Posts Tagged ‘Instapundit’

Tax Roundup, 4/2/14: CPA Revenge edition! And more.

Wednesday, April 2nd, 2014 by Joe Kristan

20140330-1Mutually assured destruction.  Accounting firm breakups can generate bad feelings.  Bad feelings can generate bad ideas — like filing bogus 1099′s on your erstwhile colleagues.  That went badly for an Ohioan in a U.S. District Court case reported in today’s Tax Notes ($link). 

When Waldman, Pitcher and Co. broke up, it wasn’t amicable. Lawrence Waldman felt ill-used by departing partners Kenneth Pitcher  and Michael Enders.  Some background from the District Court judge:

This case arises from the acrimonious break-up of the successful accounting firm Waldman, Pitcher, and Co., P.S.C. The individual parties in the present case were formerly partners in that firm. The break-up has spawned numerous related lawsuits, various audits by the Internal Revenue Service (“IRS”), numerous complaints of improper conduct to various professional oversight groups, and protracted contentious litigation of the present case.

Mr. Waldman apparently attempted to enlist the IRS in his fight, using an assignment of uncollected receivables in the break-up agreement (footnotes and other references omitted):

In January 2010, Waldman & Co. issued 1099-MISC forms to Pitcher and Enders personally for tax year 2009, for non-employee compensation in the amount of $111,535.00 for Pitcher and $13,260.00 for Enders. It is undisputed that Waldman and his company had not collected any of the AR/WIP money reflected on those 1099 forms (doc. no. 134, ¶¶ 18-19). Waldman was admittedly angry at Pitcher and Enders and has repeatedly characterized their departure as effectively “stealing” two million dollars from him. As a prominent and experienced CPA, Waldman was familiar with the matching program of the IRS and knew that issuing these 1099s to Pitcher and Enders personally would likely result in IRS audits of their personal income tax returns. Waldman & Co. benefitted by taking a corresponding tax deduction for the reported amounts.

The unhappy 1099 recipients fought back:

In February and March of 2010, Pitcher and Enders complained to the IRS’s Office of Professional Responsibility (“OPR”) that Waldman had issued 1099s containing information that Waldman knew to be inaccurate. They asserted that Waldman had done this “to exact a revenge that he couldn’t otherwise exact during our negotiations.” They filed similar complaints with the Accountancy Board of Ohio and Ohio Society of CPAs . Those groups declined to take disciplinary action against Waldman.

20120509-1It then got even uglier:

In February 2011, Waldman & Co. issued “corrected” 2009 1099s to the plaintiffs, reflecting “zero” for their nonemployee compensation. At the same time, he issued “corrected” W-2s to Pitcher and Enders reflecting increased amounts in Box 1 . For Pitcher, an additional $199,290.00 of reported income was included, reflecting the $111,535.00 for the accounts receivable assigned to KPE, $27,755 for the amount paid to KPE by Waldman & Co., and $60,000.00 for attorney fees paid by Waldman & Co. to plaintiffs’ attorneys… For Enders, an additional $13,260.00 was included, consisting of $13,260.00 for the accounts receivable assigned to KPE. Waldman & Co. took a tax deduction for the increased amounts listed on the corrected W-2s, even though such returns indicated that no federal income taxes had been withheld.

I suppose if you are going to make up compensation on W-2s, you may as well be consistent and deduct the pretend expense.

Much litigation later, the District Court ruled for the departing accountants Pitcher and Enders:

Given his education, knowledge, and business experience as a CPA, [Mr. Waldman] could not have reasonably believed that these information returns were proper to file. He filed these information returns “willfully” in order to obtain tax benefits and harass the plaintiffs. Despite having “settled” a previous lawsuit over the plaintiffs’ departure from the firm, Waldman was dissatisfied and stubbornly believed the plaintiffs had “stolen” two million dollars from him by leaving his firm with clients. In taking on the role of whistleblower, he deliberately misused the IRS reporting system.

A lot of good it did them.  They were each awarded $15,000 in damages, but not attorney fees:

In light of the unusually hostile litigation history between the parties, the Court observes that plaintiffs have certainly played a significant role in creating the bitter circumstances of this case. This case has also been marked by needlessly contentious discovery battles, repetitive briefing, and unfortunate personal attacks. In view of the animosity between the parties, the Court in its discretion declines to award attorneys’ fees to the plaintiffs. The Court is aware that, absent such an award, this may be a Pyrrhic victory for plaintiffs. Nonetheless, the Court is convinced that this is a just result under the unusual circumstances of this case.

It’s hard to believe that the plaintiffs came out ahead on this, especially when their time is taken into account.

The Moral: breaking up is hard to do, even for accountants.

Cite: Kenneth B. Pitcher et al. v. Lawrence Waldman et al., DC-SD Ohio, No. 1:11-cv-00148

 

20140307-1Jason Dinesen, Life After DOMA: Estate Tax   

Kay Bell, No April Fools’ joke: No capital gains taxes for some investors

William Perez, Extended Time for Choosing When to Deduct Colorado Flooding Losses

TaxGrrrl, Taxes From A To Z (2014): R Is For Royalties   

Leslie Book, What is a Fair CDP Hearing: Courts Push Back on IRS

 

William McBride, French Economist Wants Top Tax Rate of 80 Percent to Fix Inequality (Tax Policy Blog).  No, it’s not an April Fools joke, and some people who should know better take this serously.  The “French economist” is Thomas Picketty, who is big into the whole “inequality” hand-waving being used to distract us from our real problems.   The post illustrates the folly of the whole war on millionaires with this chart:

20140402-1

He could have added that an increasingly progressive tax system has coincided with increasing inequality.

 

Howard Gleckman, House Republicans Punt on Tax Reform (TaxVox): “…it effectively turns its back on the tax reform plan drafted by Dave Camp, the GOP chairman of the House Ways & Means Committee.”

Tax Justice Blog, ITEP Predicts Illinois Tax Reform Debate…and Then Puts Crystal Ball Away

 

TaxProf, The IRS Scandal, Day 328

Name that Party!, tax edition.  Instapundit has a recurring gag poking fun at news stories of corrupt politicians whose political affiliation is left mysteriously unstated.  Here’s an example from the tax world: Gary councilman sentenced to prison.

 

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Tax Roundup, 3/4/14: Des Moines votes on refunding illegal tax. And: life after football!

Tuesday, March 4th, 2014 by Joe Kristan

20121002-2Des Moines voters decide today whether to approve a legal tax to refund a similar tax imposed illegally.  The Des Moines Register reports:

A special election Tuesday will determine how the city pays back a portion of a franchise fee it illegally collected from 2004 to 2009.

The Iowa Legislature gave Des Moines the authority to temporarily increase its franchise fee — a tax assessed on anyone who connects to electric and natural gas utilities — to pay off the judgment.

However, if voters reject the proposal, city officials will be forced to raise property taxes for at least 20 years in order to issue and pay municipal bonds to cover the court judgment.

When the tax was ruled illegal, the city appealed all the way to the U.S. Supreme Court before finally conceding that it would have to issue refunds — incurring enormous legal bills in the process, including a $7 million bill to the winning lawyers on the other side.  From the District Court opinion awarding the fee:

This case has been in our courts since 2004.  To say it was highly contested would be a gross understatement.  The history of this case shows that the City, while it was entitled to do so, erected one barrier after another in an attempt to prevent the class from being successful in obtaining a refund.  Almost without exception, class counsel was successful in dismantling each of those barriers.

