Posts Tagged ‘Christopher Bergin’

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Tax Roundup, 11/12/2012: Ottumwa edition!

Monday, November 12th, 2012 by Joe Kristan

I’m in beautiful Ottumwa, Iowa today to help at the Iowa State University Center for Agricultural Law Farm and Urban Tax School.  Ottumwa last month made a rare appearance i!n the tax news when a resident pleaded guilty to tax charges arising from an investment scam.

There are four sessions of the school left — Muscatine, Red Oak, Sheldon and Ames.  Sign up today!

 

Whither Wandry?  The IRS made clear that the withdrawal of their appeal of the Wandry case does not mean they are going along with it. 

The case involved a “defined value” formula that prevented the IRS from increasing the value of intra-family gifts for gift tax purposes.  The formula said that if the IRS changed the value of the gift, the recipients would have to give part of the gift back to the donor so that the value of the remaining gift would be the amount reported on the gift tax return. 

The Tax Court agreed with the taxpayer that this worked, preventing an assessment of gift tax, but it apparently was settled before the 10th Circuit could rule on the IRS appeal.  The IRS has announced its “non-acquiescence” to the Tax Court case, signaling that they will continue to contest defined value clauses on family gifts.   Three circuits have ruled against the IRS in similar cases involving charitable gifts. 

 

Anthony Nitti,  The Fiscal Cliff For Dummies, Part 2: The Economic Impact Of Extending The Bush Tax Cuts

TaxGrrrl,  Tax Increases Looming in 2013: Who Pays, How Much and Will They Stick?

William McBride,  The Fiscal Cliff and the Stock Market (Tax Policy Blog)

Howard Gleckman, Washington Starts To Dance Away from the Fiscal Cliff

Brian Strahle, Is There a State Tax “Fiscal Cliff”?

Christopher Bergin,   Beware the ‘Frankentax’!

Robert D. Flach,  A SIMPLE FIX

TaxProf,  Burman & Slemrod: Taxes in America — What Everyone Needs to Know

Paul Neiffer,  Surprise! – IRS Does Not Promote “First Time Abatement” Program

Jack Townsend,   Court Holds Government Must Prove FBAR Willful Penalty by a Preponderance

Missouri Tax Guy,  Small Business Health Care Tax Credit

Spelling test.  IRA Penalty On Withdrawal To Pay Alimony – Can Family Law Judge Spell QDRO ?  (Peter Reilly) 

Buh-bye.   IRS Commissioner Shulman outta here, leaving fiscal cliff hassles to new tax  boss  (KayBell)

Russ Fox,  If It’s In Cash It Doesn’t Count, Right?

 Won’t that make it a lot more expensive? “Cost of Ramsey Northstar station: $130,000 per new rider; But supporters say it will boost ridership significantly.  (Via Gongol.)

 

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Tax Roundup, 10/5/2012: $2 million to anonymous whistleblower. Plus more debate echoes!

Friday, October 5th, 2012 by Joe Kristan

Image via Wikipedia

Cheating on business taxes just got a little scarier.  CNNMoney reports:

An anonymous Wall Streeter is getting rich exposing alleged tax fraud through the IRS’s whistleblower program.

Washington law firm Phillips & Cohen announced Thursday that its client, a “Wall Street insider,” has netted a $2 million reward from the Internal Revenue Service for exposing an alleged tax-avoidance scheme by manufacturer Illinois Tool Works

This is interesting for many reasons.  The report implies that the whistleblower is in the financial services business.  That could mean banking, investment banking, or even accounting.  That means somebody who knows how to work the whistle could be in your business.

If you can get a million dollars from the IRS and keep your identity secret, it becomes a lot easier to call the IRS.  It also becomes a lot more dangerous for the boss to take flaky tax positions, let alone commit tax crimes; every staff accountant becomes a potential IRS mole.  Because business taxes usually require some staff cooperation, this changes the odds in the tax game in favor of the IRS.

 

Richard Morrison,  Chart of the Day: The Growth of Refundable Tax Credits, 1990-2010. (Tax Policy Blog).

I bet the chart of tax refund fraud incidence would look about the same.

 

More debate fallout:

Christopher Bergin,  Shovel Ready (Tax.com):

And does the President really believe, as he said, that if we bring back the Clinton tax rates we will bring back the Clinton economy? Does he really think we are that naïve?

Clearly, Mitt Romney thinks we are that naïve. He came to the debate loaded with the latest iteration – it seems to change by the day – of his hocus pocus tax reform plan.

