Posts Tagged ‘iowabiz.com’

Tax Roundup, 2/26/16: Gronstal hints at approach to Section 179 coupling deal. And: Yes he can! (Release his returns)

Friday, February 26th, 2016 by Joe Kristan

couplingInteresting, if true. In opening hostage negotiations over the fate of Section 179 coupling, Iowa Senate Majority Leader Gronstal may have hinted at a “Main Street vs. Walnut Street” approach. From wcfcourier.com:

If the choice is between offering tax relief to a limited number of manufacturers “or taking care of 30,000 farmers, 25,000 small businesses,” Gronstal said he would “gravitate more toward the 50,000 or 60,000 effort to help those folks (rather) than something that is much more narrow in terms of its impact.”

I say “may have” because I think he is hinting at trying to get the Governor to reverse its regulatory change to sales tax rules on manufacturing supplies.

By “Walnut Street,” I refer to downtown Des Moines, where several of the big law/lobbying firms in town have their offices (Nothing against Walnut Street — that’s where Tax Update World Headquarters is located, too).  Whether or not Sen. Gronstal realizes it, the coupling issue is ultimately about whether to benefit a handful of insiders and big companies benefitting from special tax benefits, or whether to further the interests of the rest of the taxpayers who pay for any special deals.

The revenue cost from adopting the $500,000 Section 179 limit for Iowa is estimated around $90 million. Eight taxpayers by themselves claimed $35 million in research credits in 2015, of which around $30 million were paid to the companies in cash because they exceed the claimants income tax bills. Just last week the state promised $15 million to DuPont as a location incentive. The potential loss of Section 179 deduction is making its many beneficiaries suspicious of the multi-million dollar “economic development” tax credits that benefit relatively few insiders with lobbyists.

Walnut Street back in the day.

Walnut Street back in the day.

While Senator Gronstal will insist on concessions for passing the bill, I expect he will reach a deal without insisting on his full pound of flesh. More than anything else, he wants to remain Majority Leader, with control over whether legislation lives or dies. He has only 26-24 control of the Senate. If he is perceived as blocking coupling, it may be just enough to tip a close race or two against his party. I think his reference to the “50,000 or 60,000” shows he’s aware of this. That’s why I think an agreement to couple with the federal limit is now likely in the next two or three weeks. I have no insider information to confirm this guess.

Related: Me, Tax season impasse: why your 2015 Iowa tax return may be on hold. My new post at IowaBiz.com, the Des Moines Business Record Business Professional’s Blog.

Other coverage: Des Moines Register, Gronstal opens door to Iowa tax-coupling deal

 

Yes he can! Trump says he can’t release tax returns because he’s being audited (marketwatch.com). That’s not true, of course. While it’s illegal to release someone else’s returns without their permission, you can make your own returns public any time. The IRS doesn’t make you sign some sort of confidentiality agreement when they audit you.

Like every other silly thing he says, this probably will probably increase his standing in the polls.

Related: TaxGrrrl, Trump Won’t Release Tax Returns, Citing IRS Audit: Is It A Legitimate Excuse? “Trump could absolutely release those returns now – even in the middle of an audit.”

 

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Tony Nitti, Beachbody Coach? Rodan & Fields Consultant? At Tax Time, Beware The Hobby Loss Rules. “If your Facebook feed is anything like mine, videos of clumsy toddlers and unlikely animal pals have recently given way to a relentless string of friends pushing side businesses.”

Kay Bell, Penalty for late tax filing increases in 2017. “Starting in 2017, if you send in your Form 1040 (and additional forms and schedules) more than two months after the return is due, you’ll be slapped with a penalty of $205 or 100 percent of your due tax, whichever amount is smaller.” Another example of the ugly practice of funding the government through penalties instead of taxes.

Keith Fogg, Discharging the Failure to File Penalty in Bankruptcy (Procedurally Taxing).

Somehow I missed this: WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL TAX SEASON EDITION (Robert D. Flach). “An unprecedented tax season BUZZ!  Some good stuff that needs to be spread around now – and could not wait until April.”

Andrew Mitchel, Charts of Examples in Rev. Proc. 91-55: Form 5472 & Direct and Ultimate Indirect 25% Shareholders. A big issue when you have foreign owners of a U.S. corporation.

Robert Wood, Kanye West Could Still Get $1 Billion Tax Free. Why?

Jim Maule, Section 280A and the Tree House. “The reader asked, ‘Can a tree house qualify under the Section 280A rules? Can a tree house be depreciated?’ Though there’s no direct authority, careful reading of the applicable statute provides an answer.”

Party on Walnut Street.

Party on Walnut Street.

 

TaxProf, The IRS Scandal, Day 1023

Renu Zaretsky, Times get taxing for candidates… Today’s TaxVox headline roundup covers last night’s debate, candidate tax returns, and the lost credibility of the IRS under Shulman and Koskinen.

 

News from the Profession. Password Inundation: Password Policies We Love to Hate (Megan Lewczyk, Going Concern).

 

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Tax Roundup, 2/8/16: When your password is a key for thieves. And: More Tax Credits!

Monday, February 8th, 2016 by Joe Kristan

20150910-2You need more than one password. Another home tax software company reports that its customers may have had their data stolen. Marketwatch.com reports:

In its letter to affected customers, TaxSlayer said it became aware Jan. 13 that hackers had accessed some of its customers’ accounts. The illegal access took place between Oct.10, 2015, and Dec. 21, 2015.

The letter said an “unauthorized third party may have obtained access to any information you included in a tax return or draft tax return saved on TaxSlayer, including your name and address, your Social Security number, the Social Security numbers of your dependents, and other data contained on your 2014 tax return.”

In its statement, TaxSlayer said it doesn’t believe its own systems were breached. Instead, “user credentials, stolen from other sources, were then used to misrepresent our customers and therefore access our program.”

They’re saying that they got passwords from another site and tried them on TaxSlayer, and they worked. That kind of breach is on the user, not the software company.

Reusing passwords is poor data security hygiene. McAfee Software offers some great tips for good passwords. The tips include a list of things people do that make them vulnerable to data theft, including:

Reuse of passwords across multiple sites: Reusing passwords for email, banking, and social media accounts can lead to identity theft. Two recent breaches revealed a password reuse rate of 31% among victims.

If you use different passwords for your different important accounts, one data breach won’t expose your entire financial life.

Related: TaxSlayer data breach is the 3rd tax software-related security issue so far this filing season (Kay Bell)

 

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Brent Willett, Iowa’s next economic frontier (IowaBiz.com). An unintended but useful followup to my IowaBiz post on Friday on the unwisdom of targeted tax credits, the post boosts a proposed new tax credit that I criticized by name. The post touts a new report promising “Fifty thousand jobs” to Iowa if we just enact a new “Bio-Based Chemicals” tax credit.

