Posts Tagged ‘Athony Nitti’

Tax Roundup, 8/30/2012: Hey, I said I’m sorry edition. But the IRS isn’t apologizing!

Thursday, August 30th, 2012 by Joe Kristan

Sorry about that $2.1 million.  Remember the world’s thriftiest tax cheat, the one who stole $2.1 million from Oregon and used it to buy a 1999 Dodge Caravan and some tires?  An apology from the director of the Oregon Department of Revenue didn’t go well, according to this report from OregonLive.com:

SALEM — A contrite director of the Oregon Department of Revenue appeared before a legislative committee Wednesday and apologized repeatedly for dropping the ball on a $2.1 million fraudulent tax refund. But both Democrats and Republicans weren’t in a forgiving mood, demanding to know why four workers who failed to catch the return weren’t fired and whether the agency can do its job.

“It’s not going to be enough to sit here and say you’re sorry,” said Rep. Cliff Bentz, R-Ontario.

 

Why are they so upset?  He said he was sorry, after all?

 

Two managers and one administrative clerk received written reprimands but no change in their salaries. A fourth worker was demoted and transferred to another part of the agency. That person, an administrative specialist, got a pay cut from $45,396 a year to $41,208.  

Most private sector clerks have problems beyond reprimands if they let $2.1 million go out the door to a theif.  Still, while the apology may not seem like much, it’s more than we’ve gotten from IRS Director Doug Shulman for letting over $5 billion per year go out the door to identity thieves.

Why is Doug Shulman too darn busy to apologize for letting ID thieves loot the Treasury?  Maybe because he’s spending his time making life miserable for Canadians.  Tax Notes reports ($link) that Frustration Grows for Canadians in OVDI:

Taxpayers and their advisers asked the IRS for guidance on how to deal with RRSPs [Canadian retirement accounts] in the summer of 2011 but received inconsistent replies     The IRS’s delay in issuing the guidance…  annoyed taxpayers because, at least regarding the requests for a letter ruling granting 9100 relief, it caused them to incur professional fees that turned out to be unnecessary.

“This decision could have been made in September, October, even November, and the clients could have avoided the additional costs,” said [attorney] Ciraolo. “While we appreciate the 9100 relief offered under FAQ 54, the fact that the IRS failed to acknowledge the inconvenience and cost caused by the delayed guidance, and failed to address whether the Canadians in the OVDI would be eligible for the new program open on September 1, only furthered the belief of the Canadian taxpayers that the IRS is acting without due consideration to the circumstances of those taxpayers who entered the OVDI in good faith.”

Of course.  The program has been haphazardly administered, treating innocent noncompliance with obscure IRS rules as presumptive evidence of offshore money-laundering.
The frustration that the delayed guidance on late elections to file Form 8891 has caused for U.S. practitioners and their Canadian clients exacerbated an increasingly tense diplomatic situation and perhaps convinced some Canadian taxpayers who sat out the 2011 OVDI that noncompliance was the right choice.

So we’ve provoked our closest neighbor while convincng many that non-compliance is safer than expecting the IRS to be fair.  Well done, Commissioner! 

Jack Townsend,  AICPA Complains to IRS About Form 3520 Administration Issues.  Form 3520 is a form that must be filed by taxpayers with interests in foreign trusts.  You’ll be shocked to hear that Doug Shulman’s IRS is botching it:
The AICPA letter described six specific errors the IRS letters claim taxpayers have made, including filing Form 3520 late when it was filed on time.

When you make it harder to follow the rules than to ignore them, the results won’t be good. 


This looks like one of those kinds of things that happen when staffing at a government agency is reduced beyond what is reasonable for the kinds of tasks that have to be carried out. 

I’d be more sympathetic to that argument if Doug Shulman’s IRS hadn’t taken it upon itself to devote massive resources to an intrusive and futile preparer regulatory scheme at the behest of the big national tax preparation firms and to requiring massive amounts of futile paperwork for international compliance.

How Bain Capital execs lower their taxes (Dan Primack, Fortune, via Going Concern):

There has been lots of talk over the past few days about how Bain Capital executives have used management fee waivers to effectively lower their tax payments (a tactic that is not unique to Bain). Some academics have argued that such waivers are an illegal dodge, while private equity tax attorneys I’ve spoken with call it “aggressive but accepted by the IRS.”

Here is the basic structure: Bain officially charges 2% management fees to investors in its private equity funds. The idea is to cover overhead, such as salaries, office leases, electric bills, etc.  But Bain has lots of other business lines (venture capital funds, hedge funds, etc.) that generate sufficient cash flow, so it “waives” the PE fund management fees…

By doing so, Bain partners don’t pay ordinary income taxes on their management fees. Instead, they pay at capital gains rates if/when the deals generate profit (because it’s now considered carried interest).

Many commentators seem to think that Mitt Romney should have gone out of his way to pay the highest tax possible, rather than doing what his tax advisors and the rest of his industry did.  I doubt that they direct their own preparers to forego deductions and exclusions that they think are poor policy or the result of poor administrative interpretations of the tax law.

 

TaxProf: Mitt Romney’s Tax Mysteries: A Reading Guide

Dan Meyer, The Annual Tax Extenders Legislation Addressed by the Senate.  But it has a long way to go.

Peter Reilly, Challenge To Clergy Tax  Break Gets Green Light — Next Stop, Scientology?

 Jason Dinesen has incorporated.

Anthony Nitti, How Does a “Go Shop” Provision Impact the Treatment of Transaction Costs?

 

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Tax Roundup, 5/2/2012

Wednesday, May 2nd, 2012 by Joe Kristan

In case you need more evidence that your Iowa public officials hold you in contempt:  “Two decisions made in favor of mobile speed cameras; Supervisors OK them for busy Polk roads, while legislators kill a proposed state ban.”   Remember them in November. (Des Moines Register)

The lush life of the washed-up NFL player: three of them charged in ID-theft tax refund scam.  (Kay Bell, Bankrate.com)

Just another humble municipal public servant: Dixon, Illinois financial officer accused of helping herself to $53 million or so.  Think it ever hit her 1040? (Going Concern)

Sadly, they get to pay taxes for humble municipal public servants steal:The Price of Freedom: What Happens to the Wrongfully Convicted?” (TaxGrrrl)

Commissioner Shulman won’t rest until they’re all gone: Wealthy Americans Queue to Give Up Their Passports“‘There is incredible frustration at the audacity and imperial overreach of this law,’ said David Kuenzi, a tax adviser at Thun Financial Advisors in Madison, Wisconsin, referring to Fatca. “ (Bloomberg)

Death and Income Taxes.  My new post at IowaBiz.com, the Des Moines Business Record group blog for entrepreneurs.

Off the barbie: Crocodile Dundee settles Oz tax bill (Kay Bell)  TaxDood has more.

No.  “Would a Romney Presidency Bring Sweeping Tax Cuts?” With the debt we’ve been accumulating, avoiding tax increases will be an accomplishment. (Anthony Nitti).

Are the new broker basis reporting rules worth it?Five Challenges for the IRS’s New Capital Gains Reporting Rules“(TaxVox)

News you can use: Beating The Possible Estate Tax Increase Without Switching To Cat Food – The Midmill Dilemma.  An issue for folks with net worth of $4 million to $14 million. (Peter J. Reilly)

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