bunch of penny-ante credits and deductions that don’t apply for federal purposes.  These are too small to make a significant difference to taxpayers but also too small for the Department of Revenue to police.  There are also dozens of special-interest tax credits and deductions that take dollars from the rest of us on behalf of people with connections at the Statehouse.

It’s not in his nature, but the Governor ought to go bold and embrace the Tax Update’s Quick and Dirty Iowa Tax Reform Plan.  It strips the Iowa tax law to a very few deductions and repeals Iowa’s highest-in-the-nation corporation income tax while drastically lowering personal rates.  The Iowa Senate is unlikely to pass the Governor’s half-baked half-measure anyway; why not change the terms of the debate with a plan that actually makes sense?

Related:  The Iowa flat tax proposal: a good deal for middle class and up, but not for lower incomes.

 

taxanalystslogoChristopher BerginTax Analysts v. IRS: What Are They Hiding? (Tax Analysts Blog):

Back in August, I wrote about the lawsuit Tax Analysts had filed against the IRS seeking documents under the Freedom of Information Act. The documents being sought were training materials used to instruct and guide IRS personnel in the IRS exempt organization determinations office in Cincinnati. The big story then, and now, was generated by former EO director in the IRS Tax-Exempt and Government Entities Division Lois Lerner’s admission that the agency had used inappropriate means to determine which organizations qualified for tax-exempt status as social welfare organizations. The organizations singled out for extra scrutiny were mostly, if not entirely, conservative. Tax Analysts felt compelled to seek relief from the courts because we were getting nowhere with the IRS – other than the big stall – even though it had promised expedited treatment on our original request.

Several months later, the big stall continues — to the point that I have to ask myself whether the IRS just made a stupid mistake in targeting those organizations or whether something much worse is going on. 

They are using the “taxpayer confidentiality” excuse for their standard big stall.  Christopher isn’t buying it:

But I’ll say it again: Training materials, really? Why on earth would the IRS try to keep those secret? You’d think the training manuals would all be in a file cabinet somewhere, which hardly would require a search party of 100 lawyers and a scouring for tax return information.

Could it be that this time something is different? Could there be a smoking gun here? I’m not saying there is. I’m just saying it may be time to start asking that question. Because even for the IRS, this is darned peculiar behavior.

Congress should amend the taxpayer confidentiality rules to keep the IRS from using them as an excuse to hide its own dirty laundry.  It shouldn’t require a federal lawsuit to get the IRS to publicize internal non-taxpayer documents.

 

 

20130121-2Whither the Registered Tax Return Preparer Program?  Robert D. Flach argues that the RTRP designation that was part of the nearly-dead IRS preparer regulation power grab should be administered by the IRS on a voluntary basis.  I disagree.

Robert would like a way to distinguish the better class of “unenrolled” preparers from less-professional seasonal preparers.  I can understand that, but I don’t think that the IRS is the agency that should do this.  It would divert already strained IRS resources to do something the preparer industry could do on its own.  I agree with Jason Dinesen that if preparers want a government designation, they should take the Enrolled Agents exam, which is much more difficult than the RTRP literacy test.  The EA designation is sadly underappreciated in the market, and adding a new IRS-run designation would only make that worse.

 

The IRS reminds us that the “savers credit” can help lower-income taxpayers who contribute to a retirement plan.  This is a non-refundable credit of up to 50% of the amount contributed to IRAs or deferred to a 401(k) plan.  For parents, funding a young adult offspring’s retirement plan contribution is a tax-efficient way to help build a nest egg.

 

Don’t try this with your tax deadlines.   TIGTA: IRS Is Seven Years Past Statutory Deadline for Providing Online Account Access to Taxpayers (TaxProf).  From the TIGTA report:

The RRA 98 required the IRS to develop procedures to allow taxpayers filing returns electronically to review their account online by December 31, 2006. The IRS did not meet this requirement, and we determined that the IRS has not made adequate progress in allowing taxpayers to access tax accounts. Currently, taxpayers cannot review account information electronically.