The post neatly checks off several items I note in my post:

Might these special favors be better for the economy than some farmer or small business who buys a new tractor or machine? You could make that case, but it would be plausible only if these favors were enacted by a process where the state looked at the vast menu of possible industries to support and carefully evaluated which ones were more persuasive. That never happens. Instead, the credits follow the path of the notorious Iowa film industry credits, where an industry gets some legislators and business boosters excited and builds support — sometimes with “studies” funded by booster groups. There is no evaluation of the opportunity costs, of whether the funds would be better used elsewhere.

No comparison to other industry opportunities? Check. Studies funded by booster groups? Check. Ignoring opportunity costs? Check.

I encourage your to read the Willett post and ponder why a government subsidy is needed if the industry is such a slam-dunk.  Also, consider whether you would get the same article by substituting other industries for bio-chemicals in the post.

 

 

Andrew Mitchel: New Expatriate Record for 2015 – Nearly 4,300 Expatriations:

2015 expatriations

“The escalation of offshore penalties over the last 20 years is likely contributing to the increased incidence of expatriation.”

Related: Record Numbers Renounce Their U.S. Citizenship (Robert Wood)

 

Jason Dinesen, Lots and Lots of Scam E-mails this Year. Jason posts many helpful examples. Be very skeptical of emails you don’t expect, and delete any purporting to come from IRS.

Annette Nellen, Ideas for Retirement Savings Reform. “One overall reform Irecommend is to change the focus of retirement plans from the employer to the employee, making them truly portable from job to job and if in employee or contractor status or both.”

Jim Maule, The Biggest Tax Refund?. Overwithholding will do the trick.

Leslie Book, The Limits of the “One Inspection” of Taxpayers’ Books and Records Rule (Procedurally Taxing). “One limitation on IRS powers is the Code itself, as Section 7605(b) provides that ‘only one inspection of a taxpayer’s books of account shall be made for each taxable year unless ․ the [Treasury] Secretary ․ notifies the taxpayer in writing that an additional inspection is necessary.'”

Robert D. Flach, TAX GUIDE FOR NEW HOMEOWNERS

Russ Fox, It Was Only a 13.33% Kickback. A police chief breaks the tax law.

TaxGrrrl, So About Those Cam Newton ‘Sunday Giveaway’ Game Balls…

 

Only the form of your destructor. What Would Be At Stake In A Trump v. Sanders Election? How About $24 Trillion in Tax Revenue (Tony Nitti).

 

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TaxProf, The IRS Scandal, Day 1003Day 1004Day 1005

Scott Greenberg, White House Calls for Targeting the Cadillac Tax by Location:

Why would the White House propose changes that would weaken the Cadillac Tax – a central part of the administration’s most significant policy achievement? In fact, these changes might be necessary to secure the continued existence of the tax. The White House has been fighting a losing battle to defend the Cadillac Tax, and these proposed changes may placate some of the tax’s opponents, particularly employers in states with high healthcare costs.

We must destroy the Cadillac Tax to save the Cadillac Tax!

Renu Zaretsky, Budget Hearings, Saving, and Entertaining (TaxVox). “There is almost always something perfunctory about the last budget of an outgoing president, but this year’s will generate even less interest than usual. In the ultimate insult, the GOP-run congressional budget committees won’t even invite White House officials to describe their fiscal plan.” And lots more in today’s TaxVox headline roundup.

I reject this false choice. Kentucky Can Attract Tourists Who Like Bible More Than Bourbon Without Violating First Amendment  (Peter Reilly)

 

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Tax Roundup, 2/5/16: The IRS isn’t a bank, and a 1099 isn’t what makes income taxable. And: oil companies, money trees.

Friday, February 5th, 2016 by Joe Kristan

20151217-1Nice Try. The tax law discourages taxpayers from tapping retirement savings too early with a 10% early withdrawal tax. The tax law also allows an above-the-line deduction for penalties imposed by banks for closing out a CD or savings account before maturity.

They aren’t the same thing.

A Mr. Martin learned that lesson this week in Tax Court. He was 54 years old when he pulled out $55,976.29 from his IRA. He reported the 10% penalty tax, but then he also deducted it on line 30 of his 1040 as a “penalty on early withdrawal of savings.”

I can see the logic, as it does look like, well, a penalty on an early withdrawal of savings. But that’s not how the Tax Court sees it (my emphasis):

Martin argues that the additional tax imposed by section 72(t) is deductible under section 62(a)(9). We disagree. Section 62(a)(9) provides a deduction for an amount “forfeited to a bank, mutual savings bank, savings and loan association, building and loan association, cooperative bank or homestead association as a penalty for premature withdrawal of funds from a time savings account, certificate of deposit, or similar class of deposit.” The section 72(t) additional tax is payable to the federal government, not to a “bank” or similar institution listed in section 62(a)(9). Therefore, it is not deductible under section 62(a)(9). Further, the additional tax imposed by section 72(t) is a federal-income tax. Section 275(a)(1) disallows any deductions for “Federal income taxes” (A deduction for certain other taxes, including State income taxes and some other federal taxes, is allowed by section 164(a).).

There was one other problem with the return. He won $1,000 at a casino, an amount arguably below the threshold for which casinos most report gambling winnings on a W2-G. They reported it anyway. Again, the Tax Court:

The casino reported on an information return its $1,000 payment to Martin. Martin argues that, because he earned entries into the lottery by playing slot machines, his gambling winnings should be subject to the $1,200 reporting threshold. Thus, Martin argues, the casino should not have reported the gambling  winnings of $1,000 because the payment fell below the $1,200 reporting-requirement threshold for gambling winnings from slot machines.

Martin assumes that gambling winnings that are not reportable on information returns are not includible in gross income. At trial he said that the IRS is “trying to separate the taxation from the reporting when it is undeniably one and the same”. Martin does not see, or refuses to see, the distinction between information-reporting requirements and the imposition of income tax. Whether the casino was required to report Martin’s winnings is irrelevant to the question of whether his winnings are includible in his gross income. The Internal Revenue Code does not exclude a payment from income when the payment is not large enough to require the payor to report the payment on an information return.

A lot of people think that when something doesn’t show up on an information return, it’s tax-free. It just doesn’t work that way.

Cite: Martin, T.C. Memo. 2016-15

 

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Obama seeks oil tax, destruction of self-driving car industryCNBC reports:

President Barack Obama will propose a $10-per-barrel charge on oil to fund clean transportation projects as part of his final budget request next week, the White House said Thursday.

Oil companies would pay the fee, which would be gradually introduced over five years. The government would use the revenue to help fund high-speed railways, autonomous cars and other travel systems, aiming to reduce emissions from the nation’s transportation system.

“Oil companies would pay the fee.” Such a kidder, that President. Apparently the oil companies will pay it by planting more carbon-absorbing money trees out behind their refineries.

