Posts Tagged ‘Antarctica.’

Tax Roundup, February 25, 2013: And the award for the dumbest economic development tax credit goes to…

Monday, February 25th, 2013 by Joe Kristan

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Field of bad dreams.  TheFiscalTimes.com says Iowa is the ninth worst state for taxes:

The Hawkeye State gets a black eye for being the second worst state for corporate taxes, with a 12 percent rate. It also ranks 37th in property taxes, 33rd in individual income taxes and 34th in unemployment insurance taxes.

 They accompany the article with this photo of the “Field of Dreams” — an unwitting illustration of the problems of Iowa tax policy.  The Governor last year signed a proposal giving a special sales tax exemption to a private athletic complex being built around the field, made slightly famous in the Kevin Costner movie.  It’s special carve-outs like this that make for high rates and complicated taxes all around.

 

Speaking of movie-related scams, Instapundit Glenn Reynolds writes in the Wall Street Journal The Hollywood Tax Story They Won’t Tell at the Oscars.  Here he talks about how it worked out in Michigan:

State leaders ballyhooed the plan as a way of moving from old-style industry to new.           

Despite tens of millions of dollars in state investment, the promised 3,000-plus jobs didn’t appear. As the Detroit Free Press reported last year, the studio employed only 15-20 people. That isn’t boffo. That’s a bust. The studio has defaulted on interest payments on state-issued bonds, and the guarantors—the state’s already stressed pension funds—may wind up holding the bag. “In retrospect, it was a mistake,” conceded Robert Kleine, the former state treasurer who signed off on the plans in 2010.

He doesn’t neglect Iowa’s film fiasco:

Iowa ended its motion-picture subsidies in 2010, after officials misused $26 million in state money, leading to criminal charges. According to a 2008 investigation by Iowa Auditor David Vaudt, 80% of tax credits issued under the state’s film-subsidy program had been issued improperly (to production companies that weren’t even spending the money in Iowa, for example).

 

Two film credit recipients are now serving 10-year sentences on theft charges arising from the program.  That’s fine, but I really want to see a groveling public apology from the Governor who signed the program into law, the “economic development officials” who turned the keys to the state treasury over to a former Walgreens photo desk clerk in charge of the program, and to the legislators — all but three out of 150 — who voted the moronic program into existence.

 

 

Sequestration panic at the IRS.  Politico adds IRS cuts to the least of things we’re supposed to freak out about in the face of the tiny impending sequestration spending cuts:
“At a minimum, it’s probably going to take longer for people to get through on the phone; it’s going to take longer for refunds to be processed,” said Floyd Williams, a senior tax counsel at Public Strategies Washington.

Williams, who worked for the IRS for nearly two decades and directed the agency’s legislative affairs office for 16 years, says the sequester could also be a boon to those who purposely commit fraud, or accidentally fill out returns incorrectly.

Good thing the IRS can redirect the employees who had been assigned to the preparer regulation program to do something useful, now that the courts have shut down that futile enterprise.  The IRS can’t stand their good fortune, though; Tax Analysts reports ($link) that the IRS is appealing the court decision.

It would be even better if Congress stopped using the IRS as the Swiss Army Knife of public policy.  Given the agency’s new mandate to take care of our health insurance, their performance at the job of actually collecting taxes is only going to get worse.


Preparers gone bad.  Accounting Today rounds up the week in preparer fraud, including a guy in New Mexico who, while serving time for identity theft-related charges, has been hit with 56 counts of fraud and embezzlement.  That would be overachieving in underachieving.

 

Hak Ghun will travel.  To Club Fed. From DurangoHerald.com:

Durango man pleaded guilty to tax evasion this week in federal court in New Mexico.

Hak Ghun, 62, is facing 12 to 18 months in prison after signing a plea agreement with the U.S. Attorney’s Office. He also will be required to pay $249,567 in restitution to the Internal Revenue Service.

The man was accused of embezzling from a company that had received investments from the Navajo Nation. For those who don’t get the old TV show reference, here you go.


 

Paul Neiffer,  Safe to File After March 1

If a fire is worth fighting, it’s worth fighting in style.  But the firefighter still can’t deduct the Benz.  My new post at IowaBiz.com, the Des Moines Business Record blog for entrepreneurs.