Going Concern,  Let’s Try to Make Some Sense of President Obama’s “Tax Breaks for Companies Shipping Jobs Overseas” Statement

Kay Bell,  Romney ‘makes up’ a new, higher tax deduction limit during the debate

Trish McIntire,  Location, Location, Location

Patrick Temple-West,  Essential reading: Fact or fiction in the U.S. presidential debate? and more

 

Anthony Nitti,  Tax Court Has Mercy on Taxpayer’s $16,000,000 Charitable Contribution Deduction

 Brian Strahle,  DC Employers Required to File Annual Use Tax Return by October 20, 2012!

Robert D. Flach,  TAX BLOGOSPHERE BUDDIES – JASON DINESEN

Peter Reilly,  Young Earth Creationists Whipsawed By IRS.  Tax Update coverage here.

 

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Tax Roundup, 9/19/2012: 47% Frenzy, Day 2! And the dangers of filing unneeded returns.

Wednesday, September 19th, 2012 by Joe Kristan

Who know tax policy would finally take center stage in the presidential campaign?  The Romney “secret video” saying 47% of taxpayers won’t be interested in him because they pay no taxes continues to crowd high unemployment and foreign policy disaster from the headlines.  Will Freeland of the Tax Policy Blog takes an approach nobody else (besides me) seems to have, looking at both taxing and recipients of government spending.  It’s worse than 47%:

 

The red top line is the top 1% of taxpayers; the remaing lines are quintiles of taxpayers, top to bottom. The bottom 3 quintiles (60%) receive more in government payments than they pay in taxes.

If this controls voting (and it doesn’t), Mitt is doomed.

More 47% frenzy coverage:

Kelly Phillips Erb (TaxGrrrl):  Note to Romney: We’re all on the dole (USA Today)

Christopher Bergin,  Romney Steps in Taxes, Again (Tax.com)

Roberton Williams,  Why Do People Pay No Federal Income Tax?  (TaxVox)

Peter Reilly,  Mitt Romney And The 47% All A Matter Of Context

Trish McIntire,  Stoning Glass Houses – Again

Linda Beale,  Romney’s Tax Views Lead to Blooper Comments Denigrating America’s Elderly and Poor

Tyler Durden,  Your Taxes At Work: All You Need To Know About Who Pays What Taxes In The US (Via Instapundit)

 

 

If you’ve ever been snookered into buying a lame extended warranty for a car, you’ll like this.  From the St. Louis Post Dispatch:

Cory Atkinson, a former co-owner of what was once one of the nation’s largest seller of auto service contracts, was sentenced in federal court here Tuesday to 40 months in prison on charges of tax fraud conspiracy and tax fraud charges for bilking both consumers and the IRS.

Atkinson, 42, of Chesterfield, will also have to pay $4.49 million in back taxes.

40 months? that’s less than a lot of extended warranties.

The company’s profit on a typically contract worth $2,000 or more was often more than $1,200. Fidelis kept 60 percent of that.

Unhappy customers canceled, sometimes at a rate as high as 60 percent, but US Fidelis staffers were told to arbitrarily withhold 10 percent to 40 percent of their money, according to plea documents.

I suspect few of the extended warranty customers will miss being able to work with this guy for the next 40 months.

 

You don’t want to give me more money?  Traitor!   As Taxes Edge Upwards, Leaders Question Taxpayer Patriotism  (TaxGrrrl). 

True that:   Tales from the Tax Field: Don’t “Start a Business” Just to Get Tax Deductions  (Jason Dinesen)

Jana Luttenegger,  Top Tax Errors in Estate Planning  (Davis Brown Tax Law Blog)

William Perez:  Avoid the Medicare Surtax by Giving Incoming-Producing Investments to Minor Children

Missouri Tax Guy,  Tax Misperceptions – Small Business

Jack Townsend,  The Role of the DOJ Tax Division in Criminal Tax Enforcement

It’s Wednesday, so it’s time for a Buzz!  Robert D. Flach Obliges.

Going Concern:  Audit Finds That IRS Small Business Division Not So Different From That Attractive Person at the Bar That Seemed Really Interested in You

Get ’er done, Iowans!   Could Iowans get any fatter? Yes, new study concludes.  Related?  ISU economist says now may be the time to stock up on meat

 

I’m going to get even with you by getting myself sent to federal prison!  A Nebraska couple has a funny idea of vengeance, based on this item from the North Platte Bulletin:

Evidence presented at trial showed that the Kleensangs had not filed any tax returns in 2003-06 or in 2008-11, U.S. Attorney Deb Gilg said.

The Kleensangs testified under oath in state court proceedings in Sheridan County that they did not have to file tax returns because they were not federal employees and did not live in the District of Columbia.