It’s a credit to misguided persistence that the President is still pursuing high-speed passenger rail, an idea that California is busy proving once again to be ridiculously expensive and impractical. And somehow I’d feel much safer in an autonomous car from Google or Apple than one from the the same government that brings us the IRS.

 

Scott Hodge, New IRS Data: Wealthy Paid 55 Percent of Income Taxes in 2014 (Tax Policy Blog).

distribution 2014 income

“So while many politicians may argue that the wealthy don’t pay their fair share of income taxes, the data simply does not support that opinion.”

 

Russ Fox, Maryland Suspends Processing Tax Returns from 23 Liberty Tax Service Locations:

For consumers, the advice that Maryland noted in their press release is accurate: “Taxpayers should carefully review their returns for these issues and should be suspicious if a preparer: deducts fees from the taxpayer’s refund to be deposited into the tax preparer’s account; does not sign the tax return; or fails to include the Preparer Taxpayer Identification number “PTIN” on the return.” I’ll add, if you don’t own a business and see business income on your return, there’s a problem.

Indeed.

Kay Bell, Lesson from IRS hardware failure: Be prepared for the unexpected during tax filing season. The hardware went back on line yesterday afternoon. 

TaxGrrrl, Update: IRS Website Back Online, Tax Refunds Unaffected

Peter ReillyIRS And The Tea Party – Scandal Enters A New Millennium. Peter observes The TaxProf’s Day 1000 Tea Party Scandal entry.

Keith Fogg, Discharging Late Filed Returns – A Novel but Unsuccessful Approach. “The case shows the creativity that can come into play in the face of very long odds.”

Robert Wood, Bank Julius Baer Hit With $547M Criminal Tax Evasion Penalty, Two Bankers Plead Guilty

 

Me, Tax credits for a few vs. business deductions for everyone. I take my battle against cronyism and for conforming Iowa tax law to 2015 federal changes to IowaBiz.com, the Des Moines Business Record Business Professional’s Blog.

 

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TaxProf, The IRS Scandal, Day 1,002. Another supposedly-erased hard drive sought by investigators miraculously reappears.

Megan McArdle, Obamacare’s Cadillac Tax Will Not Survive. The way pieces of the machine keep falling off, you might wonder if it wasn’t very well designed.

Renu Zaretsky, A Budget, Capital, Growth, and TransparencyToday’s TaxVox news roundup covers the Obama oil fee, last night’s Sanders-Clinton debate, and lots more.

News from the Profession. Lying About Your Financial Statements Being Audited Still Frowned Upon (Caleb Newquist, Going Concern).

 

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Tax Roundup, 12/4/15: Keeping inmates busy, Keeping CPAs fit.

Friday, December 4th, 2015 by Joe Kristan

20150916-3It’s important that our inmates feel they have a purpose. A few years ago Edward Hugh Okun was sentenced to 100 years in federal prison after being convicted on charges of buying and looting Section 1031 exchange intermediaries, stealing $126 million earmarked to close tax-free swaps, spending it on yachts and other rich-man toys.

Mr. Okun apparently tried to make the best of his situation. Tax Analysts reports ($link) that David Chityal, a Canadian national, has pleaded guilty to helping Mr. Okun divert $2.3 million in tax refunds from a fund set up to pay restitution to Mr. Okun’s fraud victims. From the report:

Following Chityal’s release in March 2010 and his deportation to Canada, the men maintained regular contact and developed plans to obtain $2.3 million in tax refunds intended for the bankruptcy estate handling Okun’s businesses. The indictment said the two men planned to put $500,000 of the tax refunds toward hiring a specific “prestigious New York lawyer” to handle Okun’s appeal and use the remainder for personal enrichment.

Chityal hired a Canadian lawyer to complete a process to grab the tax refund checks, travel to the Beaumont prison to have Okun endorse the checks, and then fly to the Turks and Caicos Islands to deposit the checks in a trust controlled by Okun. However, an attorney for the bankruptcy estate discovered the scheme, tracked the Canadian lawyer to the islands, and had the checks sent back to the United States hours before they were to be deposited.

The Bureau of Prisons inmate locator says Mr. Okun has a projected release date of April 30, 2095. This sort of thing could roll that back a bit.

Related:

A 10-year sentence is plenty, assuming fire ants are involved

WHEN A LIKE-KIND EXCHANGE IS TOO TAX FREE

Department of Justice Press release

 

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Kyle Pomerleau, Deficit Worries Over a Permanent Extenders Package? (Tax Policy Blog). The post addresses the lie underlying the nature of “temporary tax breaks”:

The extenders are a perfect example of what the current law baseline can miss. Under current law, extenders have already expired. So current law estimates assume that the federal government will collect revenue as if the extenders are no longer there.

However, this does not reflect our recent experiences with the extenders. Every year, for the past several years, Congress has retroactively extended the extenders and reduced actual revenues that the CBO believes the Treasury will collect. And there is no reason to believe that this would not keep happening. However, CBO’s current law baseline will still assume that the government will collect revenue over the next decade as if the extenders didn’t exist. In other words, the CBO current law baseline likely overstates the amount of revenue that the federal government will actually collect over the next decade.

Any “temporary” tax break that is extended once should be considered permanent for budget purposes. Maybe we should even remove the four words of the preceding sentence starting with “that.”

 

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It’s Friday! Get ready for your weekend with fresh Buzz from Robert D. Flach. Today’s roundup from Robert runs from musical theater to fraudulent earned income tax credit claims.

Speaking of musical theater, I have a son playing bass in the house band for a run of Ain’t Misbehaving in Chicago right now. Go if you can, because it’s a great show and because I want to stay in a nice nursing home someday.

Robert Wood, When Foreign Banks Ask For U.S. Taxpayer ID, How Should You Respond? “FATCA letters are everywhere, and foreign banks want you to certify that you’re complaint with the IRS.”

Jim Maule, Rubbing Tax Penalty Salt Into the Tax Liability Wound:

There are two lessons here. First, if using a preparer, be certain to provide the preparer with all necessary information, even if that means providing the preparer with more information than is needed. It is better to over-include than to under-include. Second, review the return.

A preparer signature isn’t a magic charm that makes any tax problems go away.

Keith Fogg, Who Can/Must Sign the Power of Attorney Form (Procedurally Taxing)

Jack Townsend, IRS Use of Cell-Site Simulators (Also called Stingray) to Retrieve Information About and From Cell Phones

Me, Estimated tax payments: who needs to file quarterly. My new post at IowaBiz.com, the Des Moines Business Record’s Business Professionals’ Blog.

 

Howard Gleckman, The Highway Bill Takes Congress on a FAST Track to More Debt (TaxVox). Fiscal gimmickry lives.

TaxProf, The IRS Scandal, Day 938. Today’s post links to a voice for the “no scandal here” crowd.

They lack a lot more than that. Illinois Needs Budget, but Leaders Lack Urgency (Sebastian Johnson, Tax Justice Blog).