It just goes to show that the city will do the right thing, once it has exhausted all appeals.  Maybe next time they won’t be so quick to enact an illegal tax.

The state legislature voted to allow Des Moines to impose the tax legally to repay the illegal tax.  Somehow I doubt the legislature would do a similar favor for taxpayers by letting them, say, legally not pay income tax for a few years to help them repay the taxes they had illegally avoided in prior years.  

 

William Perez, Deducting Work-Related Expenses

TaxGrrrl, Taxes From A To Z (2014): A is for Affordable Care Act

Leslie Book, EITC Snapshot: Overclaims and Commercial Preparer Usage (Procedurally Taxing).  ”In fact, there is a steady decline in the use of paid preparers among EITC claimants, while the rate of paid preparer usage overall has remained fairly steady.”

Another reason why preparer regulation to cut fraud is like pushing on a string.

Jack Townsend, The Scariest Tax Form? Scary Is in the Eye of the Beholder.  I think the article he cites, which chooses Form 5471, makes a good case, considering the almost-automatic $10,000 fine for filing it late.

Kay Bell,  Tax moves to make in March 2014

 

TaxProf, Tax Court Issues 63-Page Opinion Debunking Cracking the Code Book

 

taxanalystslogoTax Analysts Blog is having a tax reform party:

Clint Stretch, 10 Reasons Republicans Should Embrace the Camp Tax Bill.  This is pretty faint praise:  ”2. If they want a credible claim that Obama and Democrats are responsible for the failure of tax reform, they must pass a bill in the House.”

Jeremy Scott, Comparing the Camp and Obama Bank Taxes:

Including the bank tax in his plan is one of Camp’s most intriguing decisions, if only because the gain for him isn’t obvious, even after a closer look. The tax doesn’t raise much money. It is very similar to an Obama proposal that congressional Democrats didn’t really like, meaning it doesn’t buy the chair any bipartisan support. And it comes about four years too late to take advantage of widespread public anger at financial institutions. All Camp seems to have accomplished is legitimizing a revenue raiser for future use by the progressive caucus and undermining his own party’s opposition to this kind of tax increase.

Just… brilliant.  I prefer ending the “too big to fail” subsidy directly, if necessary by denying deposit insurance to such institutions.

Martin Sullivan, 25 Interesting Features of Camp’s New Tax Reform Plan.  ”Biggest disappointment. Camp and fellow House Republicans all but promised to reduce the top rate to 25 percent. They failed.”

Christopher Bergin, Tax Reform Only a Mother Could Love:

Many political observers think the GOP has a good chance of not only increasing its majority in the House, but also taking the majority in the Senate. I’m among those who believe that the Republicans will shoot themselves in the foot before that happens. I’ll bet there are more than a few Republicans this week who fear that Camp just put a bullet in the chamber.

I think the Camp plan will be quietly forgotten long before November, but there is still plenty of time for the GOP to demonstrate its skills with a Glock 40.

Norton Francis, Camp Tax Reform Would Create New Challenges for States (TaxVox).  The repeal of the deduction for state and local taxes and limits on muni bonds won’t win friends in the state capitals.

 

National Review, via InstapunditThe IRS Is the Problem:

Representative Camp’s thou-shalt-not list is fine so far as it goes, and, unlike the IRS bureaucracy, Congress does have the authority to rewrite the law. But his proposal falls short in that it assumes that the IRS is a proper and desirable regulator of political speech. It is not. It is not even particularly admirable in its execution of its legitimate mission, the collection of revenue: Its employees have committed felonies in releasing the confidential tax information of such political enemies as the National Organization for Marriage and Mitt Romney, and the agency itself has perversely interpreted federal privacy rules as protecting the criminal leakers at the IRS rather than the victims of their crimes. 

Instapundit comments: “Abolish governmental immunity and make them personally liable for damages for misconduct.”  Hard to argue with that; it would be a good addition to my “Sauce For the Gander” reforms.  I still don’t understand why a nonprofit should lose its exempt status for being primarily political.  Isn’t freewheeling debate a good thing?  The IRS certainly hasn’t shown itself a neutral observer here.

TaxProf, The IRS Scandal, Day 299

 

Scott Drenkard, Johannes Schmidt, Guess Which State Has the Highest Liquor Taxes in the Nation? (Tax Policy Blog).  Think coffee.

 

Preparing for life after football.  Two former members of a Sioux Falls indoor football league team may have to change their post-athletic career plans.  From the Sioux Falls Argus:

A federal grand jury has indicted six people for conspiracy to defraud the United States and aggravated identity theft.

Two of those indicted – Undra Stewart Franks, 27, and Donta Moore, 28 – are former Sioux Falls Storm players.

The new federal indictment says Moore, Franks and the others conspired to defraud victims by using names, Social Security numbers and dates of birth stolen from others to file fraudulent income tax returns that claimed false income tax refunds.

Identity theft isn’t just a Florida thing.  If you deal with Social Security numbers at work, treat them as valuable confidential data — because that’s what they are.  Guard your own identity by never giving out your social security numbers, protecting your bank account info, and being sure never to transmit those things in unencrypted e-mails.  If you need to send documents with that info electronically, use a secure file transfer site, like our rothcpa.filetransfers.net.

 

News from the Profession.  10 People Not Cut Out to Be Partner (Going Concern)

 

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Tax Roundup, 1/21/14: Weaponizing the IRS. And: whither Section 179?

Tuesday, January 21st, 2014 by Joe Kristan
Lois Lerner, ex-IRS, ex-FEC

Lois Lerner, ex-IRS, ex-FEC

The new, “weaponized” IRS is a focus of Glenn Reynolds, the Instapundit, in a USA Today Column:

Since then, of course, the new “weaponized IRS” has, in fact, come to be seen as illegitimate by many more Americans. I suspect that, over time, this loss of moral legitimacy will cause many to base their tax strategies on what they think they can get away with, not on what they’re entitled to. And when they hear of someone being audited, many Americans will ask not “what did he do wrong?” but “who in government did he offend?”

This is particularly true since the Obama administration is currently changing IRS rules to muzzle Tea Partiers.

While I don’t think it’s that bad yet, it’s headed that way if things don’t change.  And, as Glenn points out, it’s not changing:

Meanwhile, the person chosen to “investigate” the IRS’s targeting of Tea Party groups in 2010-2012 is Barbara Bosserman, a “long-time Obama campaign donor.” So the IRS’s credibility is in no danger of being rebuilt any time soon.

I think this is a terrible and shortsighted mistake by the Administration.  So much of its agenda, especially Obamacare, depends on effective IRS administration, but as the recent budget agreement proved, the GOP isn’t going to fund the IRS when it thinks that’s the same as funding the opposition.

The USA Today piece makes broader points about the effect of the loss of faith in civil servants as apolitical technocrats; read the whole thing.

Via the TaxProf.

Andrew Lundeen at Tax Policy Blog has two new posts on tax reform.  In Tax Reform Should Simplify the Code and Grow the Economy, he says:

We need to eliminate the biases in the code against savings and investment, so individuals have the incentive to add back to the economy, and businesses have the capital to buy new machines, structures, and equipment – all the things that give workers the ability to be more productive and earn higher wages. And we need a tax code that is simple and understandable, so taxpayers know exactly what they pay and why. 

Max Baucus

Max Baucus

We’ve been going the wrong way now for 27 years.  In Responses to Senator Baucus’s Staff Discussion Drafts, he curbs his enthusiasm for the tax reform options offered by outgoing Senate Finance Committee Chairman Baucus:

Generally speaking, we found that the tax reform proposals in these drafts go in the wrong direction. Our modeling shows that they damage economic growth, hurt investment, and, in many instances, violate the principles of sound tax policy: simplicity, transparency, neutrality, and stability.