However, in 2008, together they filed a total of 67 returns for 2007, with David Kleensang filing 57 separate returns for himself and Bernita Kleensang filing 10 separate returns on her behalf.

That’s a lot of returns if you don’t have to file.  What’s that all about?

During the investigation, Gilg said the Kleensangs admitted that they filed the bogus returns to “get justice” for judgments that were rendered against them in Sheridan County. The total amount of the refunds they claimed was $48.4 million.

Yeah, we’ll file bogus tax returns.  That’ll teach Sheridan County!  What could go wrong?

The frivolous returns were detected by the Frivolous Return Program Unit, established by the Internal Revenue Service around 2001, Gilg said. Frivolous returns are pulled and the filer is sent a warning letter that says if the returns are not corrected, the filer could be assessed a $5,000 penalty.

Not only did the Kleensangs not correct their initial returns, they continued to file similar returns for nearly four months, seeking refunds, Gilg said.

So they ended up convicted of fraud and false claims charges.  It will be a long time before Sheridan County messes with that couple — six years, anyway.

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Tax Roundup, 9/13/2012: Winning = losing. Also: Factually-challenged fact-checkers and astute Minnesotans.

Thursday, September 13th, 2012 by Joe Kristan

Iowa’s winning the wrong race.  An opinion piece in today’s Des Moines Register by Beuna Vista College economics professor Jeremy Horpedahl:

This year, Iowa came in first place. Unfortunately, it wasn’t a bowl championship for the Hawkeyes but rather unmatched, high corporate tax rates — not an area in which anyone wants to beat out rivals.

The United States’ combined federal and state corporate income tax is the highest in the world at nearly 40 percent, and Iowa’s 12 percent corporate income tax rate is much higher than that of any other state. To make matters worse, Iowa’s corporate tax rate is significantly higher than those of its neighboring states. South Dakota doesn’t even have a corporate income tax.

It’s worse than that.  Iowa’s corporation income tax is very complicated and so full of special favors that it nets only a small portion of state revenues.  That makes it both destructive and useless.  There is a better way.

 

Flickr image courtesy Retrofresh! under Creative Commons license.

Economic illiteracy and fact checkers.  The Cedar Rapids Gazette has ventured into the shady “fact checker” business, with unfortunate results.  They attempt to say whether the claimed number of jobs “created” by wind energy tax credit subsidies are correct:

While the figures cited by the wind energy industry and politicians are inexact and fluid, they’re the best available information. The U.S. Bureau of Labor also relies primarily on the industry’s information. We found no evidence that these figures are misleading, but keep in mind these are estimates.

We rate the jobs claims mostly true.

There are two key words missing from the analysis: opportunity costs.  The money spent on wind subsidies wouldn’t just disappear if the tax credit went away.  It would be used to buy or invest in other things.  This is explained wonderfully in Bastiat’s broken window parable, which (slightly updated) goes something like this:

A vandal breaks a shop window, and the shopkeeper pays a glazier to replace it.  The glazier says that the vandal did good by creating a job for him.  The local fact-checker rates the claim “mostly true” because he considers the glazier “the best available information.”  But because the shopkeeper spent the money fixing the broken window, he loses the opportunity to hire an assistant to keep the store open longer, to develop a new line of merchandise, or to buy something from another business down the street.  But that ”opportunity cost” is unseen by the fact-checker and ignored.

The Gazette’s “fact-check” ignores the jobs squandered by funneling resources to an economically inefficient technology, because they are “unseen,” especially by the industry that benefits from the subsidies.

 

Speaking of opportunity costs:  Compliance with ObamaCare Estimated at 80 Million Man-hours  (William McBride, Tax Policy Blog)

 

Former Corporate Raider Bilzerian rebuffed by Tax Court.  You can’t be a corporate raider without taking some risks, and sometimes those risks lead you to bankruptcy court, like they did for Paul Bilzerian.  He yesterday lost some more when the Tax Court ruled that he could not relitigate tax liabilities determined by a bankruptcy court.  Tax Court Judge Wells ruled against the former raider on the grounds that he had agreed to be bound by the bankruptcy ruling.

 

Getting what you pay for? TIGTA: Tax Returns Prepared Through IRS’s Volunteer Assistance Program had 51% Error Rate   (TaxProf)  To be fair to the volunteers, though, I doubt they do much worse than IRS phone helpers, and certainly paid preparers don’t always get our ridiculously complex taxes right.