 

News from the Profession. Here Are Some Health Iniatives Accounting Firms Should Consider for the Upcoming Busy Season (Leona May, Going Concern). I’m not sure “treadmill desks” send the right message.

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Tax Roundup, 11/23/15: Maquoketa! And, bought and paid-for at year-end insufficient for golf-cart credit.

Monday, November 23rd, 2015 by Joe Kristan
A Maquoketa Cave. Picture by Iowa Department of Natural Resources.

A Maquoketa Cave. Picture by Iowa Department of Natural Resources.

Maquoketa! The Day 1 team of the  ISU Center for Agricultural Law and Taxation Farm and Urban Tax Schools is in the northeast Iowa town of Maquoketa, known for its cave system and the 61 Drive-in theater, “one of the few remaining outdoor theaters in the United States.” We then get two weeks off before the penultimate session in Denison, on the other side of the state, and our December 14 final session in Ames. Register here for one of the final schools or for the webcast of the Ames session.

 

“Ordered” doesn’t cut it for year-end asset purchases. Among the many silly tax rules enacted in the panicked response to the 2008 financial crisis was the tax credit for “low-speed electric vehicles,” more conventionally known as golf carts. This led to panic buying of golf carts to claim the lucrative tax spiff. Last week the Tax Court disappointed one buyer who tried to get a tax credit purchase in under the wire. It provides a lesson for all taxpayers looking at year-end purchases to get a Section 179 deduction or bonus depreciation.

The credit was available only for carts “placed in service” in 2009. Judge Paris sets the stage (all emphasis mine, footnotes omitted):

Respondent determined a deficiency of $6,253 in petitioners’ Federal income tax for 2009. The issue before the Court is whether petitioners are eligible for a New Qualified Plug-in Electric Drive Motor Vehicle tax credit (PEVC) of $6,253 pursuant to section 30D for 2009. The notice of deficiency did not determine a penalty.

The electric vehicle at issue, a Spark NEV-48 EX, was manufactured by Zone Electric Car, LLC (Zone Electric). Pursuant to Notice 2009-54, 2009-26 I.R.B. 1124 (June 29, 2009), Zone Electric submitted a request on October 1, 2009, to the Internal Revenue Service (IRS) to certify that its electric vehicles were qualified plug-in electric vehicles for purposes of section 30D, which as of the date of the notice allowed a tax credit for qualified plug-in electric vehicles placed in service from January 1 to December 31, 2009. On October 7, 2009, the IRS issued a letter to Zone Electric stating that the Spark NEV-48 EX model “meets the requirements of the Qualified Plug-in Electric Vehicle Credit as a Qualified Plug-in Vehicle.

$6,253 off if delivery taken by December 31, 2009!

$6,253 off if delivery taken by December 31, 2009!

So the Spark NEV-48 EX qualified — if it beat the deadline. Back to Judge Paris:

The electric vehicle was delivered to petitioners on June 8, 2010, even though petitioners placed an order for a low-speed electric vehicle reflecting their choice of color, radio, and size from Drive Electric, LLC (Drive Electric), through its Web site FreeElectricCar.com on December 21, 2009.

On December 21, 2009, petitioners remitted full payment of $7,786.53 for the vehicle with a credit card and promptly commenced insurance on the vehicle on December 28, 2009.

For charitable contributions and cash-basis business expenses, this would normally be all that is necessary, as a credit card transaction is as good as cash to IRS. But not this time:

Petitioners argue they remitted payment and acquired title to a qualified electric vehicle on December 21, 2009. Petitioners assert that legal title passed to them on the date of purchase and therefore they are entitled to a PEVC for 2009 because the vehicle was acquired before December 31, 2009. However, the statute effective on the date of purchase also required a qualified motor vehicle to be placed in service on or before December 31, 2009. 

Petitioners entered into the transaction for purchase of the vehicle just before the close of the year. As previously discussed, they received a bill of sale, which contained a VIN, and a certificate of origin shortly after they remitted full payment. However, a bill of sale containing a description of the vehicle and a VIN is not sufficient to show the vehicle was ready and available for full operation for its intended use. Petitioners have not offered evidence to show the vehicle was available for their use, much less fully manufactured. In fact, the vehicle was not delivered until June 8, 2010, making it impossible for the vehicle to be available for use until that date. Even if the Court were to assume the vehicle was fully manufactured and operational while awaiting shipment to petitioners, Brown and Noell tell us that the vehicle could not be considered placed in service unless and until the vehicle was readily available to serve its assigned function for petitioners’ personal use on a regular basis. The Court finds that the low-speed electric vehicle was not available for its intended use on a regular basis until it was delivered on June 8, 2010. Consequently, petitioners did not place the vehicle in service in 2009 and are not eligible for a PEVC for that year.

So the taxpayer’s golf cart just went up $6,000 or so in price.

The lesson for year-end tax planning is that the same “placed in service” rule applies to year-end fixed asset purchases by taxpayers wanting Section 179 deductions or bonus depreciation. If your business races to buy a big SUV or a new tractor by year-end, it needs to be in your garage or barn by December 31. A new machine has to be on the shop floor, ready to go.  “Bought and paid-for” isn’t enough.

Cite: Podraza, T.C. Summ. Op. 2015-67.

 

 

Peter Reilly, Tax Court Denies Exempt Status To Group Using Trading Card Games To Promote Sobriety. Peter has an in-depth exploration of last week’s Gamehearts Tax Court case. It explains that the organization denied tax exemption in the case was involved in non-casino games, including “Magic: The Gathering and similar games such as Pokemon and World of Warcraft Trading Card Game.” I had assumed that it was more of a gambling thing. I have edited my original post on the case accordingly.

Peter does not agree with the decision:

This is another example to me of the IRS EO group being out of touch with the modern world.  Magic the Gathering has been a thing since 1993.  You will also see IRS giving a hard time to not for profits dedicated to open source software.  It also turned down a sorority that wanted to operate on-line and a group planning to provide free wi-fi.

The whole exempt organization function is in disarray.

 

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Kay Bell, Is Alaska getting closer to enacting a state income tax? The oil bust has clobbered Alaska revenues.

Jason Dinesen, From the Archives: Issuing 1099s to an Incorporated Veterinarian

Jim Maule, Old Tax Returns Have Value. I keep my tax returns forever; Prof. Maule explains why being a tax hoarder can be useful.

Robert Wood, Your Passport Could Be Cancelled If You Owe IRS. Because Congress apparently feels we need one more poorly-considered bill that will hugely inconvenience honest taxpayers and will be impossible to undo.

Russ Fox, The Turf Monster Striketh. With a caution against sending tax ID numbers via e-mail.

TaxGrrrl, Jay Z Loses On Alvarez-Cotto Boxing Bet As Charity Gets Big Win.