The post links to a point-by-point examination of the Baucus proposals.

 

 

TaxProf, Martin Luther King, Jr. and the IRS:

This past year, much ado was made about the so-called “IRS-Gate” and concerns that the Obama administration may have used the agency to target Tea Party and other right wing groups. … [W]hat often is not stated during the Martin Luther King Holiday weekend is that King, early in his leadership of the Southern Christian Leadership Conference (SCLC), was routinely subjected to IRS audits of his individual accounts, SCLC accounts as well as accounts of his lawyers, first starting during the administration of President Dwight Eisenhower and continuing through the Kennedy administration.

If you audit me, I shall become more powerful than you can possibly imagine…

Kay Bell, IRS abuse of power, now and in MLK’s day. “Overall, the IRS is paying for its operational indiscretions by receiving less money and more restrictions on how it does spend what funds it has.”

 

Paul Neiffer, Section 179 Update (or Not):

 Here are my official updated odds on when we might know what the actual 2014 Section 179 amounts will be:

By Memorial Day 10 Billion to 1

By Labor Day 10 Million to 1

By the November Mid-Term elections 500 to 1

Between the November Mid-Term Elections and December 15, 2014 25 to 1

After December 15, 2014 and before January 1, 2015 1 to 1

After December 31, 2014 5 to 1

I give about 5 to 1 odds in favor of the current Sec. 179 deduction being extended to $500,000 for 2014, and I think that Paul is right that it is most likely to occur during the lame-duck session.  I think odds are about 50-50 on an extension of 50% bonus depreciation. It’s too bad the Feds have closed Intrade, as this would be a betting market I would like to follow.

 

HelmsleyTaxTrials, Leona Helmsley, Angry Employees Strike Back:

Their mistreatment of employees and squabbles over bills are the stuff of legend and left prosecutors rife with eager witnesses when it came time for trial.

Helmsley was just as arrogant about her taxes, famously telling her housekeeper: “We don’t pay taxes, only the little people pay taxes.”  Helmsley participated in several schemes to avoid paying millions of dollar in income and sales taxes.  

Sometimes that sort of thing comes back and bites you; read the post to see how it bit Helmsley.

 

William Perez on an important topic: Tips for Securely Sending Tax Documents To Your Accountant.  First, don’t send anything with your Social Security Number in an unencrypted email.  Like many firms, Roth & Company offers a secure upload platform to send sensitive information.  If your tax firm has one, use it.  They are the safest way to transmit confidential information and files.

 

Phil Hodgen wonders whether there is a Delay in approving renunciations at State Department?  It’s harder to shoot jaywalkers when they are running away.

Missouri Tax Guy goes back to basics with An Introduction to the Double-Entry Bookkeeping System.  Just remember, Debits are on the door side.

Andrew Mitchel has posted a New Resource Page: 2013 Developments in U.S. International Tax

 

Kay Bell, $4 billion more tax breaks for Boeing from Washington State. Taxing you to give money to folks with good lobbyists.

Jim Maule is appropriately annoyed by the use of the term “IRS Code.”  It’s the Internal Revenue Code, and it’s written by Congress, not the IRS.  Remember that when you vote.

Keith Fogg, Qualified Offers – Is it meaningless to offer what you think a case is worth? (Procedurally Taxing)

Jack Townsend, The New Provision for Tax Restitution and Ex Post Facto

 

The Critical Question: Is Kent Hovind A Tax Protester?  It doesn’t seem like a more promising career path for him than his forays into evolutionary biology.

TaxGrrrl, Hot Tub Tax Machine: News Anchor Takes Plea In Scandal.

 

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Tax Roundup, 12/9/2013: Denison! And 56 cents a mile for 2014.

Monday, December 9th, 2013 by Joe Kristan

The Tax Update is in sunny, but very cold, Denison, Iowa today.

20131209-1

I’m participating in the Iowa State University Center for Agricultural Law and Taxation Farm and Urban Tax School here.  The only remaining session is in Ames next Monday, so register now!

 

The IRS has issued updated standard mileage rates for 2014:

- 56 cents for business travel (down from 56.5 cents for 2013);

- 23.5 cents for medical travel;

- 14 cents for charitable travel.

Gas is down.  (Notice 2013-80)

Related: Paul Neiffer, IRS Almosts Eliminates the 1/2 cent

 

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.

Mickey Kaus, Big Obamacare payoff for tax cheats?:

Doesn’t Obamacare create a big new incentive to fudge your income on your tax returns? The subsidies available on the health care exchanges seem to be based on adjusted gross income (line 37 on Form 1040)– and there’s a huge, conspicuous difference between the subsidy available at, say, a $25,000 income and a $46,000 income. (The subsidy cutoff of is $45,960 for a single person). In California, for the “bronze” policy I’m interested in, at $46,000 I’d pay $507 a month. At $25,000 I’d pay … $63. A difference of $444 a month.

I have mentioned quite often the high hidden marginal rates caused by the phase-out of the earned income tax credit.  The Obamacare subsidy phase-outs worsen this.  The government pays you to stay poor, or to cheat on your taxes if you aren’t poor anymore.  You get what you pay for. (via Instapundit)

William Perez,  Year End Review of Choice of Business Entity. “There is definitely no one-size-fits-all answer when it comes to deciding on an appropriate tax structure for a business.”

Margaret Van Houten, What our Estate Planning Clients Need To Know – What are Digital Assets? (Davis Brown Tax Law Blog).  On the importance of including “digital assets” in your estate planning.

Kay Bell,  Freezing? Home improvements provide warmth, tax savings

Jason Dinesen, Colorado Tax Guidance for Same-Sex Marriage 

Tony Nitti, IRS Addresses Deductibilty Of Organizational And Start-Up Costs Upon Partnership Technical Termination 

 

 

Lyman Stone, Missouri Gives In With $2 Billion Incentive to Boeing.  Missouri taxes its residents and existing businesses to give cash to an insider with good lobbyists.

How do you know that the new proposed 501(c)(4) regulations are designed to silence right-side speech?  The left-side advocacy groups have dropped their lawsuit demanding the IRS enact regulations to silence right-side speech (Huffington Post).

TaxProf, The IRS Scandal, Day 214 and Smith: The Latest IRS Power Grab

Robert D. Flach, HERE’S A THOUGHT – A FEW MORE CENTS ON A VOLUNTARY CREDENTIAL FOR TAX PROS.  ”If the IRS does not decide to go ahead with a voluntary RTRP program after it loses the appeal of Loving v IRS, I have proposed an independent industry-based organization to administer a voluntary RTRP-like tax preparer credential in my ACCOUNTING TODAY editorial ‘It’s Time for Independent Certification for Tax Preparers. ”  It would be an improvement over the IRS system.

Peter Reilly, Cigarette Importer Sees $300M Deduction Go Up In Smoke   

 

 

Greg Mankiw, The Progressivity of the Current Tax Code :

20131209-2

 

Jack Townsend,  Swiss Banks Scrambling to Commit to Participation in U.S.Swiss Bank Initiative

TaxGrrrl, IRS To Rapper: It’s Hammertime!  Remember M.C. Hammer?  The IRS does, even if you don’t.

 

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Tax Roundup, 8/9/2013: Another international tax enforcement milestone. And don’t count on the ex for a character reference.