They always can.  “Just when I think that our politicians can’t act any more irresponsibly, they up the ante”  (Christopher Bergin)

Anthony Nitti,  Tax Court Applies Garnett Decision to Liberalize Real Estate Professional Test

Would you jump off a cliff just because your friends all deducted it?  Never Do Something Just Because It’s Tax Deductable (Jason Dinesen)

Kay Bell,  Share and share alike: your taxes in a community property state

Paul Neiffer,  Express Saver Costs a Taxpayer Thousands

TaxGrrrl,  Amazon Sees Silver Lining With Sales Tax Collections.  She also interviews an obviously astute Minnesota tax pro, as his answer to her final question shows.

 
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Tax Roundup, 8/27/12: Verify, then trust. Plus the tenant-free landlord!

Monday, August 27th, 2012 by Joe Kristan

http://www.rothcpa.com/misc/EFTPS.JPGPayroll taxes: Trust a little, verify a lot.   Sad stories all around in Binghampton, New York, after an executive at a payroll service provider admitted stealing tax deposits, rather than remitting them to the IRS and the state.  From WBNG.Com:

“It was almost like being kicked in the stomach because I had already paid the taxes and we were told we had to pay them again,” said President of Silo Restaurant Gary Kurz.

Kurz was another victim. He says he had to borrow money to pay the IRS a second time, in addition to cutting hours for employees, and working hard to save on electricity bills.

All of this in an effort to to fill a sudden $24,000 loss for the restaurant, a loss that’s still affecting his business.

Outsourcing payroll processing can be a good business decision, but it leaves a business horribly vulnerable if the processor has a thief on board.  That’s why even businesses that outsource their payroll should enroll in the Electronic Federal Tax Payment System.  EFTPS lets you go online to make sure that the payroll taxes you are sending to your payroll service provider are truly getting deposited on time.  It might seem like extra work, but it’s a lot easier than paying your payroll taxes twice.

 

Being a landlord is so much easier without tenants.  But it has its downsides, as a Connecticut attorney named Joseph Colbert has learned.  From the Wilton Patch:

According to court documents and statements made in court, Colbert  filed false federal tax returns in 2006, 2007 and 2008. In  each of the returns, Colbert falsely claimed that he had sustained  thousands of dollars in losses on a rental property in New Jersey when,  in fact, the New Jersey property was not a rental property, but was  exclusively for his personal use. In total, Colbert underpaid his federal tax obligation by more than $133,000.

Folks, this sort of thing isn’t hard for the IRS find.  If you have a Schedule E property that year after year shows little or no rental income and lots of expenses, the IRS computers are likely to notice.  That’s especially true if you find a way deduct those losses, which will normally be non-deductible “passive” losses absent other passive income.

Of course, there are times in real life when commercial properties go a long time without being rented.  Residential rental properties, though, aren’t likely to sit empty for three years in most markets.

 

Bad tax ideas of the northlands.  An Alaska couple apparently didn’t take their tax evasion conviction well.  From the Alaska Dispatch:

According to documents filed in court Thursday, Lonnie and Karen Vernon, of the so-called “241″ militia trial, are planning to enter guilty pleas to some of the eight counts against them, the Fairbanks Daily News-Miner reports.

The couple faces charges related to tax evasion, weapons possession and conspiracy to commit murder.

Independent of the “241″ militia trial, the Vernons are charged as a couple for allegedly plotting to kill an Internal Revenue Service agent and U.S. District Judge Ralph Beistline following the outcome of their tax evasion trial. Judge Beistline was allegedly targeted because he ruled against the Salcha, Alaska, couple.

Maybe this has something to do with long winters.  A few years ago Minnesotan Robert Beale got in trouble for similar reasons.

I’ll be the last person to discount the seriousness of tax convictions.  Nothing disrupts personal plans like a stretch in the federal can.  Yet, according to the story, this couple owed about $180,000 –  good for maybe a three year stretch before you can resume your previously-scheduled programming.  Conspiring to kill a federal judge will extend that time away considerably, without any chance of making the original sentence go away.  Poor move, north or south.

 

 

It’s Guest Post Week on Taxgirl!

Russ Fox ponders Jason Dinesen’s series on identity theft and asks, Why Is the Death Master File Still Available?  Why, indeed?

William McBride, Sweden’s Corporate Rate is 13 Points Lower than Ours, and Going Lower (Tax Policy Blog)

Jack Townsend,  Prominent Neurosurgeon Convicted for Offshore Accounts.  A Milwaukee case.

Janet Novack, Romney’s Taxes: It’s The Carried Interest, Stupid

Jim Maule, Using Taxes to Measure Generosity

Christopher Bergin,  Taxing With the Stars

Robert D. Flach has a new Buzz on.

Isn’t that what Hell is for anyway? Pennsylvania Court Gives No Relief To Investor In Tax Shelter From Hell (Peter Reilly)

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Tax Roundup, 7/27/2012: Congressional preening, California refund dreaming; corn squeezers squeezing.