Robert D. Flach, YEAR-END TAX UPDATE WORKSHOPS. With some sound year-end planning reminders.

 

Me, How your calendar might help you beat the IRS. My newest post at IowaBiz.com, the Des Moines Business Record’s business professional’s blog, covers the importance of keeping track of your time to document “material participation” to take tax losses and to avoid the 3.8% Obamacare Net Investment Income Tax.

 

TaxProf, The IRS Scandal, Day 926Day 927Day 928, Day 926 discusses the ties between Lois Lerner and the architect of Wisconsin’s Kafkaeske partisan “John Doe” witchhunt.

 

Steven Rosenthal, Treasury Pulls its Punches on Earnings Stripping (TaxVox). “Treasury made only small technical changes to the definition of an inversion.  News reports suggested something much larger—namely limits on earnings stripping, which would have made inversions (and other combinations of U.S. firms with foreign corporations) much less profitable.”

 

Career Corner. Let’s Enjoy Some Intern Reviews of Various Accounting Firms (Caleb Newquist, Going Concern).

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Tax Roundup, 10/5/15: Cool implosion, but no tax break. And more tax fairy tales!

Monday, October 5th, 2015 by Joe Kristan

This happened in Downtown Des Moines over the weekend:

YouTube Video Courtesy star105

Preservationists wanted to save the building, the old YMCA. I never understood this. Some beautiful buildings have been lost in Des Moines, but this isn’t one of them. If you aren’t willing to buy a building and fix it up yourself, it doesn’t seem right to tell the owners that they have to do it with their own money.

But did they get a tax break for the implosion? Did they get to write off the cost of the building when they brought it down? It would seem logical — obviously the building is a total loss. But no, it doesn’t work that way. Internal Revenue Code Section 280B is pretty clear:

In the case of the demolition of any structure—
(1) no deduction otherwise allowable under this chapter shall be allowed to the owner or lessee of such structure for—

(A) any amount expended for such demolition, or
(B) any loss sustained on account of such demolition; and

(2) amounts described in paragraph (1) shall be treated as properly chargeable to capital account with respect to the land on which the demolished structure was located.

So not only is there no write-off of the building, the cost of the demolition itself is capitalized, along with any remaining basis in the building — to be recovered only when the land is sold someday. So the income tax law doesn’t encourage implosions. Pretty much the opposite.

 

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Jack Townsend, IRS Makes FOIA Disclosures to Tax Analysts Regarding OVDP and Streamlined Processing. “One point that was already known to practitioners is that rejection of the transition streamlined relief inside OVDP is not a determination of wilfulness so that, upon opt out, the wilfulness penalty is pre-determined.”

Peter Reilly, Rand Paul Suffers Setback In Foreign Reporting Lawsuit

 

Kristine Tidgren, Let the Motions Begin: Drainage Districts Seek Partial Summary Judgment. Des Moines Water Works is suing upstream drainage districts for not keeping nitrates out of the river. 

Annette Nellen, Obamacare – can pieces be removed? “Obamacare has too many complicated tax provisions in addition to many complicated non-tax provisions.”

Kay Bell, Time to make your flexible spending account choices

Sonya Miller, Freezing the Refunds of Our Guests (Procedurally Taxing). “We are aware of a group of nonresident taxpayers (taxpayers that fall under the rules for aliens temporarily present in the United States as students, trainees, scholars, teachers, researchers, exchange visitors, and cultural exchange visitors) who had their 2014 refunds frozen.”

TaxGrrrl, Treasury Sends Dire Warning To Congress: We’re Running Out Of Money Faster Than Expected.

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TaxProf, The IRS Scandal, Day 877878879. They’re still talking about impeaching Koskinen. If the administration really wants to build trust in the IRS, they’ll dump him. Until they do so, we can assume his stonewalling and stiff-arming of the GOP appropriators is the behavior the administration wants out of him.

Scott Greenberg, New Study Shows that Tuition Deduction Does Not Increase College Attendance (Tax Policy Blog):

 Last year, Bulman and Hoxby published a similar study of three federal education credits, which concluded that all three have a “negligible” effect on college attendance. This finding was in stark contrast to the Obama administration’s claim that the expansion of the American Opportunity Tax Credit made it possible for 12 million more students to earn a college degree.

The increase in subsidies over the years coincides with wild increases in tuition costs. I don’t believe that’s a coincidence.

 

Renu Zaretsky, Hope’s Limits, Math, and Cuts. Today’s TaxVox headline roundup talks about the apparent death of an international tax reform effort and efforts to improve IRS verification of earned income tax credit eligibility.

 

Russ Fox, There Is No Magic OID Process. Just like there is no Tax Fairy.

Me, Chasing the Tax Fairy. My latest at IowaBiz.com, the Des Moines Business Record business professionals’ blog. I discuss four manifestations of the Tax Fairy cult – The ESOP Fairy, the Home-based Business Fairy, the Pennies-on-the-dollar Fairy, and the Classic 105 fairy that Hank Stern spotted.

 

 

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Tax Roundup, 8/17/15: New directions in Iowa tax policy. And lots more!

Monday, August 17th, 2015 by Joe Kristan
If Iowa's income tax were a car, it would look like this.

If Iowa’s income tax were a car, it would look like this.

This week may see the start a discussion of the future of Iowa tax policy. The Iowa Association of Business and Industry Tax Committee meets Thursday to discuss proposals for the future of the Iowa income tax.

There’s a lot to talk about. The Tax Foundation puts Iowa among the bottom-ten states in its 2015 Business Tax Climate Index. Iowa has the second worst corporate tax ranking and the highest corporation tax rate of any state. We also have a subpar individual tax ranking. Along with the high rates — and made possible by them — the Iowa income tax is full of special favors for influential and sympathetic interests. This makes the taxes expensive and difficult to comply with and not so good at collecting revenue.

The state legislature has not seriously addressed income tax reform in recent years. There has been no movement against the awful corporation tax that I am aware of. The Republican caucus has pushed an individual “alternative maximum tax,” one with lower rates and a broader base — that would co-exist with the current system. That has an obvious flaw — everyone would compute their tax both ways and pay the lower tax. That makes the system more complex. But all tax reform has been bottled up by the Democrat-controlled Iowa Senate.

What are the ingredients for Iowa tax reform? A good tax reform discussion should consider:

Repeal of the Iowa corporation income tax. The Iowa corporation tax provided $438 million of the the state’s 2014 revenue, out of $7.545 billion. Corporation income taxes discourage in-state growth and are expensive to enforce. The state would be better off without it.

Repeal of all incentive tax credits. The state has many tax credits, some of which are refundable, including the R&D tax credit. Simply eliminating the tax credits would recoup some of the lost revenue from a corporation income tax repeal.

Move the individual income tax to an AGI-based system. Eliminate state itemized deductions and special state deductions and use the savings to lower the rates. Such as system would only retain a few itemized deductions to prevent abuse of taxpayers, principally the deduction for gambling losses.