Friday, August 9th, 2013 by Joe Kristan

Andrew Mitchel,  Number of Expatriates Skyrockets Again (Second Quarter of 2013):

The number of published expatriates for the first two quarters of 2013 (1,809) has already exceeded the highest number of annual published expatriates ever (1,781 in 2011).  Thus, 2013 will clearly be the year with the highest number of published expatriates ever.

 

Chart by International Tax Blog.
Chart by International Tax Blog.

Another triumph for the IRS offshore enforcement program.  If you make being an American abroad a tax nightmare, people will stop being American.

 

TaxProf, The IRS Scandal, Day 92

Phony Scandal Watch: IRS agent: Tax agency is still targeting Tea Party groups. (Washington Examiner, Via Instapundit):

In a remarkable admission that is likely to rock the Internal Revenue Service again, testimony released Thursday by House Ways and Means Committee Chairman Dave Camp reveals that an agent involved in reviewing tax exempt applications from conservative groups told a committee investigator that the agency is still targeting Tea Party groups, three months after the IRS scandal erupted.

We did nothing wrong, it was just a few rogue agents in Cincinnati, and we don’t do it anymore.  Oh, and it’s phony.

TaxGrrrl,  DEA Passed Secret Data, Tips For Covering Up To IRS.   That’s reassuring.

 

Tax Analysts fights the good fight.  Transparency: Worth Fighting For  (Christopher Bergin).  They’ve done more than anyone else to fight the growth of secret tax law, known only to insiders and cronies.

 

Howard Gleckman, Beware of Tax Reform That Promises Deep Rate Cuts.  I worry more about tax reform that doesn’t promise rate cuts at all.

 

Tax Justice Blog,  Politicians Use Tax Breaks to Subsidize Manufacturing. What Could Possibly Go Wrong?  Everything, of course, though the Tax Justice Blog’s solutions would be no improvement.

 

Kyle Pomerleau, Cities, States, and Obamacare’s “Cadillac” Tax (Tax Policy Blog).

No, they shouldn’t. Cheating and Visibility on Taxes: IRS Efforts to Regulate Tax Return Preparers Should Continue (Procedurally Taxing):

Nonetheless, I believe that the IRS’s approach to the return preparer issue, with uniform identification requirements, reasonable competency testing and ongoing education requirements, will greatly enhance visibility in the return preparation process.

This is one of the better arguments I’ve seen for preparer regulation, but it is still not very good.  The preparer regulations impose restrictions on honest preparers that the cheaters will ignore.  It will raise the costs of preparation, causing many taxpayers to self-prepare and others to drop out of the system entirely. The real way to stop cheating is to remove the worst opportunities to cheating, especially refundable tax credits, and to make the law simple enough and the rates low enough that cheating is harder to hide and less attractive.


Watching the watchmen. NYPD cop faces hard time for tax fraud and identity theft. (New York Daily News):

Jonathan Wally, 34, was moonlighting as a tax preparer while working in the 34th Precinct that serves Inwood and Washington Heights. The 10-year NYPD veteran, who resigned upon entering his plea, admitted in Manhattan Federal Court to using bogus Social Security cards to list fictitious dependents.

I’m sure that with a little ethics training from the IRS, he would have turned out differently.

 

Paul Neiffer, Don’t Forget Your Retirement (Plan)!

Brian Strahle, CALIFORNIA:  HOW SHOULD YOU “SHAVE” (FILE YOUR 2012 INCOME TAX RETURN)?

Trish McIntire, Health Insurance Wizard for Business

Russ Fox,  While I Was Out…, where he discusses my post from yesterday, where the Tax Court required an S corporation $877 in taxable income to impute $31,000 in salary income to the owner to incur payroll taxes:

 I do agree with Joe’s conclusion: “When advancing and withdrawing funds from an S corporation, be sure to generate the appropriate prissy paperwork.”  If you have a loan, make it look like a loan: Charge interest and record it!  It’s possible that with good paperwork the owner wouldn’t have received such a ridiculous result.

The more I ponder this Tax Court decision, the more I dislike it.

Freakonomics Blog,  How Much Tax Are Athletes Willing to Pay?

Boxing is particularly interesting because it allows a participant to choose where he performs. If you are a pro golfer or tennis player, you might be inclined to skip a particular event because of a tax situation, but you generally need to play where the event is happening. A top-ranked boxer, meanwhile, can fight where he gets the best deal. Which is why it’s interesting to read that Manny Pacquiao will probably never fight in New York — primarily, says promoter Bob Arum, because of the taxes he’d have to pay.

Yes, tax rates matter.

 

Going Concern, After His Open Victory, It Appears Phil Mickelson Is Doing Some Tax Planning at the PGA Championship.  Yes, taxes are lower if you miss the cut.

 

I hope he didn’t solicit this character referenceA 64-year old Florida executive won’t get to enjoy a golf-course retirement for awhile.  TBO.com reports:

John D. Stanton III stalled an Internal Revenue Service audit for four years, promising he would submit corporate tax returns for his company while secretly diverting tens of millions of dollars to himself.
 
The deception caught up to him Thursday, when a federal judge sentenced him to 10 years in prison for tax evasion.

His ex-wife spoke up for him, pleading for leniency.  Yeah, sure:

The family drama emerged when a letter by ex-wife Susan Stanton was read aloud. In the letter, Stanton called her ex-husband “devious” and said he should be given the maximum prison sentence allowed. John Stanton III fled Tampa in December 2011, the letter said. An arrest warrant on a contempt of court charge was issued, stemming from a divorce case where Stanton defied an order to pay more than $6 million to his ex-wife. “He fled and stayed in $240-a-night hotels,” Susan Stanton wrote. While he was on the run, John Stanton III fathered a child with a 32-year-old woman, the letter said.

Other than that, the break-up was amicable. Now Mr. Stanton gets to spend 10 years in a federal prison, where any money he managed to hide isn’t much use.  When he gets out, assuming his health holds up, he will still have the government ready to seize any hidden cash that slips out.  It seems like the results would have been a lot better if he just had filed his returns.



A note to readers:  I have learned how to embed links to items within longer “Tax Roundup” posts.  I won’t use it for every item, but I will use them for some items that you might want to point out to someone.  There are two that you will find in this post, and they look like this:

No, they shouldn’t.

and

I hope he didn’t solicit this character reference.

Maybe I should just post these things as their own posts, but there you go.

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Tax Roundup, 7/18/2013: Cincinnati, D.C. edition. And: the Redflex auto dealer tax.

Thursday, July 18th, 2013 by Joe Kristan

chief counsel shieldI didn’t know the IRS Chief Counsel worked out of Cincinnati.  The “nothing to see here” apologists for the IRS harassment of right-wing exempt organizations have always said that nothing wrong happened, and it was the work of rogue employees in the Cincinnati hinterlands anyway.  Perhaps not.  Tax Analysts reports ($link):

Embattled IRS official Lois Lerner directed a multilayered review of Tea  Party groups’ exemption applications that reached all the way to the IRS chief counsel’s office and led to lengthy delays in processing the applications, according to testimony from an IRS attorney released July 17 by House committees investigating the matter.

Carter Hull, a “Washinton IRS tax law specialist,” says the IRS Chief Counsel’s office was involved:

     Hull testified that at the August 2011 meeting, officials from the chief counsel’s office told him they needed updated information on the applications and suggested that a template letter be developed for future processing of applications. He said he told the officials that a template was impractical given the differences in the various applications.