Friday, July 27th, 2012 by Joe Kristan

Flickr Image by Bryan Villegas used under Creative Commons license

Christopher Bergin ponders our congresscritters:

The point is that you could set these folks pants on fire and they still wouldn’t get it. Our tax system is a mess, and we are heading into another recession (yes, I’m “doubling down” on that bet!). And these folks squabble like children.

The tax world is a microcosm of what is going on in Washington. Our political system is completely dysfunctional. Congress, when it manages to pay attention, is totally reactionary. Our lawmakers will do nothing but bicker until catastrophe hits. Bet on it.

But, sincerely, let’s all try to have a nice summer.

Maybe setting their pants on fire wouldn’t help, but it’s worth a try.

 But Political Preening Season is. Middle Class Tax Cuts Not Extended (TaxGrrrl)

Jason Dinesen: Enrolled Agents – The Lichtenstein of the Tax World:

In terms of name recognition, EAs are far, far behind. We may outnumber attorneys but that doesn’t mean our name recognition is better than that of attorneys, and we are light years behind CPAs.

The IRS’s program to “professionalize” unenrolled preparers will help enrolled agents, with their stricter requirements, not at all.

No. Any more questions? Do Higher Education Tax Credits Make Sense? (Kim Reuben, TaxVox). 

Unfortunately, we are flying blind in our efforts to reform these subsidies. There are limited data to help  evaluate the effects of these programs, including  recent expansions.  We know little about what the grants and credits mean for students over time. A key question is whether either or both programs result in higher tuition.

The key answer is almost certainly yes.

California refund claim opportunity? A California court rules that California’s double-weighted sales factor apportionment factor is optional, reports Russ Fox.  The traditional three-factor formula weighs payroll, property and sales equally.  Extra weight on the sales factor punishes out-of-state corporations, which is why Iowa uses only sales.  Brian Strahle has more.  If the decision holds up, taxpayers may want to file amended California returns to use the traditional three-factor formula.

Got Drought? Roger McEowen explains the rules for deferring crop insurance and disaster payments for farmers.

So stop making it. Ethanol Makers are Getting Squeezed (Paul Neiffer)

Kay Bell: Mississippi sales tax holiday begins today.  Iowa’s holiday for clothes is August 3 and 4.

Joining the rest of us:  Senate, House Take Turns Hatin’ On One Another (Anthony Nitti)

Peter Reilly says  Lowell Yoder Has Some Great Tax Posts – Read Them.  And he’s right.

Peter Pappas is posting again: Obamacare Will Cost Taxpayers $1 Trillion Over Next Ten Years

Tax Policy Blog has Updates to Bush Tax Cuts Calculator

TaxTv, Self-Directed IRAs: Prohibited Transactions Can Get You in Trouble

Young Buck’s IRS auction raises $53,000 (Sohh.com, via Going Concern)

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Tax Roundup, 7/13/2012: triskaidekaphobia edition.

Friday, July 13th, 2012 by Joe Kristan

At least it’s a higher-class crime this time: rapper Beanie Sigel got a two-year sentence for skipping out on over $700,000 in fefderal income taxes.  Mr Sigel has an idea of what the next two years might be like, having done time in 2004-2005 on weapons and drug charges.  TaxGrrrl has the scoop.

I think he at least has a hobby loss problem.  Kay Bell: Is Batman cheating on his taxes?

Anthony Nitti: Prince of Bel Air Denied Ordinary Loss (Alternate Title: Lying on Your Loan Application Might Bite You…):

What’s the lesson? If you’re one of the unfortunate souls still trying to unload a spec home you built pre-2008 and you’re angling to take an ordinary loss, you need to know the factors, and behave accordingly. Run it like a business, keeping books and records. Try like hell to sell the property through advertising, hiring unrelated brokers, etc… And for god’s sake, don’t admit you were “just trying to get rid of it.”

TaxProf: Sen. Grassley Places Hold on Treasury Nominations Pending Response on IRS Whistleblower Office

Taxing the Rich, and Missing the Point (Christopher Bergin):

The President’s proposal to temporarily extend the tax cuts for the middle class may have been smart election politics; I don’t know. What I do know is that it would help perpetuate a tax system – for which the Republicans share equal blame – that is unfair and unsustainable. Now, how does that protect any of us in the middle class in the long run? Like a lot of other things in our tax code now, it’s a ruse.