Don’t be Kansas. That state enacted a poorly conceived tax reform effort a few years ago, and it has been a mess. Ambitions for tax reform have to be reconciled to revenue needs. While I think the state should spend less than it does, we can’t assume it will do so. Tax reformers need to present a plan that is revenue-neutral, or close to it.

Related:

Is Iowa’s business tax climate really that bad?

Baby steps towards fixing Iowa’s business tax climate

What an Iowa income tax might look like with a fresh start.

The Tax Update’s Quick and Dirty Iowa Tax Reform Plan

 

Jared Walczak, How High Are Property Taxes in Your State? (Tax Policy Blog). With this map:

 

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Iowa still has relatively high property taxes, even after the recent property tax reforms. But we have high income and sales taxes too.

 

Russ Fox, Two Sets of Returns Aren’t Better than One:

Today I look at the idea of preparing one set of tax returns for clients but using a second set of returns when submitting the returns to the IRS. Of course, those second returns had higher refund amounts with the difference being pocketed by the preparers. After all, what’s a little tax fraud?

This is what Russ might call a Bozo tax offense. It’s not like this sort of thing will go very long without someone noticing.

 

Jason Dinesen, Glossary: Estimated Tax Payments

Annette Nellen, Innovation box tax reform proposal, A good explanation of a bad idea.

Kay Bell, IRS says free identity theft protection services are tax-free. “That’s very good news for me, since I was part of the huge OPM hack”

TaxGrrrl, IRS Offers Tax Guidance On Free Identity Theft Protection Services

Paul Neiffer is on the road on The ProFarmer Midwest Crop Tour.

Jim Maule, Rebutting Arguments Against Mileage-Based Road Fees. I think an expansion of tolling is more likely, but I don’t think that is very likely either.

Jack Townsend, Ninth Circuit Requires a Filing for Tax Perjury Charge. “Under the facts, Boitana had merely presented the false return to the agent, but that presentation was not a filing.”

Peter Reilly, Let Irwin Schiff Die With His Family Not In Prison:

You don’t have to agree with Irwin Schiff’s views on the federal income tax, to feel sympathy for Peter Schiff’s request that his father be released from prison. Irwin, now 87, has been diagnosed with lung cancer and it seems likely that he will not live to see his July 26, 2017 release date.

I think the government has made its point.

 

Patrick J. Smith, D.C. Circuit Majority Opinion in Florida Bankers Not Consistent with Supreme Court’s Direct Marketing Decision (Part 1) (Procedurally Taxing):

The weakness of the majority opinion in Florida Bankers, together with the strength of a dissenting opinion filed in the case, as well as the inconsistency of the majority opinion not only with the Supreme Court’s Direct Marketing decision but also with other D.C. Circuit opinions, all make the Florida Bankers case a strong candidate for en banc review. 

The suit challenges the FATCA rules on foreign reporting.

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TaxProf, The IRS Scandal, Day 828Day 829Day 830

Matt Gardner, Latest Inversion Attempt Illustrates U.S. Can’t Compete with a 0 % Corporate Tax Rate (Tax Justice Blog). It could with a zer-percent rate of its own.

Renu Zaretsky, Tax plans and presidential candidates: The future [may or may not be] now. The TaxVox headline roundup talks about presidential candidate tax plans and the bleak outlook for the IRS budget under the current Commissioner.

Quotable:

If you think of government programs as technology, they are hopelessly behind. We regulate communications using the FCC, which is 1930s regulatory technology. We address health care for the elderly with Medicare, which is 50-year-old technology.

In the private sector, when an enterprise becomes technologically obsolete, it falls by the wayside. In government, it gets larger.

Arnold Kling

 

News from the Profession. Yep, Almost All Accounting Firm Partners Are Still White Guys (Caleb Newquist, Going Concern). Well, I still am, anyway, and I don’t see that changing.

 

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Tax Roundup, 6/2/15: See what the thief filed to claim your refund. And: a crowded Irish address files 580 1040s!

Tuesday, June 2nd, 2015 by Joe Kristan

20111040logoIt seems only fair. In a policy change, the IRS will enable identity theft victims to see copies of fraudulent returns filed in their names, reports Tax Analysts ($link).

Tax-related identity theft victims will soon be able to obtain IRS copies of the fraudulent tax returns used to steal their identity, thanks in part to a push by Sen. Kelly Ayotte, R-N.H.

“Once we have a procedure in place, we will issue an announcement informing tax-related identity theft victims of the process for receiving a redacted copy of the fraudulent return,” IRS Commissioner John Koskinen said in a May 28 letter that acknowledged Ayotte as the impetus for the change in the tax agency’s identity theft policy.

The redactions will deal with other taxpayers included on the stolen return. I am guessing could include pretend spouses and dependents used by the ID thief.

This is good news for taxpayers, as it may help them resolve otherwise inexplicable problems with their IRS accounts. It also promises to help shed light on how the thefts occur and, perhaps, help practitioners suggest measures to fight the fraud. It’s also long overdue. It’s not as if thieves can reasonably expect confidentiality for their crimes.

 

20130316-1The luck of the IRisSh. The tax agency still seems to be way behind the ID thieves. This report from the Irish Times is hardly reassuring: 

An address in Kilkenny topped a table of addresses used for multiple potentially fraudulent tax return applications submitted to the Internal Revenue Service in 2012, a study by the US treasury has found.

The address in Kilkenny was used for 580 returns in 2012, which led to “refunds” totalling $218,974 being issued, according to the study by the treasury inspector general for tax administration in the United States.

The IRS likes to claim that budget constraints are behind its abject failure to control the identity theft refund fraud epidemic. The inability to flag hundreds of refunds claimed from the same offshore address — which would seem like an easy enough programming problem to solve — indicates the problems are deeper than lean budgets.

 An address in Kaunas, Lithuania, was used for 525 applications that prompted the payment of $156,274, while an address in Miami, Florida, came third on the list, with 417 applications leading to the payment of $221,806. 

Somehow this doesn’t tell me the IRS needs to expand its responsibilities — but Congress and the President clearly feel otherwise.

 

Will there finally be real steps to fight the problem? Tax Analysts also reports ($link) that the IRS, in cooperation with states and software vendors, will require additional information to process e-filings:

Central to the announcement is a greatly enhanced public-private effort to combat fraud through increased information sharing.

Another upshot is that industry and government will need to process returns differently starting with the 2016 filing season, said Alabama Department of Revenue Commissioner Julie Magee. On the front end, tax return preparation software providers will need to provide multifactor authentication steps when a taxpayer logs in or returns to a site, she said.

The changes also will require vendors to increase by a few dozen data points the amount of information collected from the taxpayer or the return and sent in a standardized format to the IRS and state revenue departments, Magee said.