In fact, the IRS is getting worse, having cut back electronic access for tax professionals.  That makes resolving even a simple IRS notice a tedious multi-week snail-mail slog.

 

Tony Nitti, The Definitive Questions And Answers On The New Net Investment Income Tax [Updated For Final Regulations] 

amazonCara Griffith It’s a Bird, It’s a Plane…It’s Amazon Prime Air? (Tax Analysts Blog).  Sales tax by drone.

Alan Cole, Report: Obamacare Premium Subsidies Will Need Fraud Protection (Tax Policy Blog).  No kidding.

TaxProf, The IRS Scandal, Day 210

 

Kay Bell, Tax e-filing continues to grow, hitting 122 million in 2013

TaxGrrrl, Will Congress Drive Up Gas Taxes In 2014?   

 

Um, because most commuters drive?  Why Does the Tax Code Favor Commuters that Drive? (Tax Justice Blog)

Going Concern, IRS’ Improved e-File System Is a Total Success Except For Two Jerks Who Foiled It

 

Don’t trust tax collectors, if you’re a tax collector:

The former tax collector of Plainville, who is also former treasurer of the Connecticut Tax Collectors Association, was arrested Monday morning and charged with first degree larceny, after being under investigation for possible embezzlement since June.

Debra Guerrette, of Bristol, was placed on administrative leave from Plainville’s Revenue office in June after Bristol police informed the town Guerrette was involved in a criminal investigation.

After an analysis of the financial records for the Connecticut Tax Collectors Association, and also Guerrette’s financial records, police said she had “misappropriated funds in excess of $50,000” between 2008 and 2013, into her personal account.

Will there be a special assessment of the collectors to make up the difference?

 

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Tax Roundup, 11/19/13: Sub-zero edition! And the dark side of non-recourse debt forgiveness.

Tuesday, November 19th, 2013 by Joe Kristan

20120511-2

Tax Court says you can’t go below zero.  At least not in computing penalties.

A taxpayer filed a return showing no tax, but claiming refundable tax credits that generated a refund of $7,327.  That’s why refundable credits are such a sweet deal — you can get a refund of taxes without ever paying them through withholding or estimated taxes.  They are really a form of welfare.

The IRS issued the refund as claimed, but then thought better of it.  The IRS recomputation was that the taxpayer should have showed a positive tax balance of $144.  That meant the taxpayer was supposed to repay the $7,327 refundable credit plus the $144 tax due, for a total of $7,471.  The IRS assessed the difference, plus a 20% penalty on the $7,471 “underpayment.”  The taxpayer didn’t think refunding the refundable credit counted as an “underpayment, and the case went to Tax Court.

The tax imposes an “accuracy related” penalty on deficiencies, based on how much the taxpayer underpays the “tax required to be shown on the return.”  The IRS said the underpayment was the whole $7,471.  The Tax Court said that refundable credits can’t take the tax below zero for this purpose, so the “underpayment” is only $144 for computing the penalty.

 

This seems wrong.  Refundable credit fraud — especially Earned Income Tax fraud — is a multi-billion-dollar problem.  If there is no monetary penalty for claiming bogus credits, the only deterrent for gaming the system is criminal penalties, and given the limits on the IRS ability to prosecute EITC fraud, it’s an empty threat.

The Tax Court seems to agree:

We note that our conclusion breaks the historical link between the definitions of a deficiency and an underpayment; however, it was Congress that made that break.

If the case holds up on appeal, Congressional action is all that can fix it.

Cite: Rand, 141 T.C. No. 12.

 

Peter Reilly, IRS Letter To Senator Boxer On Short Sales Not Good News For Everybody

I hate to spoil a nice celebration, but I am going to risk it.  The position that the IRS outlined in the ruling is probably good news for most people affected by it.  It may not be good news for everybody, though.  In order to understand why you have to understand the IRS reasoning.  Here is the deal.  When debt is secured by property, it is either recourse or non-recourse…

The effect of that section is to make just about all California home mortgages non-recourse…  There are various exceptions to recognizing debt discharge income, such as the insolvency exception.  These will no longer be available.  

