Posts Tagged ‘Huffington Post’

Tax Roundup, 12/4/12: Lohaus rejected. So is GOP cliff proposal.

Tuesday, December 4th, 2012 by Joe Kristan

Iowa Department of Revenue blocks Lohaus shot at refund.  Ex-Iowa basketball star Brad Lohaus is remembered for, among other things, taking a ball in the face while guarding against an inbounds pass.  That feeling might have come back when Mr. Lohaus was recently denied a tax refund by the Department of Revenue.

According to a newly released letter denying a protest filed by Mr. Lohaus, he didn’t get around to filing Iowa income tax returns for 2001 through 2005 until July 2010.  The department of Revenue began collection action, including wage garnishment, in 2007.  The returns filed in 2010 showed some overpayments, but the Department denied refunds on the grounds that the statue of limitations had expired.   From the protest denial letter (my emphasis):

In their protest, taxpayers raise the following points to support their position.

1.  The Department did not notify them that there was a one-year statute of limitations at the time the wage garnishment began.

2.  Normal Iowa taxpayers have no way of knowing the rule of the one-year postdate matter with the Department disclosing the implication of the effects of lost payments.

3.  Taxpayers filed their returns in good faith that the Department would refund any overpayments of the garnished funds to them.

4. Due to the trust the taxpayers had in the State of Iowa together with personal circumstances, taxpayers are petitioning that the Department refund overpayment of $36,379.66 to them.

Pro tip: never trust the State.  Especially when the rules are on their side.  From the denial letter:

Telephone conversations with Mr. Lohaus show that he was repeatedly advised to file returns.  These returns were not filed with the Department until July 12, 2010. 

 Notification of the statute of limitations concerning Iowa income tax refunds is found in both Departmental rule 701 IAC 43.3 (8) and Iowa Code §422.73.  Both the Iowa Code and the Department’s administrative rules are published and available for public review.  Every citizen is presumed to know the law. 

The statute on refunds in Iowa reads:

A claim for refund or credit that has not been filed with the department within three years after the return upon which a refund or credit claimed became due, or within one year after the payment of the tax upon which a refund or credit is claimed was made, whichever time is the later, shall not be allowed by the director.

The taxpayer was eligible for amounts garnished within one year of the filing, but not older payments.

The moral?  File your returns, even if you have an overpayment.  If you let the statute of limitations expire, they get to keep it.  And they don’t have to warn you that they will.

 

TaxProf,   IRS Releases 159-Page Proposed Regs on New ObamaCare Medicare Taxes.  Just in time for me to teach them to the Iowa Bar tax school Thursday.  Thanks, IRS.

Paul Neiffer,  IRS Issues Proposed Regs on 3.8% Medicare Surtax

Anthony Nitti,   The Elf On A Shelf Will Haunt Your Kid’s Dreams, And More Thoughts On The Obamacare Investment Tax

 

White House rejects GOP fiscal cliff counteroffer (AP)

Wrong. They feel they need a distraction.  Democrats Needlessly Insisting on Rate Hikes (Martin Sullivan,  Tax.com)

Concern Trolling:  Why the Tea Party Is Bad for Conservative Tax Policy.  (Jeremy Scott, Tax.com).   When you see Todd Akin listed as a Tea Party candidate (he was more a creature of the social conservative wing of the GOP, not the Tea Party wing), somebody is being lazy.

Linda Beale,  Republican “fiscal cliff” proposal

 

Please please please:    Ohio Considers Changes to Complex Municipal Tax Codes.  (Julia Morriss, Tax Policy Blog)  If you have to have something as stupid as a municipal income tax, at least do it like Iowa, as an add-on to the state filing.

Please no!  It’s Beginning to Look a Lot Like… Tax Season (Trish McIntire)

Kay Bell,   Tax moves to make in December 2012

While doing their best to prevent them:  France Struggles to Tax Corporate Profits (Robert Goulder, Tax.com)

Actually, writing big checks can cause poverty, for those writing them.   There’s More To Fighting Poverty Than Writing Big Checks And Claiming Tax Deductions  (Janet Novack)

Robert D. Flach posted his Saturday Buzz right on time over  the weekend.  Catch it!

Maybe people could file forms reporting their fraud so they can measure it?  IRS Tax Fraud On The Rise But Actual Size Of Problem Hard To Pin Down: Report (Huffington Post)

Muskrats exempt from service on this jury.   Jury selection to begin in Beavers tax evasion trial

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Tax Roundup, 11/27/2012: Rocking Sheldon! And billionaires and millionaires

Tuesday, November 27th, 2012 by Joe Kristan

The Tax Update is in Sheldon, in the Northwest Iowa, helping out at the Iowa State University Center for Agricultural Law and Taxation Farm and Urban Tax School today.

Some of the happy practitioners at today’s Farm and Urban Tax School in Sheldon, Iowa.

Two schools are left: Red Oak and Ames.  Register today!