The story says the details will be announced sometime this month to enable vendors to prepare for next season. We will cover the announcement when it is made.

 

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Robert D. Flach has a fresh Tuesday Buzz roundup, covering topics as diverse as extenders and “I Love Lucy.

William Perez, The Key Benefits of Health Savings Accounts. Tax deductible contributions, tax-free accumulation, and tax-free withdrawals for qualified medical expenses.

Robert Wood, IRS Says If You’re Willful, FBAR Penalties Hit 100%, $10,000 If You’re Not

Peter Reilly, Conservation Easements – Tax Court Lets Owner Sell Them Or Give Them But Not Both

Jason Dinesen, History of Marriage in the Tax Code, Part 9: After Poe v. Seaborn. “Finally in 1948, Congress acted. For the first time, filing statuses were created and we moved closer to the tax system we know today.”

Kay Bell, Ohio becomes 25th state in which Amazon collects sales tax

Me, How states try to tax the visiting employee. My new post at IowaBiz.com, the Des Moines Business Record Business Professionals Blog.

 

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Alan Cole, Oregon to Experiment with Mileage-Based Tax (Tax Policy Blog):

Oregon will become the first state to implement a per-mile tax on driving. The tax is voluntary – an alternative to the state’s fuel tax. Drivers will get the choice of paying one or another. Should they choose the mileage-based tax, they will be charged 1.5 cents per mile, but get a credit to offset the taxes they pay on gas.

States have difficulty increasing gas taxes. Energy-efficient cars and electric (coal powered!) vehicles also are affecting gas tax revenues. The post doesn’t expain how the state will measure mileage; privacy issues promise to be a big obstacle for mileage taxes, but if this can be overcome, expect more states to follow Oregon.

TaxProf, The IRS Scandal, Day 754

Martin Sullivan, How Grover Norquist’s Pledge Can Hurt the Conservative Cause (Tax Analysts Blog). “First, the pledge’s hard and fast prohibition on tax hikes can prevent signers from agreeing to compromises that would result in outcomes most conservatives would consider highly favorable.”

 

Scott Sumner asks Why are interest expenses tax deductible? (Econlog).

The cost of equity (dividends, etc.) is not tax deductible, while interest is deductible. But why?

Good question. I respond with another — why aren’t dividends deductible? That would prevent double taxation of corporate income while making sure corporations can’t be used as incorporated investment portfolios.

 

 

 

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Tax Roundup, 3/2/15: Thawing Iowa’s frosty business tax climate. And: film credit post-production!

Monday, March 2nd, 2015 by Joe Kristan
Iowa's business tax climate, illustrated

Iowa’s business tax climate, illustrated

Baby steps towards fixing Iowa’s business tax climate. At IowaBiz.com, the Des Moines Business Record’s Business Professionals’ Blog, I discuss some easy steps to make Iowa’s tax climate a little less frosty, along with a few slightly harder ones.

The real easy:

– Eliminate the Iowa individual and corporation alternative minimum tax.

– Have Iowa’s tax law automatically conform to federal changes.

– Tie Iowa return due dates to federal due dates for all returns.

The slightly harder:

– Encourage or require “composite” returns or withholding for pass-through non-resident taxpayers.

– Repeal the deductibility of federal taxes by building the tax advantages into lower tax rates.

– Repeal refundable and transferable business tax credits.

None of this takes the place of a real Iowa tax reform along the lines of the Tax Update Quick and Dirty Iowa Tax Reform Plan, but you have to start somewhere. My next IowaBiz piece will attempt to put some more meat on the bones of the Quick and Dirty plan.

 

The Iowa Film Tax Credit Program is dead, but the lawsuits linger. A disappointed filmmaker wanted more taxpayer money, but the Iowa Supreme Court ruled that the Department of Economic Development had the final say over what expenses would qualify. Ghost Player, L.L.C. and CH Investors, L.L.C. vs Iowa (Sup. Ct. Iowa, No. 14-0339)

 

Kristine Tidgren, March 2 Deadline Extended for Farmers Waiting for 1095-A. Farmers that file by March 1 (today this year, because March 1 was on a Sunday) do not have to pay estimated taxes. “In a last-minute announcement, the IRS has declared that farmers waiting for a corrected 1095-A will have until April 15 to file their returns and pay their taxes. If they file Form 2210-F along with their return, the penalty for failure to pay quarterly estimated tax will be waived.”

Russ Fox, It Was the Sisterly Thing To Do. “Three Wisconsin sisters allegedly decided that tax fraud and identity theft should stay in the family. They’ve been accused of filing 2,000 phony returns by the Wisconsin Department of Revenue.

 

 

Jack Townsend, DOJ Tax Tough Talk About the Violating Trust Fund Tax Withholding and Payment Obligations. It seems that the IRS has become more willing to try to jail employers who fail to pay withholding; this post discusses how it can become a criminal issue. You can’t argue with this: “The solid advice is to withhold, account for and pay over to the IRS.”

William Perez explains The Key Benefits of Health Savings Accounts. “Contributions are tax-deductible when going into the HSA. And distributions can be tax-free when coming out the HSA.”

Jason Dinesen, Financing a Small Business, Part 3 of 5: Tell Your Accountant Before You Spend the Money

Kay Bell, Lions, lambs, warning Ides and luck all apply to March taxes. “Are you a tax lion, aggressively hunting down tax breaks? Or are you a tax lamb, cowering before the complicated Internal Revenue Code?”

Leslie Book, US v Clarke Remand: Allegations of Bad Faith Still Face A High Hurdle (Procedurally Taxing). “The case involved allegations of retaliatory summons issuance following a failure to extend (for a third time) the statute of limitations and allegations that the summons was a way to avoid discovery limitations in a Tax Court TEFRA proceeding that was commenced after the summons was issued.”

Bob Vineyard, Solyndra-care (InsureBlog). While Iowa’s ACA co-op, CoOpportunity, was the first one to collapse, it might not be the last.

 

Liz Malm, Richard Borean, How Does Your State Sales Tax See That Blue and Black (or White and Gold) Dress? (Tax Policy Blog):

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Robert Wood, Finally, Suing IRS Over All Those Emails. “IRS attorneys said the back-up system would be too onerous to search. Yet in recent testimony, the Treasury Inspector General for Tax Administration said IRS tech employees told them that IRS management never asked for the tapes.”

TaxProf, The IRS Scandal, Day 660Day 661Day 662. It appears that Commissioner Koskinen is putting the same effort at getting to the bottom of the Tea Party harrassment that Vladimir Putin is putting into finding Boris Nemtsov’s killer.

 

Richard Phillips, Netflix is a Real-Life Frank Underwood When it Comes to Tax Breaks (Tax Justice Blog)

Eric Todor, What if We Funded Public Education Like Affordable Care Act Health Insurance? (TaxVox). “Both seek to promote a form of universal or near-universal coverage – K-12 education for all and mandated health insurance for many. But they go about it in very different ways: one makes government subsidies explicit and the other makes much of them disappear, at least in the budgetary and political sense.”