When you give up a house for non-recourse debt, you are considered to sell it for that amount.  That can be a bad thing.   If you don’t qualify for the residential gain exclusion — say, because you haven’t used it as a residence long enough to qualify, or you bought the house to rent — you can have taxable gain, no cash, and no available debt forgiveness exclusion.

 

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

 

Alan Cole, High Implicit Marginal Tax Rates Make Life Difficult for the Poor (Tax Policy Blog):

The CBO did a great study on this a year ago. It found that the implicit marginal tax rates on some poor folk are frequently above 50%, and sometimes above 80%. That is to say, that when they figure out how to increase their income by a $100, they lose $50 or more in new taxes or lost benefits. 

That’s exactly the sort perverse effect that results from the increase in Iowa’s earned income tax credit, which by itself can put low income taxpayers in a 50%+ bracket.  Take away other benefits and you can see how it could get to 80% or more.

 

Sioux City Journal, Branstad declines to issue a gas tax veto threat.  Probably because he’d like a higher gas tax, even though he likes being re-elected too much to push for one.

 

Ben Harris,  Sorting Through The Property Tax Burden (TaxVox):

Using self-reported American Community Survey data, we find that residential property taxes tend to be close to $1,000 per year, with a small share of households paying substantially more, especially in Connecticut, New Jersey, New York and New Hampshire. In recent years, 48 percent of homeowners paid between $750 and $1,750 in property taxes. About one-third—31 percent—paid less than $750 and 21 percent paid more than $1,750.  Just 3 percent paid more than $4,000, with a miniscule share of homeowners (0.2 percent) paying more than $8,000. 

That seems low, but my clients probably aren’t a representative sample.

 

Jason Dinesen, Missouri Guidance on Same-Sex Marriage

 

Kay Bell, Missouri recognizes same-sex marriages for tax filing only20130121-2TaxGrrrl, Black Market Tax Preparers Continue To Defy IRS :

The solution for tax preparers who didn’t want to register and pay the fee? They simply don’t sign the returns.

And yes, that’s against the rules. But a number of paid tax preparers do it anyway. They are referred to in the business as “black market preparers” or sometimes, “ghost” tax preparers.

And that will happen no matter what regulations the IRS imposes on honest preparers.

 

William Perez, Tax Provisions Expiring at the End of 2013

Tony Nitti, House Republicans Put Tax Reform On Hold To Revel In Obamacare Struggles

I really don’t expect to receive tips from clients–it’s not the norm for tax preparation. I definitely don’t expect to receive $1,458,905 in such gratuities.  

I can’t say I expect that either.  But I would be OK with it!

TaxProf, The IRS Scandal, Day 194

Robert D. Flach brings the Tuesday Buzz!

 

The Critical Question: Are Jamaican Credit Unions The Next Tax Haven?  (Brian Mahany)

AOL? Prodigy? Attorney’s License to Practice Law Is Suspended for Failing to Maintain an Email Account  (TaxProf)

 

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Tax Roundup, 9/19/2013: Beanie Babies busted. And no mo’ Mo Money.

Thursday, September 19th, 2013 by Joe Kristan


20130919-1
Ty Warner was a big winner in life’s lottery.  He invented the Beanie Baby, a toy craze that made him a very wealthy man.  But then, like many lottery winners, he began to handle finances unwisely.  According to media reports, he will plead guilty to hiding funds in Swiss banks.  From the Wall Street Journal:

The creator of Beanie Babies has agreed to plead guilty to U.S. tax evasion and pay $53.6 million, the largest offshore-account penalty ever reported.