Smoke-filled rooms?  What Does Poker and Revenue Neutral Tax Legislation Have in Common? (Brian Strahle)

Daniel Shaviro: What’s so special about “small business”?:

“Small business” sounds good rhetorically, whether you are trying to put a misleading face on support for the top 0.1%, like the Republicans, or simply trying for a more generally faux-populist tone, like the Democrats.  Tax breaks for “big business” certainly don’t sound as wholesome.  But there is no particular reason to favor one part of the business sector over another, or to give businesses a tax incentive to stay small 

 Or to clobber one over the other, either.

And tax increases, too:  Essential reading: Obama, Democrats put tax cuts at center of 2012 agenda, and more (Tax Break)

 Howard Gleckman: Taxes Don’t Always Drive the Economy–Sometimes the Economy Drives Taxes (TaxVox)

I get a very kind mention from Peter Reilly today:

The Blogger With Whom I Feel Most Sympatico

Joe Kristan is a CPA with Roth and Company PC in Des Moines, Iowa.  Joe describes the Robert Flach version of tax season as a two month death march.  He actually has the temerity to criticize the Pro, before whom, I stand in awe and wonder. In his Tax Update, he will often pick up the same cases that I do.  He has taken to having many of his posts be Tax Roundups, which reflect a pretty good sampling of other tax blogs.

Totally unrelated to taxes, but well worth looking at is another blog of Joe’s that is inactive, presumably due to lack of further material.  It is called 42-72817.  The number is the serial number of a B-24 that was shot down in 1944.  The top turret gunner, who survived the crash, was Joe’s father.

Peter is a prolific and perceptive tax blogger, one of the best of a group of new tax bloggers who have emerged in the past year or so.  It’s the sudden abundance of excellent material from Peter and others that is behind these Tax Roundups; there’s so much good stuff out there now that I should link to, and this format helps me do that.

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Tax Roundup, 6/29/2012: Supreme Court Frenzy edition

Friday, June 29th, 2012 by Joe Kristan

 Janet Novack: How Health Insurance Individual Mandate Quacks Like A Tax:

Roberts concludes the mandate functions more like a tax than the “penalty” for not buying insurance the Patient Protection and Affordable Care Act labels it as, because in most cases “the amount due will be far less than the price of insurance,’’ and the IRS is “not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution,’’ to enforce it.

Because the penalty is so low as to be ineffective, it invites actuarial disaster.  Because insurers can’t reject you for a pre-exisiting condition, it will be cheaper to wait until you are sick to get “insurance.”

Peter Reilly: Julian Block On The Tax In The Health Care Act That Everybody Knew Was A Tax. He notes an anomoly in the wage and “unearned income” surtaxes:

Whether by design or inadvertence, Congress created rules that require a person to pay more Medicare surtaxes solely because he or she is married. Congress allows two cohabitating singles to each have up to $200,000 in wages without exceeding the threshold for the 0.9 percent tax. Congress penalizes them if they marry. Wages above $250,000 exposes them to the 0.9 percent tax. Similarly, two cohabitating singles each can have MAGI of as much as $200,000 without exceeding the threshold for the 3.8 percent tax. If they marry, MAGI above $250,000 exposes them to the 3.8 percent tax. Their reward for a walk down the aisle is that they could become liable for both surtaxes.

The question answers itself.   “So here’s my issue. What if our politicians are giving us a health care system that is as screwed up as our tax system? I’m just asking.”  (Christopher Bergin).

Unintended Consequences: Hank Stern explains the Obamacare “50th Employee problem” at Insureblog:

Here’s the problem: if you currently employ 49 people, you’re not going to be hiring that 50th guy, because that would cancel your exemption. Which means your current workforce is either going to have to work harder (to make up for that missing 50th employee), or you’re going to need to scale back even further.

The Eve of Destruction:  “The Supreme Court once acknowledged that the ‘power to tax is the power to destroy.’ Let the destruction begin!” (David Windish)

Howard Gleckman at TaxVox, The Supreme Court Says the Health Care Mandate is a Constitutional Tax:

But the Court rejected the White House’s main legal argument—that Congress has the authority under the Commerce Clause to require people to get insurance. It will be interesting to see how legal scholars read this in the coming weeks: Is the Court saying that tax policy is the only tool Congress has to enact certain social welfare programs? If so, it would put an already-stressed tax code under even greater pressure.  

I get an Instapundit mention!  No link, alas… (update: linked now, thanks Instapundit!)

And a floor wax and a dessert topping!  The Individual Insurance Mandate is Constitutional Because it is Both a Penalty and a Tax. Wait…What?  (Anthony Nitti)

Martin Sullivan: The Great Anti-Climax: Using Tax Law to Deliver Economic Incentive is Constitutional

Kay Bell: Tax component saves health care act

Paul Neiffer: ObamaCare Survives The Supreme Court!  “For  now, the most immediate effect facing farmers is the imposition of the Medicare Surtax on earned income and unearned income starting January 1, 2013.”