 

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Peter Reilly, Will Christian Soldiers Be On The Streets Of Pensacola As Kent Hovind Goes To Trial? Peter covers the latest developments in the strange and sad case of the guy who had the “Young Earth Creationist” theme park devoted to the idea that humans and dinosaurs co-existed.

 De gustibus non est disputandum. Form 1040: An Unappreciated Work of Art. (Christopher Bergin, practitioner of dark arts for Tax Analysts).

News from the Profession. Florida Man Drives Porsche on Sidewalk to Make a Point, Gets Arrested. (Caleb Newquist, Going Concern). When Grandma started doing that, we took away her keys.

 

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Tax Roundup, 1/22/15: Business-only tax reform: do-able, or doomed? And: Are Iowa taxes all that bad?

Thursday, January 22nd, 2015 by Joe Kristan
paul ryan

Paul Ryan

Business-only tax reform? Tax Analysts reports ($link) that the chief taxwriter in the GOP-controlled House is exploring tax reform ideas with the Obama administration:

As Republican taxwriters look for a way to advance tax reform in the face of White House ambivalence, House Ways and Means Committee Chair Paul Ryan, R-Wis., said he would explore a business-only compromise with the Obama administration, as long as it includes passthroughs.

“I’d like to think that there is perhaps an area for common ground there,” Ryan said on Fox News January 20 after President Obama’s State of the Union address. “We’re going to try to explore it and see if we can find something.”

Ryan said Obama’s recent tax proposals, which involve increasing capital gains taxes and implementing a tax on financial institutions to pay for new and expanded middle-income tax incentives, as well as new spending programs, show he is disinterested in comprehensive reform.

I think “as long as it includes passthoughs” is absolutely the right approach. I also think it will be fatal to the reform effort. A majority of businesses and business income is taxed on 1040s as a result of the increased popularity of passthrough structures like S corporations and limited liability companies.

Source: The Tax Foundation

Source: The Tax Foundation

Any tax reform effort worthy of the name would bring down rates in exchange for a broader base. As the President seems firmly committed to ever-higher rates on “the rich,” I don’t see how this can happen.

 

Is Iowa’s business tax climate really that bad? (Me, IowaBiz.com). Is Iowa ready for tax reform? Ready or not, it’s overdue for it:

Even after all of the explaining, the Tax Foundation’s main points remain true. Iowa’s corporation tax rate is the highest in the U.S. (even taking the deduction for federal income taxes into account). In fact, it is the highest in the developed world. Our individual tax rate is high, even considering the federal tax deduction. All of the special breaks make Iowa’s income tax very complex. And while Iowa has many tax credits, they are often narrowly tailored and require consulting and string-pulling to obtain. Many small businesses don’t qualify for the wonderful tax breaks, but they still have to pay their accountants to comply with the resulting complex and confusing tax system.

If Iowa's income tax were a car, it would look like this.

If Iowa’s income tax were a car, it would look like this.

The post begins an exploration of Iowa tax reform options I will be running at IowaBiz.com, the Des Moines Business Record’s Business Professional’s Blog. While longtime readers know my fondness for massive changes to the Iowa tax system, I will also be exploring changes on the margin that would improve and simplify Iowa’s tax system in its existing structure that might be easier to pass.

 

David Brunori, Bad State Tax Ideas Abound – Nebraska, Virginia, and Missouri (Tax Analysts Blog):

Special taxes — those on narrow bases — should be imposed sparingly and only for good reason. The best reason is to pay for externalities. But unlike, say, cigarettes, 99 percent of gun purchases produce no externalities. So they should not be subject to special taxes — unless you really hate guns, gun owners, and the guys from Duck Dynasty.

Not every problem is a tax problem.

 

Via Wikipedia

Via Wikipedia

TaxGrrrl, Taxpayers Urged To Be On ‘High Alert’ For Fraud During Filing Season:

This week, the Treasury Inspector General for Taxpayer Administration (TIGTA) issued a reminder to taxpayers to beware of scammers making calls claiming to represent the Internal Revenue Service (IRS). The scam, which heated up last year, has continued to plague taxpayers.

If you aren’t expecting a call from the IRS, it’s not the IRS.

 

William Perez, Understanding Form W-2, the Annual Wage and Tax statement

Robert Wood, 10 Surprising Items IRS Says To Report On Your Taxes. As a listicle, it will probably generate traffic to crush Forbes’ servers.

Tax Trials, Fourth Circuit Affirms the Tax Court on Conservation Easement Donation.  “In the end, the Fourth Circuit held that while the conservation purpose of the easement was perpetual, the use restriction on the’ real property is not in perpetuity because the taxpayers could remove land from the defined parcel and replace it with other land.”

Robert D. Flach, ONE WAY RETIREES ARE SCREWED ON THE NJ-1040.

Keith Fogg, How Long Does a CDP Case Toll the Statute of Limitations on Collection? (Procedurally Taxing)

Peter Reilly, Bitter CPA Fight Good For Attorneys And Nobody Else. The U.S. Sixth Circuit picks up the tale of one of the worst accounting firm breakups I’ve come across.

Jack Townsend, USAO SDNY Announces Another Offshore Account Client Plea

 

20141201-1Glenn Hubbard, Obama’s Bad Economic Ideas (Via the TaxProf): “Piling up child tax credits and subsidies for health care over narrow household income ranges, as the president proposes, leads to high rates of taxation on earnings from work as assistance is phased out.” In other words, a poverty trap.

Kay Bell, Obama’s ‘won both’ elections State of the Union quip, Republicans’ many responses to the speech (and gibe)

 

The Tax Policy Blog has lots on the Presidents’ doomed tax proposals:

Kyle Pomerleau, Andrew Lundeen, The Basics of President Obama’s State of the Union Tax Plan

Scott A. Hodge, Michael SchuylerWhat Dynamic Analysis Tells Us About the President’s Tax Hike on Capital Gains and Dividends

Stephen J. Entin, President Obama’s Capital Gains Tax Proposals: Bad for the Economy and the Budget

 

TaxVox is also flooding the SOTU zone:

William Gale, David John, Retirement Security a Priority in the 2015 State of the Union

Gene Steuerle, President Obama’s Middle-Class Tax Message in the State of the Union

William Gale, Adjusting the President’s Capital Gains Proposal

 

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TaxProf, The IRS Scandal, Day 623. Today’s installment features an e-mail where scandal figure Lois Lerner shows she’s well aware her unit was under suspicion, and was desparately discouraging further inquiry.

Matt Gardner, Adobe Products’ Acrobatic Tax-Dodging Skills (Tax Justice Blog). I would read that as “skills in meeting their fiduciary duty towards their shareholders.”

 

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