Janet Novack,  The Forbes 2013 Tax Guide

Peter Reilly, Don’t Be Fooled By E-Mail ‘From IRS’ – But Don’t Ignore Their Snailmail

Jim Maule,  Tax Law Provision Enforceable Even if Unwise.  That would be most of them.  For example…

Tax Effects of the Health Care Act (Missouri Tax Guy)

Patrick Temple-West, Payroll tax’s return hits retailers, and more (Tax Break)


These guys are what I call real public servants.  Vigilantes fighting revenue-driven traffic enforcement (The Telegraph, London).

Breaking:  Women Are Not Men: A New Freakonomics Radio Podcast

Today’s Going Concern employment tip: Accountant on Probation for Embezzlement Still More Employable Than the Average Non-Accountant (Temporarily)

 

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VERY SNEAKY, COUNSEL

Friday, May 2nd, 2008 by Joe Kristan

Occasionally tax issues arise that affect many taxpayers. Tax shelters, for example, can be sold to hundreds of individuals. It doesn’t make sense to issue hundreds of identical decisions. To avoid results like the 90 virtually identical Antarctica foreign earned income exclusion decisions that have been issued in the last couple of years, the IRS and taxpayers agreed to resolve a set of cases involving the “Kersting” tax shelters. After test cases were tried, the parties agreed to “stipulate” the remaining cases based on the result of the test cases.
Then the IRS attorneys decided to stack the deck. They worked out a favorable secret settlement with the taxpayers in the test case. Perhaps not coincidentally, the taxpayers then didn’t defend the shelter successfully.
The Tax Court had resisted applying the secret settlement to all similar taxpayers, but following a reversal by the Ninth Circuit, they changed their mind. The Hartman decision issued yesterday ordered the IRS to apply this secret settlement to all of the taxpayers involved in the shelter to correct “a fraud on the Court.” It is no small group; according to the tax court’s decision yesterday: “As of Mar. 13, 2008, 1,173 Kersting project cases remained on the Court’s inventory of docketed cases in which decisions have never been entered.”
The court ordered the IRS to administratively adjust the accounts of all of the Kersting project taxpayers.
Unusually, the decision had appended to it statements by IRS personnel apologizing for the secret settlements, including this from former IRS Chief Counsel B. John Williams:

The recent reversal makes clear that fraud on the court is never harmless; the Ninth Circuit decided that the appropriate remedy was to give to all of the affected taxpayers the same settlement that the IRS lawyers had granted to the lead test case. I want you to know that I fully concur with both the Ninth Circuit’s outrage over the fraud and its mandate. Is there any taxpayer who could believe that he or she would receive a fair trial of their cause if IRS lawyers could secretly offer a deal in the lead test case and then offer tainted testimony to convince a court that the transaction at issue was unsound? Fraud on any court is, in my view, not only pernicious to the fair resolution of the particular case, but also threatening to fundamental democratic principles.

This seems like the correct result. If the IRS can’t be trusted on this sort of thing, attorneys will insist that each case be resolved individually like the Antarctica cases, with dozens (hundreds) of identical opinions taking up court resources.
Cite: Hartman, T.C. Memo 2008-124
UPDATE: The TaxProf has more.

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84… 85… 90

Wednesday, April 23rd, 2008 by Joe Kristan

Since I last looked, the Tax Court has ruled against Larry D. Harvey’s Antarctican clients seven more times, bringing 90 the number of losses on this issue, by my unofficial count. One more decision holding that Antarctic employees do not qualify for the foreign earned income exclusion came down yesterday.
Cite: Gober, T.C. Memo 2008-110.

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…82…83…

Tuesday, April 1st, 2008 by Joe Kristan

Two more taxpayer defeats for Antarcticans in Tax Court yesterday, bringing their counsel’s losing streak to 83.
Cites:
Gomez, T.C. Memo 2008-76
Michaelis, T.C. Memo 2008-77

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81 and counting

Tuesday, March 11th, 2008 by Joe Kristan

Another Antarctican lost an argument that income earned on “the Ice” is eligible for the Section 911 foreign earned income exclusion. By my count, that’s the 81st time the Tax Court has rejected this argument as made by attorney Larry D. Harvey. Two taxpayers who have made the argument without an attorney fared no worse, but no better.
One Antarctic employee has kindly provided me some background on these cases. He reports that a Colorado CPA first suggested using the Section 911 exclusion on Antarctic income to one or two taxpayers in the late 1990s. The idea was passed around the Antarctic taxpayer set by word of mouth and became, understandably, quite popular, until the IRS caught on. The CPA referred the taxpayers to Mr. Harvey, and the rest is history.
There is a MySpace page for the beleaguered Antarctic taxpayers. While Mr. Harvey’s losing streak may have reached comic proportions, the Antarcticans that have to come up with back taxes can be excused if they fail to get the joke.
Cite: Cephers, T.C. Memo. 2008-57