 

How easy is it for rich folks to avoid higher rates?  Florida Senator and potential presidential candidate Marco Rubio said that tax rate increases would be largely futile.  From Huffington Post:

WASHINGTON — Sen. Marco Rubio (R-Fla.) said Thursday there isn’t much point in raising tax rates on the wealthy, because they also have the money to hire people who will help them get out of paying taxes.

“The billionaires and millionaires that are going to be impacted by higher rates, they can afford to hire the best lawyers, lobbyists and accountants in America to figure out how not to pay those higher rates,” Rubio told National Journal’s Major Garrett at The Atlantic Washington Ideas Forum. “The people that are going to get stuck by that bill are the small businesses, the partnerships, the S corporations, that cannot hire the lawyers to get them out of it.”

Is it really possible for “billionaires and millionaires” to get out of taxes through the best efforts of their lawyers?  To some extent.  Greg Mankiw explains how Warren Buffett does it:

1. His company Berkshire Hathaway never pays a dividend but instead retains all earnings.  So the return on this investment is entirely in the form of capital gains.  By not paying dividends, he saves his investors (including himself) from having to immediately pay income tax on this income.

2. Mr Buffett is a long-term investor, so he rarely sells and realizes a capital gain.  His unrealized capital gains are untaxed.

3. He is giving away much of his wealth to charity.  He gets a deduction at the full market value of the stock he donates, most of which is unrealized (and therefore untaxed) capital gains.

All of these are useful only to people who don’t need their cash right away.  If you want to use your cash, these aren’t very useful.  And many of these items are fraught with danger for taxpayers with less pull than Warren.  For example, a closely-held C corporation that pays no dividends runs the risk of being hit with the Accumulated Earnings Tax.  Many other tax-sheltering opportunities have been shut down through various crackdowns on tax shelters over the years, like the passive loss rules.

The real futility of taxing the rich is that it does so little to address the government’s insolvency.  Letting the tax cuts for “the rich” expire only covers about $80 billion of the $1,200 billion annual budget deficit.  The big attempt to tax “the rich” is just a distraction; the rich guy isn’t buying.

 

Tax Prof Poll: Taxes and the Fiscal Cliff (TaxProf)

Joseph Henchman,   Chambliss, Others Distance Themselves from ATR Tax Pledge (Tax Policy Blog)

Patrick Temple-West,  Consensus on increasing tax revenue, a wide gulf on how to do it, and more (Tax Break)

Daniel Shaviro, Broadening the base versus raising the rate

 

I vote yes:  Can We Kill the Death Master File? (Russ Fox). The publication of dead folk’s Social Security numbers is a boon for identity thieves.

TaxGrrrl,  Tax Breaks For Medical Expenses Under ObamaCare.  Hint: they are fewer and smaller.

Paul Neiffer,  2012 May Be Last Year for Section 179 Flexibility.  “What many farmers do not know about is the ability to go back and amend their tax return to change their Section 179 deduction.”

Trish McIntire,  Document Your Holiday Giving.  If you give over $250, no receipt=no deduction.

William Perez,  Tax Tips for Charitable Giving During the Holidays

Anthony Nitti,  Could Tax Savings Expedite Free Agent Baseball Signings?

Jack Townsend,  Swiss Bank Pictet & Cie On DOJ Tax Radar Screen

Robert D. Flach didn’t let Thanksgiving weekend stop his Buzz!

Howard Gleckman, How Can 98 Percent of Us be Middle-Class? (TaxVox)

Angus Young (Wikipedia image)

Kay Bell, More Cyber Monday shoppers this year are paying state sales taxes

News you can use:  Tax Dodger Alert: Your Friend in the Senate (Robert Goulder, Tax.com)

Jeremy Scott,  Why the Finance Committee Needs Angus King. (Tax.com)  I prefer Angus Young.

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Tax Roundup, 8/9/12: IRS scolded for carelessly issuing ID numbers. Plus stupid vs. criminal, hitting bottom and digging.

Thursday, August 9th, 2012 by Joe Kristan

IRS Commissioner Douglas Shulman

IRS discouraged fraud detection in ID program (Huffington Post):

The Internal Revenue Service has been looking the other way instead of rooting out fraud when people apply for taxpayer identification numbers, Treasury Department investigators said Wednesday, exposing a shortfall with both financial and national security implications.

A member of Congress who sits on the House’s tax-writing committee responded to the report by calling on IRS Commissioner Douglas Shulman to resign, claiming the IRS is helping illegal immigrants defraud the government.

He wants the Commissioner to resign for that?  Considering that the Commissioner oversees the mailing of $5 billion annually to thieves, that he has terrorized and financially ruined otherwise law abiding Americans for footfault paperwork violations, and that he has, with questionable authority, imposed an expensive and futile preparer regulation scheme, this new outrage needs to take a number.