TaxGrrrl: When Is A Penalty A Tax? Sorting Through The SCOTUS Health Care Decision.

Tax Policy Blog has a Roundup of Reactions to Supreme Court Health Care Ruling

If you want to read about something besides yesterday’s Supreme Court decision:

Hiring the Right Accountants For Your Business (Missouri Tax Guy)

Russ Fox:  eFile an FBAR? Use Internet Explorer, Not Firefox or Chrome.  Remember, it’s due tomorrow.

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Payroll tax extension looks like a done deal

Friday, February 17th, 2012 by Joe Kristan

Congressional leaders appear to have reached agreement to extend the 2 percentage-point reduction in the employee FICA and Self-employment tax rate through December 31. It had been slated to expire at month end. The agreement had been hung up on how it would be paid for, but our leaders bravely compromised by not bothering to pay for it.
More coverage:
Anthony Nitti
Christopher Bergin

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Mitt’s 203-page tax return

Tuesday, January 24th, 2012 by Joe Kristan

There’s a lot to the Mitt Romney 2010 1040. 203 pages long, with over $20 million of adjusted gross income, it tells a story of a wealthy and sophisticated investor. The would-be GOP nominee also released some trust returns that feed into the 1040. There’s a lot here, and far more than I should spend unpaid time thinking about — but I can’t resist a little bit of voyeuristic observation.
- Mitt had a much better 2010 than 2009. His “protective” estimated tax based on 2009 tax was about $1.37 million. He had to pay in another $3.25 million with his extension. Much of that was cushion to cover 2011 estimated tax payments; he had a $1.6 million overpayment on the completed return, all of which went to 2011 estimates.
- 2010 was better because of $16.7 million in capital gains, offset by a $4.8 million capital loss carryover.
- That said, with $3.3 million in interest income and $4.9 million in dividend income, Mitt can hardly have a really bad year.
- The return was signed by somebody at PricewaterhouseCoopers on October 15, at the end of the extension period. Can you imagine the scene if Mitt had pointed out a mistake on the return on the extended due date? I can only imagine the logistical nightmare of making sure the return was signed and filed by the taxpayers on time.
- The return was, of course, prepared on what Robert D. Flach would call “flawed and expensive” tax return software. To do this return by hand, like Robert does his returns, would require a small army of flawed and expensive staff accountants with good penmanship. If nothing else, it shows that the current complexity of the tax law is possible only because of computers.
- Mitt has a $2 million passive loss carryforward, of which over $1 million is attibutable to 2010 losses.
- His return is fraught with potential expensive foot-faults. For example, he has a Form 8865 to report a foreign partnership and a Form 5471 for a controlled foreign corporation. Failure to file either one of these on time would have generated a $10,000 IRS penalty notice.
- The total tax on the 1040 is just over $3 million. If you counted the 35% tax paid by corporations on income generating the $3.3 million in qualified (15%-rate) dividends he reported, it would be about $1.79 million higher.
I’m sure the Obama, Gingrich and Santorum opposition research teams will be forthcoming with much more detailed analysis soon.
Link: Romney campaign page tax return links and campaign overview.
UPDATES:
TaxGrrrl, “Romney’s Tax Returns are Remarkably… Unremarkable”
The TaxProf has a roundup.
Kay Bell, “Romney Release 2010 tax returns”
Philip Klein, “Romney needs no apology on tax returns”
Christopher Bergin, “Romney

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The nightmare is over

Wednesday, January 4th, 2012 by Joe Kristan

The politicians have left Iowa, and Tax.com, the 2011 LexisNexis Top Tax Law Blog — silent since December 15 — has a new post! Christopher Bergin accurately pegs the two-month extension of the payroll tax cut:

Bar none, this is the stupidest tax policy idea I have ever seen

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Payroll tax cut extension imminent?

Friday, December 16th, 2011 by Joe Kristan

The Wall Street Journal reports this morning that the Congresscritters are on the verge of a deal to extend the 2% cut in the employee portion of the Social Security tax (from 6.2% to 4.2%). The deal would also extend the reduction in the Self-employment Tax from 15.3% to 13.3% — so don’t be hasty about accelerating self-employment income into this year.
I see nothing yet on whether the deal will also extend 100% bonus depreciation or the $500,000 Section 179 deduction maximum one more year.
UPDATE, 12/18: Senate passes two-month extension of payroll tax cut.
More Coverage:
Tax.com
TaxGrrrl
Kay Bell

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Corporations are people too!