Ty Warner, chief executive of Ty Inc., the maker of stuffed dolls, reached an agreement with the U. S. Attorney for the Northern District of Illinois to plead guilty to a federal tax-evasion charge in connection with undeclared offshore Swiss accounts, according to his lawyer, Gregory Scandaglia, of Scandaglia & Ryan in Chicago.

Mr. Warner also faces a possible prison sentence.

$53.6 million is a lot of beanies.  What I found striking is how little he stood to gain compared to how much he will lose:

The unpaid tax on the account came to $885,300, according to a Justice Department statement.

By my math, there was $60 to lose for every dollar he stood to gain.  That seems like an unwise bet.

Jack Townsend has the definitive coverage, Whopping FBAR Penalty in Criminal Plea; Beanie Baby Creator Gets Beaned With No Free Pass:

But then his reported net worth is $2.6 billion, so in terms of real world punishment, well not much.  He is probably more concerned with the public embarrassment than the cost of his behavior.  It would appear that for real punishment of the mega-wealthy a penalty keyed to the net worth should apply (if higher than the normal FBAR penalty; then, depending upon the amount, there could be some real punishment rather than just a nuisance).  Of course, if he gets some serious incarceration period — which is what the Guidelines will indicate — then there may be some real punishment.  But, the courts have been notoriously lenient in sentencing, at least for persons not so wealthy as Warner (and his earlier colleague among the mega-rich, Olenicoff).

I have only the customary pity for somebody who falls from success to scandal.  It sounds like Mr. Warner knew exactly what he was doing.  I have a lot more sympathy for much smaller taxpayers who face similarly disproportionate penalties relative to unpaid taxes for inadvertent violations.  It’s too bad the IRS has such a hard time telling the difference.  Apparently you have to shoot the jaywalkers so you can slap the real criminals on the wrist.

The TaxProf has more.  So does Jana Luttenegger.

 

20130919-2Mo’ Money no mo’.  The owners of the Mo’ Money tax prep franchise won’t be making any mo’ money doing taxes.  From a Department of Justice press release:

A federal court in Memphis, Tenn., permanently barred the owners of Mo’ Money Taxes, Markey Granberry and Derrick Robinson, as well as a former Mo’ Money manager, Eumora Reese, from preparing tax returns for others and owning or operating a tax return preparation business, the Justice Department announced today.  The civil injunction order, to which Granberry, Robinson and Reese agreed without admitting the allegations against them, was signed by Judge S. Thomas Anderson of the U.S. District Court for the Western District of Tennessee.

The business seemed to have its share of fraud trouble at its franchises   Based on this, it appears the problems may have started at the top.

TaxGrrrl, IRS Gets Big Win In Corporate Tax Holiday Case, Readies For Next Fight

William Perez, Need to Pay Taxes for 2012? Be Aware of Penalties and Interest

Paul Neiffer, Estimated 2014 Inflation Adjusted Tax Items

Kay Bell, 2014 tax brackets preview indicates tax savings for many

TaxProf,  The IRS Scandal, Day 133

 

Cara Griffith, The ‘Tech Tax’ That Wasn’t (Tax Analysts Blog)

Alan Cole,  Obamacare’s “Cadillac Tax” – A Poor Patch for a Hole in the Income Tax (Tax Policy Blog)

Donald Marron,  The Costs of Debt Limit Brinksmanship  (TaxVox)

 

We should all have such funding problems.  There are two posts today bemoaning the lack if IRS funding:

Tax Justice Blog,  An Underfunded IRS Means More Tax Avoiders Get a Pass.

Christopher Bergin, Mind the Gap, and Fund the IRS (Tax Analysts Blog)

Here is a chart of inflation-adjusted IRS funding:

20130821-1

 

You know, it doesn’t look the IRS is doing that badly by historical standards.  If Congress didn’t act like the tax law was the Swiss Army Knife of public policy, giving the IRS duties as varied as industrial policy and running the nation’s healthcare financing, funding would seem more than adequate.