More coverage from the Wall Street Journal, Linda Beale and the TaxProf; read the TIGTA report here and a TIGTA press release here.

Instapundit on state film tax credits:

REPEAL THE HOLLYWOOD TAX CUTS!  (LOCAL EDITION):  La. film tax break program needs limits, budget group says.   “Louisiana has spent more than $1 billion over the past decade to attract movie productions to the state, but hasn’t received much in return besides the prestige of hosting big-name Hollywood actors, according to a report released today.  The left-leaning Louisiana Budget Project suggests state lawmakers should put tighter limits on the generous film tax break program, lessening the credits offered and capping the amount of money it can cost the state each year.”  Actually, it should be abolished, as should similar programs in almost every other state.  And this is something state Tea Party groups might even make common cause with lefties on.

A sadder-but-wiser Iowa repealed its version of the film credits this year after it collapsed in scandal and disgrace and the State Auditor reported that 80% of the credits were issued improperly or lacked documentation.  But in defense of the program, two filmmakers are moving to Iowa for up to ten years thanks to the film tax credit!

It’s time to register for this year’s ISU Center for Agricultural law and Taxation Farm Tax Schools!  I will be on the Day 1 panel at all eight sessions, starting with the October 29 school in Mason City.

We’re vacationing in the mountains this year, kids. The Plot Thickens for Swiss Bankers Involved In U.S. Evasion: (Jack Townsend):

Swiss bankers whose names were delivered to the United States in April as part of the crackdown on US tax evaders face the risk of arrest while travelling in some European countries, not just on US soil.

Well, the Alps are nice…

Stupidity is no crime: Were Reid’s Remarks About Romney’s Returns Unlawful? (TaxGrrrl)

We’re just getting started!  Have We Reached the Nadir of Tax Policy Discourse? (Going Concern)

“Bipartisan” means they’re ganging up on us: Wind energy tax breaks are bipartisan in Iowa (Ames Tribune)

Kay Bell has a new Carnival of Taxes for State Fair week!

Tax Policy Blog:  Misunderstanding Tax Reform: The Case of The Olympic Tax Elimination Act

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What are the odds of an Obama compromise on Bush rates?

Friday, November 12th, 2010 by Joe Kristan

Tax planners got all excited yesterday when top White House aide David Axelrod hinted to the Huffington Post website that the President might be ready to extend the 2010 tax rates for top earners. Absent new legislation, the top marginal rate will rise from 35% to 39.6% in 2011 — and higher when phase-outs are counted.
But if the Axelrod statements are a trial balloon, the President isn’t ready to climb aboard just yet. CNN reports on comments he made in Seoul:

“That is the wrong interpretation because I haven’t had a conversation with Democratic and Republican leaders,” Obama said of a Huffington Post article suggesting that in advance of negotiations with lawmakers next week, the White House has calculated that giving in on tax cuts for the rich is the only way to get the middle class cuts extended too.
“Here’s the right interpretation — I want to make sure that taxes don’t go up for middle class families starting on January 1st,” Obama said at a news conference at the conclusion of the G-20 Summit here. “That is my number one priority for those families and for our economy. I also believe that it would be fiscally irresponsible for us to permanently extend the high income tax cuts.”

So what will happen? In sports, the betting lines do a good job of forecasting game results. So lets see what the Intrade lines are on rates.
Intrade, the online prediction market, has prediction markets for 2011 tax rates. The technical details are not entirely clear — I’m not sure whether phaseouts of itemized deductions count, but I don’t think so. Given that, two Intrade submarkets are of special interest:
- One that forecasts a top 2011 rate in excess of 38%, and
- One that forecasts a top 2011 rate in excess of 36%.
Here are the prices as of this morning:
20101112-1.jpg
The >38% market currently shows a bid price of 40 and an ask price of 55. If the rates are in excess of 38%, the market will close at 100; if not, they will close out at zero. That means the market is about evenly split at the last trade between those who think the top rates will go into effect as enacted and those who don’t. The market price fell sharply immediately after the election, indicating that speculators feel the new Congress changes things:
20101112-2.jpg
The >36% market is more interesting. It is trading at over 85, which means the traders think that an increase over the current 35% top rate is almost certain. This would seem to indicate that the markets predict that the top rates will go up, but not all the way to 39.6%. How does this square with a choice between extending current top rates and letting them expire? Perhaps it implies some “millionaire tax” on very high incomes. Or, perhaps, it’s an anomaly in a lightly-traded market. If you think the odds are good that the Bush-era rates will be temporarily extended, this market may offer a speculative opportunity.
Of course, the markets are always subject to change. For your convenience, here are live embedded charts for your convenience whenever you read this post:
>38% Market:


Chart by Intrade
>36% Market:


Chart by Intrade
In real life, the best thing to do is stay flexible so you can best shift income and deductions between 2010 and 2011, depending on what Congress does in the next few weeks.
Thanks to Going Concern for the CNN link

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