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…78…79…80…

Thursday, March 6th, 2008 by Joe Kristan

The roadrunner got a hat trick yesterday in Tax Court.
Cites:
Miller, T.C. Memo 2008-51
Nordquist, T.C. Memo 2008-52
White, T.C. Memo 2008-53

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…76…77…

Wednesday, March 5th, 2008 by Joe Kristan

Two more defeats for the Wile E. Coyote of the Tax Court bar. Meep!. Meep!.

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…74…75…

Tuesday, March 4th, 2008 by Joe Kristan

Two more anvils fell on Wile E. Coyote’s head yesterday. Well, actually, two more clients of Larry D. Harvey lost cases in Tax Court on the issue of whether income earned in Antarctica qualifies for the foreign earned income exclusion. As in 73 previous Tax Court cases, the victorious IRS attorney was Randall L. Preheim, and the Judge was Juan Vasquez.
Maybe they should go see a movie together sometime.
Cites:
Hahn, T.C. Memo 2008-47
Young, T.C. Memo 2008-48

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…72…73…

Thursday, February 28th, 2008 by Joe Kristan

They come in pairs lately, these defeats for Larry D. Harvey’s clients in Tax Court. Twice more yesterday the court ruled that taxpayers working in Antarctica fail to qualify for the foreign earned income exclusion. Each of the 73 defeats has come at the hands of the seemingly-invincible IRS attorney Randall L. Preheim. Even chemically-enhanced Neifi Perez had a better batting average last year.
The judge in all of these cases, Juan Vasquez, was hearing cases in Des Moines this week. His Antarctic experience must have made him feel right at home.
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Cites:
Nossaman, T.C. Memo 2008-42
Winslow, T.C. Memo 2008-43

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…70…71…

Thursday, February 21st, 2008 by Joe Kristan

Attorney Wile E. Coyote Larry D. Harvey racked up two more losses in Tax Court yesterday. That makes 71 defeats for him defending taxpayers on the grounds that wages earned in Antarctica qualify for the foreign earned income exclusion. Who knew so many people worked there?
Cites:
Minor, T.C. Memo 2008-35
Zimmerman, T.C. Memo 2008-36

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68, 69…

Friday, February 15th, 2008 by Joe Kristan

Chalk up two more for the Roadrunner. Wile E. Coyote Larry D. Harvey lost two more cases yesterday in Tax Court on whether income earned in Antarctica is eligible for the foreign earned income exclusion (apparently not!). That brings his losing streak to 69, all at the hands of his personal Roadrunner, Randall L. Preheim.
Cites:
Rogers, T.C. Memo 2008-32
Thompson, T.C. Memo 2008-33
Considering the weather here today, it feels like we should qualify for whatever tax breaks apply to Antarctica. But it is supposed to warm up to 11…

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66,67…

Thursday, February 7th, 2008 by Joe Kristan

The Tax Court yesterday ruled against two more Antarcticans on the issue of whether income earned on the continent that could use a little global warming qualifies as “foreign” earned income for U.S. taxpayers. That’s four losses this week on the issue for taxpayer attorney Larry D. Harvey, and now 67 overall.
Russ Fox comments:

Look, the Washington Generals did win six games. (Well, they lost 13,000 games during that same time span….) And the Cubs are celebrating the 100th anniversary of their last World Series triumph so there is hope, Mr. Harvey.

I predict the Cubs will have more wins in 2008 than Mr. Harvey has losses.
Cites:
Martin, T.C. Memo 2008-22
Naber, T.C. Memo. 2008-23

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SCORE TWO MORE FOR THE ROADRUNNER

Wednesday, February 6th, 2008 by Joe Kristan

Two streaks continued yesterday. The Drake men’s basketball team won their 20th straight game last night, sneaking past Illinois State at Normal 73-79. And Larry D. Harvey’s losing streak in Tax Court rolls on. He was vanquished twice more in yesterday by his indomitable nemesis, IRS attorney Randall L. Preheim. He has now lost, by my count, 65 cases on the issue of whether income earned in Antarctica qualifies for the foreign earned income exclusion. He hasn’t won yet.
Cites:
Lemke, T.C. Memo 2008-19
McQuiston, T.C. Memo 2008-20.