 

The Critical Question:  Is Obamacare the GOP’s White Whale? (Howard Gleckman, TaxVox)

Career Advice:  This Way to CPA Isn’t Too Confident You Can Get By Without Mommy’s Help (Going Concern)

 

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Tax Roundup, 9/9/2013: One week to deadline edition.

Monday, September 9th, 2013 by Joe Kristan

20130104-1Friendly reminder: it’s a week until the due date for extended corporation, trust and partnership returns.  File late and it’s a penalty of $195 for each K-1 on the late return.  That can add up in a hurry.

Because of the deadline, and because I spent too much time on a long-form piece that will go up later this morning about Iowa’s economic development follies, this roundup is abbreviated.

 

TaxProf, Sullivan: Political Reality Blocks Radical Tax Reform in North Carolina

UPI.com: Tax changes cause U.S. expats to give up citizenship

Delaware online,  NJ man gets 8 years in tax fraud scheme:

Gary Crawford Jr., 42, of Bridgeton, also known as Gary Taxes, was also order to pay more than $1 million in restitution to the U.S. Treasury and faces three years supervision following his prison release.

The tax fraud scheme was discovered in 2009 when the Internal Revenue Service’s Fraud Detection Center flagged a large number of fraudulent electronically filed income tax returns for the year 2008 seeking First Time Home Buyer Credits, said Kimberlynn Reeves, spokeswoman for the U.S. Attorney’s Office in Delaware.

Refundable tax credit fraud?  What a surprise.

 

TaxGrrrl,  Back To School: Save Thousands Of Dollars With Education Tax Credits 

Tony Nitti, The NFL Is Back: The Tax Consequences of Sports Gambling 

Jana Luttenegger,  Is This the End of Automatic Gratuities? (Davis Brown Tax Law Blog)

Kay Bell, More Americans are paying federal income taxes

Trish McIntire, 43% – Not What Many People Think

 

Tax Justice Blog, Payroll Tax Loophole Used by John Edwards and Newt Gingrich Remains Unaddressed by Congress.  But not by me!

Alan Cole, Bruce Bartlett on Imputed Rent (Tax Policy Blog)

 

TaxProf, The IRS Scandal, Day 123

Russ Fox,  Did IRS Give Black Nonprofits Preferential Treatment?

Jack Townsend,  The Ripple Effects of the IRS Offshore Account Initiative – Turks & Caicos

 

The Critical Question: Is IRS Targeting Magic The Gathering ?   (Peter Reilly)

Robert D. Flach,  WHAT A CROCK

Setting the bar too low.  The IRS Apprentice Video Is Still Better Than Anything Donald Trump Has Ever Done (Going Concern)

 

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Tax Roundup, 8/28/2013: Saxes and day jobs edition.

Wednesday, August 28th, 2013 by Joe Kristan

20130828-1Keep a day job.  And good records.  A sax player recently had to justify his career choice in Tax Court.  Tom Carswell was working in Chicago for awhile, until he moved to Wisconsin, where he got a computer programming job while keeping a hand in the business: 

Since moving to Wisconsin petitioner has organized the Driftless Jazz Festival in Southwestern Wisconsin and has recorded four compact disks (CDs), including “Catharsis” in 2006 and “Carswell” in 2009. “Carswell” was advertized in the May 2010 edition of JAZZed Magazine.

The Wisconsin years weren’t lucrative:

The following table reflects his gross receipts and net losses from his musical activities:

      Year                Gross receipts                Net loss
 _____________________________________________________________________

      2004                     $1,483                    $12,163
      2005                        530                     11,842
      2006                        983                     17,872
      2007                      1,615                     20,315
      2008                      2,625                     32,541
      2009                      2,931                     26,003
      2010                      3,154                      9,467

      Total                    13,321                    130,203

As is their way, the IRS jumped to the conclusion that the sax playing was a hobby, not a for-profit activity.  Judge Kerrigan explains the law (citations omitted):

We are satisfied that petitioner’s musical activities were conducted with continuity and regularity during the years in issue. Nevertheless, a taxpayer must conduct the activity with the requisite profit motive or intent for the activity to be considered a trade or business. The taxpayer generally bears the burden of proving that the requisite profit objective existed.