     Hull told investigators that in his 48 years working at the IRS, he had never been asked to send a case he was working to Lerner’s senior adviser or to the chief counsel’s office before he received the request to elevate the Tea Party cases.

Mr. Hull is scheduled to testify at Congressional hearings today.  Nothing to see here, move along.

Wall Street Journal, The IRS Goes to Washington.

 

It’s OK, she’s a witch anyway.  Failed Republican Senate Candidate Christine O’Donnell may have been one of the candidates for political office whose tax records were breached, based on a Washington Times story.  The report says Ms. O’Donnell has been contacted by the Treasury telling her that a Delaware state official improperly accessed her federal tax records.   During her campaign for Senate, she was hit with a false federal tax lien on the day she announced her candidacy.

There has been no prosecution for the illegal access:

Treasury officials have refused to give Mr. Grassley any specifics on the cases or to describe the disposition of Ms. O’Donnell’s case, claiming even people who improperly access tax records have an assumption of privacy under federal tax laws.

That will be news to Dennis Lerner, a former IRS agent who this week received a three-year probation sentence for improperly disclosing confidential tax information.

Instapundit has more.

Christopher Bergin, IRS: Victim, Football, Both? (Tax Analysts Blog)


 

gatsoClive reconsidering its revenue camera auto-dealer tax.  The Des Moines Register reports that the future of the Des Moines suburb’s contract with red-light camera operator Redflex is in doubt, now that City Councilman Michael McCoy has joined another member of the five-person council in opposing the cameras.

Most of the cameras are along a strip of Hickman Road that has some car dealerships.  Guess what happens?

McCoy said businesses have raised concerns about the program to him. He said car dealerships are incurring fees when customers test drive their vehicles — the program mails tickets based on license plates. “That doesn’t seem like a way to be business friendly and invite new business into our community,” McCoy said.

But what good are customers if the local municipality can’t pick their pockets?

 

Tax Justice Blog, Are Special Tax Breaks Worthwhile? Rhode Island Intends to Find Out:

Rhode Island is about to put seventeen of its “economic development” tax breaks under the microscope, thanks to a new law (PDF) signed by Governor Chafee last week.  This reform is a welcome step forward in a national landscape where states often do nothing at all to figure out whether narrow tax breaks are really helping their economies.

After Iowa’s film tax program collapsed in disgrace and scandal, a blue ribbon commission was unable to identify any definite benefit to Iowa’s dozens of targeted corporate welfare tax breaks.  Yet Iowa continues to pass them out like Tootsie Rolls at a parade.

 

Cara Griffith, Break Out the Champagne (Tax Analysts Blog).  State revenues are up.

Jack Townsend, Interview of Swiss Bank Whistleblower

Kay Bell, Werfel does his own tax returns, Lerner still under fire and other tidbits from House hearing on IRS small business audits

Me: Long live the Queen! 21 years for the “Queen of IRS Tax Fraud”

 

Mitch Maahs, Deducting Job Search Expenses (Davis Brown Tax Law Blog)

William Perez, Same-Sex Spouses and Small Business: What’s Changed?

 

‘Merica!  U.S. Tax System Ranks 94th in the World (Andrew Lundeen, Tax Policy Blog)

Career Corner.  If All Else Fails, You Can Still Become an Internal Auditor (Going Concern)

News you can use.  Get Ready To Shop: State Sales Tax Holidays Are Back! (TaxGrrrl)

Reports: he’s not happy any more. Reports: Happy’s Pizza founder, others indicted for fraud, tax evasion (theoaklandpress.com)

 

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Tax Roundup, 4/26/2013: The Earned Income Credit elephant in the room.

Friday, April 26th, 2013 by Joe Kristan
The Ultimate Swiss Army Knife. Flickr Image courtesy redjar under Creative Commons license.

The Ultimate Swiss Army Knife. Flickr Image courtesy redjar under Creative Commons license.

Christopher Bergin, Dilemma – The Earned Income Tax Credit (Tax.com).  An excellent summary of the problems with the tax law’s biggest welfare program:

Our politicians have tried to do too much through the tax law. And that has created a complicated mess of winners and losers that makes the task of trying to reform it, even to some level of sensible, a daunting one.The poster child for this mess is the Earned Income Tax Credit. Like it or not, the EITC is welfare administered through the tax system. Do we really want our tax system to do that?

The tax law works best if it is seen solely as a tool to finance the government.  Much of its hideous complexity comes from using it is the Swiss Army Knife of public policy.  As you add more gadgets it becomes less useful at being a knife.

Mr. Bergin isn’t afraid to mention the elephant in the room:

And there is another huge problem. The EITC program leaks like a sieve. More bluntly and honestly stated, well-intentioned as it may be, the EITC has been corrupted. Don’t take my word for it. Recently, the Treasury Inspector General for Tax Administration released a report stating that up to one-quarter of EITC payments made in fiscal 2012 were improper. How much does that represent? Try $13.6 billion. In one year. Using a ten-year budget window, that’s $136 billion, and that’s just the tainted stuff.

Supporters say the EITC is a program that “works.”  Can you say that something “works” when it sprays billions to thieves every year?

Read the whole thing.

 

Fairness:

 But the compliance costs imposed by the Marketplace Fairness Act would place smaller upstarts at a distinct disadvantage, which is, I suspect, one reason that market incumbents such as Amazon support the tax. The real cost of taxes is not the revenue out the door to the taxman; it’s the revenue out to the door to the taxman plus all of the costs involved in complying with the tax code.

- Kevin Williamson, via Instapundit

 

Megan McArdle draws  Lessons from Curt Schilling’s Failed Business.  I would add one more: states shouldn’t finance private businesses.  Iowa hasn’t gotten the memo.

Peter Reilly,  How 38 Studios LLC Turned A CPA Into A Warrior

 

Paul Neiffer,  What About Those 1099s?!

Kay Bell,  Sony deal could help singer Lauryn Hill pay delinquent tax bill

Me: But how can we slap money launderers on the wrist if we don’t throw the book at widows?

Phil Hodgen,  How to Compute Net Tax Liability for Form 8854

Patrick Temple-West,  UK’s Cameron fights tax evasion, and more

TaxGrrrl,  H&R Block Offers Apology, Cash To Make Up For Filing Snafu

Howard Gleckman,  Will the Retirement of Max Baucus Open the Door to Tax Reform?

 

Jim Maule, When Taxes Are Cheaper:

And perhaps the short-sightedness and narrow-mindedness is compounded by  the “freedom” mentality that has taken such a hold in modern culture

Yes, let’s all get on board with the new hip “docile submission” mentality.  Because the government knows best!

David Cay Johnston,  Taxpayers Subsidize Rich Anti-Taxers (Tax.com).  Speaking up against the ALEC bogeyman.

 

It’s Friday, you aren’t being productive anyway.  Let’s Play a Game of Accountant/Not an Accountant! (Going Concern)

 

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Hoarders, wreckers and the Accumulated Earnings Tax.

Wednesday, February 27th, 2013 by Joe Kristan

Instapundit notes idiocy in Connecticut:

Solzhenitsyn, who wrote about what happened to "hoarders and wreckers" in the USSR.

Solzhenitsyn, who wrote about what happened to “hoarders and wreckers” in the USSR.

IN SEPTEMBER OF 2010, I WROTE “They’ll be going after ‘hoarders and wreckers’ next.”

And now this:  In Connecticut, a “Hoarder’s Tax.”   “Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.”

Gee, I wonder why businesses are fleeing the northeast?