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SEEK THE ADVICE OF COUNSEL. OR NOT.

Tuesday, January 29th, 2008 by Joe Kristan

Two more taxpayers represented by attorney Larry D. Harvey went down to defeat in Tax Court yesterday on the issue of whether income earned in Antarctica quailfies as foreign earned income. That brings the total of Tax Court losses for Mr. Harvey to 63, all at the hands of IRS attorney Randall Preheim. Mr. Preheim has also vanquished two pro se litigants on this issue. Lawyer or no lawyer, I wouldn’t hold out much hope on this issue before the Tax Court.
Cites:
McDonald, T.C. Memo 2008-11
McPike, T.C. Memo 2008-12

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AT LEAST THEY DIDN’T DO ANY WORSE WITHOUT A LAWYER

Tuesday, January 22nd, 2008 by Joe Kristan

Like a fresh crevasse in an enormous glacier, a crack has opened in Larry D. Harvey’s icy grip on aggrieved Antarctican taxpayers.
Mr. Harvey, as you may recall, has represented in Tax Court 61 Americans who have worked in the frozen continent. He has argued that the wages earned by his clients in Antarctica qualify for the foreign earned income exclusion. The IRS has thrown Randall L. Preheim against him in each court battle, and the IRS has prevailed 61 times.
Two Antarcticans weighed the odds and decided to fight it out in Tax Court without a lawyer. They, too, faced the seemingly-invincible Mr. Preheim. The result? Two more notches on Mr. Preheim’s pistol.
Cites:
JOHN K. YAMASAKI, T.C. Memo 2008-7
GERALD STEPHEN MACALA, II T.C. Summary Opinion 2008-7
(Note: original post incorrectly listed only 54 losses. My apologies)

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DOG BITES MAN, IT’S COLD IN IOWA IN DECEMBER…

Wednesday, December 5th, 2007 by Joe Kristan

Senate fails to agree on how to fix AMT, and…
Larry D. Harvey loses three cases in Tax Court on whether you have to pay taxes on income earned in Antarctica. If you’re counting, he’s 0-61.

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TWO MORE LOSSES FOR WILE E. COYOTE

Friday, November 30th, 2007 by Joe Kristan

The Tax Court this week handed defeats in two more cases to attorney Larry D. Harvey on the issue of whether his clients can treat income earned in Antarctica as foreign income eligible for the foreign earned income exclusion. Again the IRS attorney was Randall L. Preheim.
The score: Harvey 0, Preheim 56.

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ROADRUNNER 54, WILE E. COYOTE 0

Wednesday, November 14th, 2007 by Joe Kristan

The Tax Court decided two more cases yesterday on whether Antarctica is a foreign country for U.S. tax purposes. As in the prior 52 cases litigated by Larry D. Harvey on behalf of Americans who had been stationed on the cold continent, the court ruled the taxpayer doesn’t qualify for the foreign earned income exclusion. These cases were again litigated for the IRS by Mr. Harvey’s nemesis, Randall L. Preheim.
Mr. Harvey will have to reorder from the Acme catalog.
Cites:
Barber, T.C. Memo 2007-338
Swanson, T.C. Memo 2007-337

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WILE E. COYOTE 0, ROADRUNNER 50

Tuesday, October 30th, 2007 by Joe Kristan

A grim milestone was achieved in tax attorney Larry D. Harvey’s crusade against the taxation of income earned in Antarctica. My count shows he has now lost 50 Tax Court cases on this issue after two defeats yesterday, again at the hands of IRS attorney Randall L. Preheim. He has not yet won a case on this issue.
Related:

HIS PERSISTENCE WILL PAY OFF WHEN THE ICE CAPS MELT

Cites:
Stevens v. Commissioner; T.C. Memo. 2007-322
Elliott v. Commissioner; T.C. Memo. 2007-321

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WILE E. COYOTE WATCH

Thursday, October 25th, 2007 by Joe Kristan

The Tax Court yesterday dealt two more Tax Court defeats for Larry D. Harvey on the issue of whether wages earned in Antarctica are “foreign” wages. Again the defeats are at the hands of his nemesis, IRS attorney Randall L. Preheim. The score: Harvey 0, Preheim 48. Maybe next time.
Russ Fox has more.
Cites:

Grant, T.C. Memo. 2007-318

Fabre, T.C. Memo. 2007-319

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