Apparently our Sax Man has talents in addition to jazz.  He convinced the judge that he was, in fact, trying to make money:

Petitioner had a series of losses from 2004 to 2010 and a small profit in 2011. Respondent contends that petitioner’s small profit in 2011 could not offset years of sustained losses that total over $100,000; however, petitioner was able to explain these losses. The music industry changed, and petitioner’s focus moved from performance to original composition and other aspects of music. Petitioner contends that he made adjustments and retooled his career and that he was profitable in 2011…

After considering all the facts and circumstances, we hold that petitioner was engaged in the trade or business of music during the years in issue.

The Sax Man would never have won if he didn’t have the records to support his expenses in the first place.  If he didn’t have the mileage and other records, the IRS would have won on substantiation grounds.

As my oldest son is embarking on a career as a professional musician, I can only hope he doesn’t incur six figures in losses before he figures out a profitable business model.

Cite: Gullion, T.C. Summ. Op. 2013-65

 

TaxProf, Roe: Did Taxes Cause the Financial Crisis?   “And yet the argument that this tax preference for debt played a role in the financial crisis – and that it remains an ongoing risk to financial stability – was quickly rejected.” 

Jack Townsend, Sentencing, Redemption and Predicting the Future:

Paroles can permit someone to take a later look to see if there mitigating factors exist that could not be known to the judge in fashioning a sentence, even with Booker discretion.  Judges do not always predict the future well. 

 

All hail Skwire’s First Law.  The science is settled.  (Lynne Kiesling)

 

Joseph Thorndike, Can Debt Ceiling Debates Be Useful? History Says Maybe. (Tax Analysts Blog):

But the 1953 experience underscores the way in which debt limit debates have historically been used to focus the nation’s political attention on fiscal policy. That leverage has always entailed certain risks. But it’s also been successful – at least once.

Anything’s possible, but refer to Skwire’s First Law.

 

For those of you who have extended returns, 6 Weeks Is Not That Much Time.  (Trish McIntire).  Get your information together and to your preparer now.

 

TaxGrrrl, Ask The Taxgirl: Taxing Social Security Benefits   

Jason Dinesen, Glossary of Tax Terms: HSA   

Kay Bell, Rapper Fat Joe heads to jail for failing to pay federal taxes

Tax Trials, Elmore Leonard’s Tax Connection

 

TaxProf, The IRS Scandal, Day 111

Clint Stretch is Home From Vacation (Tax Analysts Blog):

Perhaps, with vacation fresh in their minds policymakers can think about tax reform and whether it’s fair to ask ordinary taxpayers to pay tax at higher rates so that wealthier taxpayers can get help from the treasury in buying second homes.

The obvious place to start is with the repeal of the mortgage interest deduction for second homes. 

You can’t deduct interest to go on a cruise, after all.

 

Russ Fox is interviewed.  “I needed to either add an employee or a partner, but the tax and regulatory climate in California made that unprofitable. So I moved—both myself and my business—to Nevada.”  He also posts on a three time Tax Court loser:  The Third Time Wasn’t the Charm

 

Robert D. Flach surprises with a special midweek Buzz!

 

Peter Reilly,  Louisiana Second Amendment Sales Tax Holiday – Why Stop There ?  

The Critical Question:  Why Are Cab Fares So Expensive? (Alan Cole, Tax Policy Blog)

 

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Tax Roundup, 8/21/2013: Just scraping by edition.

Wednesday, August 21st, 2013 by Joe Kristan

Time is short today, so just a few highlights:

You know how the IRS is just starved of cash?  They’re being forced to scrape by on about their 2010 funding.  The horror!