Monday, August 15th, 2011 by Joe Kristan

Mitt Romney caught some grief for telling an Iowa State Fair heckler an obvious truth – corporations are people. They are a tool for people to organize their activities and cooperate to do things. That this is at all controversial is sad.

TaxVox explains:

He

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Is the income tax doomed?

Thursday, July 28th, 2011 by Joe Kristan

Christopehr Bergen thinks so:

The deadlock on the debt is perfect proof that we won

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Can the Department of Justice sue the IRS for antitrust violations?

Wednesday, June 1st, 2011 by Joe Kristan

So the Antitrust Division of the Dpeartment of Justice is suing H&R Block for its attempted purchase of Iowa-linked TaxACT Software.
That’s so funny. The federal government itself is doing more than anyone to restrict competition in H&R Block’s market with the new IRS rules on tax preparers. It just issued final rules yesterday as part of this effort. The tax preparer regulation system was designed by a former H&R Block executive, and will push out of business many small seasonal preparers who don’t want to deal with the cumbersome IRS preparer bureaucracy — less competition for Henry and Robert Richard (thanks, Everett!).
It’s way too much to hope that the next antitrust suit names IRS Commissioner Shulman.
Related:
Christopher Bergin, Blocking Block
Tax Update: Tax Preparers, Bootleggers and Baptists

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State of the Union — taxed!

Thursday, January 27th, 2011 by Joe Kristan

The President called for corporate tax rate reduction — without losing revenue — and made a nod to individual tax reform, but didn’t sound like he will lead the charge for tax simplification. He also got on the bandwagon for repealing the hated 1099 expansion enacted for 2012 in his own health care bill. Howard Gleckman at TaxVox pretty much covers it here:

What he said: We need a competitive corporate tax system with low rates and fewer tax preferences that raises the same amount of money as the current corporate tax system.
What he didn

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Let’s compromise and do what I want

Monday, November 8th, 2010 by Joe Kristan

Christopher Bergin at Tax.com thinks the President will propose a temporary extension of the Bush-era tax cuts, but that a triumphalist Republican House will turn it down:

Here

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Charlie, Rangeled?

Monday, August 2nd, 2010 by Joe Kristan

Former head House taxwriter Charlie Rangel totters to his political destruction. From a tax policy standpoint, that’s not necessarily a good thing, as he at least realized that U.S. corporate tax rates are a problem. His successor doesn’t seem to have a clue. Still, you can’t have your taxwriters blowing off their own filing responsibilities or shaking down constituents.
Christopher Bergin reports that President Obama is nudging Rep. Rangel out the door. TaxGrrrl thinks he’ll take the hint. The TaxProf has a roundup.

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It’s not just luck

Tuesday, July 27th, 2010 by Joe Kristan

Christopher Bergin at Tax.com:

When talking about the rich, Treasury Secretary Geithner and President Obama refer to them as “fortunate,” insinuating — if not just stating it outright — that the rich are lucky. That’s why they’re rich. This is a point of view I ‘d expect from a couple of liberal arts college professors, not from those in charge.
I’m all for a progressive income tax system. And I’m all for a strong estate tax for the idle rich. But the people I know who are well-off work hard for their money. They worked hard in school and worked hard in business. They took risks, which weren’t backed by government safety nets. They created things. And, as they rose, they learned that there are some in this country who like to demonize success — even fear it.
There’s a saying that I’m fond of: Trying to blow out somebody’s candle won’t make yours burn any brighter. I’m fully aware of the growing gap in this country between the haves and the have-nots. But building class warfare by arguing that the land of opportunity has changed into the land of the fortunate few is not the answer. The tone at the top matters.

My client base is made up of of people that are “rich” by Geithner standards. They are small business operators who have achieved a little success in their S corporations and partnerships, generating enough taxable income to put themselves in the top tax bracket. They have had some luck, or at least not catastrophic bad luck, but as a rule they also work very hard. Many have taken huge chances, and some lost almost everything before finally achieving some success.
For these clients, the 1040 is also the business return, because the business income passes through to their schedule E via a K-1. Many of these people only take enough cash out of their businesses to pay their taxes, plowing their remaining cash into growth and debt reduction. When taxes on “the rich” increase next year, it’s not a matter of getting by with a smaller yacht for these clients. It’s a matter of sending money to the government that would otherwise pay down debt or grow the business. It’s sad that somebody with as much power as Tim Geithner has a world view that seems to come out of a comic book.
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Targeted tax breaks, explained

Friday, May 14th, 2010 by Joe Kristan

Christopher Bergin:

It

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