He might be bemused to learn that the federal tax law already has its own “hoarder’s tax”: The 20% “Accumulated Earnings Tax” of Section 531Section 532 explains how it works (my emphasis)

The accumulated earnings tax imposed by section 531  shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.

Needless to say, taxpayers don’t self-assess this.  It’s generally imposed only when the IRS asserts it on audit.  I have only seen the IRS assert the tax once, and I have been in tax practice since 1984.

The tax, little-known outside of tax geek circles, and not well-known among us, goes all the way back to the earliest days of the income tax in 1913.  Political conditions may be coming together to wave this relic around again.  Consider this from influential left-side economist Paul Krugman:

So corporations are taking a much bigger slice of total income — and are showing little inclination either to redistribute that slice back to investors or to invest it in new equipment, software, etc.. Instead, they’re accumulating piles of cash.

So don’t be too surprised if the incoming Treasury Secretary and IRS Commissioner step up enforcement of this penalty tax.  Or, as Instapundit might say, “all is proceeding as I have foreseen.”*

*4th item.

 

 

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

Monday, February 25th, 2013 by Joe Kristan

20130225-1

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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Tax Roundup, 1/29/2013: The best tax proposal ever. Also: tax season delayed for students and parents.

Tuesday, January 29th, 2013 by Joe Kristan
20130129-1

Flickr image courtesy Pasa47 under Creative Commons license

A Tax I can support!  Tax the Revolving Door (Glenn Reynolds)

In short, I propose putting a 50% surtax — or maybe it should be 75%, I’m open to discussion — on the post-government earnings of government officials. So if you work at a cabinet level job and make $196,700 a year, and you leave for a job that pays a million a year, you’ll pay 50% of the difference — just over $400,000 — to the Treasury right off the top. So as not to be greedy, we’ll limit it to your first five years of post-government earnings; after that, you’ll just pay whatever standard income tax applies.

Plus make them wear clown clothes to work.  (Via the TaxProf)

 

Allysia Finley,  Mickelson and the Sports Star Tax Migration (Wall Street Journal):

About 3.5 million Californians have migrated to other states over the past two decades. Almost anywhere they chose to go would allow them to enjoy greater returns on their labor. Is it really surprising that athletes like Mr. Mickelson might be keeping an eye on the leaderboard?

It would be surprising if they didn’t.

 

Kyle Pomerleau and William McBride:  EITC Awareness Day (Tax Policy Blog)

Research has shown that the EITC is associated with higher workforce participation among certain populations.  However, Casey Mulligan’s research shows there is no free lunch here, since the EITC creates disincentives to work over the income range in which it phases out (roughly $20,000 to $50,000).  And because the EITC is one of many overlapping anti-poverty programs, such as unemployment insurance, they all add up to huge disincentives to work among the poor.

And some Iowa politicians want to increase the Iowa EITC, making it a bigger poverty trap.

 

Steven Rosenthal,  Chairman Camp Agrees: Too Many Choices Burden our Tax System (TaxVox)

Jeremy Scott, Huffington Post Draws Tenuous Link Between Camp Plan, Fix the Debt Group (Tax.com)

Robert D. Flach,  GUIDELINES FOR TAX REFORM:

Recognize and acknowledge that the purpose of the federal income tax is to raise the money necessary for the administration of the government and government sponsored programs.  It is not to be used to “redistribute income” or as a method for delivery of social welfare and other government benefits.

If that principal were vigorously applied to the tax law, the 1040 would fit on a postcard.

 

Climb in the Cavalcade!  Worker’s Comp Insider hosts the latest Cavalcade of Risk roundup of insurance and risk-management posts, including Insureblog on the Curly Bulb Menace.

Russ Fox,  Form 8863 Added to Returns that the IRS Won’t Accept Just Yet.  The form for tuition credits.

William Perez,  When Can You Begin Filing Your 2012 Federal Tax Return?

Jason Dinesen,  Taxpayer Identity Theft, Part 11.  In which the IRS ignores the change-of-address filing and mails a long-delayed refund to the wrong address.

Martin Sullivan, Taxing Financial PollutionOn the futility of a financial transactions tax. (Tax.com)

Missouri Tax Guy,  What you’ll Need.  A guide to gathering your tax return information.

TaxGrrrl,  Tax Season Kicks Off January 30th: Here’s What’s On Tap

Jack Townsend,  IRS Issues John Doe Summons to UBS (All Over Again)

Kay Bell,  Deducting sales tax on your new car … or boat or airplane or home

What does his politics have to do with anything?  Liberal man sentenced to federal prison for tax evasion (Topeka Capital Journal Online)

What does his species have to do with anything?  Beaver County sheriff’s deputy convicted of tax evasion (Pittsburgh Post-Gazette.com)
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Tax Roundup, 12/7/2012: You can’t soak the rich without soaking employers. And: Baby Insane Crips?

Friday, December 7th, 2012 by Joe Kristan

When you tax “the rich,” you tax business.  That’s not going to help a struggling economy, but that’s where we’re going.  The TaxProf reproduces a great Congressional Budget Office chart that shows how how business income has moved from corporate returns to individual returns, mostly through the use of “pass-through” entities like S corporations, partnerships and LLCs:

 

Remember when the IRS Commissioner said they are up against sophisticated criminals?  Not so much,  From the LA Times:

Authorities arrested 11 people and seized piles of cash, guns and vehicles Thursday following an investigation into an alleged $1-million tax fraud scheme operated by a Long Beach street gang.
Thursday’s arrests were the result of “tedious investigative work,” and targeted the Baby Insane Crips, as well as family members and acquaintances, according to Long Beach Police Chief Jim McDonnell. Gang members allegedly used stolen Social Security numbers and other personal information to file false tax returns and then funneled refunds to family members and acquaintances.

When the “Baby Insane Crips” can defeat your financial controls, your controls aren’t that good.  Related: Russ Fox,  Why Rob Banks?

 

Indictment of St. Louis CPA unsealed.  The indictment of St. Louis-area CPA Frank “Tiger” Zerjav has been made public.   Mr. Zerjav survived an IRS attempt to shut down his practice via civil injunction.  This is much more serious, alleging the use of falsified Quickbooks files to conceal taxable income.

Bill Straub,  5 Ways The Fiscal Cliff Drama Could Play Out. (Via Instapundit)

Anthony Nitti,  The Top Ten Tax Cases Of 2012, #4: S Corporation Reasonable Compensation – How Much Is Enough?.  The much discussed Watson case.

 Jack Townsend,  Is Restitution a Criminal Penalty Requiring the Jury to Speak?

 

Patrick Temple-West,  Some in GOP urge lawmakers to back tax hikes for changes in safety-net programs, and more

David Brunori, The Rich Will Pay for Our Sins.  For now.  But not forever; the rich guy isn’t buying. (Tax.com)

Christopher Bergin,  Fool’s Gold and Loopholes:

There are no silver bullets that can fix the fiscal distress facing our nation. The fact that our politicians are trying to convince us to the contrary is not productive and shows that they are small leaders. Unfortunately for us, the chances that leaders who think small can solve big problems are not good.

It’s not about solving our problems, to them.

 

It would make putting up with the politicians easier, anywayDude, Should Marijuana Be Legalized and Taxed?  (Howard Gleckman,  TaxVox)

That makes it a better Friday: Robert D. Flach’s Buzz, SPECIAL FRIDAY EDITION

 

News you can use: The Simpsons’ Montgomery Burns explains (sorta) the fiscal cliff (Kay Bell)

Cruel and unusual punishment:  Brazil Prison Gang Conducted 10-Hour Conference Call (Via Going Concern).   Egads.  I’d rather face thumbscrews.