20130821-1

Via The TaxProf.  Of course, since Congress has made the IRS into a cross-portfolio superagency, the funds are spread thinner.

 

Jason Dinesen, Work Opportunity Credit Mathematical Computations 

Robert D. Flach, TAXPAYERS SCREWED BY TAX COURT:

If the taxpayer can provide proper documentation that the money was actually given to the charity, via cancelled checks, and that it was an actual charitable donation, via an acknowledgement from the charity, and the charity confirms to the IRS or the Tax Court either in writing or by oral testimony that no goods or services were provided, the deduction should be allowed. 

That would be too sensible.

 

David Brunori, Governor Christie Does Not Understand Tax Policy (Tax Analysts Blog):

Like many governors, New Jersey’s Chris Christie is not well versed in the principles of sound tax policy. In fact, if recent events are an indication, he is ignorant of the basic concepts…

The bill Christie vetoed would have exempted business purchases of various software from sales tax. That is classic good tax policy. His veto is classic bad tax policy.

Sadly, he has plenty of political company.

 

Alan Cole, A Partial Defense of the Mortgage Interest Deduction (Tax Policy Blog):

The mortgage interest deduction is one of the most frequently-criticized elements of the entire tax code. We have written that it distorts investment towards owner-occupied housing. It is also regressive, in that it doesn’t benefit renters or standard deduction filers, both of whom are generally poor. It adds a small layer of complexity to the tax code, which should generally be avoided. It looks for all the world like a social engineering effort.  

All of these accusations, unfortunately, are quite true. And yet, I would stop short of saying the mortgage interest deduction absolutely must be eliminated. A scary truth about our tax system is that owner-occupied housing is one of the few types of capital treated somewhat correctly.

The problem is really the tax system’s abusive taxation of capital.

 

Kay Bell, Reduced municipal bond tax benefits could threaten all governmental credit ratings

TaxGrrrl, Up In Flames: Cigarette Taxes Create Opportunity For Revenue And Crime 

Peter Reilly, IRS Eases Up On War Tax Resisters 

Tax Justice Blog,  Remembering an International Tax Expert and Voice for Tax Justice

Allison Christians, Here is the only reason why Ted Cruz’s citizenship is interesting.

Me, The saga of Canada Cruz.

 

The Critical Question: What If Your Tax Professional Vanishes? (Russ Fox)

I’ll, er, drink to that.  Why Legal Marijuana is a Good Argument for Tax Reform (Howard Gleckman, TaxVox).

 

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Tax Roundup, 8/19/2013: You may already be a Californian! And the amazing tax secrets of Jeff Bezos.

Monday, August 19th, 2013 by Joe Kristan

20130819-1California is so short of cash, they aren’t just looking under their sofa cushions for spare change.  They’re looking under yours, too. Paul Neiffer reports that California is Out of Control!

In Swart Enterprises, Inc. v. Franchise Tax Board, the taxpayer was an Iowa  corporation with a farming activities in Kansas and Nebraska.  They also had various passive business investments including an .02% interest in a California LLC (Cypress) that acquired, held, leased and disposed of capital equipment in various states.  This LLC had 435 members of which 384 members were out-of-state.

The Franchise Tax Board asserted that Swart had enough business activity through their .02% interest in the Cypress LLC to require the filing of a California LLC tax return.  Normally LLC’s filed as a partnership do not owe any state tax, however, California charges $800 simply for the privilege of filing a return.  In addition, based upon the gross revenue of the LLC an additional fee is owed.  Since Swart was a corporation, that particular fee would not apply, but they would owe the $800 filing fee plus interest and penalties plus paying a person to prepare the tax return.

 That’s one of the dangers of investing in a partnership.  You buy the chance to pay state taxes in any state where the partnership does business.  In most states it may not matter because it the tax may round down to zero, but even a whiff of California can cost you $800.

Russ Fox has more at California Goes After Flow-Throughs with Passive Investments in California.

 

Stephen J. Dunn, Fraudulent Tax Returns?:

The IRS most commonly learns of alleged fraud in a tax return from an insider—a disgruntled former employee, spouse, or romantic interest of the taxpayer.  In one case, the taxpayer’s estranged daughter came to the taxpayer and asked him for a job.  The taxpayer hired her, and eventually placed her in charge of a business.  But the daughter mismanaged the business, and the taxpayer closed it.  The prodigal daughter became enraged, and reported her father to the Internal Revenue Service. 

Business tax fraud is hard to do without accomplices.  Each “helper” is one more chance for the IRS, one more potential informer.  Payroll fraud, where you pay employees “in cash,” with no taxes, may be the worst, as it gives every employee an opportunity to snitch.

 

Is the concept of “deadweight loss” a right-wing conspiracy?  “I am sorry, but this is absurd” (Tyler Cowen).  

Deadweight loss” is economic loss from tax, as  Megan McArdle explains here.  Mr. Cowan says it exists, even if fellow economist Charles Manski doesn’t care for it:

Manski also ignores that a belief in deadweight loss is fully compatible with the view that government spending may bring economic benefits.  In fact you often cannot understand the benefits of (some) government spending without first grasping the deadweight loss concept.

If you don’t think taxes have a cost, then there’s no helping you.

 

Kay Bell,  Employers in 17 states could face higher unemployment taxes

 

Missouri Tax Guy,  DOMAs Death, There Are Questions.  “It’s been nearly two months since the United States Supreme Court struck down the Defense of Marriage Act, but there are still many things we don’t know when it comes to how this affects the taxes of couples in same-gender marriages.”

 

Jack Townsend,  Simon’s Last Hurrah / Fizzle?  “So I am not sure what lessons it teaches except as a variation of the old saying, ‘Bulls make money, bears make money, pigs get slaughtered.'”

Phil Hodgen, Email and Encryption.  An interesting discussion of the problem of preserving email confidentiality in a world of hackers and NSA snooping.

TaxGrrrl, Death & Taxes: Elvis Presley Topped Charts And Tax Brackets  

Janet Novack,  IRS Agent Faked Pastor’s Letter To Claim Charity Deduction 

Russ Fox, IRS Scandal Update

TaxProf, The IRS Scandal, Day 101

 

Martin Sullivan, A Dark Cloud Over Silicon Valley (Tax Analysts Blog)

 Nobody in Washington D.C. has a wish to make enemies with tech companies that are the crown jewels of the American economy. Nobody is deliberately targeting them. But there is a basic dynamic of corporate tax reform that will be hard even for the tech sector to overcome: those who are the biggest winners under the current system have the most to lose from tax reform.

Of course.

 

Alan Cole, The Standard Deduction Undermines Itemized Deductions (Tax Policy Blog):

The standard deduction makes a lot of sense, though, if you believe itemized deductions are arbitrary and confusing. In that case, the standard deduction restores some fairness and reduces paperwork, bringing the tax code more in line with our Principles of Sound Tax Policy – particularly, neutrality and simplicity.

The standard deduction is an interesting half-step towards eliminating itemized deductions, suggesting that America is actually quite ambivalent about them.

There’s something to be said for eliminating itemizing.  It adds a lot of complexity, especially with AMT and phaseouts.  If a deduction is really needed, move it above the line and make it available to everyone.

 

Robert D. Flach, WHAT CONGRESS SHOULD DO, BUT PROBABLY WON’T.  “I have recommended limiting the mortgage interest deduction to acquisition debt on a principal primary residence.”

Me, Walnut Street is back! For lunch, anyway and Because your safety is the most important thing.

 

Tax Justice Blog,  Washington Post Owner Jeff Bezos Does Not Believe in Taxes:

As an organization that follows tax policy, we went looking for the track record on taxes and, as it turns out, Bezos and his company have consistently demonstrated a contempt for taxes and an aggressive interest in avoiding them.  

Sounds suspiciously like almost every client ever.

 

 

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