If she were in Congress, I would believe it.   Ex-Chelsea selectwoman accused of tax fraud claims she is illiterate.  A novel tax evasion defense.

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Tax Roundup, 10/23/2012. News of the obvious edition. And…look! Dead squirrels!

Tuesday, October 23rd, 2012 by Joe Kristan

Refundable credits are vulnerable to fraud, and IRS can’t recover the fraudulent payments.  The Treasury Inspector General for Tax Administration discovers the obvious,  reports Accounting Today (my emphasis):

A new report released Monday by the Treasury Inspector General for Tax Administration on refundable tax credits found that they are highly vulnerable to fraud. Refundable tax credits such as the EITC, the Additional Child Tax Credit, the First-Time Homebuyer Credit, and the American Opportunity Tax Credit for education also provide valuable tax breaks for low-income taxpayers and the middle class.

I call foul.  To say the “First-Time Homebuyer Credit” provides “valuable benefits for low-income taxpayers and the middle class” is lazy and dishonest propaganda.  That’s just the Accounting Today reporter’s assertion, and it appears nowhere in the TIGTA report.   The credit poured money into a declining housing market with little effect, other than blowing $30 billion.  The policy behind the other credits is at best arguable, and the benefits aren’t clearly “valuable” to taxpayers as a whole.

TIGTA initiated its audit to determine the effectiveness of efforts by the IRS to recover refundable credits disallowed during post-refund examinations and to consider options the IRS could implement to decrease the issuance of erroneous refundable credits. 

“Because of the susceptibility of these credits to fraud, and the low success rates in recovering erroneous credits once refunds have been issued, the IRS should take every reasonable step possible to identify potentially questionable credits and validate those credits before associated refunds are issued,” said TIGTA Inspector General J. Russell George in a statement.

So Doug Shulman’s IRS isn’t taking every reasonable step to keep from sending cash to thieves?  He’s been too busy terrorizing innocents abroad and setting up a vast, expensive and useless preparer regulation bureaucracy, apparently.

 

Attorney: West Des Moines firm’s outstanding liabilities to be paid soon (Des Moines Register).  The payroll service provider facing large bills for not remitting client payroll taxes timely says they will make good on them:

A West Des Moines human resources provider has paid its 2012 tax liabilities and has the funds necessary to pay off more than $4.8 million liabilities within the next three months, an attorney for the businessman said today

The Internal Revenue Service since 2006 has issued at least 15 tax liens against John Vratsinas and his collection of companies, InFocus Partners, Iowa Construction Logistics and ICL Staffing, according to court documents.

That’s good news for clients who might otherwise have to pay their payroll taxes twice, first to the payroll company and then to the IRS.  The taxman wants its payroll taxes, even when the payroll company already has received them.   Of course payroll providers shouldn’t fall behind on payroll taxes in the first place.  A wise employer will enroll in EFTPS and go online to monitor that the taxes are being paid, even when they outsource the job.

Also from the West Des Moines Patch: Attorney for West Des Moines Payroll Outsourcer Says 2012 Taxes Paid

Related Tax Update coverage here.

 

The TaxProf mentions an academic paper “Ranking State Tax Systems: Progressivity, Adequacy, Efficiency.”  From the abstract:

A good tax system must raise sufficient revenue – and do so fairly, efficiently, transparently, and coherently. How do the tax systems of the states stack up in terms of fairness, adequacy, and neutrality? To answer this question, we assess each state’s relative performance in terms of progressivity, growth, and administrative and economic efficiency.

Iowa rates 32nd by their measure. I think “progressivity” is a poor tool for measuring state tax systems.”Progressivity” is just a weasel-way of saying ”high rates,” which create distortions and inefficiency, like in Iowa, while punishing pass-through businesses.  Any measure that rates the horrendous New York tax system as #1 is absurd.

 

Russ Fox, Bad States for Gamblers

Patrick Temple-West,  Essential reading: Democrats threaten payroll tax cut consensus, and more (Tax Break)

Trish McIntire,  Tax Backup.  Maintain your records.

Kay Bell,  Kiddie tax, gifts and other tax-related items do get 2013 inflation adjustments

William Perez,  IRA Contribution Limits for 2013

 

Brutal Assault on Reason Watch: 

TaxGrrrl,  Final Presidential Debate – Live Blog

Janet Novack,  10 Reasons Reagan Could Cut The Top Tax Rate To 28%, But Romney Can’t

Peter Reilly,  Debate Proceeds Despite Green Party Lawsuit – Hear Jill Stein On Defense Here

Anthony Nitti,  Clearing Up Confusion Created By The Debates: President Obama’s Tax Proposal And The Fate Of The Small Business Owner.  Anthony unfortunately repeats the pointless fact that increasing the Obama plan only affects “2.5 of small business owners.” That’s true when you rate your Shacklee-selling neighbor the same as a business with dozens or even hundreds of employees.

As the Tax Foundation notes, the Obama plan affects a much higher percentage of pass-through income, a more important measure than the number of Schedule C 1040s.  Anthony dismisses this as just a concern of hedge-funds and private equity millionaires.  My pass-through clients would disagree.

 

The Critical Question:  So Jason … How’s that Guidebook About Same-Sex Marriage and Taxes Coming?  (Jason Dinesen)

Stretch your coffee break:  How to Weaponize Office Supplies (Bloomberg Business Week, via Instapundit)

So the dog can do this, but I can’t?  Man cited for backyard squirrel hunt (KCCI.com)

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Tax Roundup, October 22, 2012: can houses have cowl lamps? And why Iowa tax reform will be hard.

Monday, October 22nd, 2012 by Joe Kristan

20110119-1.jpgIt’s the housing version of “cowl lamp violations.”  A few years ago an Iowa county prosecutor ended up in hot water over the practice of rewriting serious traffic offenses, like drunk driving, down to “cowl lamp” violations, sometimes in exchange for contributions to charities or government agencies.  Cowl lamps are something your great-grandpa’s car might have had.

That may have given the Iowa Civil Rights Commission an idea.  From Reason.com:

The Des Moines Register reports that for five years ending in February 2011, the Iowa Civil Rights Commission shook down landlords for “voluntary contributions” in exchange for dropping discrimination complaints. The Register obtained copies of 27 settlement agreements involving about $20,000 in contributions. Unlike money from fines, which end up in the state’s general fund, the donations went directly to the commission, creating “the impression that justice is for sale,” as state court administrator David Boyd puts it. The commission ended the practice after Winterset attorney Mark Smith questioned its propriety.

Creates the “impression?”  Creates the fact.   Instapundit explains:

I think that all revenue collected by all agencies should go to the general fund.  Otherwise, it doesn’t just give the impression of corruption, it’s corrupting. 

 

Why Iowa tax reform will be hard.  The politicians will no longer get articles like this from Radio Iowa:

State economic development officials approved financial help for six companies Friday. The Iowa Economic Development Authority awarded tax benefits to Alfagomma America to move its stainless steel tube production from its plant in Italy to its only U.S. plant in Burlington.

The company is investing 1.3 million dollars and is expected to create 14 new jobs.

With a non-corrupt system where everybody is treated the same, there would be no more press releases.  The state economy would be much stronger, but the politicians wouldn’t get to cut any ribbons.

In a more just world, the economic development bureaucrats would have to call a press conference any time a business closed or fled as a result of Iowa’s whimsical, byzantine and sometimes punishing state tax system.

 

Crime doesn’t pay, but turning state’s evidence might.  The ex-wife of a Minnesota real estate magnate gets three months after cooperating in the case against him.  He got 4 1/2 years.

 

That won’t stop them for a minute?  “Do education tax benefits produce more educated Americans? Congress has no idea.”  (Marie Spirie, Tax Analysts – subscriber link)

 

Andrew Mitchel,  Repatriate Now? (Before the Bush Tax Cuts Expire).  “There may never be another opportunity for individuals to pull cash out of foreign corporations at such a low U.S. tax cost.”

Roberton Williams,   Understanding TPC’s Analysis of Limiting Deductions (TaxVox)

Anthony Nitti,  Tax Court: Spec Home That Was Never Built Was Not A Trade Or Business

Jim Maule,  The Expensing Deduction is an Expensive and Broken Idea

Peter Reilly,  Beware Of Partnership Status Sneaking Up On Your Business Venture

Alisa Martin,  Things That You Can Do To Get Ready For Tax Season (Guest post at the Missouri Tax Guy)

TaxGrrrl,  Gun and Ammo Tax Proposal Draws Fire.  Yes, that will put Chicago’s violent criminals out of business…

The weekend Buzz from Robert D. Flach.  This part is very true: “In my 40+ years in ‘the business’ I have found that IRS notices are more often than not incorrect (and state notices even more so).”

And I’m eight feet tall!   Maryland Governor O’Malley Says State Has Third Lowest Taxes in the Country! (Joseph Henchman,Tax Policy Blog).

Going Concern,  Arthur Andersen’s Bones Still Have Some Meat on Them.  Not very tasty by now.

Fortunately, the election will be over in about two weeks.  Smelly, destructive bug entering Iowa (TheBeanwalker.com)

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Tax Roundup, 10/12/2012: Megafauna Friday! Also: reversing the tax documentation process.

Friday, October 12th, 2012 by Joe Kristan

Not a Registered Tax Return Preparer

Never defraud a mammoth.  Feds Charge Colleyville Pharmacist and Wife In Mammoth Tax Fraud Scheme (DallasObserver.com)

 

 

 

 

 

You use the information from the supporting documents to prepare the returns, not the other way around.  A former IRS agent-turned-preparer is in trouble after mixing up this basic rule of tax return preparation, reports the Hartford Courant.com (my emphasis):

A former IRS agent abruptly pleaded guilty to tax fraud Thursday, moments after a federal prosecutor accused him in an opening statement to jurors of claiming deductions that included the price of treats for his dog and a ring he was stuck with after a broken engagement.

Thomas Thorndike, 62, of Milford operated the profitable tax preparation and financial services business Cornerstone Financial Services in Woodbury after leaving the IRS.

Why was his business profitable?

Assistant U.S. Attorney Christopher M. Mattei told jurors Thursday that Cornerstone was a high volume, high profit business. During tax season, he said, Thorndike collected as much as $12,000 a day by preparing 40 returns daily, one every 15 minutes. The secret to high-volume was big refunds, Mattei said.

Impressive productivity.  How did he get the big refunds?

But Mattei said the audit showed that many refunds were based on unsupportable deductions for mileage and donations of old clothing. A Waterbury police officer reported commuting 4,000 miles to work in 2006. A high percentage of Thorndike clients reported giving between $3,000 and $4,000 in clothing to Goodwill Industries during the same year and had receipts purportedly signed by the same Goodwill employee.

Just an overworked Goodwill employee?  Maybe not:

When Thorndike learned the IRS was examining the returns, Mattei said he instructed clients to manufacture phony supporting documents.

Oops.  That’s definitely against the rules.  Many people think the charitable deduction for used clothing is a freebie deduction.  It’s not.  You need to document the deduction, and the clothing has to be at least in good used condition.  As this case shows, overdoing it can attract IRS attention.  And if you don’t have the documentation to start with, you can’t invent it later.

 

Tax Policy Blog  Chart of the Day: Payroll Taxes and Refundable Credits:

 

 

Water is wet, too. IRS Audits Deter Corporate Tax Avoidance. (TaxProf) 

A coveted heh for the Tax Update.

Brutal Assault on Reason Watch: 

Anthony Nitti,  Reactions to the Biden – Ryan Debate

TaxGrrrl,  Vice Presidential Debate, 2012 – Live Blog

David Hirsanyi,  Democrats Are the Real Tax Ideologues  (Reason.com)

Howard Gleckman,  Can Romney Cut Taxes for the Rich Without Reducing Their Share of Taxes? Yes, but….  (TaxVox)

Jason Dinesen,  IRS Releases FAQ for Same-Sex Married Couples:

It’s refreshing to see the IRS publish this FAQ. The IRS does a lot of things wrong, but on the topic of same-sex marriage, the IRS has been surprisingly open-minded.

Now if only the Iowa Department of Revenue would publish a similar FAQ — or give us SOMETHING.

Better specify that “something.”

 

Kay Bell,  Double check dependents, filing status

Jack Townsend,  Another Plea Related to Offshore Activity

Martin Sullivan,  Business Overstates Its Case on International Taxation

Courtney A. Strutt-Todd,  Using Tax-Exempt Bonds as a Way to Finance Your Next Project (Davis Brown Tax Law Blog)

Going Concern,  City of Detroit’s Finance Department Makes Case for Most Hysterically Pitiful Internal Control System in Recent Memory

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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 concludesRelated?  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, 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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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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Revenge of the Tax Policy nerds

Thursday, March 22nd, 2012 by Joe Kristan

The Section 199 deduction — a special 9% freebie deduction off the top of “production” income — is one of the worst ideas enacted in the tax law since the Section 409A rules.  Section 199 taxes income from manufacturing, farming, construction, and related architect and engineer services, at a lower rate than other income.  The arbitrary favoring of one way to make a living over another is economic illiteracy and a tax compliance headache.  It ignores the many supporting services – transportation, human resources, logistics — to say nothing of accounting – that gets stuff from the factory to you.

So tax nerds with long memories can smile a bit at defeat in a primary this week of Congressman Donald Manzullo.  The Illinois Republican lost after being redistricted to the same district as another congresscritter.  Mr. Manzullo “led the charge” to get Section 199 enacted in 2004. 

 

He lost after House Majority Leader Eric Cantor endorsed his Tea Party-linked opponent (via Instapundit).  So maybe the Section 199 deduction might go away?  Maybe Congress will swear off micromanaging the economy through the tax law? Don’t get your hopes up.

 

 

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Lawsuit draws attention to IRS preparer regulation power grab

Wednesday, March 14th, 2012 by Joe Kristan

The Institute for Justice lawsuit has drawn much-deserved attention to IRS Commissioner Shulman’s inane and wasteful preparer regulation initiative. For example, Instapundit links to Katherine Mangu-Ward:

Readers get no points for guessing who backed the regulation. H&R block, and other big tax prep firms were in favor of the rule. Attorneys and certified public accountants are exempt from the requirements. As with many kinds of regulation, relatively low compliance costs for the big boys can be ruinously high for the little guys.

Of course, those of you astute enough to follow the Tax Update have known about this for a long time. Stay on the bleeding edge with the Tax Update!

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Warren Buffett’s exclusive club

Tuesday, October 11th, 2011 by Joe Kristan

Only eight of the Forbes 400 were willing to say they want to pay higher taxes. (via Instapundit).
Remember, when they push higher taxes, they mean higher taxes for other people. After all, they are already free to increase their own tax by just giving the government a tip for fine service rendered.

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